For a while, I have been interested in Development Charges and their impacts on growth. The announcement that the Greater Essex County District School Board was reviewing their education development charges (EDC) was certainly interesting, partially because I didn’t know that they existed.
Originally set back in 2014, the charge of $305 per residential unit applies to all of Essex County, including the City of Windsor and Pelee Island. These funds are then at the disposal of the school board for the acquiring of property for new schools. These charges are imposed for 5 year periods after which point they need to be renewed. This renewal requires a 15 year projection for land use and student enrollment growth as a justification for the EDC (the projection will actually be very interesting to see). In the case of the Toronto Catholic School Board, they expect over the next 15 years to need $2 billion to acquire land for new schools.
These charges are collected by the corresponding municipalities and deposited to the School Boards, in a similar manner to the education property tax. Strangely I could only find a listing of these charges on the City of Windsor website which creates some confusion and probably why I was unaware. This lack of listing does raise some questions on whether or not the EDCs are being transparently imposed across the region.
The Money Stuff
According to the School Board’s and budget EDCs are expected to allocate approximately $230,000 from these funds towards land purchases this coming year. From the Board’s last audited statement they generated $363,901 in revenue. Generally speaking based on previous audits this account seems to be drawn down each year as the EDC off-set grant funding from the province.
At $305 per residential unit and reported revenues of $363,000 that works out to 1,190.16 unit being charged the EDC (2017 saw $517,131 equating to 1,695.51 units). From CMHC data just in the Windsor CMA in the 2017 calendar year there were 1,187 residential units permitted (when the charge would have been imposed). Now the data does have some issues related to calendar (School Board data based on a August 31 fiscal year and CMHC using annual calendar) as well as CMHC data misses Essex, Kingsville, Leamington and Pelee Island as they are not apart of the CMA. The primary takeaway is that it is very hard to say if the Board is maximizing its revenue potential from this tool or if it is allowing for fees to be waived in jurisdictions. Areas of Windsor Core for example have a blank waiving of development charges, it isn’t clear if the school board charges are also waived in this area. It is also possible that they are collecting partial charges in certain areas where municipal reductions are in place.
The school board currently does not charge non-residential changes. Simcoe County District School Board as an example charges 35 cents per square ft charges to commercial and industrial buildings.
To complicate matters the Ministry is involved in approving School Board EDCs. The underlying justification for EDCs and the background report must be submitted to the Ministry. In many high growth areas, EDC regulations have been challenged as unfair and constraining, resulting in school boards leaving millions of dollars that could be utilized for new builds or repairs. Some advocacy groups have also called for reform in EDC to allow repairs to be financed through EDCs.
According to the presentation provided to GECDSB by Watson Associates, the Ministry is conducting a full review on EDC and the finding should be release by summer/fall 2019. It is possible there will be an update on this at the public meeting in the coming weeks.
Progressive Educational Development Charges
A review by Watson Associates, the same consultants for the Public Board here locally, for the Halton District School Board stated that:
- EDC by-laws may be uniform across the jurisdiction or area-specific.
- EDCs may be a single charge for all types of residential development or the Board may wish to impose different charges on different types of residential development.
- Boards can allocate net education land costs to both residential and non-residential developments.
My takeaway is the possibility that the EDCs for GECDSB could play a role in shaping broader development patterns in our region. By adjusting it’s charges from a flat rate for all of Essex County to a more targeted approach. Although its not entirely clear if exemptions are provided to the current charges, large areas of Windsor do not have development charges in an effort to encourage new development. In contrast, high growth communities (LaSalle, Lakeshore) where new development will create pressures for new schools, could/should have higher charge rates.
Given that these charges seem to be set based on expected growth patterns, that will shape the size of the charge that can be imposed, some careful calculus would need to be undertaken based on the projections developed by the consultants. The charges could in theory be only deployed on high growth areas of residential development and by not including even nominal charges for other areas it maximizes the developmental impact of the charge. For (a very crude) example:
Let’s say the consultant’s say 15,000 new residential units will emerge over the next 15 years (between Jan 2013 to Jan 2018, 4,921 residential units were built). Based on that housing growth, a student growth multipler would result in approximately 3,000 new student needing accommodation from that new housing stock. If 3,000 student equates to 5 elementary schools and a high school needing $5 Million in land acquisition costs, that amount can be applied to the new residential units via EDC at $333 per unit. Or the School Board could decide that Lakeshore units are $1,000 and Windsor Core are $0 per unit.Calculations are crudely applied based on Watson Associate calculation for the Simcoe County District School Board
Since the charge can only pay for land needs, setting an equal charge across the whole region when certain parts are growing faster than others, actually places undue burden on part of the community by stunting potential growth with additional cost. Obviously there are political ramification to using changes in this manner but by putting a damper on outward expansion it could also help mitigate pressure to close or realign existing schools in core areas. If 10% of those 15,000 units become infill within existing school boundaries of the next 15 years, the capacity issues of certain core schools could be mitigated as high cost to develop new residential vs low infill is a proven (if often bluntly applied) tool to shape economic behaviour.
The addition of a commercial or industrial sq-ft charge would also shape this calculus. As the total amount that can be collected is based on the total land acquisition costs, adding a commercial or industrial charge would lessen the residential charge burden.
To be perfectly honest, I don’t fully know if the above is actually in the power of the school board to implement. A reading of the Education Act on EDC provides less clarity than I would hope. If the Toronto District School Board gets it way, these charges could actually have much more power in the future to finance building repair and other capital projects. That being said, this EDC issue is one of those issues that is flying under the radar in our region. With all of the the oxygen being sucked up by other “mega” issues, the potential impact of EDC on our region’s future is significant and won’t get the discussion that it deserves.
It’s issues like these are why we elect school board trustees, it will be interesting to see where they land. So I would encourage you to head to the public meeting on April 2nd.