Here’s my letter to the Milton Canadian Champion about the Nassagaweya Tennis Club renovation, published on Canada Day, 2009:

DEAR EDITOR:

This letter is in response to the recent Champion article entitled ‘Town of Milton applies for recreation stimulus funding.’

The article mentioned the Nassagaweya Tennis Club, which is a private club that the Town subsidizes by paying 50 per cent of the court re-surfacing costs, 100 per cent of the exterior and structural clubhouse upgrades and 100 per cent of the cost of security and damages. This is in addition to the fact that the club only pays the Town $100 a year in rent.

All this may actually make sense, but I couldn’t help but be appalled to read that town council directed staff to submit an application for a $2.9 million redevelopment of the club that only has 191 members. That translates to more than $15,000 for each member.

Am I the only one who’s shocked at this waste of public money? Is this really the right time for this? Wouldn’t this money be better spent on some of the urgently-needed infrastructure improvement projects that far more residents could benefit from?

ZEESHAN HAMID, MILTON

This is a follow up to my previous post titled ‘Stealth Tax – Developer Fees.’  

I was surprised to learned that very few people knew about development charges.  This is a charge that builders pay on each home that they obviously pass on to customers.  This can be high.  Not thousands, but tens of thousands of dollars!  A typical detached home in Oakville, for example, may carry a development charge as high as $50,000 (no wonder homes in Oakville cost so much more than homes in Mississauga). 

I’ll leave the claim of “lowest property tax in GTA” for another day.  If I already paid $40,000 in taxes up front then my taxes aren’t really low now, are they?   Next time someone tells you that Milton has low property taxes then tell them it’s because they paid many years of taxes up front. 

In theory development charges make sense.  New developments require new infrastructure that existing residents should not have to pay for.  However, in order for them to make sense in practice the revenue from those charges should be spent around the communities it is collected from.  That, unfortunately, doesn’t happen.  In practice, development charges have turned into a tax on new home buyers so existing home-owners don’t have to pay for services they receive (see the post on the Nassagaweya Tennis Club where the town proposes spending $3 million on a tennis club with less than 200 members).  Other recent projects using development charges are the expansion of Milton Sports Centre and the construction of a central library and arts complex on the Main Street.  These would make sense if the needs of new residents who paid dozens of millions of dollars in taxes were met.  Instead, my neighbours and I are stuck with a Derry Street that should’ve been expanded two years ago, the neighbourhood park area that is a pile of dirt collecting garbage, schools that are overcrowded and delayed, and the underpass on Derry Street that isn’t planned for almost a decade when it should have been built before construction ever started.   

Development Charges are only fair if there is a bylaw that forces a majority of those charges to be spent in communities they were raised from.  Otherwise they cause a serious moral hazard.  The region starts considering this as free money.  This caused huge issues in cities like Las Vegas and Phoenix that were addicted to developer charges.  In those cities the planners thought not of residents when approving new construction, but at $$s coming from developers.  As a result they overbuilt and brought down home values in the entire area. 

If you think that cannot happen in Milton then think again.  Milton doubled its population in less than a decade.  Even Brampton has a growth cap of around 5000 homes (that’s for a population of 433,806.  Milton equivalent for this would mean less than 1000 new homes would be allowed every year in Milton so infrastructure could keep up).  Instead Milton has no development cap, none.  That’s horribly risky for your property values, if not for your quality of life because of ever-crowded streets and schools.  This sort of stuff happens because the town and the region sees dollar signs.

A better way of increasing revenue is to increase the tax-base by attracting good, high quality employers to the region. Many of them moved to Mississauga over the last decade, proving that an area West of Toronto can attract top employers. That’s what we need in Milton. It will help solve traffic issues (so people in this region will work in this region), give employment to people and find a more diversified tax-base so tax-rate can stay low.

I have been thinking for a few days whether to post this or not.  This is one of the topics that can cause huge misunderstandings! 

Let me state facts first.

The Town of Milton subsidizes a private tennis club with less than 200 members all the way out in Nassagaweya.  This is actually (potentially) smart.  It allows the town to provide a service to residents without bearing the full cost.  The club only pays $100 / year in rent and the town picks up 50% of court re-surfacing cost, 100% of exterior and structural clubhouse upgrades and 100% of the cost of security and damages.

(Before I go further, I must point out that I am ignoring some moral and ethical questions here. Why this private club and not another?  If I start another club in Nassagaweya to compete with this one, will the town subsidize me equally? If not then why support one over the other?   In my opinion the town should partner with non-profit private enterprises, but partner equally.  However, I will leave that topic for another post).

This is what made me type this post: the Town Council approved the staff to submit application for $2.9 million of redevelopment on this tennis club with 191 members on Guelph Line (North of 401).  That is more than $15,000 per member!!!!  Am I the only one who is shocked by the utter disregard for good financial management?  Wouldn’t this money be better spent elsewhere?  Why do those residents get a special treatment and other rural residents on the other side of town do not?  Something about this doesn’t smell right! 

Seriously, please leave a comment to tell me if I am crazy to be really upset about it. 

It’s tempting to get excited about all the construction in town using developer fees.  It’s free money, right?

Wrong!

It’s a tax on new residents, or existing residents who choose to buy a new home in Milton again.  These residents pay for tax by paying a much higher price on a house than they otherwise would have to.  Developer fees levied on commercial construction also discourages businesses from moving into Milton, which is bad for all residents.

Notice I am not passing any judgement on whether Milton / Halton charge too much or too little.  I am merely pointing out that the expansion of roads, Milton Sports Club, Library, Townhall etc. are done using a tax levied on people buying a new home in the town.  It’s certainly not free money, and shouldn’t be spent as such.