What should be done about HRM's Regional Development Charges to help support affordable housing?

Halifax Regional Municipality’s “growth pays for growth” policy was approved by the Nova Scotia Utility and Review Board in 2014, and since that time, Halifax Water has levied regional development charges (RDCs) on housing being built in fully-serviced and in partly-serviced areas of the Municipality. 

Depending on the location and type of housing being built, the charges range between $1,291 and $1,922 per unit for the Water RDC and $4,115 to $6,127 per unit for the Wastewater RDC. In fully-serviced areas, the charges total $5,406 per multiple dwelling unit and $8,049 for a townhouse or single-family unit. 

Non-profit housing groups must include RDCs in their project budgets and experience has shown that Halifax Water fees frustrate the financing of affordable housing up front. Without support from HRM, RDCs get paid through forgivable loans from senior levels of government, and if lending is involved, then the charges get passed on to tenants in their rents. 

And the impacts are significant. One of my non-profit housing clients is paying over $465,000 in RDCs and water infrastructure costs for 75 mixed income housing units. 

Third party involvement in the financing of affordable housing is required in programs such as CMHC’s Affordable Housing Fund (formerly called the Co-Investment Fund). Demand for HRM’s participation far exceeds the amount of funding that is available in the Municipality’s Affordable Housing Grant Program (AHGP). 

There has been a steady increase in the amount of money HRM is making available in its grant program, most notably since the Municipality accepted $79 million from the federal government’s Housing Accelerator Fund. There has also been a steady increase in HRM’s Bonus Zoning Reserve ($6.7 million as of May 2024) which is used to support affordable housing, but only in the regional centre. I

Instead of using the Bonus Zoning Reserve, the staff report recommends that $6.1 million from the Accelerator Fund be used in the regional centre, that being, 94% of the total grant allocation this year. 

All communities have affordable housing needs and the geographical bias that has existed since the grant program’s inception is unacceptable. HRM’s approach to affordable housing would be strengthened if RDC offsets were made available during the financing phase of an affordable housing project. If $1 million was reserved in the grant program for this purpose, then the financing of 185 non-profit apartment units would be supported ($1 Million divided by $5,406).The financing for even more units would be supported if the affordable housing project was located in partly-serviced areas. 

Here’s why HRM should change its grant program to do this: 

• HRM’s support for affordable housing would be broadened and more targeted. For example, if RDC offsets were included, then deep affordability and often-overlooked rural areas could become higher priorities for the grant program. 
• RDC offsets would be easy to administer since they would be tied to the number of units in financing applications and would only get paid to Halifax Water if the financing for those units was secured. 
• There would be savings in staff time to administer the grant program and duplication with senior levels of government would be reduced. 
• Halifax Water’s practice of imposing liens on property and interest charges for deferring RDCs up to 10 years would be eliminated. 
• Halifax Water would not need much involvement in this process - the offsets would be paid to the utility - and the utility’s capital budgets would not be impacted. 
• Delays and timing issues with the grant program would hopefully be reduced, and 
• RDC offsets will create a more level playing field, eliminate the geographical bias, and help ensure consistency and transparency in how the grant program is being administered. 
  

HRM is aware of the impact that RDCs have on non-profit housing and has asked that the Province amend legislation so that Halifax Water can waive these fees. The Province should encourage HRM to consider alternatives such as the one presented here because: 

• The financing of affordable housing projects is complex. Non-profit housing groups do not need any more forms, applications or another agency (Halifax Water) involved in the financing process. 
• If the goal is to support the construction of more affordable housing, then we would want to see a lot of fee-waiving taking place, in which case, would the Province be compromising Halifax Water’s capital budget with this change in legislation? 
• As shown above, HRM has the money to offset regional development charges and, therefore, it is in a good position to provide more targeted support for affordable housing. HRM’s Affordable Housing Grant Program needs to be aligned with the needs of non-profit housing providers and help them secure financing for their affordable housing projects.