By Gerry Barker
February 4, 2019
Recently, by an 8 to 4 vote council exempted the University of Guelph of paying development charges for its never-ending expansion of facilities.
That’s a great deal by any standard.
But let’s try to understand just what the city receives from the University to maintain taxpayer-supported costs including infrastructure, transportation, public safety, hospital and medical services and city administration.
City taxpayers pay for all of these categories.
Don O’Leary, the University’s Vice President of finance, administration and risk, admitted that he University is paying $1.6 million in lieu of property taxes. This special deal, created the province in 1987, is called the bed-tax.
Each post secondary institution in the province multiplies the number of students attending by $75. That number remains the same today, some 36 years later. There is no allowance for inflation or the effect on city taxpayers in terms of operational costs and population growth of the city.
The city’s operating and capital spending costs are estimated to be 395 per cent compounded, at an average of three per cent per year since the introduction of the plan.
When comparing the property tax rate proposed by the city of Toronto was 2.55 per cent. Yes there will be folks in Guelph who will dispute the fact that Guelph’s 3.93 per cent property tax rate is not valid. It’s relative because size is not what matter.
It’s how to reduce overhead and spending. By practicing more accurate forecasting managing within our means and working to increase revenues. It is not at the expense of property taxpayers. That well has been tapped too often.
But the University of Guelph owns possibly the largest total tract of urban land among the post secondary schools in the province, much of it yet to be developed.
The U of G property contains a larger portion of leased land including a multi-use subdivision known as the Arboretum. In addition, much of the commercial and offices along Stone Road pay a land lease charge to the University that owns the land. Over the years this has been a financial gold mine for the University that grows every year. Is it an increasing real estate bonanza including the Stone Road Mall?
So why are the citizens financing this in perpetuity?
Moreover, while the property tax rate has only dipped twice below three per cent per year in 9 years, The University’s contribution has remained at $75 per student.
Is this part of the $800 million economic contribution to the City of Guelph claimed by University VP O’Leary? Particularly when it is obvious that the University is in the real estate business and receives grants from the province.
Yet city council voted to continue exempting the institution from development fees for another five years.
The council vote was 8 to 4 with Coun. Dan Gibson absent. Breaking it down, voting for this largess was Mayor Guthrie, Counillors James Gordon, Phil Allt, June Hofland, Dominique O’Rourke, Mark MacKinnon, Cathy Downer and Leanne Piper. Voting against the motion were Councillors Bob Bell, Christine Billings, Rodrigo Goller and Mike Salisbury.
One of those councillors voting for the development fee exemption was Leanne Piper who is employed by the University. She should have recused herself as well as any other councillor working or associated with the University.
Who benefits from this economic generator?
. Don O’Leary addressed what the University of Guelph brings to the city. “The University is a significant economic generator and allows the economy to thrive,” he said, adding that the school supports approximately 12,000 local jobs and brings nearly $800 million worth of economic activity to the city every year.
Those economic numbers came from a University produced brochure that lacked the data source of the $800 million that the institution claims brings to the city. Further, that figure of 12,000 staff, according to the brochure, includes staff at a Toronto campus that links Humber College and another campus in South Western Ontario.
What that brochure failed to mention was the endowment fund that the University has reported to be more than $100 million. That represents 25 per cent of the entire annual city budgets.
Then the City’s General manager of Finance and Treasurer, Tara Baker, reported to councillors that Guelph could expect to see $50 million in the next decade in tax-supported growth costs. However, the study found a shortfall of $1.25 million this year that will need to be added to the capital budget, approved by council Jan. 30.
That’s not a rounding adjustment, based on the $50 million it is anticipated to be spent by taxpayers over the next ten years; that works out to $5 million a year. This current shortfall represents 25 per cent that must be added to the capital budget.
But where is the University of Guelph’s contribution to support the taxpayer’s responsibility to pay for those services, the cost of which increases exponentially every year? Oh, they don’t because council voted to exempt the University from paying property taxes and development fees.
Guelph Transit revenue threatened
Breaking news! We have learned that the Ford Government is considering allowing students to opt out of the obligatory transit pass payment each semester.
This comes when Guelph Transit announced that 50 per cent of its passenger traffic is by students, chiefly from the University of Guelph.
If this occurs, transit officials are concerned it will hit the bottom line of operating costs. The shortfall will affect the property taxpayers, as they will have to pick-up the difference.
For the record, the city already subsidizes Guelph Transit by more than $15 million annually. In other words, this service is built for the students and it is an inefficient and costly operation that is used by a minority of residents. If the Ford proposal passes, then Guelph Transit must reduce services and operating overhead.
Guelph is now Discount City
Did I tell you about the other discounts the city gives to the University?
Up to now, the city has granted a 25 per cent reduction of development fees initiated for the University. Staff reported that the full exemption will apply when it comes to community public services such as libraries, recreation, parks, and infrastructure.
The other big discount is the bed tax deal in lieu of property taxes that gives the University a huge break in land taxes. The city will argue that deal is mandated by the province. But not adjusted for 36 years?
I still maintain that the relationship between the city and the University needs a review and sharing of taxpayer costs that support the institution on a daily basis, 24-7.
There is concern that increasing development fees will immediately impact the development industry, thereby increasing housing prices and people looking elsewhere. We have already experienced developers leaving Guelph due to the rigid and unfair treatment by city officials during the eight years of the Farbridge administration.
The Mayor ran in 2014 to abolish the “Guelph Factor” that affected approval times of development proposals.
It appears the ‘Guelph Factor’ is alive and well and being just as impossible and demanding by planning and engineering staff as ever. It still takes two and three years to process a development plan.
It is the Jonah of Guelph that failed to increase commercial and industrial assessment for 12 years. It would have alleviated the pressure on residential properties. Those properties, the ATM machine of City public revenues, that have had to support sacred institutions, costly, failed environmental schemes and still, no downtown library, no south end recreation centre or adequate parking downtown.
Even the staff receives a convenience discount
Correction: city hall staffers will mostly occupy the $22 million Wilson Street Parkade, now under construction. The location is just too convenient.
We have just re-elected the same city council with only two changes. The same group that has driven up taxes and user fees and is proposing another 3.93 per cent
Increase this year in property taxes.
Remember? Mayor Guthrie promising to keep property tax increases at the same rate as the Consumer Price Index. That rate in 2014 was 1.11 per cent. In the intervening years, it has not increased by more than 2.55 per cent.
I regret Mr. Mayor, most of the Guelph electorate felt you had great promise and twice have elected you. Sorry, but you folded like a cheap suit when you went along with a 3.96 per cent property tax increase in your first budget in 2015.
And now with your second post election budget, the proposed property tax increase for 2019 is 3.93 per cen if approved by council.
Déjà vu or is it just a convenient opportunity?