Nearly $70M on the line if council rejects allowing 4-unit homes across Fredericton
Planned infrastructure upgrades would potentially need to be paid for with higher taxes, user fees
Close to $70 million in government grants could be pulled off the table if Fredericton councillors reject changes to allow most homes in the city to be split up into four separate units.
The scuttled funding could result in the city needing to potentially raise property taxes, as well as the fees it charges for water and sewer to pay for infrastructure upgrades it says are needed to accommodate more homes.
"The city's Housing Accelerator [Fund] application laid out a series of initiatives that we would try and implement — some of those are infrastructure investments, so investments we'd make in pipes and roads to facilitate residential development," said planning director Ken Forrest, speaking Monday night after the regular Fredericton council meeting.
"So there would be impacts there."
Forrest spoke to councillors about a report he and other staff prepared that laid out the financial implications if council votes against a zoning bylaw amendment that would allow homes in the city to be turned into four separate units, subject to lot size requirements.
The current limit for most homes is two units, and homeowners are required to first obtain a zoning amendment if they want to create more units.
The federal government required the city to pursue the zoning bylaw changes as a condition for receiving a piece of the $4 billion Housing Accelerator Fund.
Several other Canadian municipalities have signed up for the same fund, along with the condition they make similar zoning changesm which are designed to make it easier for property owners to create more housing.
However, the amendments ultimately come down to a vote by councillors. At a meeting earlier this month, council heard from a contingent of residents strongly opposed to the changes.
Councillors would have had a final vote on the proposed zoning changes Monday, but at the earlier meeting, they deferred the vote to give staff time to prepare a report outlining the financial implications of rejecting them.
Rejection could require return of some money
In December 2023, Fredericton struck a deal to receive $10.3 million from the Housing Accelerator Fund, with money earmarked for infrastructure upgrades, as well as for grants for non-profit and private housing developers who planned to build affordable units.
The city received its first of four $2.6 million instalments in 2023, and its second just last month, with the third and fourth to be doled out over the next two years.
However, if councillors reject the zoning changes, the last two instalments would be cancelled, and the second might have to be paid back.
"Summarized, it has been assumed that the City would need to allocate $7,705,589 of City funding to honour its community and municipal commitments," staff say in their report.
$61.3M at risk with infrastructure fund
While the zoning changes might have been originally pursued because of requirements set for the Housing Accelerator Fund, the change is also being required of cities hoping to tap into an even bigger federal fund.
The $6 billion Canada Housing Infrastructure Fund allows municipalities to apply for grants that help them upgrade roads, water and sewer lines and other amenities needed to accommodate the growth in the number of housing units.
Fredericton has submitted two applications totalling $84 million under that program, which would result in a combined $61.3 million in grant money flowing from the federal and provincial governments, after the city's contribution of 27 per cent of each project's cost.
One of those is a $29.9 million project to install water and sewer lines, a new booster station, new reservoir and upgraded lift station to create new subdivisions in the Doak Road area.
"That's a significant investment in order to start to develop in that area," Forrest said.
"So there's a large funding application in there that is kind of the pre-development investments that are necessary to unlock that area for about 7,000 people."
Other projects the city hopes to undertake using that fund include infrastructure upgrades in the Brown Boulevard area, as well as "major investments to address issues at the Garden Creek Waste Water Treatment Facility and water supply needs" in the Liane Street area.
Without the funding, the city would have to finance about $17.6 million of the work through its general capital fund, which would require stretching the work out over 12 years. Alternatively, the city could borrow the money while raising the tax rate by 1.4 cents per year for 20 years.
The remaining $51.4 million in projects the city wants to undertake would need to be financed through the water and sewer capital fund, a cost that would require borrowing money to pay for.
To pay for it, the city would either have to increase the water and sewer connection fee by $224 annually for 20 years, or increase the consumption-based rates by 18.35 per cent per year for 20 years.
"There are significant short and long-term financial impacts related to this decision that will impact current and future budgets totalling slightly more than $69 million," staff say, in their report.
Council's vote on whether to approve the proposed zoning bylaw changes will be made at its meeting on April 14.
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