Developers And Housing Advocates Criticize the Effects of Increased Fees
Council in the City of Toronto voted in July to increase development charges by a colossal 46% for new residential buildings, with the raise phased in over the next two years. The fees are collected when a building permit is issued and are applied to fund infrastructure that supports a growing population, such as transit, roads, and housing. A representative of the development industry and a housing advocate are concerned that the decision could further tighten the city’s lack of housing supply and result in less affordable housing.
Developers building a single-detached or semi-detached home will be expected to pay an additional $43’062 from the current rate of $93’978. The cost to construct a condo with two or more bedrooms will increase $35’592 from $77’679, and apartments with two or more bedrooms will increase $25’206 from $55’012.
Richard Lyall, the president of the Residential Construction Council of Ontario, claims that the increase could do many housing projects economically unattainable. According to Lyall, it will result in the cancellation of many projects in the future. He says developers are already dealing with increased construction costs and a skilled labor shortage. Requirements to include affordable units in new projects near transit stations under the city’s inclusionary zoning policy will force developers to subsidize the units by raising the price of the remaining ones. Lyall added that the fee increase would inflate the already exorbitant housing costs for homebuyers and renters.
The City of Toronto has stated that the increase is based on a provincial mandate that ‘growth should pay for growth. Development charges and other fees are meant to cover the costs of infrastructure required to accommodate the new residents. According to the city, the government took a balanced approach by splitting the increase between two increments in May 2023 and 2024 and exempting purpose-built rental housing and inclusionary zoning projects from the fee increase.
Toronto Development Charges Are Among the Highest in The Country
To learn more about how the increased development charges are going to affect the ongoing housing crisis, go to CBC.ca:
“In a statement, a spokesperson for Mayor John Tory said the new development fee increase balances the need for growth with the need to get housing built. The spokesperson highlighted amendments championed by Tory and Coun. Ana Bailão to exempt certain affordable and smaller housing projects from the increase.
‘We do want to ensure that growth continues to pay for growth and that the infrastructure needed to support more homes and more people is properly upgraded to accommodate new developments,’ wrote Lawvin Hasidi.
‘It's also important to keep in mind that Toronto's development charges are still lower than Mississauga, Vaughan, and Markham for large residential construction — despite Toronto having higher land and labour costs than surrounding cities.’
While Toronto's development charges may be lower than some surrounding municipalities, a report by the Canadian Mortgage and Housing Corporation released last month found that they are still among the highest in the country.
The report said developers in Toronto pay an average of $86 per square foot in government fees, compared to $70 in Vancouver and $24 in Montreal. Depending on the dwelling type, the report said fees and levies account for between 10.4 to 23.5 per cent of the cost of construction in Toronto.
Meanwhile, the city says none of its research has shown that lower development charges would lead to lower housing prices or more housing supply.”
From Developers, Housing Advocate Criticize Development Fee Increase Amid Housing Crisis - CBC
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How do you feel about the increased development fees in the City of Toronto?
Written by S2A Modular & Associates Inc.
August 9th, 2022