Development Charges in Toronto Possibly Going up 70%

By Penny Munoz

Following last week's council meeting, Mayor Rob Ford’s executive committee voted to increase development charges in the city by 70%. A substantial decrease from July’s projected 90%, the hike is still expected to generate up to $250 million a year for city infrastructure repairs and maintenance.

The July report stated that the City would need approximately $3.4 billion over the next decade to adequately meet the costs of growth related demands. The initial proposal was met with heavy backlash from the development industry, who are already paying $8,356 for each one-bedroom and bachelor unit, and $12,412 for a two-bedroom or larger in a new development. Expressing concern over the adverse effect it would have on the housing market, developers urged city councillors to make “technical revisions” on the 90% calculation.

On Sept. 20, the Ontario Home Builders Association (OHBA) and the Building Industry and Land Development Association (BILD) hosted a Live and Interactive Industry Conversation with Minister Linda Jeffrey, and the future of development charges was one of the main topics. Before approximately 400 association members, provincial partners and municipal and regional council members, Jeffrey said that there was “nothing crazy planned,” and assured that a destabilization of the industry would not occur.

Engaged throughout the process, BILD Vice-Chair Steve Deveaux said that “BILD has been at the table working hard to come to a compromise that would not adversely affect the thousands of new homes in the planning process now and bring certainty to the projects that will get started over the next two years.”

Any hike in development charges, he warned, will immediately affect the affordability of new homes in the city. As an industry that generates more than $10 billion in annual wages across the GTA, Deveaux said that it is paramount to find a reasonable compromise.

Confronted with the question of transparency and accountability regarding the hike in development charges, Minister Jeffrey expressed the importance of striking a balance. Jeffrey said that growing municipalities logically require more funds to meet infrastructure demands, and that it would not be fair to expect new homebuyers to absorb those costs.

Responding to criticism for the compromise, Deputy City Manager & Chief Financial Officer at the City of Toronto Roberto Rossini said that the lost revenue from this strategy must be weighed against the potential risk of having an appeal taken to the Ontario Municipal Board (OMB).

Even with the new proposal, developers would be paying an estimated $14,205 for one-bed and bachelor units by February 2016. However, Deveaux said his members were satisfied with the new proposal as long as the bylaw is implemented in phases that will not hinder existing projects.

As consultations over the proposed by-law proceed, BILD and OHBA members will continue to be present at the table acting as representatives on behalf of the industry providing feedback on the reforms.

Councillors will meet next month to vote on the revised proposal.