What Kind of Industry are we BILDing?

With a strong housing market and low interest rates accounting for much of Ontario’s growth — if not its entire economy — it pays to protect the industry, and that means protecting consumers. Most builders recognize that for them to win, consumers have to win too. And yet it seems to me that BILD, one of the industry’s most prominent organizations, could do more to create public awareness of one of the biggest issues they face right now, especially in the GTA: development charges.

BILD is an acronym of Building Industry and Land Development Association, with more than 1,400 members. They are the “voice of the land development, home building and professional renovation industry in the Greater Toronto Area.” BILD says that along with improving communication between the industry and government and “promoting the welfare of the industry,” they also protect the interests of consumers. “We regularly facilitate discussions between the industry and the federal, provincial, regional and local governments with respect to issues that affect development, building, and home ownership in the Greater GTA,” according to their website. “We are proactively involved with the current round of GTA municipal development charge by-law reviews.”

I just think that the public needs to be more informed. Consumers need to know that they, not the builders, are paying for development charges.

This summer and fall, BILD president and CEO Bryan Tuckey used his Toronto Star column to delve into some of the finer points of development charges, including making the point that new-home buyers shouldn’t be the only ones paying for the infrastructure — after all, existent residents will benefit too, not just from roads, schools, and the like, but also from soft services such as recreational centres and libraries.

He also pointed out that while development charges have increased exponentially, property taxes have increased only nominally, effectively making development charges a tax on new neighbours. “Since 2004, development charges have increased between 143 and 357% across the GTA,” he said in his column.

I’m not suggesting that BILD doesn’t do some good work. They do. But among your average new-home buyers, how many are reading a niche column in the Toronto Star?

I would like to see BILD launch a major campaign that stirs the public. Buyers need to know that these development charges are passed directly onto them. If BILD is advocating for the industry, they need to make the public aware that practically our entire economy right now rests on real estate, and the new construction industry in particular. We need to take up the fight, take on local politicians, and let our policy makers know that the cost of new infrastructure needs to be spread beyond buyers of newly constructed homes. These days, levies and taxes account for about 30% of the cost of a new home. Isn’t that something the public should be outraged about?

Yes, there needs to be funding for infrastructure as a result of growth — municipal services need to expand as the population expands — but consumers need to decide what they’re used for, and who pays for them. Currently, development charges can be used to fund only a portion of transit, for example, whereas they can be used to entirely fund municipal services such as roads. Environment commissioner Gord Miller noted in September that development charges can only be used to help create the average level of service that has existed for the previous 10 years, which means that growing municipalities that have had limited services are at a disadvantage. Isn’t that ironic? Development charges were introduced in the first place in the late ‘80s to help fast-growth areas have enough money to build infrastructure.

All continued escalation of development charges will do is drive buyers to the resale market (where they don’t even have to pay HST — fodder for another column), which is bad for the economy and therefore bad for us all. Development fees are deterring development. Municipalities expouse a “growth pays for growth” philosophy, but how does that compute? If you’ve got an empty-nester couple moving out of a single-family home and a family with three or four kids moving in, it creates infrastructure needs. New construction is not the only way we create growth.

The Government of Ontario is in the process of reviewing the way that development charges are levied, including changes to the OMB, removing municipal flexibility in addressing local priorities, changing the “growth pays for growth” principle, education development charges and the development charges appeals system.

Use your voice to affect change, and to support the entire home building industry, and in turn the entire economy. Visit http://www.mah.gov.on.ca/Page10355.aspx and have your say.