Some new home owners aren’t getting the park they paid for
By Newinhomes on May 14, 2019
It’s common knowledge now that parkland and green space makes for a better living environment, but how is funding for this type of space impacting home prices? A new report sheds some light on the mismanagement of these funds.
Altus Group and the Building Industry and Land Development Association released new findings that say that parkland payments to municipalities can add $20,000 to $30,000 to the cost of a new home.
“Municipal governments need to recognize the impact that fees and taxes have on new home affordability,” says Dave Wilkes, President and CEO of BILD. “Charges by all three levels of government already account for as much as 25 per cent of the cost of a new home in the GTA and are increasing. Parkland cash-in-lieu payments are yet another fee that negatively affects housing affordability.”
The Planning Act says that municipalities can require 5% of land be developed as parkland or for some other type of public recreational purposes. Builders and developers also have the option to make a parkland payment instead. According to the report, the 29 municipalities across the Greater Toronto Area studied have accumulated $1.13 billion in unspent parkland reserve.
That means builders are paying levies for parkland, then those fees are being added to the price of a new home, but there’s over a billion dollars of unspent money, so many homeowners are paying for parkland that hasn’t been developed.
“BILD and its members support parks as an integral amenity to any new development, however, municipalities are clearly collecting more funds than they are returning to communities in the form of recreation facilities and parks,” explains Wilkes. “This is being done on the backs of the new homeowner who in the case of high-rise condominium dwellers in urban environments are not getting the benefit of a park that they paid for.”
The parkland payments are based on the value of land, and since the introduction of the Growth Plan in 2006, land values have skyrocketed. Four of the municipalities studied had parkland payments increase more than 300% from 2006 to 2017. Only one municipality actually reduced parkland fees over the same time, and one other saw an increase of 78%. Nearly half of the municipalities had parkland payments increase 200-300%, and nine had increases of 100-200%. In 2006, there was $300 million in parkland reserve. In just over a decade, the reserve shot up to $1.13 billion.
“With housing affordability being the number one issue across the GTA, all levels of government need to be cognisant of the impact of their policies, fees and practices. Clearly, the practice of cash-in-lieu payments needs to be revisited, especially in light of all the other costs that get rolled into development charges,” says Wilkes. “We are pleased that the provincial government is looking at a new ‘community benefit authority’ as part of its Housing Supply Action Plan, currently in front of the legislature. Hopefully, this will provide some relief to those looking to buy a new home.”
