Toronto Development Charges: Will they Double?!
By Lucas on Jul 04, 2013
Recently, The City of Toronto has been debating whether or not to increase development charges. With many new residents moving to Toronto every year, the City needs to be pulling in more money to accommodate the growth.
The proposed changes to Toronto’s development charges
According to a staff report on development charges, the City needs to increase fees to pay for infrastructure such as sewers, roads, and transit. The report states that the City is going to need approximately $3.4 billion to service new city residents over the next decade.
The report suggests that a nearly 90% increase to development charges is a fair way to come up with some of that money. To put that into perspective, developers currently pay $12,412 for each two-bedroom unit in a new development, and an 86% increase would mean paying $23,036 for each two-bedroom unit.
This proposed rate would generate approximately $240 million a year, which means that developers would be contributing $2.4 billion over the next decade to the $3.4 billion that the City believes it will need.
Decision to increase development charges deferred
Mayor Rob Ford’s executive committee voted to defer the debate on the raising of development charges until September. The deferral will hopefully generate more research and discussion about alternative ways to find the money that the City will need to accommodate the growing population.
Councillor Peter Milczyn of Ward 5 Etobicoke-Lakeshore stated that development charges will definitely rise dramatically, it’s just a matter of how much and how quickly.
If a motion is passed in September to raise development charges, the new fees will take effect in July of 2014.
What are development charges?
So, if you’re not familiar with development charges, then you're probably very confused by everything mentioned above. Development charges are fees that developers pay to the City when planning and constructing a new building. The idea is, the developer is creating new space for people to move into the city, so they should be partly responsible for contributing to the infrastructure needed to accommodate the extra bodies.
There are general services and engineered services to which the fees contribute. The general services include: Spadina Subway Extension, transit, parks and recreation, library, subsidized housing, police, fire, emergency medical services, development related studies, civic improvements, child care, health, and pedestrian infrastructure.
The engineered services include: Roads and related, water, sanitary sewer, and storm water management.
The issue: Should developers be responsible for paying for the bulk of this infrastructure? In the end, it’s not even the developers paying - it’s the homebuyers - because developers take development charges into account when pricing their units. A dramatic increase to development charges would undoubtedly cause an increase in prices, and affordability is already an issue in Toronto.
What do you think about the development charges? Should they be doubled?
