City is loading more costs on to new development
I’m sure that as you sip on your Saturday morning coffee and flip through the paper or your phone, looking at new home ads, that you had no idea the City of Toronto increased development charges by $20,000 on a new single family home.
From the $41,251 fee set this past May 1, development charges for a single family home increased to $60,739 this past Nov. 1. That charge will increase to $71,432 on Nov. 1, 2019 and then to $80,227 on Nov. 1, 2020, adding $38,976 to the cost of a new home in just three years.
So, what are development charges? They are a tax imposed by local municipalities on new homebuyers, as well as GO Transit and education boards. They contribute to the capital costs of municipal services such as roads, water services, sewers, parks and recreation and emergency services. The building and land development industry supports the need for new homebuyers to pay their fair share of these costs.
New homebuyers pay their fair share for infrastructure and services, but municipalities like the City of Toronto are loading excessive costs on to new development. The bottom line is that these costs are pricing new homebuyers out of the market. Development charges have increased exponentially and it has shifted the burden of paying for critical infrastructure onto the newest residents and businesses moving into a neighbourhood.
This past May, BILD commissioned a study by Altus Group that calculated all government fees and charges on a new single family home in six municipalities across the GTA.
The study found that, on average, all government fees, taxes and charges amounted for 22 per cent of the cost of a new home. The biggest contributor was development charges, which accounted for 30 per cent of all charges. Since 2004, development charges have increased between 236 and 878 per cent across the GTA. Once the City of Toronto finishes the phase-in of its latest round of increases in 2020, the increase over 2004 levels will be a whopping 1,700 per cent. To provide a comparison over that same time frame, the Consumer Price Index (CPI – Inflation) rose by 22 per cent and the average new house price in Toronto increased by 143 per cent.
Development charges are increasing 10 to 40 times faster than inflation over the same period. Existing City of Toronto homeowners faced a property tax increase of 30 per cent per household during that same period.
When we talk about affordability of new housing, we must ensure that development charges do not become a barrier to new home ownership.