Report says city has $2.6B in reserve

More than $5 billion in development charges and fees are sitting in Ontario municipal reserve funds, adding to the high cost of homes and creating a “lost opportunity” to immediately improve the lives of the region’s residents and newcomers, says the Toronto-area homebuilders’ association.

The Building Industry and Land Development Association (BILD) released a study Wednesday of 16 municipalities showing that more money is being collected than is being spent through development charges, parkland fees and density bonuses.

The City of Toronto accounts for more than half of that with $2.6 billion in reserves, according to the report prepared for BILD.

Toronto risks deterring housing and other projects if development costs continue to rise, said BILD CEO Dave Wilkes. He mentioned the inclusionary zoning provisions passed by city council last month that will require developers to pay for affordable housing units in some areas.

Wilkes said he fears that, “Capital might flee to other areas of the region, but more importantly, capital will flee to other areas of North America where it’s not as costly to undertake development.

“Municipal fees and charges are by far the largest component of the government-imposed taxes and fees that make up 22 to 24 per cent of the cost of a new home,” he said.

In Toronto, that rises to nearly 27 per cent once inclusionary zoning kicks in. Where development charges and fees have risen by as much as 606 per cent in the GTA since 2009, property taxes have increased only 22 per cent, said BILD.

“To me, the fundamental finding of the report is that the funds that are there to support growth aren’t being spent,” said Wilkes.

He said BILD isn’t advocating higher property taxes. But, “I do believe it’s easier to raise taxes on new homeowners than to raise property taxes,” he said.

The development charges on a single-family home in the GTA rose from $31,500 in 2009, to $80,600 in 2021, according to the report. Vaughan had the highest rate at $118,400 for a single-family home.

Between 2013 and 2019 the combined development charge reserves of 16 area municipalities grew to $3.25 billion — a $1.3 billion increase — for which the City of Toronto comprised the biggest part. Its reserve balance rose by $839 million in that period, totalling $1.2 billion.

The study found that development charge reserves across the GTA rose 70 per cent between 2013 and 2019 to $3.25 billion — a $1.3 billion increase among all of them. The City of Toronto accounted for the greatest boost in reserves, rising $839 million for a total of $1.2 billion.