Government should develop a better plan for Development Charges
We read and hear a lot of criticism in the media and from the general public aimed at builders and developers, complaining about the rising prices of new homes and condominiums in Toronto and the Greater Toronto Area. Blaming builders and developers alone is unfair. Our governments that control development charges must accept a big chunk of the responsibility for current housing prices.
In May of this year, Altus Group conducted a study for BILD entitled “Government Charges and Fees on New Homes in the Greater Toronto Area” and found that the average government charges for a new single detached home add up to $186,300, which is 21.7 per cent of the price. Think about it: 21.7 per cent of the price! Development charges for the average highrise apartment in the GTA amount to approximately $122,800, or 23.9 per cent of the average price. No wonder so many people are priced out of the market.
Of course, land prices have soared over the past while, and the costs of everything from trade labour to suppliers, materials, administration, engineering, architecture, advertising, public relations and the numerous other services necessary to bring new home communities to market have jumped as well. Add to that the fact that once a developer purchases a piece of land, it can, and usually does, take years to obtain all of the approvals in order to build on it, and you can see why offering new homes and condos at affordable prices is a challenge. Throughout those years, ongoing rising costs push up home prices even further.
Having said all of that, development charges are necessary. Municipalities levy these amounts on new developments to help cover the capital costs of increasing each area’s infrastructure and services. These include sewers, roads, water, local amenities, emergency services, etc., that benefit everyone. It is one thing to say that new home buyers should pay their fair share; it is quite another to say that the development charges that have increased between 236 to 878 per cent since 2004 are “fair.” Over that same period, average wage increases and inflation have not gone up anywhere near that much.
Remember that every year, the building and development industry creates thousands of jobs and contributes billions of dollars to our local, provincial and national economy. According to BILD, every construction crane you see across the GTA represents up to 500 new jobs in construction and related fields.
Before you blame only builders and developers, take a good look at your municipal government and how it collects and allocates funding through development charges. If you think it is unfair, speak up. You elect your municipal politicians, and they should work for you, not against you. Ask candidates what they might do to fix this unfair situation. And before you play the blame game with builders and developers, do some research and look at home prices in the proper context.
BARBARA LAWLOR is president and CEO of Baker Real Estate Incorporated, winner of the pinnacle 2017 Riley Brethour Award from BILD, and an in-demand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas. Keep current with The Baker Blog at blog.bakerrealestate.com