What goes into the cost of building a new home or condo development is more than meets the eye. It’s not only the cost of the land, the excavation of the site, the materials and labour, but also the fees municipalities across the region charge home builders and developers to build the infrastructure required to service new development.
Infrastructure includes parks, libraries, roads, transit, sewers and emergency services. Investing in infrastructure benefits existing and new homeowners and those working in offices throughout the region. This investment is paid for by fees, known as Development Charges, that are charged to builders and developers by local governments across the GTA, but ultimately paid for by the new-home owners and businesses of Toronto. The fees vary depending on infrastructure needs in specific areas, as well as the type of unit being built and the number of people who are expected to live in or utilize the space.
For example, a new one-bedroom condo in the city of Toronto is currently assessed a development charge of $17,138. A non-residential non-industrial building is assessed a development charge of $207.52 per square metre. Current proposals that are being considered by the City would approximately double those charges.
Our members recognize and accept their responsibility for supporting the infrastructure that is required to service new neighbourhoods. But as municipalities across the region look to replace aging existing infrastructure, we are concerned that new neighbourhoods will be asked to disproportionately absorb the costs. There is no doubt that we need to reinvest in our cities, but these costs should be the responsibility of all of us, not just shifted onto those buying new properties.
The numbers back up our concerns. Altus Group, a leading provider of data solutions to the real estate industry, indicated in a recent report provided to BILD that in Toronto, residential property taxes rose two per cent on average annually between 2009 and 2016, while Development Charges increased an average of 14.3 per cent per year between 2009 and 2018.
Our industry is committed to working with our partners in municipalities to fund growth, but we must ask the tough questions about how we pay for infrastructure in an equitable, transparent manner and how we ensure that these costs are shared fairly between development charges that are paid by new development and property taxes that are paid by all. We are all responsible for ensuring that we build the type of cities we want.
How we answer the question of who pays for what, and the share of the costs between new and existing tax base, will define the types of cities we build and the costs of the homes and offices in our cities. We need to find the right balance so that new homes are affordable and not priced beyond the reach of all but the wealthy. On behalf of those who purchase new homes and offices, BILD intends to ask these questions this year as part of the fall municipal elections.