Corp Comm Connects

High development charges deter hotels from northern York Region: Aurora mayor
March 17, 2016
Lisa Queen

When visitors come to northern York Region, there isn’t a hotel or motel for them to stay at in Aurora.

And when there’s a big sports tournament in Newmarket, the lack of hotels in the area means visitors often have to head south to Richmond Hill and Markham to find accommodation.

Now, almost two years after the Howard Johnson hotel in Aurora closed down, Mayor Geoff Dawe is asking York Region to give potential prospects a break on development charges.

Development charges, or DCs as they are commonly called, are the fees developers have to pay municipalities to fund growth-related costs such as roads, water and sewer pipes, transit and recreation facilities.

While DCs aren’t the only consideration when someone is looking to build a new hotel, York’s high fees are a significant reason why Aurora is having trouble attracting a new hotel, Dawe said.

Building a 90-unit hotel in Ajax would cost $831,000 in development charges, he said. In Toronto, it would cost $868,000, while in Milton, the fees would come to $1.2 million.

That same hotel in Aurora would costs $2.8 million in regional and town DCs, Dawe said.

“I believe that our rate is, quite simply, uncompetitive. We are impeding that particular part of the market,” he told councillors, adding hotel owners have told him high DCs are a significant reason why they are bypassing Aurora.

“I understand why the DCs are there. I understand why we have development charges to fund some of the projects we’re looking at, but the reality is the hotel part of the development charge income is extremely small (and wouldn’t contribute a significant amount overall).”

Dawe wants the region to follow Aurora’s lead in deferring DCs for hotel developers.

“Part of our economic plan in Aurora is to drive sport tourism. The hotel industry will definitely help us with that particular business. So, it does drive our economic development in Aurora,” he said.

Also, while three hotels were built in the region from 2013 to 2015, no hotel development charges have been collected under the region’s current DC bylaw, Dawe said.

“I would rather take a reduced DC on a hotel project that is built than 100 per cent of the DCs on a project that is not,” he said.

Terry Mundell, president of the Greater Toronto Hotel Association, and Tony Elenis, president of the Ontario Hotel and Motel Association, could not be reached for comment.

Arguing the region does have a program that gives hotel developers small financial relief, regional chairperson Wayne Emmerson urged councillors not to focus on one industry before the region reviews its entire development charges structure in June 2017.

While regional treasurer Bill Hughes said there may be a case for lowering hotel development charges as part of next year’s review of DCs, he said the revenue from the fees is important to the region’s financial security.

East Gwillimbury Mayor Virginia Hackson expressed similar frustration with the region’s costly hotel DCs.

“We are one of the municipalities, as well, that doesn’t have a hotel. In our growth plans that are coming forward, we have had several discussions with individuals who either own land or are looking for land for some kind of hotel and the discussion around development charges has come back to us,” she said.

“I hear the chair as far as what he is saying about 2017, but we are in a dilemma and the problem, of course, is if it goes out to 2017, then we’re not looking at hotels (being built) in our communities until 2020 or much later. It certainly prohibits us in some of the large sport events that are looking at our location, as well as some cultural events.”

Often, visitors coming to an event in Newmarket have to rely on accommodation in the south part of the region due to the lack of hotels in the north, Mayor Tony Van Bynen said.

Hotels and motels in northern York Region: