Hotels eye York Region with promise of slashed development charges

Yorkregion.com
March 6, 2017
By Lisa Queen

With York Region poised to slash its hotel development charges, it appears the industry is jumping in to build lodging here.

Wyndham is planning the Aurora Microtel Inn and Suites, a four-storey hotel southeast of Leslie and Wellington streets.

While a company spokesperson could not be reached for comment, both Mayor Geoff Dawe and the town’s long range and strategic planning manager, Anthony Ierullo, agreed the pending cut to the region’s hotel DCs helped attract the hotel.

“The change has made a big difference, big in capital letters,” said Dawe, adding there have been no new hotel projects in York since the region changed its DC models in 2012.

“The drop doesn’t guarantee a hotel, but the former DCs were definitely an impediment when trying to attract a hotel developer.”

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

Aurora had been working on bringing a hotel to town for some time, but high development charges were a major deterrent, Ierullo said.

Meanwhile, a hotel company is looking at building in Newmarket, Coun. John Taylor said.

“A well-known hotel chain has approached us for a preliminary discussion and indicated that they are moving forward at this time because of the proposed DC reduction for hotels,” he said.

“Without the reduction, they would not be advancing their project.”

Under the region’s existing DCs, a 124-room, 73,000-square-foot hotel now costs $40.31 a square foot.

That is expected to drop to $7.95 a square foot when council this year adopts a new DC bylaw with a new hotel rate, Yi Luo, the region’s manager of revenue forecasting and policy, said.

“It is a huge change,” she said, adding the last hotels built in the region were the World On Yonge in Thornhill, which combines hotel, office and retail space, and The Element in Vaughan, both constructed in 2012 when the region’s hotel DCs were $26.74 a square foot.

Dawe has been fighting for lower DCs, arguing last year a 90-unit hotel in Ajax would pay $831,000 in development charges, while the same hotel would pay $868,000 in Toronto and in Milton would pay $1.2 million.

That same hotel in Aurora would cost $2.8 million in regional and town DCs, Dawe said, adding the region’s incoming model will make a huge difference in attracting new hotels to the region.

Development charges are very significant factor for hotels looking to build, Terry Mundell, president of the Greater Toronto Hotel Association, said.

“it is one of the numbers that will turn a decision,” he said, adding the hotel industry is faced with a number of other high costs including land prices, property taxes, hydro and food costs compared to other North American jurisdictions.

“At the end of the day, and York Region is no different, all of these costs add up and investors, just like they are investing in anything else, want a return on their investment,” he said.