Municipalities keep developers waiting longer, paying more to build housing, says study for GTA homebuilders

Application approvals can stretch for years, and development fees have risen up to 36 per cent in some municipalities, according to the latest benchmarking report.

Thestar.com, CBC.ca
Sept. 28, 2022
Tess Kalinowski

Toronto area municipalities are taking 40 per cent longer on average to approve housing development applications than they did two years ago, and the cost of processing those permits has soared more than 30 per cent in the same period.

The fees and cost of delays are among the highest in the country and are being passed directly on to GTA homebuyers while extending the time it takes to bring new homes to market, says the latest benchmarking report released by the region’s homebuilders on Tuesday.

Two years ago municipal fees, including development charges, parkland, planning and permitting costs, added about $90,000 or $40 per sq. ft. to the cost of a single-family home in the GTA. This year, those costs averaged $116,900 or $53 per sq. ft.

For highrise condos, those costs amounted to about $59,000 or $72 per sq. ft. This year, the study found they added up to $80,621 per unit or $99 per sq. ft.

In the City of Toronto, development charges added $189,325 or $85 per sq. ft. per house and $99,894 or $125 per sq. ft. for condos.

Every month of delay for a condo or apartment, adds about $2,600 to the cost of that home.

Municipalities say limited staff and the turnaround time for applications to be resubmitted are among the reasons for the delays, according to the report. Ultimately, however, the requirements of the provincial Planning Act, related statutes and regulations, handicap efforts to make the review and approval process more efficient.

Despite years of talk about cutting red tape and a growing consensus that a housing shortage is a leading cause of the region’s affordability crisis, the development process has become slower and more costly, said David Wilkes, CEO of the Building Industry and Land Development Association (BILD).

“If we look at the applications across the GTA, 85 per cent are not processed within the time frame legislated by the province,” he said. “We have a huge problem here, a problem that is creating a lack of supply.”

The rising approval times and cost increases are detailed in BILD’s second Municipal Benchmarking Study.

Among 16 Toronto region municipalities, approval times for most types of development applications -- including rezoning, site plans and plans of subdivision -- averaged 20 to 24 months. But they ranged from 10 to 34 months depending on the municipality.

Milton had the fastest approvals averaging 10 months. Caledon had the slowest at 34 months. Toronto, which has some of the most complex planning applications, averaged about 32 months.

Two years ago, the average approval took 15 months and Toronto had a 21-month average timeline.

The report acknowledges that some of the increase across the Toronto region could be due to the two- to three-month period starting in March and April 2020 where municipal council meetings were postponed or cancelled. Municipal officials have also argued that time spent working with applications results in better development.

This year’s study found it took municipalities as much time to approve smaller development applications as much larger highrise plans. Municipal staff devoted five to 10 times more days per unit on applications with three to 50 units than they gave to larger projects. That means municipalities that want to build more small developments to add density to established neighbourhoods will need a more streamlined process, said the report.

As-of-right zoning, which would automatically allow those smaller developments in appropriate locations, would solve that problem, said Wilkes.

It takes so long to recover the additional costs of delay on smaller project applications, those developments just aren’t viable. “A system that should be skewed to deliver those lower density projects is actually skewed to preventing them from being built and delivered,” he said.

“It’s no surprise to see the (development approval) timelines are getting worse and are the worst in Canada,” said the benchmark studies’ author Daryl Keleher, a senior director of Altus Group, the company that tracks home construction metrics for the homebuilders’ association.

The GTA timelines don’t reflect municipal staffs’ willingness to get applications moving, he said. It’s more likely that Ontario’s increasingly complex planning regime is slowing approvals.

“If you printed out all the documents from the Growth Plan, to the Planning Act to official plans, to secondary plans to zoning bylaws, you would have thousands of pages in some municipalities to conform with the provincial legislation,” said Keleher.

Wilkes said there were 17,000 words in the provincial Planning Act in 1970. In 2020, there were 96,000.

The benchmarking report notes that some municipalities argue that a longer approval process is preferable to quickly refusing a development application. But the lengthening delays of the last two years go beyond massaging project applications, said Wilkes.

“We’ve tolerated the inefficiencies and the complexities within this system at our own expense,” he said. “We need a simpler, more efficient, more disciplined process to create the change that is necessary.”