York Region collects up to $100M less in development charges

Yorkregion.com
Dec. 10, 2015
By Lisa Queen

You might not think it to see the bulldozers and work crews building new homes and buildings in communities across the region, but a slowdown in new construction means York Region will collect as much as 30 per cent less in development charges this year.

The region had projected it would collect $329 million in development charges, used to bankroll infrastructure such as water and sewer pipes and roads for new development, this year.

“We’re probably going to be $50 million to $100 million off that outlook,” said CAO Bruce Macgregor, adding there is still time left in the last weeks of the year to collect additional charges.

A decrease in development charges does not mean existing homeowners will be financially impacted in any way, he said.

Macgregor and treasurer Bill Hughes are downplaying the drop as part of a cyclical change in market forces and point out the region will recoup the money within the next couple of years as new construction is completed.

“What history shows us is if we have a down period, all that means is we’re likely to have a boom period and we’ve gone through several of these cycles already,” Macgregor said.

“I would call it a normal dip. I wouldn’t call it crisis-setting or recessionary or depressionary at all. It’s a normal cycle… It (collection of the development charges) is not lost; it’s never lost. If it’s not collected now, it will be collected in the future.”

But York University professor James McKellar, director of the real estate and infrastructure program at the Schulich School of Business, argues the drop in development charges isn’t merely a cyclical pattern.

Young people today are choosing to live in condos in downtown Toronto, close to jobs and entertainment and recreation attractions.

“I think it’s a structural shift. There’s no evidence of it being cyclical. I think there is a definite change in consumer preference, demographics, etc. They can wait (for development charges to rebound) but it will be a long wait,” he said.

“It’s all created by the labour force, where the jobs are going, where the jobs are being created. There is an old adage that jobs follow people and what we see is a tremendous migration of people. Certainly, people want to be in the city today. They don’t need the suburbs with the white picket fence and the two-car garage.”

For about 50 years, young families flocked to the regions outside Toronto and while there are still many people who still do, more and more people want to be in the city, McKellar said.

Hughes agreed more younger adults between the ages of 25 and 44 today are choosing to live in condos in downtown Toronto than have in the past few decades.

“What’s unclear is what will happen in the future as they start to form families. Will they still prefer to be in Toronto or will they move out to the 905s? We don’t know,” he said.

The region is responding to the demand for different types of housing and is creating corridors and centres to meet people’s lifestyle choices and public transit needs, Hughes said.

That means it takes longer for development charges to come in, he said.

“It takes longer for these housing types to come to fruition. A single-family house, you’re talking months (to build). With a condo apartment, for example, you’re talking three years. That may be what’s happening, the housing mix is changing and it’s just taking us a bit longer to collect the development charges,” he said.

“It’s not that the region isn’t growing. The region continues to grow at a strong pace. The question is how fast? It is not growing as quickly, but it is still growing and you can see that with all the development that is happening around the region.”

But Teena Bogner, president of the Newmarket Taxpayers Advocacy Group (NTAG), is concerned about the drop in development charges collected by the region.

Development charges in York Region will continue to decline, especially in land-locked Newmarket, where limited land is available for development, she said.

“For too long, the Town of Newmarket and York Region have relied almost exclusively on development fees and increasing property taxes and user fees for funding,” she said in an email.

“NTAG has consistently lamented the town’s unwillingness to find meaningful ways to cut costs and control spending rather than relying on development fees and increasing property taxes.”

The town and the region need to forge a better economic development plan to attract new businesses and jobs, Bogner said.