Challenges mount in efforts to build
Industry has seen double digit increases in development charges

Thestar.com
April 17, 2014
By Bryan Tuckey

There’s no question the building and land development industry plays an essential role in the local and provincial economies.

While our industry is determined to build complete, quality communities that people can afford, it is also focused on creating an environment that allows businesses to locate where they can effectively compete.

That was one of the messages driven home in our submissions during the 80-day provincial consultations on the Development Charges Act and the land-use planning and appeals system.

Our direction is taken from policies that have been supported and endorsed by our elected officials to ensure there are diverse residential options and sufficient employment space as the GTA’s population continues its rapid growth.

BILD members are developing employment lands and building office, industrial and retail space that help accommodate some of the 100,000 people and 50,000 jobs that come to the GTA every year.

With more than five million square feet of office space under construction in downtown Toronto alone, the GTA is experiencing its largest boom since the 1980s. But that could change as escalating development charges are introduced.

In 2012, new-home owners and new businesses contributed $1.8 billion in development charges to construct infrastructure in municipalities across the province, an increase over the $1.3 billion collected in 2011.

Development charges are paid by new-home owners and new or relocating businesses. With every increase in development charges, the industry’s ability to reinvest and build complete communities becomes more and more difficult.

In a global economy where Ontario is competing for new investment, our province’s quality of life continues to be an important factor to support economic expansion and secure jobs. It is important for all levels of government to understand the economic impact of growth-related taxes on our economic competitiveness.

Commercial and industrial development charges have also sharply increased over the last number of years, making it harder to attract foreign investment in Ontario.

A recent study of Brampton, Vaughan and Whitby, released by IBI Group in January, revealed that from 1999 to 2013, a steep rise in retail and office development charges has significantly challenged the affordability of new retail and office developments.

Whitby’s fees were the most expensive of the three. Since 1999, office development charges in Whitby grew by 1,235 per cent, rising from $1.25 per square foot to $15.44 over the 14 years. During that period, development charges for a 61,000-sq.-ft. building increased from $76,230 in 1999 to $941,593 in 2013.

Facing the rise of development charges, some experts say low interest rates are the sole reason that residential and non-residential development can continue in Ontario. Any significant hike in interest rates will create an unsustainable cost structure for non-residential development.

The GTA needs jobs to ensure that the people who call this region their home can enjoy the quality of life they deserve. Government charges are becoming a more important component to the financial summaries of new employment uses and, as a result, it is becoming more difficult to build businesses people can afford to purchase.