Toronto City Council Voted to Raise Development Charges

by Editor

The Toronto City Council voted to raise development costs, which will result in some development application processes costing more than $40,000.

Residential building fees increased by 46%, while non-residential building fees increased by 40%. A detached or semi-detached home will cost developers $137,040, which is a $43,062 increase over the existing development fee of $93,978. The cost to build a bachelor or one-bedroom apartment will increase from $35,910 to $52,367, and the cost to build an apartment with two or more bedrooms will increase from $55,012 to $80,218. These price increases represent a difference of $25,206.

The development charges for non-residential structures will increase by the least amount, from $476.94 to $666.90, a difference of $189.96.

An amendment proposed by Councillor Ana Bailo that was later approved by the Council exempts multiplexes with four or less units and eliminates construction fees for the second, third, and fourth apartments on a single property. These exemptions were proposed as a means of promoting more housing for the missing middle.

The increase occurred despite developers’ worries that higher development fees—which are paid by the developer when a building permit is issued—would stifle development in the city. Others expressed concern that the expense will simply be passed along to purchasers and tenants, further increasing the affordability of an already overpriced housing market.

The City uses the development fees it receives to build the necessary infrastructure to service the occupants of the newly constructed residences. The value of new homes will ultimately increase as a result of these infrastructure initiatives, which include new parks, libraries, and leisure centers, according to councillor James Pasternak.

Many of the city’s developers dislike paying development fees, but they must understand—and I believe they do understand—that if residents are coming into a vibrant neighborhood, they are more likely to sell their apartments.

A change in provincial law that mandated the City to examine its current fee system led to the increase in the development charge. The development fees, as they were before the increase, “don’t even begin to compensate for the infrastructure that we have to put in place to deal with a developing city,” according to Mayor John Tory. Tory stated that there was no other choice despite the objections of housing advocacy organizations and even the city’s chief planner Greg Lintern, who raised the issue of the already high building costs.

What has been written about how this is either consumed by the developers or, more likely, transferred to the final buyers, whatever that means for the price of the home, is only partially correct, according to Tory. But ultimately, someone needs to pay for this infrastructure.

In an effort to lessen the impact on community growth, the new development charges will be implemented gradually over a two-year period. On May 1, 2023, half of the rise will go into force, and one year later, the full rates will take effect.

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