A provincial review into fees municipalities levy to pay for the cost of providing services to new developments is fuelling distress among Ottawa home builders, who worry changes will further push up the cost of housing.
John Herbert is the executive director of the Greater Ottawa Home Builders' Association. (File photo)
By Jacob Serebrin
“We’re concerned about it because we’re not sure what the province is thinking,” said John Herbert, executive director of industry group the Greater Ottawa Home Builders’ Association.
He said there’s a great deal of uncertainty around what might come out of the review, which started earlier this fall.
The government is currently in the process of gathering feedback about development charges as part of a review of Ontario’s land use planning system, the province said in a press release.
The province said it’s not looking at creating additional fees or taxes as part of the review but Mr. Herbert is nevertheless concerned the government might change the law and allow cities to implement more charges.
Currently municipalities can levy development charges to cover the cost of infrastructure such as sewers and roads.
However some stakeholders would like to see significant changes to the system.
Some municipalities have called for the cost of services like health care and waste collection, which are currently ineligible, to be included in the development charge calculation, according to a consultation document issued by the provincial government.
According to Mr. Herbert, development charges currently account for around $25,000 for each dwelling unit in Ottawa. That amount is higher in suburban areas because of an additional storm water fee.
Development charges have increased significantly since they were first introduced in the late 80s, he said. Back then, the charge was slightly over $2,000.
He said he’d like to see “infrastructure funded in a different way.”
“Development fees haven’t worked,” said Mr. Herbert.
While the development charge is based on the principle that growth should pay for growth, Mr. Herbert said builders are paying twice in many cases.
Developers are not only required to pay the charge, they’re also required to install sewers and build roads in new developments.
“The builder pays for that,” he said. “That’s why serviced lots are so expensive.”
It’s not just the development charge, he said. There are a host of other government fees, charges, taxes and levies – all of which are passed on to consumers.
According to Mr. Herbert, this can account for up to 23 per cent of the cost of a new home in Ottawa. And with the average price over $400,000, that means those charges and fees could add up to over $100,000.
“It’s creating a serious affordability problem,” he said. “It puts a burden on young people.”
If new home buyers didn’t have that additional financial burden, said Mr. Herbert, they’d be able to use that money to fund their children’s education, make investments and start businesses.
“It’s having a negative impact on the wealth creation ability of the entire province,” he said.
The Greater Ottawa Home Builders’ Association is working with the Ontario Home Builders' Association to develop and submit position papers to the province as part of the ongoing consultations, he said.