February 3 - Toronto Star editorial on development fees

February 3, 2009

As seen in the Toronto Star

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Mayor is right on development fees

February 03, 2009

Having already shown flexibility with a proposed one-year freeze on development charges, Mayor David Miller is displaying even more by proposing to extend that freeze to two years in response to hard times facing Toronto's residential builders.

Miller's critics, most notably Councillor Cliff Jenkins, accuse the mayor of giving away too much to the development industry. But this sector is far too important to Toronto's economic well-being to risk battering it with a hike in development charges at a time like this.

There is no doubt that residential development is suffering now. Stephen Dupuis, head of the Building Industry and Land Development Association, told the city's executive committee yesterday that sales were down 77 per cent in December, compared to the same month in 2007, with just 451 units sold in the Greater Toronto Area. Sales in the City of Toronto accounted for just 169 of those units. This industry may have been a golden goose in the past, but it is gilded no longer.

This downturn comes at an awkward time for Toronto. The city had planned for a significant increase in development charges, which help to pay for services to accommodate new residences, including new water lines and sewers, parks, roads, additional public transit routes and increased policing, fire protection, ambulances and libraries.

Toronto's fees are strikingly low compared to the surrounding GTA. For example, the executive committee was told that a two-bedroom condo in Toronto carries a development charge of $8,000 while the fee for a similar unit in Markham is about $20,000 higher.

That represents lost revenue for this city. So staff last year drafted a new bylaw that would have more than doubled Toronto's development charges. Then the economic downturn hit.

Miller proposed a modified bylaw last fall, with a one-year freeze and then a gradual ramping up of fees, pegged to the economic health of the housing sector.

Now, with the economic crisis deepening, it is reasonable to extend the freeze to two years and to moderate future increases beyond then. That is what the executive committee voted to do yesterday. City council should back these changes to help Toronto's development industry get back to being golden again.