Home developers and municipalities are raising concerns over the Ontario government’s promise to build 1.5 million homes over the next eight years.
“The difficulty now is the amount of time it takes to get an approval,” said Dennis Bottero, owner of Landen Homes, based in Orillia, Ont.
But for municipalities, the potential loss of billions in tax revenue comes with the removal of developer fees outlined in the More Homes Built Faster Act (Bill-23). The Association of Municipalities of Ontario believes Bill 23 benefits developers at the expense of taxpayers.
Bottero has been building in the town about 130 kilometres north of Toronto for the last three decades, along with a few projects in the GTA.
He said much about how developing homes have changed over the last 30 years, from the application process to the cost of building. Bottero said he is relying on municipalities to ramp up the speed at which the green light is given.
In Bottero’s case, the application process can take anywhere from eight months to two years.
“It makes it difficult for a developer to have their profit margin and at the same time satisfy the development requirements of the city,” he said.
Orillia charges developers approximately $23,000 per single and semi-detached unit to go toward infrastructure like transit, schools and community services.
On top of the fees, Bottero said that the physical cost of building a home has “almost doubled” since 2017.
“It’s a conundrum really,” Bottero said. “The market has dropped so your profit margins have significantly dropped.”
In a 2022 Municipal Benchmarking Study by the Canadian Home Builders’ Association, all 10 Greater Toronto municipalities were ranked in the bottom 10 for low planning features, slow approval timelines and high municipal charges.
Bottero said in addition to a slow approval process, he has to pay interest on land that’s under development every month it’s not approved by the municipality.
The GTA is projected to need almost 900,000 more homes by 2031, according to a recent Ontario Census Division report. With a massive influx of newcomers announced by the federal government last year, this forced the Ontario government to accommodate the move with more homes, built faster.
Developers must meet the bylaws when building homes so that they are safe and part of a livable community. Paul Lowes, president of the Professional Planners Institute of Ontario, raises concerns about smaller municipalities’ infrastructure.
“Timing for [the construction of] major infrastructures is critical to bringing on those new homes,” Lowes said.
Sewage plants, bigger water pumping stations and roads are some of the key focuses municipalities have to meet in order to accommodate the projected growth in population.
Lowes believes the smaller towns won’t have enough expertise to review applications fast enough.
“The same issue that the government is trying to deal with could backlash and have an impact on delaying applications,” he said.
To help “diversify communities,” Lowes said a higher population in a smaller geographic area would mean that municipalities would have to change some of their zoning laws.
“It’s part of a broader solution to affordable housing and increasing the densities in our communities,” he said.
A visual map by DataLabTO shows that 62 per cent of residential land in Toronto is zoned for detached houses only, meaning that it excludes families that cannot afford a multi-million dollar home within the city of Toronto.
Amber Crawford, a policy advisor for the Association of Municipalities (AMO), said that AMO’s top concern is the ability for municipalities to manage their growth.
“It’s one thing to build a house but the infrastructure and underneath it is really important,” Crawford said.
The AMO wrote an open letter to all MPPs in November, addressing the association’s concerns with Bill 23, the More Homes Built Faster Act, that reduces some developer fees that would go to municipalities and loosens conservation authority on parts of protected land that are under “natural heritage.”
To make up for the expected losses in fees, proposed tax increases for GTA municipalities range from about five per cent to 100 per cent in towns like East Gwillimbury, just north of Newmarket.
“With the act, over the next 10 years, the town foresees a potential $40 to $70 million shortfall in development charges,” East Gwillimbury Mayor Virginia Hackson said in a statement. “To put this in perspective, the town currently collects approximately $27 million in property taxes to fund ongoing annual operations.”
Brampton is also expecting a significant shortfall in revenues that will impact its tax rate.
“Brampton residents could be looking at their tax bills going up by as much as 80 per cent over the next 10 years, not including inflation or additional programs and services,” according to the Brampton Environmental Alliance.
“It really gives us pause and a real concern that it limits our ability to create livable communities,” Crawford said.
Amber Crawford, the policy advisor for the Association of Municipalities, said their concern with Bill 23 More Homes Built Faster is the cost shift from developers onto taxpayers and weaker conservation oversight when building. Photo credit: Emma Posca
The AMO were told in a response from Municipal Affairs and Housing Minister Steve Clark that the provincial government’s decision to enact Bill 23 “is the right thing to do,” and their “position on Bill 23 will not waiver.”
“Bottom line is, they listened to our requests that there need to be a partnership between province and municipalities,” Crawford said. “This letter was a great start — it’s an open question as to what happens now.”