Mayor calls for a freeze on new project levies
October 18, 2008
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Paul Moloney
CITY HALL BUREAU
The credit crunch has prompted Mayor David Miller to propose a freeze on development charges as a way to help the development industry.
The levies – one-time charges on new projects to pay for infrastructure – have been bringing in about $50 million annually. They should be frozen at current rates through 2009, Miller said yesterday.
"At a time of economic uncertainty, you want to keep building," he said. "You want to keep people employed so ... they're able to put food on the table for their families and they're able to help keep the economy going."
Miller said the move is aimed at offsetting the impact of the financial meltdown.
"What the development industry is facing at the moment is considerable uncertainty because of the financial crisis in the U.S.," he said. "They're finding it more difficult to get loans than they did six months ago to finance new development."
A report to be unveiled next Thursday indicates development charges should be doubled. Miller is asking city council to support a freeze instead.
Councillor Cliff Jenkins opposes it saying the levy falls far short of the amount needed to build new infrastructure, leaving taxpayers on the hook to fund the difference.
"We believe it's very unfair to Toronto taxpayers," Jenkins said. "In 2008, we're spending $307 million on new infrastructure. Development charges are supposed to pay for that."
Jenkins took issue with the $50 million revenue total supplied by city manager Joe Pennachetti, and said the charges will bring in $42 million this year.
"We should be increasing development charges, not freezing them," he said. "It's a very profitable industry. So maybe their profits will be down a little bit, but should the taxpayers be forced to subsidize an industry like that? I don't think so."
Currently, newly constructed commercial and industrial buildings are exempt from the levy but not condominiums or single- and semi-detached homes. For example, a new one-bedroom condo is charged $4,467, and a two-bedroom, $7,187.
The money helps pay for infrastructure needed to service the new development such as sewers, a new fire hall or police station.
"It's encouraging to see the mayor step up and freeze development charges, obviously recognizing that the economy is in a shape that has people concerned," said Von Palmer, of the Toronto Real Estate Board.
Toronto Star