Development charges a concern for developers
February 24, 2010
Tony Wong
BUSINESS REPORTER
Rising costs due to development charges have become the top concern for Canadian homebuilders, according to an annual survey.
Development charges on serviced lot prices remain a "critical problem" for a large proportion of homebuilders, but particularly in Ontario, the Canadian Home Builders' Association said in its survey released Tuesday.
"Regulatory issues such as more onerous municipal standards, building code requirements and environmental regulations remain of concern to many new homebuilders" according to Don Johnston, director of technology and policy for the association.
While about one-third of builders surveyed nationally said this was a critical problem, that number jumped to two-thirds in Ontario.
"There is a sense that despite the fact we have been in a recession and the recovery is still fragile, development charges keep increasing beyond the rate of inflation," said Michael Collins-Williams, director of policy for the Ontario Home Builders' Association.
Development charges are levied by municipalities to pay for infrastructure costs for new housing.
In Ontario, the charge could be as little as $3,928 per lot for single detached housing in Sudbury, or as much as $54,160 in Halton Region, according to 2009 figures supplied by the association.
Additional taxes, fees and surcharges could more than double the cost.
"There's nothing wrong with implementing a charge for infrastructure, but we are concerned that some municipalities are using development charges to subsidize the tax base instead of property tax increases," said Collins-Williams.
According to an earlier Canada Mortgage and Housing Corp. study, development fees and taxes "have a direct effect on the overall cost of housing and ultimately on housing affordability."
Development charges have replaced consumer confidence as the biggest problem facing builders.
With the collapse of the housing market at the start of the recession last year, 54 per cent of builders across Canada said consumer confidence was the No. 1 problem.
This year only 9 per cent of builders cited that at the main issue.
In Ontario, consumer confidence remains an issue at 17 per cent.
"In Ontario builders did far better than anyone expected when the downturn first started, but there is a sense by builders that we're not out of the woods yet, because we still have very high unemployment numbers," said Collins-Williams.
Toronto Star