LILLEY: Battle brews on development fees after province clips city wings

Ontario’s big city mayors met on Friday to talk strategy about how to react to the Ford government’s changes to development fees.

While most mayors were looking to work with the province to push for changes, Mississauga Mayor Bonnie Crombie continued her push for an all-out war with the province.

It’s an interesting battle, the Ford government is looking to freeze or lower development charges on certain types of housing – affordable rental and lower cost homes for purchase. That puts Premier Doug Ford and Housing Minister Steve Clark on the side of younger people who want to buy but have been priced out of the market.

Crombie is clearly trying to position herself as the champion of existing home owners and warning that without changes property taxes will go up. She warned on Wednesday that if something doesn’t change, the average property tax bill will go up between $300 and $600.

“None of this is fair to our property taxpayers or our residents,” Crombie said.

There are certainly more existing property tax payers than there are people looking to buy a new home and Crombie is counting on that to win her battle. She is even sending out postcards to every home in Mississauga as part of her attempt to take on Ford.

While Crombie is looking to rally her residents, she failed to rally her fellow big city mayors on Friday. Even former Ontario Liberal leader, now mayor of Vaughan, Steven Del Duca declined to join in Crombie’s crusade.

It’s not like other mayors aren’t raising concerns about Bill 23 and the changes to development charges, many have spoken out, they just aren’t looking for a battle with the province.

Under Bill 23, the province has eliminated development fees for affordable housing, not-for-profit housing like Habitat for Humanity and what they call “select attainable housing units.” That is the province’s still undefined plan to build affordable housing units for purchase for lower-income families.

For most housing projects, development charges will still be applied but they won’t be allowed to increase at the rapid rates of recent years.

Mississauga, for example, has increased their total municipal charges for highrise buildings from $75,859 per apartment or condo to $105,569 per unit, an increase of 39% in just two years. Their development charges for a lowrise housing unit increased from $113,109 per home to $143,439, a 27% spike in the same time frame.

Crombie’s development fees, and her increases, are far from the worst.

In Markham, the total municipal charge on a highrise has increased by 51% over the last two years from $85,731 to $129,235. Their charges for lowrise homes have increased by 35% from $120,372 to $162,348.

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The Ontario Home Builders Association has asked the province to audit these fees, a request the province has now granted.

“Municipalities in the GTA are holding in reserve more than $6 billion in development charges, parkland cash-in-lieu and Section 37 fees, and they are spending a fraction of what they collect on an annual basis,” said Luca Bucci, CEO of the OHBA. “Municipalities across the province hold reserves in excess of $9 billion and these reserves are growing rapidly.”

Those are big numbers in the reserves but response from every mayor has been the same, those funds are earmarked for specific projects. As individual mayors throw around big numbers in lost revenue, it’s important to have some perspective.

The $200 million per year that Toronto Mayor John Tory says he will lose only amounts to 1% of the city’s $15 billion budget.

It’s understandable that mayors don’t want to lose any revenue but charging development fees to Habitat for Humanity or for not-for-profit housing makes no sense. As for freezing development fees, increases of 39-50% over the last two years have been sizeable enough, municipalities shouldn’t be adding to the housing crisis with out of control fees.

blilley@postmedia.com