Housing minister says he's trying to convince big cities not to hike development charges

  5/22/2024 |   SHARE
Posted in Government and Regulation by Eileen Farrow | Back to Main Blog Page

Development charges hike

Housing Minister Sean Fraser said he is trying to coax big city mayors to keep development charges steady with new federal funding after some major Canadian cities recently raised fees for new housing construction.

The government has chosen to address the problem of development charges through a new program, the Housing Infrastructure Fund, which will give municipalities funding to build new infrastructure, like water and sewer lines, provided they don’t increase charges, said Fraser, who appeared Tuesday at the House of Commons infrastructure committee to talk about his department’s spending in the coming year.

Conservative MP Leslyn Lewis asked why there was nothing in the government’s original Housing Accelerator Fund to prevent cities from increasing their development charges.

“Can you confirm that freezing or lowering development charges was not a precondition of any housing accelerator agreements,” she asked Fraser.

Fraser said the Conservatives don’t have any plan to address the problem.

“I’ll note one point of contrast between our plans, is the Conservative plan that was put forward includes no measures to address the issue of development cost charges,” Fraser said. “If you want to raise the issue with someone who has not been clear on their position, you can talk to your party leader or perhaps you could write to the provincial conservative government of Ontario.”

After Toronto signed a housing accelerator deal last year, worth $471 million, it raised development charges for new construction by 20 per cent, with the cost developers need to pay for a one-bedroom unit rising to over $44,000. Ottawa also recently raised its fees, going ahead with the increase despite a warning from Fraser that it would cut them off from future funds.

Development charges are meant to cover some of the costs a new development brings to a city, including things like water and sewer costs, as well as roads, parks, community centres and police. Most communities in the country charge some fees with differences about the overall cost and what is included.

Fraser defended his government’s efforts despite a decline in new housing starts and cities across the country raising fees for new builds.

The Liberals have spent $4 billion through the Housing Accelerator Fund, giving cities across the country money in exchange for them agreeing to remove restrictive zoning rules and build more houses

Housing starts declined in April 2024, the most recent available data, compared to the year prior, with 2.2 per cent fewer homes starting construction this year as compared to 2023. They were also lower across all of 2023 compared to 2022.

The Trudeau government pledged in the recent budget to build 3.9 million homes to get the country back to an affordable housing market.

Lewis asked Fraser to explain why his government’s housing plan wasn’t working.

“In the city of Toronto since the Liberals signed their housing accelerator funding agreement and that was in December 2023, housing starts are down by 21 per cent,” she said.

Fraser said there were many reasons that housing starts were down including higher interest rates, but said his government was putting more on the table all the time to try and reverse that direction.

“We continue to put more measures on the table such as tax cuts, changes to municipal zoning and other measures to help speed up the pace of construction,” he said.

Conservative Leader Pierre Poilievre introduced a private member’s bill on housing last year that would require cities to build 15 per cent more housing every year and would penalize communities that don’t do that by taking away grants.

Poilievre’s housing proposal would also require apartment buildings and other high density projects to be built around transit stations.

Fraser’s proposal has a similar requirement, which he said is good not just for people looking for a place to live, but for the transit systems.

“We’re not just saying we’re transferring money, carte blanche to build out a system with no federal input. We want to make sure that we have enough riders for those systems and want to increase density within walking distance to the transit stations.”

Source: National Post

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