Here's my particular beef with development charges in the City of Toronto. Development Charges are intended to pay for increased services used by those who move into new developments, and into new neighbourhoods. These types of charges make imminent sense in the 905 and for 'greenfield' development, where new infrastructure is built to accommodate new residents. These include massive new Water pipes, Schools and community centres.
Unfortunately though a Toronto resident would have to have been living under a rock for the last 10 years if they think that with all the population growth and development Toronto has seen, that any new services or large infrastructure has been delivered. In fact, the opposite is true - services have shrunk, user fees increased and new fees introduces - such as the Vehicle Registration fee.
Now, some Councillors are advocating increasing development charges by upwards of 126 percent over the charges approved 5 years ago. Unfortunately, this is one instance where our City government finds the rules that are adequate for the suburbs are adequate for a mature City like Toronto when in most cases they argue for special treatment based on the age, density and special needs of the City of Toronto. Think of the opposite of the School Funding Formula and you have the Development Charges Act. I guess consistency doesn't really matter when all you run on is your name, not your record or your party's record. People largely vote based on name recognition so even if you make the comments of a buffoon in local media, as long as they spell your name right it's generally considered good publicity. It's too bad no one tracks voting - a far more important record than what Lobbyist you met with.
The charges would be about 25,000 for a Single Family Home (not too many of those being built, but this seems excessive for nothing in return.) A one-bedroom condo would be charged nearly 11,000 a 144 percent increase over the current charge of $4,467.
Cliff Jenkins is leading the charge with his fellow poor North Torontonian Karen Stintz. Together, these two represent some of the City's wealthiest residents and yet are the first to whine about increased property taxes on homeowners (which are very low in Toronto.) Mr. Jenkins is even making the ridiculous complaint that homeowners will subsidize developers to the tune of 40 or 50 Million dollars. Unfortunately, his flawed reasoning leads him to believe that since the Mayor has wisely signalled that there will be a base number of units built in one year before certain increases are introduced, that foregone revenue amounts to a subsidization by homeowners.
But let's look a bit deeper and with some sense of reason and ration. Who buys condos? They are predominantly bought by three segments. First time homebuyers, empty nesters and investors who plan to rent the unit out. In the first instance, Mr. Jenkins proposes to make it even harder for young families, freshly graduated students, new Canadians and those trying to make the leap from rental housing to home ownership. In the second, empty nesters are people who are selling a home in Toronto to do something good for all of us. They have, by Jenkins' logic, already paid they're fair share as homeowners - why should they be hit again? Lastly, the vast majority of new condominium units become rental units. Increased costs are a barrier to entry to the market for those seeking to offer a unit, thereby reducing supply over the long-term and ultimately driving up rents.
Here's the other problem too. Tell me what new infrastructure has been built at Yonge and Eglinton, to the exclusive benefit of new condo owners in the Minto complex that was not paid for by the developer? There are fees under Section 37 (in exchange for height and density bonuses) there are parks levies, there are public art levies, sewer impost charges and a myriad of fees, including building permits based on the value of the project - and yet the new owners will move into exactly the same neighbourhood as existed before it was built. This will only further undermine the City government's legitimacy and further increase the belief that City Hall is run by Unions who are bleeding this City dry. In fact, most Condominium projects are built with their own Community-Centre like facilities, such as work-out facilities, meeting rooms, etc. So there isn't necessarily any truth to the argument that new condo owners create needs for new facilities and services.
Point me to any massive new infrastructure that has been built to accommodate a new development in the City of Toronto. There was the Sheppard Subway Development Charge where development charges were introduced to pay for the Subway and to offset some of the increases in property values. There are also other financial tools that can be used to extract added value from developers who benefit from new public infrastructure.
Development Charges may not immediately be passed through to buyers since there is some price sensitivity in the market. But that also assumes that developers do not share information or the ultimate goal to make money. Eventually, increased costs for building lead to increased costs of housing. Why do Right wing Councillors not get this basic fact about economics? Are they Sarah Palins? Right wing but not really sure why - just that they resent other people and taxes.
If these Councillors are delusional enough to think that homeowners subsidize anything in the City of Toronto, perhaps they'd be willing to actually look at our system of property taxes. For instance, maybe Karen Stintz would support basing the Transportation portion of property taxes on how many cars are owned and how far they are driven by homeowners. Maybe we should treat condos differently than homes and tax them less since they clearly use much less resources and City services. Let's really look at this issue and who subsidizes who.
I am dead sure you will find that it is tenants who subsidize property owners, the poor that subsidize the rich and those who make wise, sustainable lifestyle choices that subsidize the self-centered homeowners of North Toronto. It makes one wonder if those from Lawrence and Bedford Park ever actually leave their neighbourhood to see how the rest of the City lives.
And it is clear why Jenkins and Stintz support development charges. It's obvious that they cannot identify places within the budget to save money (something both of them are normally quite bold about) and that they must agree that the City needs more money (even though Stintz is famous for her sorority-girl style rants about taxes) since both think charging more is a sensible plan. Clearly it is because they do not have to fear the reaction of homeowners (ie voters) since those who pay development charges don't live in the neighbourhood - yet.
My questions to Councillors Jenkins and Stintz are: Since new Condo owners pay municipal taxes that are the same as homeowners, how are homeowners subsidizing new Condo buyers to the tune of $40 to $50 Million? Are you saying that every new condo owner will get nearly 11,000 worth of new services in the neighbourhood they move into? Tell me then, with nearly 2500 units built in the Yonge/Eglinton over the last few years, what new major pieces of infrastructure (to the tune of 27.5 million) have been built in that area to accommodate new residents? Presumably if homeowners are 'subsidizing' condo buyers than at least that much
new infrastructure has been built there right? You see, to subsidize means that some have paid more for something than others.
I am going to record the vote on development charges and circulate it to every new condo built over the last 3 years to show new residents how their new Councillors welcomed them to the neighbourhood - with a bill for an additional $6,000 (added after their mortgage!) This is another tiny (massive actually) part of the ignorance shown by Councillors about the condo market. Many of the City's fees are imposed after the purchase and are added at closing, which then drives up either the mortgage or the closing costs depending on the buyer's arrangement.
The truth here is that trying to prop-up an unsustainable Operating Budget is actually looking to Condo builders and buyers to subsidize homeowners!!!! Get your economics straight Mr. Jenkins and Ms. Stintz - you'd think with all the Richie Riches the two of you represent you could find one brain that understands the concept of subsidies and the basics of economics.
At the end of the day, what Stintz and Jenkins and those other right-wingers are saying with this and their opposition to anything progressive is 'keep those people out of my neighbourhood. My nice White neighbourhood.' If they could put walls around North Toronto, they would have quite some time ago. They'll do it through zoning and if they fail there, they can just price us all out of the market. Genius. What a Healthy City that builds!
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