To get its message across about the importance of the real estate construction industry and what it sees as the negative impact of rising development fees, the Building Industry and Land Development Association (BILD), didn’t get mad. It got graphic.
In recent weeks, BILD has unveiled a series of six booklets containing development industry statistics on six regions across the Greater Golden Horseshoe (Durham, Halton, York, Simcoe, Peel, and the big one, Toronto).
BILD clearly views the reports as political ammunition in the fight against rising fees: on its website it urges its members to “use these booklets when speaking with councilors or other municipal politicians, in their discussions with media representatives, as well as when dealing with partners, colleagues or clients.”
The timing couldn’t be better. There’s a wild campaign on for mayor of Toronto and the future of the country’s largest city revolves around development and mass transit.
“As an election tool, it is a good resource for politicians, civic leaders, to read out of the same song book,” said George Christopoulos, vice-president of communications and media relations with BILD. “You dig down to one figure that everyone knows and everyone talks about, so when you are talking about a specific figure in Toronto about development charges, that is the figure.”
Christopoulos knows more than a bit about politics. Before joining BILD a year ago, he was communications advisor and press secretary to North America’s most famous/infamous mayor, Rob Ford, and prior to that he was part of the Toronto Police Service’s communications team.
What’s been the reception so far?
“Over the past three or four days, you are probably about the ninth person I spoken to how has called up and said, ‘Hey, this is interesting. Have you done this before?’ ” said Christopoulos.
Of all the data in the eight-page Building Toronto report, the information concerning development charges is the most powerful. It shows that development charges have risen 357% since 2004, far outpacing the rise in home prices. (The price of new low-rise home prices have gone up 70% while those of new high-rise homes have increased 61% over that span. The graph above has been copied from the BILD report.).
According to the BILD report on Toronto, those soaring development fees have played a major role in rising new home prices, today accounting for 22.6%, or $116,000, of the average price of a low-rise home, and 19.7%, or $64,000, of the average price of a high-rise home.
“Affordability is a big issue; I think one-fifth of the cost of a home is development charges or taxes,” said Christopoulos. “So you purchase a home for $660,000 and $126,500 is taxes alone.”
BILD describes the $1 billion in development fees paid out every year by GTA new home buyers to fund growth-related infrastructure as “an unfair tax burden.”
As an issue that has flown under the radar, development fees have soared in the past decade. “I think it is the least path of resistance possibly. There are certainly other avenues where you could make changes, but it always seems that it goes back to the thought that it is an easy way of doing it.”
All but invisible and unknown to most people outside the building industry, it could be a hot button issue among politicians who are now in full campaign mode, BILD hopes. “They are using these figures. I think they are getting a better understanding of how the process works and the breakdown of the cost of a home,” said the BILD communications VP.
He notes that the main mayoral candidates will be participating in a debate hosted by the Ontario Home Builders’ Association that will zero in on the building and development industry.
More facts & arguments
BILD touts the home building, land development and professional renovation industry as “an economic engine” of the greater GTA. In 2013, it says the industry was responsible for 34,719 new housing starts, $22.6 billion worth of economic activity (construction, renovation and repair, acquisitions and conversions), 207,4000 jobs and $9.7 billion in wages:
• BILD said it takes approximately 10 years to complete either a low-rise or high-rise development project in the GTA;
• The parkland fee rate municipalities slap on new home development, particularly condos, doesn’t make sense, with a 300 unit development charged for the equivalent of one hectare of parkland adding about $20,000 to the price of a new unit. BILD suggests municipalities cap parkland dedication fees at 5 to 10% of the value of the development site or the site’s land area as was done in the City of Toronto;
• Section 37 fees in the City of Toronto (for infrastructure upgrades) has become “a highly political process and more certainty and transparency is required for its success.”
BILD argues that Section 37 “should only apply to development applications not in conformity with the Provincial Growth Plan” and in all other cases “bonusing should only apply where height and density exceeds the Official Plan or what could be reasonably contemplated by the Provincial Growth Plan.”