Toronto is scaling back plans to hike development fees on new homes in a move that will delay the full impact of rate increases and ward off a battle with the development industry.
The compromise, outlined in a staff report released Tuesday, would see the fees for a single home or semi jump to $34,482 from $19,412. That's a 78-per-cent increase, but less than the $37,457 fee proposed in June.
Fees on a two-bedroom unit in the city's hot condo sector will run $21,203 under the new proposal, a 71-per-cent increase from the current charge of $12,412.
The revised plan also calls for a longer phase-in period for the rates. The full increase will not be in place until August, 2016, rather than the summer of next year as first planned.
In return, the Building Industry and Land Development, a group that represents developers, has indicated it will not appeal the changes to the Ontario Municipal Board.
"BILD will not appeal the by-law nor support actions of its independent members to appeal," says the report from staff to be considered next week by Mayor Rob Ford's executive committee. If approved, the new rates will require final approval by council at its October meeting.
The mayor was not available to talk about the plan on Tuesday, but his brother, Councillor Doug Ford, called it a "happy compromise."
The development industry "seem to be happy and city staff seems to be happy," he said. The longer phase-in period gives the industry "time to make that transition," he said.
Even with the changes, some developers worried that the higher rates – still less than the average for the Greater Toronto Area – will discourage the kind of investments that have brought numerous benefits to the city in recent years.
Michael Turner, president of the Toronto chapter of NAIOP, a commercial real estate organization, said municipal government must be careful to make the city affordable and attractive and not kill the goose that lays the golden egg. "Construction and development have created a lot of jobs that really has helped us rise through a tough economic environment for the last few years."
Steve Diamond of Diamond Corp. agreed, saying the increases, along with other fees, have the potential to put a damper on growth and impact housing affordability.
City staff have pointed out that there are more high-rise towers under construction in Toronto than anywhere in North America.
The fee increases are part of a regular review of development charges and are designed to cover the cost of new and improved infrastructure required to support the city's growth. Under the proposal, Toronto would continue to exempt industrial and commercial developments from the charges except for ground-floor properties, which are mainly retail.
Under the revised plan, there are also changes to the way some townhouse units are treated.