SNOBELEN: Ontario government fighting to make new homes more affordable
· Toronto Sun
This fairness thing isn’t easy – j ust ask Ontario Minister of Municipal Affairs and Housing Rob Flack.
Flack is charged with the difficult business of getting homes built. It’s a more convoluted task than you might think.
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Back in 1997, when Ontario enacted the ill-fated Development Charges Act, the government gave municipalities taxing authority in the name of fairness. Heck, why should existing homeowners shoulder part of the cost of building new homes?
But fairness is a tough target and development charges (DCs) added a cost to new homes that had not been applied to previous homes. Fair or not, municipalities came to love DCs.
Heck, what’s not to like? DCs are the perfect tax. Municipalities can have someone else (the developer) collect a hidden tax from people who are not yet local voters, all while raising property values for constituents. What could be better than that?
DCs worked so well that municipalities began to attach them to a confusing array of real and imagined expenses far beyond roads and pipes. Think public transit, parks, recreation facilities, libraries, road maintenance, police, ambulance and schools.
But, you ask, aren’t those things people pay for in their property taxes? Yup, but voters pay property taxes and politicians much prefer loading hidden taxes onto new construction.
That same dynamic, the contest between current homeowners and future development, makes it inherently hard to build new homes. The neighbours of any greenfield project naturally want the field to stay green and those folks vote. Add to that dynamic the difficulty for municipalities in funding new infrastructure from existing taxes and you have a perfect storm to stall growth.
Development charges add huge financial burden on new-home buyers
Over the years, DCs have added a huge financial burden on new-home buyers and the planning process seems perfectly designed to thwart growth. Something needs to change.
Enter Rob Flack. Flack has a business background and the entanglements frustrating homebuilding obviously bother him. Rather than ignore or paper over the underlying problems, Flack seems determined to actually fix them.
The first steps to prime the homebuilding pump are short-term fixes. Cutting DCs in half by transferring cash to municipalities from provincial and federal taxpayers isn’t ideal, but it is fast. The same is true for eliminating HST on new builds.
The good news is that Flack isn’t stopping with tax-dollar transfers. He has introduced Bill 98, the Building Homes and Improving Transportation Infrastructure Act. The details of the act are complex, but the direction is clear.
Flack wants to make the planning process efficient and effective. It is currently neither. He wants to help municipalities amortize the cost of building infrastructure with tools like the Wastewater Public Corporations Act. Most of all, he has acknowledged that getting homes built is going to require provincial involvement in local planning.
This isn’t going to be an easy fight. There are 444 municipalities in Ontario and any number of non-government organizations (NGOs) that are not going to give up the byzantine planning process easily. A small cadre of folks make a good living from protracted planning.
We had better hope that Flack succeeds in getting some homes built, because the high cost and frustrating timeframe to build anything in Ontario is an embarrassment.
Years ago, the government said that Ontario should be the best place to live, work and raise a family. We should keep that goal in mind as the usual suspects argue to stall growth and keep housing expensive.