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New Development Fee Increases for Toronto

Johnzz

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If you purchased pre-construction without a development fee cap, unfortunately you might be out of luck come closing...


http://www.thestar.com/business/real_estate/2013/06/27/new_condo_buyers_could_face_big_bills_at_movein_time.html


By: Susan Pigg Business Reporter, Published on Thu Jun 27 2013

Thousands of people who’ve bought preconstruction condos in the City of Toronto over the last two years or so could find themselves faced with an unexpected extra bill when it eventually comes time to move in.

If city council goes ahead with a proposal to double development charges, those extra costs — some $7,671 on the average one-bedroom unit and $10,624 on the average two-bedroom — are likely to land right in the laps of unsuspecting buyers.

“Most new condominium contracts provide that the buyer is responsible for any increased development charges that the developer incurs after the date that the agreement (of purchase and sale) is signed,†says veteran real estate lawyer Mark Weisleder, who writes about real estate law for The Star.

The get-rich-quick mentality that became the hallmark of the condo boom of the last few years may have also left thousands of buyers of preconstruction units vulnerable.

Some buyers became so convinced they could make a quick buck by the time the unit was built and ready to occupy, they didn’t have lawyers even review the complex sale documents and may not know the clause even exists, says Weisleder.

Real estate lawyers have been able, in many cases, to negotiate a cap on any potential increases from developers keen to make the sales targets needed to get bank financing, but others have simply refused to assume the possible risk, he notes.

“I always recommend the cap, and while many developers agree, some developers still refuse to give it.â€

While it’s almost impossible to determine exactly how many buyers of preconstruction units could be impacted if city council supports staff recommendations to double development charges, there were more than 20,000 condos in the preconstruction phase across Toronto as Q1 of 2013, according to market research firm Urbanation.

And thousands more are just in the excavation phase and also likely to be impacted. That’s because development charges in Toronto only kick in after the foundation has been poured and the “superstructure†building permit is issued.

“Builders have two choices here — they can pass the added costs on to buyers or they can absorb them. But these proposed increases are so great, they can’t be absorbed in most cases,†says Bryan Tuckey, president of the Building Industry and Land Development Association (BILD), the umbrella group for the development industry.

“It has been brought to the City of Toronto’s attention that there are a number of buyers who will be impacted.â€

A city official declined to comment on the issue, other than to say that any increases would likely be phased in over a year, to July, 2014, and are need to cover the costs of city services, from transit to sewers and water mains, that are impacted by every condo project that’s built.

The increases would still leave Toronto development charges below what’s charged in 905 municipalities.

Developers have asked the city for more time to assess the impact and have cautioned that the sudden jump (increases in 2008 were phased in over four years) could further threaten the condo industry, which has already been impacted by softening sales and tougher mortgage lending rules imposed by Ottawa that have knocked many first-time buyers out of the market.

This could knock out more, notes Tuckey.
 
so wait if someone bought two years ago and the project has already broken ground in fact is almost completed this won't affect them right?

I have a cap on my fees but was just wondering anyway
 
so wait if someone bought two years ago and the project has already broken ground in fact is almost completed this won't affect them right?

I have a cap on my fees but was just wondering anyway

If there is a crane in the ground (or topped out) when the fees go up then your safe. If there is no crane then it most likely applies to the building and either you or the developer will be paying it.

Miller doubled development charges too. Everybody freaked out in the month leading up to it but nobody made a sound after that. I expect this will be the same.
 
If there is a crane in the ground (or topped out) when the fees go up then your safe. If there is no crane then it most likely applies to the building and either you or the developer will be paying it.

Miller doubled development charges too. Everybody freaked out in the month leading up to it but nobody made a sound after that. I expect this will be the same.

It's hard to complain when the good times are rolling. This current outcry is surely pre-emptive of a potential market slowdown.
 
Our development charges are so cheap its disgusting - we're giving freebees to developers for too long and it should stop - can't beleive its been delayed until September and I bet once September comes, there will be another delay - the developers are a powerful lobby in the City
 
For those of you pushing development fee increases please consider that in areas of the city that are dying for development or where developers cant charge a premium like they do in the core this TAX is effectively a killer for anyone considering setting up shop in certain neighborhoods. Seems like another issue that people downtown don’t fully grasp.
 
For those of you pushing development fee increases please consider that in areas of the city that are dying for development or where developers cant charge a premium like they do in the core this TAX is effectively a killer for anyone considering setting up shop in certain neighborhoods. Seems like another issue that people downtown don’t fully grasp.

Why can't developers charge a premium in those areas?
 
Our development charges are so cheap its disgusting - we're giving freebees to developers for too long and it should stop - can't beleive its been delayed until September and I bet once September comes, there will be another delay - the developers are a powerful lobby in the City

Commercial developments are exempt from development charges and city council is recommending them to be kept this way as a plan to bring jobs to the city. from A Strategic Plan for Accelerating Economic Growth and Job Creation in Toronto. That shows you how strong a grip these developers have on this city.
 
For those of you pushing development fee increases please consider that in areas of the city that are dying for development or where developers cant charge a premium like they do in the core this TAX is effectively a killer for anyone considering setting up shop in certain neighborhoods. Seems like another issue that people downtown don’t fully grasp.

The money goes to infrastructure expansion to handle the new buildings. The choice is either a development fee so new residents pay for that expansion; or a general property tax increase.

Are you willing to pay higher property taxes so others can get a discounted condo in your neighbourhood, or much more likely, downtown?

Interestingly, replacing the SRT with a subway will also bump development charges when the next evaluation of the fees occurs.
 
What I do not understand is why development charges are the same in areas like Jane n Finch or other under developed areas of the city than in downtown. Shouldn't the city be using incentives to build up these neighborhoods, much like other towns have done with their downtown's
 
What I do not understand is why development charges are the same in areas like Jane n Finch or other under developed areas of the city than in downtown. Shouldn't the city be using incentives to build up these neighborhoods, much like other towns have done with their downtown's

I think you're confused as to what "underdeveloped" means. Jane and finch is a densely populated neighbourhood. Perhaps we should subsidize development in the bridal path.
 

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