Ontario Construction News staff writer
Unnecessary costs caused by lengthy wait times and high charges levied by municipalities on developers are impacting the construction of new housing across the GTA increases in the length of time it takes to get a project approved and charges levied by municipal governments on developers, a new study has found.
The Municipal Benchmarking Study, 2nd Edition, released last week, concludes the times and charges have both increased since the same study was done in 2020 and charges are being passed on to home buyers.
Researchers found that municipal fees and charges have increased 30 to 36 per cent since 2020, with charges amounting to $53 per square foot for low-rise housing and to $99 per square foot for high-rise housing. Municipal charges for high density housing, meanwhile, are nearly two-times higher than that for low density housing.
Also, municipal approval timelines range from 10 to 34 months depending on the municipality, with most types of applications taking 20 to 24 months – with each month of delay costing between $2.60 and $3.30 in added construction costs per square foot.
Municipal approval timelines for new housing in the GTA are among the worst of major municipalities across Canada and add significant costs to new home purchasers, according to the municipal benchmarking study conducted for the Building Industry and Land Development Association (BILD) by Altus Group.
“With the average approval timeframe across the GTA now being 21 months, and with approvals in some municipalities stretching to 32–34 months, not only are municipal inefficiencies and delays slowing the addition of housing supply, but they are also adding directly and indirectly up to $3.30 per square foot to the cost of a new home,” said Dave Wilkes, president and CEO of BILD. “To put that in context, each month of delay in approvals adds $2,600 per month to the cost of a new 800-square-foot apartment and more than double that for a new single-family home.”
Municipal fees added to new homes continue to escalate significantly, increasing on average by 30–36 per cent since the 2020 study. This is adding tens of thousands of incremental dollars to the cost of a new home. Delays and costs have a significant impact on GTA communities and the economy, causing many young families to leave the region for surrounding areas.
“Governments at the federal and provincial levels have taken steps to address the factors that affect housing supply and affordability,” said Mr. Wilkes. “Municipalities need to do the same. Now is the time for action.”
- In the GTA, Milton and Whitby performed best, with average approval timeframes of 10 and 13 months respectively. The City of Toronto and Caledon performed the worst, with average timeframes of 32 and 34 months respectively.
- The size of the project is not a significant factor in how long it takes to gain municipal approval. This results in long approval times and increased costs per unit for smaller projects, which acts as a disincentive for building these types of projects.
- Almost none of the approvals included within the benchmarking study would meet provincial statutory requirements.
- Nine of the 16 municipalities in the 2022 study now have combined municipal charges (development charges, parkland charges, community benefits charges, planning fees) for a ground-oriented development (mix of singles and townhouses) that exceed $100,000 per unit, and seven exceed $125,000 per unit.
- On a per-square-foot basis, municipal charges are nearly two times higher for high-density housing than for ground-related housing. This relationship is evident in every municipality studied and acts as a drag to increasing density.