Ontario Construction News staff writer
A new study produced by Altus Group for the Building Industry and Land Development Association (BILD) has found that municipalities across the GTA have accumulated $1.13 billion in unspent parkland reserve funds on the backs of parkland cash-in-lieu payments (parkland payments) by homebuilders.
These payments have increased by as much as 329 per cent since 2006 and are levied on new developments, and in turn, passed on to new home buyers. Parkland payments can add $20,000 to $30,000 or more to the cost of a new home, the study asserts.
“Municipal governments need to recognize the impact that fees and taxes have on new home affordability,” said Dave Wilkes, president and CEO of BILD. “Charges by all three levels of government already account for as much as 25 per cent of the cost of a new home in the GTA and are increasing. Parkland cash-in-lieu payments are yet another fee that negatively affects housing affordability.”
The Planning Act currently allows for municipalities to require that five per cent of the land to be developed be made available for park or other public recreational purposes. Alternatively, due to more dense or urban development, municipalities may accept a parkland payment instead of land.
These fees are based on the value of land and as land values have increased significantly since the introduction of the Growth Plan in 2006, parkland payments to municipalities have also increased dramatically. Of the 29 municipalities examined in the study, four had increases above 300 per cent since 2006, 14 had increases between 200 – 300 per cent, nine had increases between 100-200 per cent, one had an increase of 78 per cent and one reduced their fees. Over the 2006-2017 time period, the funds sitting in reserve by these municipalities have increased from just over $300 million to $1.13 billion.
“BILD and its members support parks as an integral amenity to any new development, however, municipalities are clearly collecting more funds than they are returning to communities in the form of recreation facilities and parks,” added Wilkes. “This is being done on the backs of the new homeowner who in the case of high-rise condominium dwellers in urban environments are not getting the benefit of a park that they paid for.”
The Altus Group study also demonstrated that, as currently structured, parkland payments could be acting as a disincentive to more dense homes within a particular municipality, counter to the intensification objectives and policies. All things being equal, without a cap on parkland payments, a unit in a more dense development would pay more parkland payments on a per unit basis than a unit in a less dense development.
“With housing affordability being the number one issue across the GTA, all levels of government need to be cognisant of the impact of their policies, fees and practices. Clearly, the practice of cash-in-lieu payments needs to be revisited, especially in light of all the other costs that get rolled into development charges,” Wilkes said in a statement. “We are pleased that the provincial government is looking at a new “community benefit authority” as part of its Housing Supply Action Plan, currently in front of the legislature. Hopefully, this will provide some relief to those looking to buy a new home.”