BILD: City of Mississauga leads the way

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Voluntary reduction of development charges demonstrates that some municipal leaders understand the issues facing housing

On January 29, the City of Mississauga took a bold step forward to stimulate new housing by becoming the second municipality in Ontario (after Vaughan) to voluntarily and broadly lower development charges on new homes in an effort to deliver new housing to those who want to live in the city.

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This is part of a broader endeavor by the city outlined by a housing task force convened and led by Mayor Carolyn Parrish, and though its actions, the mayor, council and city staff have illustrated a keen understanding of the current state of new housing in the GTA.

Their actions provide a meaningful contribution to addressing the current cost-to-build crisis that is stagnating new housing development and outlines a path that other municipalities must follow.

In short, the challenge is this: the costs to build a new home have become misaligned with the market’s ability to absorb them.

Over the last five years, skyrocketing construction costs, soaring financing rates and increasingly high municipal fees have undermined the financial viability of housing projects across the GTA. As a result, sales have plummeted and housing starts are sliding — and will continue to follow the sales’ trajectory. The housing supply of tomorrow is in jeopardy.

Over time, housing input costs that are market-based, such as land, materials, financing and labour are influenced by market variables. And to be clear, there are signs that some input costs are adjusting downward, albeit slowly and not to the scale required.

Costs that can be influenced, and quickly, are those that are driven by policy or government regulated, such as the sales taxes applied by various levels of government and the municipal fees and charges that are applied to new homes. This is where the City of Mississauga’s recent measures come in.

Through its motion late last month, the city voluntarily reduced its residential development charges by 50 per cent — the largest reduction of its kind — and Mississauga becoming only the second city in Ontario to do so. To put that in perspective, this action alone will reduce input costs on a single-family home by over $28,000.

In addition, by changing when the development charges are due to be paid they are creating further input cost reduction by reducing financing charges for builders of new homes. Lastly, the city has eliminated development charges on three-bedroom apartment purpose-built rental projects providing incentive to build this crucial form of development.

There are a number of other actions that the Mayor’s Housing Task Force has outlined that unfortunately space constraints do not allow me to outline; suffice to say that they all will have an impact on facilitating and accelerating housing supply in Mississauga.

For its leadership and vision in addressing housing cost-to-build and thus housing supply in the city, the mayor and council deserve acknowledgment and praise. We encourage all other GTA municipalities to follow their lead and ensure our region builds the homes that are needed to house those who want to make the GTA their home.

Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD), the voice of the home building, land development and professional renovation industry in the GTA. For the latest industry news and new home data, visit www.bildgta.ca.