Yesterday morning, Neat B and I were up at Friday Harbour messing about on jet skis with some friends. It was a lot of fun. It's a good little day trip if you're ever looking for something to do in the summer.
I think that the developers of Friday Harbour have done a wonderful job creating a new waterfront resort and creating an alternative to traditional cottages. I know a bunch of people who have opted for a place here instead. It's closer to Toronto, you don't have the same upkeep, and you get to enjoy urban amenities while still feeling like you're "up north."
Yesterday I also noticed that the most recent phase — which is just finishing up construction — looks like this:
Never before have I seen balcony guard glass like this — at least not here in the Toronto region. It is some kind of iridescent laminated glass, which changes color depending on the light and the viewing perspective. I would imagine that it also offers some degree of privacy benefits, because it got fairly opaque from some angles.
But the primary feature is that it just looks cool. And I think more projects should have fun like this. There's no need to be afraid of color.
What do you think?
While this is true, I do I have some suggestions. At the top of the list is this: Toronto needs to make better recreational use of Lake Ontario and its waterways. More specifically, it needs a summer bathing culture.
I am of the strong opinion that, as a general rule, development charges should aim to capture the costs and impacts directly attributable to new development. This is why I prefer the term "impact fee" as opposed to "development charge." The latter makes it seem like a generic catch-all tax. But that's not the intent. The intent is that "growth pays for growth." At the highest level, this makes sense and sounds good. So with all the talk of lowering/eliminating DCs to help with housing affordability, I think a lot of people are rightly wondering: Is this actually feasible? What fees are actually needed to fund growth-related infrastructure? Let's talk about this today.
For reference, here are the development charge rates effective June 2024 in the City of Toronto.
Non-rental housing:
Yesterday morning, Neat B and I were up at Friday Harbour messing about on jet skis with some friends. It was a lot of fun. It's a good little day trip if you're ever looking for something to do in the summer.
I think that the developers of Friday Harbour have done a wonderful job creating a new waterfront resort and creating an alternative to traditional cottages. I know a bunch of people who have opted for a place here instead. It's closer to Toronto, you don't have the same upkeep, and you get to enjoy urban amenities while still feeling like you're "up north."
Yesterday I also noticed that the most recent phase — which is just finishing up construction — looks like this:
Never before have I seen balcony guard glass like this — at least not here in the Toronto region. It is some kind of iridescent laminated glass, which changes color depending on the light and the viewing perspective. I would imagine that it also offers some degree of privacy benefits, because it got fairly opaque from some angles.
But the primary feature is that it just looks cool. And I think more projects should have fun like this. There's no need to be afraid of color.
What do you think?
While this is true, I do I have some suggestions. At the top of the list is this: Toronto needs to make better recreational use of Lake Ontario and its waterways. More specifically, it needs a summer bathing culture.
I am of the strong opinion that, as a general rule, development charges should aim to capture the costs and impacts directly attributable to new development. This is why I prefer the term "impact fee" as opposed to "development charge." The latter makes it seem like a generic catch-all tax. But that's not the intent. The intent is that "growth pays for growth." At the highest level, this makes sense and sounds good. So with all the talk of lowering/eliminating DCs to help with housing affordability, I think a lot of people are rightly wondering: Is this actually feasible? What fees are actually needed to fund growth-related infrastructure? Let's talk about this today.
For reference, here are the development charge rates effective June 2024 in the City of Toronto.
Non-rental housing:
One of the gold standards for this is easily Zürich. The city has a long history of urban swimming right in Lake Zürich and the Limmat River. And because the city has some of the cleanest urban water in the world, all that is really needed are platforms leading straight into water. But Zürich also has a rich history of beautiful public bathhouses (called Badis). These facilities accommodate the obvious daytime functions, but they also transform at night into bars, clubs, and event venues. It's for these reasons that their seasonal opening in May is often viewed as the official opening of summer in the city. This is what Toronto needs. So how do we make that happen?
The obvious first step is that we need clean water, which means we need to eliminate the poop. This remains a problem and here's why (taken from this 2014 document):
About 30% of the land area, which is really in the older area of the city [of Toronto], is serviced by combined sewers. That's a single pipe that carries both raw sewage and stormwater runoff when it rains. Inherent in the way these systems were configured back in the late 1800s and up to about 1950 is that during heavy rains there's a spillage of combined sewer overflow, as we call it. It's a mixture of raw sewage and stormwater runoff. We have about 80 outfalls across the city, 34 of which discharge to Lake Ontario.
The good news is that we're working on it. In 2018, Toronto started on the largest stormwater management program in the city's history with the promise that it will virtually eliminate the release of combined sewer outflows into the Lower Don River, Taylor-Massey Creek and Toronto's Inner Harbour. I don't know enough, technically, to say whether this will get us all the way there, but I do know that it is absolutely crucial to making Toronto more like Zürich. Zürich also some combined sewers, but they use large retention tanks to hold excess wastewater and prevent it from overflowing into Lake Zürich and the Limmat River.
The second step is that we need to invest in incredible bathhouse facilities. From what I can tell, this is also a work in progress. As part of the preliminary design for the Parliament Slip (in the city's central waterfront), there is a proposal for a floating barge and two outdoor pools. There may even be a snack bar! (Let's hope it's a lot more than that.) This won't be the same experience as swimming directly in Lake Zürich, but it will still be awesome and Toronto should make it happen.
But there are other opportunities. One that often comes to mind for me is Sunnyside Bathing Pavilion. Originally constructed in 1922 and renovated in 1980, today it mostly feels abandoned, other than the mediocre cafe facing the boardwalk (and yes, the adjacent pool). It's severely underutilized and under kept. What we ought to do is host an international design competition and challenge the world to rethink it and its relationship to the lake, just as we did for our central waterfront. And of course, we should do this in parallel with making our bodies of water some of the cleanest in the world.
Toronto needs a summer bathing culture.
Photos from Zürich Tourism
Rental housing:
In other words, if you were building 3-bedroom family-sized condominiums, the development charge would be $80,690 per home. And if you were building 3-bedroom family-sized rentals, the development charge would be $45,280 per home. But keep in mind that in addition to the above development charges, there are also other charges like the Community Benefit Contribution (Section 37), Parkland Dedication, Education Charges, Development Application Fees, HST, and so on.
Growing development charge reserve funds
Looking at just DCs, Ontario municipalities collected about $17.5 billion in development charge revenue over the last five years (according to the Missing Middle Initiative). But importantly, these same municipalities only spent $11.8 billion. The rest is sitting in DC reserve funds. Why is that? Well, part of this could be explained by timing. DCs are typically collected when a developer is issued their first building permit. But the costs associated with growth-related infrastructure may not happen at exactly the same time.
Except that these reserves have been growing. From 2010 to 2022, DC reserve funds across Ontario have increased from $2.6 billion to $10.7 billion (again, according to the Missing Middle Initiative). This is a 316% increase over 13 years. And in the case of Toronto — Ontario's largest city — reserves have grown 891% over the same period. This suggests that these charges aren't accurately tuned to actual impacts, because, in theory, these reserves should trend toward zero over long periods of time, as growth-related infrastructure costs are incurred.
Nexus between development charges and the impacts of new development
Let's get a little more specific. Over the last five years, DCs generated about $450 million for social services across Ontario. This includes things like long-term care, affordable housing, day cares, and public health; all of which are important and good things. But can all of these things be considered growth-related impacts? In other words, is it fair to say that because new housing got built, we now need more long-term care homes? I don't think so. Long-term care homes are certainly needed, but I don't think it's fair for new home buyers and renters to shoulder this cost.
Who is paying for the renaming of Dundas Square?
Let's consider another example. Back in 2014, Toronto City Council decided that Dundas Square should be renamed. I personally don't think this was at all necessary, but it got approved and the cost to do so was estimated at $335,000. At the time, it was also decided that this would be paid for through Section 37 funds as opposed to "taxpayer money." Section 37 of the Planning Act used to function in practice as "let's make a deal." It was a way for cities to extract money from developers in exchange for allowing more density. This has since been replaced by the Community Benefits Charge framework, but the intent is the same:
Section 37 of the Planning Act authorizes the City to adopt a community benefits charge (CBC) by-law and collect CBCs to pay for the capital costs of facilities, services and matters that are required to serve development and redevelopment. CBC funding will help support complete communities across Toronto.
In funding it in this way, the City of Toronto took a position. It basically said, "renaming Dundas Square is important to the city. We must do it. But we don't want all Torontonians to pay for it. We only want new home buyers and renters to pay for it." Because that's the effective outcome of using funds charged only to new developments. Is that fair? Once again, I don't think so. Because it's not reasonable to say that because new housing got built, it's now imperative that we rename Dundas Square. The two are unrelated matters.
By and large, this is the issue that many take with development charges. It doesn't appear to be "growth just paying for growth." It's growth paying for a lot of stuff. And it has a direct impact on housing affordability. In tomorrow's post, we'll expand on this last point and talk about what lowering/eliminating DCs could mean for apartment rents.
One of the gold standards for this is easily Zürich. The city has a long history of urban swimming right in Lake Zürich and the Limmat River. And because the city has some of the cleanest urban water in the world, all that is really needed are platforms leading straight into water. But Zürich also has a rich history of beautiful public bathhouses (called Badis). These facilities accommodate the obvious daytime functions, but they also transform at night into bars, clubs, and event venues. It's for these reasons that their seasonal opening in May is often viewed as the official opening of summer in the city. This is what Toronto needs. So how do we make that happen?
The obvious first step is that we need clean water, which means we need to eliminate the poop. This remains a problem and here's why (taken from this 2014 document):
About 30% of the land area, which is really in the older area of the city [of Toronto], is serviced by combined sewers. That's a single pipe that carries both raw sewage and stormwater runoff when it rains. Inherent in the way these systems were configured back in the late 1800s and up to about 1950 is that during heavy rains there's a spillage of combined sewer overflow, as we call it. It's a mixture of raw sewage and stormwater runoff. We have about 80 outfalls across the city, 34 of which discharge to Lake Ontario.
The good news is that we're working on it. In 2018, Toronto started on the largest stormwater management program in the city's history with the promise that it will virtually eliminate the release of combined sewer outflows into the Lower Don River, Taylor-Massey Creek and Toronto's Inner Harbour. I don't know enough, technically, to say whether this will get us all the way there, but I do know that it is absolutely crucial to making Toronto more like Zürich. Zürich also some combined sewers, but they use large retention tanks to hold excess wastewater and prevent it from overflowing into Lake Zürich and the Limmat River.
The second step is that we need to invest in incredible bathhouse facilities. From what I can tell, this is also a work in progress. As part of the preliminary design for the Parliament Slip (in the city's central waterfront), there is a proposal for a floating barge and two outdoor pools. There may even be a snack bar! (Let's hope it's a lot more than that.) This won't be the same experience as swimming directly in Lake Zürich, but it will still be awesome and Toronto should make it happen.
But there are other opportunities. One that often comes to mind for me is Sunnyside Bathing Pavilion. Originally constructed in 1922 and renovated in 1980, today it mostly feels abandoned, other than the mediocre cafe facing the boardwalk (and yes, the adjacent pool). It's severely underutilized and under kept. What we ought to do is host an international design competition and challenge the world to rethink it and its relationship to the lake, just as we did for our central waterfront. And of course, we should do this in parallel with making our bodies of water some of the cleanest in the world.
Toronto needs a summer bathing culture.
Photos from Zürich Tourism
Rental housing:
In other words, if you were building 3-bedroom family-sized condominiums, the development charge would be $80,690 per home. And if you were building 3-bedroom family-sized rentals, the development charge would be $45,280 per home. But keep in mind that in addition to the above development charges, there are also other charges like the Community Benefit Contribution (Section 37), Parkland Dedication, Education Charges, Development Application Fees, HST, and so on.
Growing development charge reserve funds
Looking at just DCs, Ontario municipalities collected about $17.5 billion in development charge revenue over the last five years (according to the Missing Middle Initiative). But importantly, these same municipalities only spent $11.8 billion. The rest is sitting in DC reserve funds. Why is that? Well, part of this could be explained by timing. DCs are typically collected when a developer is issued their first building permit. But the costs associated with growth-related infrastructure may not happen at exactly the same time.
Except that these reserves have been growing. From 2010 to 2022, DC reserve funds across Ontario have increased from $2.6 billion to $10.7 billion (again, according to the Missing Middle Initiative). This is a 316% increase over 13 years. And in the case of Toronto — Ontario's largest city — reserves have grown 891% over the same period. This suggests that these charges aren't accurately tuned to actual impacts, because, in theory, these reserves should trend toward zero over long periods of time, as growth-related infrastructure costs are incurred.
Nexus between development charges and the impacts of new development
Let's get a little more specific. Over the last five years, DCs generated about $450 million for social services across Ontario. This includes things like long-term care, affordable housing, day cares, and public health; all of which are important and good things. But can all of these things be considered growth-related impacts? In other words, is it fair to say that because new housing got built, we now need more long-term care homes? I don't think so. Long-term care homes are certainly needed, but I don't think it's fair for new home buyers and renters to shoulder this cost.
Who is paying for the renaming of Dundas Square?
Let's consider another example. Back in 2014, Toronto City Council decided that Dundas Square should be renamed. I personally don't think this was at all necessary, but it got approved and the cost to do so was estimated at $335,000. At the time, it was also decided that this would be paid for through Section 37 funds as opposed to "taxpayer money." Section 37 of the Planning Act used to function in practice as "let's make a deal." It was a way for cities to extract money from developers in exchange for allowing more density. This has since been replaced by the Community Benefits Charge framework, but the intent is the same:
Section 37 of the Planning Act authorizes the City to adopt a community benefits charge (CBC) by-law and collect CBCs to pay for the capital costs of facilities, services and matters that are required to serve development and redevelopment. CBC funding will help support complete communities across Toronto.
In funding it in this way, the City of Toronto took a position. It basically said, "renaming Dundas Square is important to the city. We must do it. But we don't want all Torontonians to pay for it. We only want new home buyers and renters to pay for it." Because that's the effective outcome of using funds charged only to new developments. Is that fair? Once again, I don't think so. Because it's not reasonable to say that because new housing got built, it's now imperative that we rename Dundas Square. The two are unrelated matters.
By and large, this is the issue that many take with development charges. It doesn't appear to be "growth just paying for growth." It's growth paying for a lot of stuff. And it has a direct impact on housing affordability. In tomorrow's post, we'll expand on this last point and talk about what lowering/eliminating DCs could mean for apartment rents.
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