Mississauga council eliminates development charges on rental units. The City now has among the lower charges in the province — but also loses revenue because of it.
It was one of the quicker votes that Mississauga City Council has undertaken in a while — especially given the financial implications of the vote. Within seconds, Mayor Carolyn Parrish received unanimous support to do away with development charges for newly built rental units. The vote was 10 in favour with no votes against.
Development charges are the funds that a municipality charges to real
estate developers for every unit that they build. The DCs — as they’re known — have become controversial during the housing crisis. They ’re effectively a tax on a new unit, which increases costs for the consumers. But they’re also revenue that’s used to provide infrastructure and other city services. The idea is that a new unit creates an added strain on city services and DCs are a way to pay for that strain.
Municipalities across the province are divided. Some want to slash them to reduce the cost of units and others are concerned about losing the revenue.
“I was told this morning that Burlington cancelled all DCs on everything… we’ll watch them for awhile and see what happens,” Mayor Parrish said at the Feb. 11.
The City of Burlington was planning to eliminate all such charges, not just on rentals, but has since paused putting it to a vote. They first want to study the financial implications of foregoing these fees. As it stands, Mississauga is believed to have the lowest DCs in the province.
The quick up and down vote on the floor of Mississauga council did not include discussion of financial implications. And the text of the motion put forward by Mayor Parrish doesn’t discuss these implications either.
The City has to date received over $100 million from the federal government’s Housing Accelerator Fund to support the construction of new homes. Much of these funds will be used to replace the revenue from DCs.
“The City needs more rental housing to serve families that continue to be priced out of home ownership,” the motion reads. “The development industry maintains that, in the absence of further incentives, purpose-built rental development remains economically unviable.”
The Ontario Ford government did bring in mandatory reductions to DCs for rental housing via their Bill 23 — More Homes Built Faster Act. This brought down DCs by around 15-25%.
