Barrie’s new development charges will squeeze city landlords, and eventually their tenants, says Steve Dearlove.
“This will have a disastrous impact on an already shrinking rental market, and more importantly, to affordable housing in general,” he said.
Development charges (DC) are fees collected from new development, so that growth pays for growth and the cost of growth-related infrastructure doesn’t result in higher property taxes or user fees from the existing community.
But Dearlove says the new DC for the creation of rental units has increased by an estimated 32-41%, depending on the type of unit being built.
City council passed its new Barrie-wide development charges bylaw Aug. 25.
Dearlove is the landlord of a four-unit building on Parkside Drive, and also lives in one of the units. But Dearlove says he’s facing huge DCs for a unit he paid for when he purchased the property.
“This (DC bylaw) is both a public safety issue and an affordable housing issue and needs serious re-consideration on the part of our city council and any city council that levies DCs on rental units,” he said.
Dearlove spoke against the new DC bylaw on Aug. 25 and Mayor Jeff Lehman was surprised at the size of the landlord’s DC bill, and instructed staff to look into it.
“The good news is that at the council meeting, Mayor Lehman seemed honestly concerned and wanted staff to follow up with me, which they have already done – at least to acknowledge that a follow-up will be taking place,” Dearlove said.
“The bad news is that the DC bylaw 103 was passed almost unanimously.”
The new bylaw increased DCs on two bedroom and larger apartments to $25,140 per unit from $17,803 in Barrie proper, to $25,614 in the former Innisfil land. DCs for bachelor and one-bedroom apartments jump to $17,976 per unit in Barrie proper, and $18,315 in the former Innisfil, from $13,084.
Other residential dwellings (but not single or semi-detached homes) now have DCs of $30,481 in Barrie proper, $31,056 in the former Innisfil, an increase from $23,016.
Dearlove’s building has three existing units, with one additional unit, so it’s in the ‘other’ residential category – although it is a house by all other definitions, and he says not an apartment building.
So his DC charges are going from $23,016 to $30,481, a 32% increase.
“This is insane,” Dearlove said. “It will act as a colossal disincentive for any landlord to bring their existing illegal units up to code standards – this is where the public safety issue enters the picture – and/or consider adding a unit or dividing their existing property into more units. This is where the affordability issue comes into play.”
He speculates that when the consultants were directed to determine DCs on individual units, they were not taking into consideration the economics of converting an existing dwelling to rental.
It’s Dearlove’s understanding the Development Charges Act does allow for some exceptions, but they are very specific.
DCs on single-detached homes have increased to $40,773 per unit from $30,788. In the new Salem and Hewitt’s Secondary Plan areas, the former Innisfil land, those DCs rise to $41,514. These increases are passed on to home buyers.
There’s a 25% discount on residential building in the city centre, with a two-year sunset clause, along with a 100% break for office development there. The former DCA bylaw gave a 100% discount for non-residential building and 50% for residential.
The former retail or commercial DC of $16.81 per square foot goes to $27.41 in Barrie proper, $28.67 in the former Innisfil land. In other non-residential sectors, but not industrial, it jumps to $18.83 per sq. ft. from $13.65.
Lawyers from Harmony Village, a proposed 1,300-unit residential development along Bradford Street, and Park Place, have said they will appeal Barrie’s new DC bylaw to the Ontario Municipal Board.
Councillors put the brakes on hiking industrial fees, fearing it would hurt growth in that sector. The current industrial DC rate of $11.11 per square foot will be maintained for the first 1.2 million sq. ft. of space with a building permit – instead of the recommended new rate of $18.83 per sq. ft. But in the last four years, Barrie has averaged just below 100,000 sq. ft. of industrial development, so the 1.2 million sq. ft. ceiling is unlikely to be reached.
The city’s DC background study identified $1.3 billion in net costs from new development from 2014-2023 for soft services (libraries, recreations centres), from 2014-2031 for hard services (infrastructure) and from developing the former Innisfil land. Some of these costs can be recovered from development charges.
During the life of the new DCA bylaw, estimated at five years, gross capital costs of $648 million have been identified in Barrie. Of that total, $369 million may be recovered through development charges.
The remaining $279 million will come from property taxes and user rates, grants and subsidies.