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The Globe and Mail

Ford’s executive punts fee hikes issue to the fall

Toronto Mayor Rob Ford speaks at a luncheon for the Toronto Real Estate Board at the Sheraton Hotel June 14, 2013.

Moe Doiron/The Globe and Mail

Toronto Mayor Rob Ford's executive committee has deferred a decision on raising development fees until September, putting off a move that has been met with resistance by developers.

The mayor's cabinet-like executive met Wednesday and considered a staff report that recommended nearly doubling development fees for new homes. The long-anticipated report, released last week, said the fees are needed to pay for new and improved infrastructure, from roads to sewers to transit.

The 13-member executive voted in favour of a motion by Councillor Peter Milczyn to put off the matter until its Sept. 24 meeting. Mr. Milczyn said more time is needed to chart a course of action and consult with stakeholders.

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"We have a well-thought-out piece of work before us. However, the devil is in the details," he said. "Development charges will go up dramatically, as they should. … However, how we work out the transition provisions is very significant."

Some developers had already expressed their resistance to the hike, arguing the city's market was too precarious. Steve Deveaux, of the Building Industry and Land Development Association, told the committee an increase of such magnitude could have significant impacts on the ability to sell and produce units.

But several councillors said there will have to be a raise at some point. Councillor Denzil Minnan-Wong said the city's future depends on it. Councillor Adam Vaughan said the fees need to go up substantially, but moving forward without determining exactly how to do it would be foolish.

Deputy Mayor Doug Holyday said it's important to resolve the matter as quickly as possible.

"If we don't come up with proper development charges, then we're going to have to increase taxes. Because someone's going to have to pay," he said.

The proposed higher development charges would see fees on a Toronto townhouse jump to $30,648 from $15,695. Charges on a two-bedroom unit in Toronto's booming condo market would go up to $23,036 from $12,412 – a level that staff stressed would still put Toronto well behind the average for the Greater Toronto Area.

The report pointed out there are more high-rise towers under construction in Toronto than anywhere in North America. Policy makers in Ottawa have been concerned that too many are being built, and the Bank of Canada has cautioned that it remains one of the biggest risks to the economy. Federal Finance Minister Jim Flaherty cited the Toronto condo market as one of the key reasons he tightened mortgage insurance rules last July.

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The new mortgage rules, coupled with warnings from Ottawa and economists, have contributed to a steep drop in condo sales.

Mr. Holyday said it "doesn't really add up" for the city to have the lowest fees in the Greater Toronto Area when it's got all the development it can handle.

Councillor Michael Thompson cautioned the city shouldn't point the finger at the industry and should instead do whatever it can to work with it.

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