Development charges in Sudbury are going up by 17.2 per cent effective July 1, which will add another $3,252 onto the construction of a new single-family dwelling in the city.
Despite a push by Coun. Bill Leduc to limit this year’s increase to 4.4 per cent, this would align it with the 12-month change in the Consumer Price Index change to September 2021.
The 17.2 per cent increase is “too much for our developers, because obviously, these development charges get passed on to the homebuyer, and right now the price of homes has skyrocketed,” Leduc said. “I don’t want to see our new home construction slow down whatsoever.”
In support of Leduc’s motion, Coun. Robert Kirwan noted that the taxes paid during the first year of new houses opening to residents would offset the reduced increase being proposed.
With only Kirwan and Coun. Joscelyn Landry-Altmann throwing support behind Leduc’s motion it was defeated and the automatic 17.2 per cent increase remains in play.
The increase will bring the per-unit cost for a new single-family dwelling build to $22,162. Semi-detached dwellings will soon cost $17,806 per unit, multiple-unit builds will be $12,791 per unit, industrial charges are being brought to $3.70 per square foot and commercial/institutional builds will increase to $5.56 per square foot. These numbers apply to fully serviced properties, with those lacking water and/or wastewater receiving lower rates.
The increase comes into play at this time of year through a related bylaw, which automatically increases development charges in concert with the non-residential building construction price index change for Ottawa, which was 17.2 per cent last year. Ottawa is chosen because there are no statistics released for Sudbury, according to a municipal report.
Through building services director and chief building official Guido Mazza, Coun. Deb McIntosh sussed out that the average cost of a new residential building is between $500,000 and $600,000, meaning the increased development cost constitutes an approximately 0.53 per cent increase to the total construction cost.
“What we need is affordable housing,” McIntosh said. “People want to purchase a $600,000 home, but I don’t think that the taxpayer should necessarily be subsidizing the building of $600,000 homes.”
Approved affordable housing projects that comply with city requirements are exempt from development charges.
The city’s development charges follow a “growth pays for growth” direction, city financial planning and budgeting manager Steve Facey explained, noting that they go toward growth-related capital expenditures.
Without development costs, he added, “the cost for additional infrastructure would be at the expense of existing property taxpayers rather than developers.”
To the beginning of March, the city had issued 25 permits for new residential construction totalling a value of $7.68 million. Mazza that cited as a five-fold increase over the five building permits with a total construction value of $1.15 million issued by the same time last year.
Since things don’t appear to be slowing down, Coun. Mark Signoretti argued that it’s premature to bring forward a motion to lessen the sting of development charges at this time.
The non-residential building construction price index change used to determine this year’s development charge increase was mainly fuelled by a rise in the prices for metal fabrication products and concrete elements, according to Statistics Canada’s report.
“Contractors mainly attributed the higher costs to rising labour costs resulting from skilled labour shortages and rises in the price of steel products, which was impacted by supply constraints.”
Residential construction costs among 11 major cities Statistics Canada factor into their report increased by 21.7 per cent last year, and non-residential construction costs increased by 11.2 per cent. The greatest non-residential construction increase was Ottawa’s 17.2 per cent, followed by a 15.3 per cent increase recorded in Toronto. The residential construction price increase for Ottawa was 24.4 per cent last year, while Toronto’s was 25.6 per cent.
Tyler Clarke covers city hall and political affairs for Sudbury.com.