Toronto should reform its development charge system to reflect the true costs of both sprawl and increased density on surrounding infrastructure including transit, green space, and amenities.
Pros: True costs of development are passed on to developers and tenants rather than the city, greater focus on real impact on surrounding neighbourhoods, could provide additional revenue for transit services and public space.
Cons: Will increase prices of new houses, further encourage suburban sprawl by making suburban development cheaper, seen as the sole responsibility of the city to service its residents.
Increased development on major transit lines benefits the city as a whole, but places great stressors on existing neighbourhood infrastructure. Development charges, the city’s financial tool to cover the costs of serving new residential and commercial developments, are evenly applied across the city. Levied on a per-unit basis, revenues from the charge are allocated towards the upgrades of power, water, and gas infrastructure required to serve new residential and commercial units. The charges, however, are often much lower than the true costs of increased density. As a result developers are able to add greater density, and realize higher profits, while paying only a fraction of the costs their developments have on the very transit infrastructure that makes their projects so appealing to buyers. The system should be changed to ensure that developers pay directly for pressure added to surrounding infrastructure, specifically on the TTC, by those who buy their units.
Outside of the downtown core, suburban development requires the construction of new infrastructure elements – particularly power, water, and gas lines - while also adding vehicles to already congested arterial roads and transit routes. The real economic, environmental, and social costs of suburban development are much higher in suburban contexts when compared to downtown intensification. The challenge for policy makers is balancing their revenue tools to encourage densification, while accounting for increased streets on downtown infrastructure and transit, without inadvertently driving developers and residents to the suburbs due to affordability issues. Simultaneously, policy makers must ensure that
While the cost of changes to the development charge system will likely be passed on directly from developers to homebuyers, it is essential that the impacts of increased density would not fall upon municipalities alone. Developers should be encouraged to provide funds for upgrades to nearby transit stations. Beyond Section 37 community benefits, a reformed development charge system can be used to ensure that increased density is accompanied by necessary infrastructure improvements.
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