Municipalities in the Toronto region are holding more than $1-billion in reserves earmarked for new park developments but not yet spent, even as parkland fees collected from developers are still increasing, according to a new report.
A study by real-estate research firm Altus Group shows developers’ required contributions for new park development have climbed across 29 municipalities in the Greater Toronto Area since 2006, with the cumulative reserve balances up 260 per cent to $1.13-billion at the end of 2017 from $314-million at the end of 2006.
Because municipalities typically charge parkland fees to developers as a percentage of the land value, much of the increase in reserves has been due to the climbing land prices in the region.
The Building Industry and Land Development Association (BILD), which represents developers in the Greater Toronto Area and commissioned the Altus report, said the parkland payments are typically adding $20,000 to $30,000 to the purchase price of a new home.
BILD chief executive officer David Wilkes said home buyers are not getting the parks they are paying for through these accumulating fees, and argues municipalities should cut the collections if they are raising more money than they can reasonably spend.
“If we see $1.2-billion sitting in the bank not being invested, why is that money being collected?” he said in an interview. “If there is an opportunity to invest in parks, we’re all-in. But we don’t believe a $1.2-billion bank account is the right thing for municipalities across the GTA.”
The City of Toronto accounts for 60 per cent of the GTA’s accumulated parkland funding, with $674-million held in its parkland reserve fund at the end of 2017, up 458 per cent from $121-million at the end of 2006. On a per-capita basis, Toronto had the second-highest reserve fund behind the town of Richmond Hill.
Lawvin Hadisi, a spokesperson for Toronto Mayor John Tory, said Monday the city has to build livable neighbourhoods, and it is necessary to ensure “growth pays for growth,” which means the development sector contributes toward broader community amenities.
“Mayor Tory understands the building industry’s concerns about the provision of affordable housing, but he knows there is a tremendous need for the city to continue to grow its park space, particularly in neighbourhoods of Toronto that are parkland-deficient,” Ms. Hadisi said in an e-mail.
Developers are required to set aside up to 5 per cent of the land they develop for parks or public recreation purposes, but can typically make payments in lieu of the parkland development, especially in denser urban locations where smaller lots are developed.
Altus said that for low-rise housing projects, the volume of land under development that would be dedicated for parks was almost unchanged across the 29 municipalities between 2006 and 2018. But because of rising land values, the required cash payments in lieu of park development have climbed by a median level of 248 per cent over the period.
Using a hypothetical low-rise housing development with 200 homes on 11 hectares, the report said the GTA median cash-in-lieu payment for parkland would be $6-million in 2018, up from $1.7-million in 2006. The parkland fee cost $29,600 per home in 2018 in that example, the report said.
Of the 29 GTA municipalities studied, the parkland fee for the hypothetical development project rose the most in the town of Aurora, climbing by 329 per cent between 2006 and 2018, the report said, followed by a 326-per-cent increase in suburban Toronto.
The only municipality where the fees fell is Brampton, where the parkland charge for the hypothetical low-rise housing development was down 6 per cent in 2018 compared to 2006 because the city adopted a fixed rate for payments rather than using appraised land values.
Altus Group also said there is also a wide difference in approaches to charging the parkland fees among GTA municipalities. The report detailed a hypothetical example of a high-rise apartment development where the parkland reserve fees would cost $16,189 per unit for a building in downtown Toronto and $53,820 per unit for the same building in Markham.
For a low-rise development project with 200 units, Altus group said the parkland fees would cost $11,547 per unit in Brampton, and $47,064 per unit for the same development in the neighbouring city of Mississauga.
The Ontario government recently announced plans to set up a new community benefits authority, which would help standardize development fees charged for community benefits like daycares, libraries and parks.
Mr. Wilkes of BILD said the new authority should help developers know their projected costs for parkland clearly when they first apply for project approval.
“There is a direction to place a cap on these fees, so that would certainly bring cost certainty,” he said.