One might reasonably wonder how a city experiencing such a construction boom can be so chronically underfunded. The city collects development charges from new construction to pay for a portion of things like roads, sewer connections and other infrastructure. With all these new condos going up, shouldn’t our city coffers be overflowing with new cash? Not so much. A city report recommends increasing these rates by about 90%. This sounds like a dramatic hike, but even with the hike, Toronto’s rates would still be well below other areas of the GTA. It’s incredible that Toronto’s rates have been so low for so long, as all the construction indicates we have a desirable city in which to build; foregoing development charges makes no sense for a city that desperately needs money. This is non-partisan: our mayor keeps talking about private sector funding and his opponents are desperate for this funding too.

But in Wednesday morning’s Executive Committee meeting, developers lined up to explain how asking them to pay more was unfair. Their claim was so nakedly dishonest, so beyond what they or any reasonable person can believe, that it ammounted to trying to run out the clock and hold onto their profits for as long as possible. It’s much like a person fighting a speeding ticket they know they deserved–they have nothing to lose by going to court, as maybe the cop won’t show, but sitting there in court before a judge requires they speak even though they are barred from saying anything true. 

I don’t want to say that the developer deputants were a decidedly rich and self-interested group, but the first to speak was named Mr. Burns. He denied it’s possible to say whether developers’ margins are higher in the 416 or 905, saying there’s “no universal answer.” He claimed that increasing the developer’s cost would affect current projects, and the industry would suffer a devastating chain reaction of unintended consequences. (Not true, current projects will be exempted, or grandfathered in.) The speech aimed at showing how bleeding heart liberals would avoid charging developers more if only they knew what devestating effects it would have. Yet he was vague. The jargon overlapped with that of social justice advocates; at its core was an appeal to “fairness.” The funding formula must be fair, asking whether Toronto condo developers benefit from our high demand for their product is an unfair question. It was, of course, a farce.

It was said before, not in this meeting, that increased development charges will be passed on to whomever eventually rents or buys the unit. But this isn’t so simple, as the buildings with the higher development charges compete against the lower ones to sell units, so the market will decide. Not increasing the rates makes sense if you think developers will stop building here, and this is unthinkable. Toronto real estate is too desirable. Not increasing these fees amounts to rejecting money. As if we have enough money and our wallets are full. This doesn’t happen in cities, only in Zelda, when a purse maxes out at 400 rupees.

One of the few opposition deputants called it inappropriate for taxpayers to pay for developers, which in effect is what happens when developers delay or reduce their development charges (as a city shortfall requires borrowing, which taxpayers are left to pay the interest on). She said the extended phase for deferral developers are seeking now is unnecessary because for years they’ve operated in a climate geared towards the 2008 financial crisis, and it’s impossible to believe they couldn’t foresee their expenses increasing at a rate commensurate with every other industry. It takes no imagination to ascertain why developers want to be charged as little as possible for as long as possible.

Even though council agreed on the thrust of the issue, like usual they were divided. Councillors Shiner and Deputy Mayor Holyday insisted that developers should have to pay more, yet the motion to defer until September passed almost unanimously. Councillors Carroll, Vaughan, and Perks visited the meeting to voice dissent to the motion to delay, but they aren’t members of Ford’s executive committee and didn’t have a vote.

So why did they disagree if they mostly agree? I wager that the executive committee passed the deferral motion so that councillors can claim they engaged in dialogue with the developers and stakeholders, hopefully avoiding developers’ delaying further by going through a process at the Ontario Municipal Board. Councillor Perks told me that he expects developers will delay anyway, so he was for increasing their charges immediately. Anyway, the development charges will go up, and if all that council disagrees on is the tactics and the timing, it’s a distinction without a huge difference. There have been bigger divides before.

If the city doesn’t increase development charges it’ll have to raise taxes. Someone is bound to find paying more “unfair,” to use the developers’ parlance. But it seems to me very stupid to charge developers so little when they are clearly so desperate to start new projects here. Everyone knows that in economics, the price goes up when demand goes up. That development charges were ever so low made sense in the context of the 2008 global recession, but what rates haven’t gone up since then? Developers in a town building more than in any city in North America are the last people who need a price break, or a subsidy. So of course we need more money and it should come from them. But expect developers to stall as long as possible. Then, we can fight over what to spend it on.

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Jeff Halperin is a Toronto-based writer. You can follow him on Twitter @JDhalperin.

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