Moms and Dads: Will your daughters and sons be able to buy a home without your help?
On June 11, 2014 Ottawa City Council approved a 31% increase in development charges levied on buyers of new single family homes. New homebuyers in Kanata, Orleans or Barrhaven (and all areas outside the Greenbelt) will pay $33,102 levy for their homes’ municipal infrastructure and services.
Ottawa’s homebuilders have maintained that the increase in development charges will have new homebuyers pay more than their share of the cost of public infrastructure and services. Homebuilders have also expressed their concerns about the impact of the development charge increase on housing affordability for young families and first-time buyers.
The City of Ottawa’s position on development charges has been that growth must pay for growth – that new homebuyers must pay the full cost of public infrastructure and services for their homes. While “growth must pay for growth” is a compelling sound bite, it’s not always the rule when it comes to city building in Ottawa.
Ninety-five percent of Ottawa’s road upgrade work is funded by development charges paid by new homebuyers. In recent years, the bulk of Ottawa’s road upgrade work has been on Bank, Preston, Bronson, King Edward and Rideau Streets. All of these streets are within the urban core. Yet, the bulk of funds for road upgrading come from development charges paid by new homebuyers living outside the Greenbelt.
New home buyers will contribute almost six times (6X) more than existing home owners towards the cost of Ottawa’s Confederation LRT line. On average, property taxpayers will pay $1,800 per single-detached home towards the cost of the LRT line. New homebuyers will pay $6,800 in development charges per single-detached unit, plus another $ 2,700 in mortgage interest. The new homebuyer will also pay $1,800 in property taxes towards the LRT line.
OC Transpo riders do not pay for the entire cost of building and sustaining Ottawa’s public transit system. In fact, all property taxpayers provide a $240 million annual subsidy to OC Transpo.
When it comes to new home buyers and development charges, they will now pay more than the cost of the public infrastructure and services for their homes.
It’s time for Ottawa to move beyond the “growth must pay for growth” approach to building homes and communities. Why? Because, we will find ourselves in a city where increasing numbers of young families miss out on the benefits of homeownership; where financial help from parents is a prerequisite for first-time homebuyers, and where more and more Ottawans are buying homes in communities outside of the city (depriving the City of Ottawa of revenues from development charges and property taxes).