“The taxpayer is already put to the limit. So we've come to the decision and realization that growth needs to start paying for growth, and that's the only way we can move forward.”
“Growth should pay for Growth!” But not really. It doesn't have to be “Growth,” or even “Growth” for that matter.
What’s become the rallying call of many municipal politicians in Canada is a slogan that’s admittedly catchy, but unfortunately, just plain wrong.
The first “Growth” is supposed to be the new residents. The flood of people moving to your city and taking over your roads, community centers, and most importantly, your sewage pipes. These are the new residents that need to pay their fair share. To make sure that happens, cities have utilized Development Cost Charges1 so that developers have to pay upfront for each new house they build in a city.
Those funds are then used to develop the second “Growth.” The infrastructure to support all these new residents. It gets a little more complicated by Province and city, but that’s the gist. Sounds pretty reasonable, right?
The devil’s in the details.
Imagine a young man named Mark, who’s approaching 30 but still lives at home with his parents in Burnaby, British Columbia.
Mark is dying to move out. He likes his parents but he’s tired of living at home with them. Unfortunately, rent is way too expensive. He doesn’t want to move out just to waste all his savings getting by. He decides to bite the bullet and stay with them until he can afford to buy a place.
Time passes by and the housing prices just keep climbing. Mark is going nuts but he has even fewer options than before. As of September 2024, the median rent for a 1-bedroom apartment in Burnaby was up to $2500/month2. Mark realizes he has no hope of affording a home anytime soon, so he decides to start figuring out why.
Mark finds a list of 186 different “Growth” projects that the “New Residents” will be paying for in Burnaby. Despite totalling $1.6B in planned expenses, Mark finds that a significant number of the projects fail to meet the guidelines set out by the provincial government. One particular project really sticks out to him. The Bonsor Community Center redevelopment.
Mark has lived with his family in Burnaby all his life, so he’s been going to Bonsor for almost thirty years. Now, simply because he wants to poop in the silence and calm of his own home, away from the noise of his parents fighting in the background, he’ll be paying over $50,000 in taxes once he buys a new place.
Mark has dinner with his parents and vents to them about how unfair the new taxes are, but all his parents say back is that he “should have moved out sooner” and that he “wasted too much of his savings on lattes.” So Mark decides to do some more research.
He finds a council report from 2020, where the city listed the Bonsor redevelopment as a priority project that would benefit "all Burnaby citizens.” Mark is pissed. With the new taxes in place, the city was now offloading half of the project’s $350M cost onto "new residents.” He can’t believe it. He’s lived here all his life. What exactly would be new about his use of Bonsor, if the only difference is that he wants to walk there from a new home, instead of his parents’ place?
Mark’s story is made-up, but the reality is that cities in Canada are failing their residents, be they “taxpayers” or not. This is all done out of a misguided pursuit of fairness. Motivated by the idea that there is a surge of some mythical "new residents" out there that haven't already been paying their fair share. The irony here is that Burnaby has had a similar tax against new housing since 2006.
Over just the last three fiscal years, Burnaby has collected over $653M in revenue from this program3. In 2021, the city actually received $22M more from this program than they did from property taxes. Considering how significant the financial windfalls have been from this program historically, it’s troubling to hear the Mayor say that he now wants growth to start paying for itself.
“The taxpayer is already put to the limit. So we've come to the decision and realization that growth needs to start paying for growth, and that's the only way we can move forward…
People who have been paying taxes in this region for a long time — 50, 60, 70 years … would have a hard time accepting that they're going to pay for future growth. They have paid their share and they continue to pay their share” — Burnaby Mayor Mike Hurley
Mayor Hurley likes to talk tough on the sanctity of longtime taxpayers, but the reality is that the city’s new taxes don’t have any exemptions for them either. If a widowed Senior wants to downsize after paying property taxes in Burnaby for 50 years, they would pay up to $70k in taxes on a new townhouse.
If cities were honest about who these taxes on new housing actually target, they’d be incredibly unpopular. The reality is that they directly affect everyone who purchases new housing in a city, regardless of how long someone’s lived or paid taxes there for.
Local governments need to focus on more effective ways to raise money that avoid limiting the supply of housing, especially during a crisis. At the bare minimum, the city of Burnaby could start to lead the charge on this by:
Explaining why existing residents, even those who have lived and paid taxes in Burnaby all their life, must still pay between $50,000 and $100,000 upfront for “growth” when they buy a new home.
Explaining why, as the provincial government requires4, they're asking new homebuyers to pay $1.6B (i.e. - roughly 5 years of Burnaby property tax revenue) for infrastructure and amenities that disproportionately benefit current residents.
https://storeys.com/toronto-development-charges-approach-change/
Sourced from Zumper
The Community Benefit Bonus fund
https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/local-governments/finance/dcc_best_practice_guide_2005.pdf?utm_source=burnaby%20now&utm_campaign=burnaby%20now%3A%20outbound&utm_medium=referral
i bought my first home in 1993 when mortgage rates were 13.5% and a certified land and home appraiser valued my home at 99,000. Tough days. Today, interest rates are low single digit but the same home is valued at 635,000. The reason for the value added is the result of realtors replacing certified appraisers. Realtors set pricing and embed profitability for themselves, each and every time. My last home I sold, I requested an appraisal. The acreage was bought for $145,000 and appraised 20 years later at $370,000. The realtor set the price at 520,000. I sold it for the appraised price to a first time couple.
Controls must be placed on realtor's right to place market value on homes. They aren't appraisers. i fear that their inflated pricing is a large part of the problem. Who allowed them to set pricing of homes? How can this be remedied?