The use of special development charges and fees in Toronto’s commercial real estate market has exploded over the past decade, with the dramatic increase in commercial use raising concerns of a potentially negative impact on existing buildings that have been converted into condos.
Although these fees and charges are designed to encourage development of mixed-use commercial properties that are generally non-residential, Toronto’s development cost assessments, the collection of development cost charges, are far beyond the development level. For example, the Toronto Real Estate Board cites $2.6 billion in development cost charges as being waiting to be collected in reserve for use in future commercial development.
Unlike other major Canadian cities, Toronto has no obligation to use a portion of its development cost assessment to facilitate the rest of the city’s tax base. This leaves many investors and developers, as well as a host of commercial real estate owners who may be feeling the effects of the deep recession in commercial real estate, frustrated with a system that continues to throw away value they’ve paid for in advance.
It’s not the best use of the City’s resources to give that money to a corporation that can usually spend it.