Long approval times, high municipal fees adding 'unnecessary costs' to new GTA housing: study

A new study has found that the time it takes to get a housing project approved and the amount of charges levied by municipal governments on developers have both increased in the Greater Toronto Area in the past two years, resulting in "unnecessary costs."

The Municipal Benchmarking Study, 2nd Edition, released on Tuesday, found that the cost of lengthy municipal approval times and additional municipal charges is being passed on to home buyers. The study says the times and charges have both increased since the same study was done in 2020. 

Market research firm Altus Group conducted the study for the Building Industry and Land Development Association (BILD), which calls itself the the voice of the GTA home building, land development and renovation industry. The study looked at 16 GTA municipalities.

"These delays in approvals and increasing municipal costs are really adding to the affordability challenges we have in the GTA," Dave Wilkes, president and CEO of BILD, told CBC Toronto. "The bottom line impact is people are leaving the GTA, looking for affordable housing."

The study found that municipal approval timelines range from 10 to 34 months depending on the GTA municipality, with most types of applications taking 20 to 24 months on average.

It also found that municipal fees and charges have increased on average by 30 to 36 per cent since 2020, with charges amounting to $53 per square foot for low-rise housing and to $99 per square foot for high-rise housing. Municipal charges for high density housing, meanwhile, are nearly two-times higher than that for low density housing.

The study estimates that each month of delay costs anywhere from $2.60 to $3.30 per square foot in additional construction costs.

"We need some streamlining. We need a new culture within municipal planning departments to look at how we're addressing approvals because there's one inescapable fact. We need more housing," Wilkes said.

Municipal fees include development charges, parkland dedication requirements, community benefits charges and inclusionary zoning, according to the study.

"Governments at the federal and provincial levels have taken steps to address the factors that affect housing supply and affordability," Wilkes said in a news release. "Municipalities need to do the same."

Affordable housing facing same issues: advocate

Housing advocate Mark Richardson, a volunteer for HousingNowTO.com, an advocacy group that tracks affordable housing developments in Toronto, said the problems affecting private developers also affect the public sector. 

"Delays are getting longer, costs are increasing on the construction side and on the delivery side, and all of those things put affordable housing projects in jeopardy in the city of Toronto," he said. 

In terms of municipal approval timelines, the study found:

• Average approval timelines have increased by 41 per cent since the 2020 study, and between 27 to 53 per cent depending on application type.
• The best average approval timelines were found in Milton, Whitby, Barrie, Oakville and Brampton, with each municipality averaging less than 16 months.
• The worse average approval timelines were found in Caledon, Toronto, Richmond Hill, and Vaughan, at 27 months or greater.
• Approval times are as long for smaller applications as they are for larger applications.
• Each month of delay is estimated to result in $2.60 to $3.30 per square foot in additional construction costs.
• Feedback from municipalities suggests that the barriers to improving approval timelines include staffing, turnaround times when applications are resubmitted, and the need to comply with provincial requirements. 

In terms of municipal fees and charges, the study found:

• Compared to the 2020 study, the average municipal charge on low-rise development has increased by 30 per cent, while high-rise charges have increased by 34 per cent. The 34 per cent increase for high-rise does not include the cost implications of inclusionary zoning policies that have been adopted in some municipalities.
•  In the 2020 study, six of the 16 municipalities had low-rise charges that exceeded $100,000, and two had charges that exceeded $125,000 per unit. In the current study, nine of the 16 municipalities now have charges that exceed $100,000 per unit, and seven exceed $125,000.
•  In the 2020 study, no municipality exceeded $100,000 per unit for high-rise units, but in the current study, four municipalities have charges that exceed $100,000.
• The charges for high-rise development, per square foot, are 90 per cent higher than for low-rise development.