Skyrocketing development fees for building in municipalities across the Greater Toronto Area have been a hot topic as of late, given how much they are impeding new construction and adding to already-high home prices.
But, while most builders are getting hit with charges that are up to 993 per cent more than they were 14 years ago, one firm just got a nearly $14 million break on theirs.
The Region of Waterloo seems to have accidentally (and vastly) miscalculated the amount it was supposed to charge the developer behind a sprawling new Amazon facility in Cambridge.
Though the region has acknowledged its glaring $13.7 million dollar mistake and requested that the company, 140 Old Mill Road Limited Partnership, pay back the funds owed, the Ontario Land Tribunal has ruled otherwise.
The original assessment for the development charges due for the e-commerce giant’s warehouse was $9 million, which was paid to the region in 2022. Soon after, permits were issued and the project commenced.
But, weeks into work on the new structure’s foundation, plumbing and frame, the limited partnership was handed a bill for an additional $13.7 million in development levies, for a total of $22,802,521.
The region claimed that being a fullfilment centre, the build did not actually meet the criteria to be defined as “industrial,” and thus was not eligible for the lower industrial development rate that it was initially charged.
The company decided to take the case to adjudicators, arguing that changing the total would pose a threat to the legitimacy of region’s entire development charge system.
“The Appellants raise the concern that there would be no permanence to the development charge regime and that it would not be in the public interest to have a region add an additional development charge, or reassessment to a development where a development charge was already paid and where a building permit was already issued,” the appeal reads.
The region asserted that “the original assessment in July of 2022 erroneously applied a 60 per cent discount from the non-residential rate under the development charge bylaw based on the appellants’ identification of the use of the lands as being an Industrial Building… the error consisted of the application of a discounted rate where such rate was not applicable given the use of the subject property as proposed by the development.”
The Manager of Infrastructure Financing for the Region of Waterloo also claimed that 140 Old Mill Road Limited Partnership knew that the way the property was set to be used was not in line with an industrial building under the relevant bylaws.
Even so, the tribunal ultimately ruled in favour of the developer, writing that confirming the receipt of development charges and issuing building permits were enough for the company to “conclude that there were no further development charges outstanding.”
It agreed with the partnership that tacking on more levies after the fact would unfairly imply that the region could come back and reassess development charges at any time, which goes against the “element of finality” that dealing out such charges should have.
Development fees exist to cover the future stresses on city services (like libraries, first responders and community centres) and infrastructure (like roads, watermains and sewers) that a new building, complex or entire neighbourhood will bring.
Their sharp increase over the years has been criticized by homebuilders as an immense obstacle to reaching new housing targets and bringing down home prices, and some places, like Vaughan, have actually slashed their rates as a result.
