Ottawa hikes fees housing experts hate, despite warning from feds

The federal housing minister warned the City of Ottawa not to do it, but councillors have hiked development charges by 11 per cent, with more increases yet to come.

Anyone building a new single or semi-detached home within the Greenbelt will soon need to shell out an extra $4,700 to help pay for creating or upgrading municipal infrastructure. Anyone building further from the city centre will see an even higher increase.

"A new community will want to have its parks, its libraries, its fire halls and so on, including roads and transit and cycling facilities," said Vivi Chi, Ottawa's interim general manager of planning, development and building services.

"That's what these funds are for. It's to support growth and it is ... a small component of the overall cost of a house."

If the city had frozen these fees, it would have had the opportunity to apply for a piece of the federal government's new $6-billion infrastructure fund.

For Mayor Mark Sutcliffe, it was not worth the gamble — especially given Ottawa's development charge bylaw hadn't been updated in five years and was about to expire.

"We have to calculate — are we better off freezing development charges and losing out on all the revenue that we would need from that to build better communities?" he told reporters after Wednesday's council meeting.

"And clearly, by a significant amount, we are better off increasing development charges to pay for the infrastructure in new communities than we are accessing the infrastructure funds."

Sutcliffe was referencing the calculations done by city planners of how much Ottawa would be out of pocket if it froze rates for three years: roughly $130 million.

Prime Minister Justin Trudeau, right, speaks with Ottawa Mayor Mark Sutcliffe at city hall. Sutcliffe is hopeful Trudeau's government will come through with infrastructure funding, even though Ottawa no longer meet eligibility requirements. (Adrian Wyld/The Canadian Press)

Sutcliffe holds out hope

Many, including housing experts, have argued the increases will further aggravate a supply crisis.

Federal Housing Minister Sean Fraser and Conservative critic Scott Aitchison both agree, with each stating at a House of Commons committee last week that raising development charges will also aggravate the affordability crisis.

Sutcliffe told reporters he remains hopeful that some sort of federal funding deal can be reached, noting his recent talks with Prime Minister Justin Trudeau as evidence of the government's willingness to work with Ottawa on its most pressing issues.

Fraser's office, however, has told CBC News the freeze is something municipalities "must commit to" in order to qualify.

Housing Minister Sean Fraser has said he believes that these charges make housing less affordable. (Darryl Dyck/The Canadian Press)

City staff have confirmed that this is not the last hike that developers can expect. The fees are indexed to inflation and go up by more than seven per cent every October, meaning the next increase will come within months.

There are also plans in the works to re-evaluate the fees as soon as a new infrastructure master plan — delayed by the province's reversal on changes to the urban boundary — makes a further hike likely to come by the end of the year.

The fees will then undergo a comprehensive review in 2025 to incorporate an updated transit master plan.