Residential building permits stall in London as developers await $8.8 billion discount to development charges

CTV’s Daryl Newcombe explains why a multi-billion-dollar announcement meant to spur housing development has had the opposite effect in London.

A multi-billion-dollar agreement between the federal and provincial governments intended to spur new housing starts is initially having the opposite effect in London.

The city’s planning and environment committee heard Monday that developers are delaying building permits so they do not miss out on expected discounts to development charges.

On March 30, the federal and provincial governments announced a combined $8.8 billion plan to lower municipal development charges over the next decade. Initial funding is expected to cut those fees in half for the next three years.

“Since the federal and provincial announcement on March 30 related to the potential lowering of development charges, there is a hesitancy for applicants to actually want to have their permit issued,” said Scott Mathers, deputy city manager of planning and economic development.

Development charges are fees municipalities levy to cover the cost of growth-related infrastructure, including roads and sewers.

Within London’s urban growth boundary, development charges on new construction range from $34,195 for row housing to $50,564 for single detached homes.

The charges must be paid when the first building permit is issued.

“There’s just a fear that they might lose out on that reduction of the development charges,” Mathers said. “So we’re very hopeful that there will be a future announcement from the province and the federal government.”

Coun. Steve Lehman, chair of the planning and environment committee, warned the delay could affect funding targets.

“We have some targets that we have to hit in September to receive another $20 million from the federal Housing Accelerator Fund,” he said.

Mathers said he has raised the issue repeatedly with the Canada Mortgage and Housing Corporation.

“I have flagged this personally several times to CMHC because this is the most critical time for us to get those permits across the finish line,” he said.

In the meantime, the city is working with developers to advance permit applications so they can be finalized once development charge reductions take effect.

“The federal government and the province have done the right thing in addressing development charges, but they’ve got to follow through and come through with the details so we can get shovels in the ground,” Mathers said.

CTV News has asked Ontario’s Ministry of Municipal Affairs and Housing for a timeline on when the development charge discounts will begin.