A developer has given a warning to the City of Cambridge that it may pull the plug on as much as $800 million in housing developments, all as councillors discussed and rejected a provincial program aimed at lowering construction costs for new homes.
It comes after a recent city council meeting, where members talked over the Ontario government’s Development Charge Reduction Program, which would require the city to reduce development charges on any newly built homes.
City staff said that the program would reduce the cost of new homes by approximately 2.5 per cent.
“I sincerely hope the city will consider the long term benefit of the program and the potential to encourage continued investment in Cambridge,” said Borz Farborzi, speaking on behalf of 217 Hespeler Inc.
“Tentatively, we’ve planned over $800 million in the next 5 to 10 years. If there’s no incentive, we may reconsider.”
He said it comes after the company has already invested as much as $250 million throughout the first phase of a development that’s already underway at 201 and 217 Hespeler Road, which aims to bring around 322 residential units to the city in a mixed-use development.
Farborzi pointed to the economic impacts of the incentive as well, saying that it would lead to further jobs and property tax revenue that would come from it and other projects in the future.
Councillors, meanwhile, were a bit hesitant about the program as a whole, with Councillor Adam Cooper wanting to know if the program would lead to any direct savings for residents and home buyers in the city, or if it would just create an opportunity for those developers to pocket the savings and not actually adjust any prices.
“Can they just pocket it? Is there anything in play to confirm how this is used?” asked Cooper.
“No, there is no mechanism to ensure that a 2 or 3 per cent savings is passed on to the purchaser,” stated the city’s General Manager of Planning and Growth, Hardy Bromberg, in response.
“So they can just pocket it, potentially?” Cooper asked again.
“There is no mechanism,” Bromberg said.
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Bromberg also said during the meeting that the initiative would also create approximately a $7 million funding shortfall in the wake of those reduced building costs for developers through the program, saying it would then be downloaded to taxpayers for several years.
Looking over the program itself, city staff said that it would be more worthwhile for those residents and homebuyers if the city were to, instead, push for further federal and provincial HST relief measures, also looking further into the city’s own development charge structure in the near future.
Some councillors asked if there was a potential to discuss the program further with the province, including any changes that could be made regarding the cost reductions and further wording on incentive mechanics.
Bromberg stated, though, that the province had made its stance firm, saying, “Their message and information is very clear: This is the response, this is the answer; Would you like to participate? Yes or no. There is no room for negotiations.”
Councillors ultimately elected to reject the program in a 7-2 vote.
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