City Sending Mixed Signals on Tackling Housing Shortage

If the city of Toronto was serious about tackling the housing shortage, why would it charge Toronto homeowners $300,000 to legalize three bachelor apartments in their house?

Patrick and Susan own a three-storey home in central Toronto. In 2001, they added three basement bachelor apartments without obtaining building permits before doing the work.

The units were rented from late 2001 until earlier this year for a modest $700 monthly each, including heat, electricity, water, internet and laundry.

A couple of years ago, they decided to enlarge the house with a rear addition and renovate the first floor.

They hired an engineering firm to prepare the necessary drawings for a building permit. They then applied to the Committee of Adjustment for a zoning variance from a single-family home. The application was approved.

But when they applied for a building permit, city staff noticed the three bachelor apartments on the drawings. As a result, they had to reapply as a four-unit building.

After a second application to the Committee of Adjustment was approved, the couple again applied for a building permit.

It was at this point that they were billed $72,450 in development charges, $1,793 in education development charges and a staggering $228,431.55 for a parks levy.

“This,” Patrick wrote me, “was insane.”

After hiring a planning expert, it became clear to Patrick and Susan that the fees were related to the legalization of the bachelor apartments. Due to the high cost of getting the units approved, the couple was left with no choice but to demolish them and have the tenants move out.

Eventually, a new permit was issued for the single-family dwelling and the work is now proceeding.

Patrick emailed me to say: “This situation is lose, lose, lose! We would have been willing to pay a reasonable fee to the city to legalize the three existing apartments, had that been possible … but $300,000 was insane. So the city lost out.

“I thought the city was interested in encouraging affordable housing in the city. It just lost three affordable units, (typically rented by students, or young people just starting their career) which were less than a block from the subway, close to U of T and George Brown College.”

Toronto development charges for a single family home are currently $60,739, but will increase to $71,432 on Nov. 1, and then to $80,227 on Nov. 1, 2020.

In addition, there is a parks levy of between five to 10 per cent of the city-appraised value of the property. This can increase to 15 to 20 per cent of the value for larger developments.

Allowing owners like Patrick and Susan to create basement apartments, or accessory units in their homes, would go a long way to alleviating the city’s crisis in affordable housing — and it can be done at no cost to the city. But charging owners $300,000 to legalize three units is just making matters worse.

The city seems to be telling homeowners to add units legally only if they can also afford to pay huge fees. Is this how you want to increase affordable housing in Toronto, Mayor Tory?

Image credit: drewhadley

Bob Aaron is Toronto real estate lawyer. His column appears on this blog, Move Smartly, and in The Toronto Star. You can follow Bob on Twitter @bobaaron2 and at his website 

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