This square foot cost $17,000! The image that’ll blow your mind

The common lament is that developers aren’t building the urban landscape we want. I don’t know if that is true, I suppose it depends on your definition of “the urban landscape we want” and how you envision the City’s growth.  What I do for certain, is that “Developers” are economic entities, which means their motive is a Profit Motive, not a City Building motive.  Therefore, if you have ever wondered why Developers don’t put any closet space into their units, or why Developers aren’t building 3 or 4 bedroom “family” units, you have to understand the impediments to making a profit influence the Developers’ decision making process.

 

A large piece of the redevelopment equation, of course, is Development Charges. The City of Brampton’s current development charges are as follows:

Current approach to development charges

As you can see, the development charges have expressly adopted a Square Footage approach to setting the fees. The implicit assumption is that square footage correlates to density and to unit dimensions (ie: 2 bedroom, 3 bedroom, etc.).  This has a few nasty side effects:

  1. Family sized dwellings are more expensive to develop, as bedrooms simply take up square footage. This increases the cost for families, without any necessary correlation to overall neighbourhood density.
  2. There is a $17,000 cost associated with 1 extra square foot. Eg: 749 sq ft is $17,000 less expensive to build that 750 sq ft. With any graduated marginal tax system, this has a wealth and substitution effect of driving units to be either 749 sq ft or less. Again, largely at the costs of families.
  3. There is a $34,700 cost for building 749 sq ft townhouses instead of 749 sq ft apartments. This will drive the construction of stacked townhouses, or apartment buildings, obviously. But again, this is a very circuitous way to encourage density, as the definition of apartments does not necessarily mean 14 story buildings. A developer only needs to build just enough units to qualify as an apartment to avoid this $34K increase in costs.
  4. There is an approximately $50K difference between 749 sq ft apartments and 749 sq ft single family detached homes. This may seem intuitively correct, but again, there isn’t actually a direct correlation to density. After all, 10 apartments of 749 sq ft each built on a 3 acre lot does not significantly higher population density than 10 detached homes on a 3 acre lot. It’s still going to be 10 units on 3 acres. But to a developer, there is a half a million dollar difference in the price tag.

Now, these problems (and this is not an exhaustive list) can be mitigated with other planning and zoning strategies. I am not trying to overstate the case. However, it is important to realize that we use, I argue, a square footage model as a proxy for density.

There is a second and third issue, which are ones of both history and of foresight, that simultaneously exist on our horizon. As the city runs out of developable land, builders will have to look at infill projects. Brampton already has a large inventory of small detached homes, built in the early 1900’s and before indoor plumbing, much of which was retrofitted by weekend warriors, do-it-yourself-ers and under the table unlicensed contractors (I have lived in such a house). These two issues operate to squeeze profits away from developers who nevertheless have to pay market price for the land underneath the infill properties, and pay development charges, and usually rezoning and plan amendment costs, in order to actually put the land to a higher, better, and more dense use.

The City can address these three issues with an approach to development charges that is based on density as a proxy for square footage, instead of the other way around. Simply put, an approach to development charges that gives credit for replacing one house/unit with 100 houses/units, regardless of size, will provide a significant economic incentive to buy up the war-time housing stock and replace it with new, modern, and more population dense residential developments, or even mixed use developments. The City would be committing to commuting and investing future taxes (now unlocked) and economies of scale in providing services into the redevelopment process (I.e.: since this is good for the city in the long run, the City will charge less now to make it happen).

new approach.png

These figures are examples, for illustration purposes only, and a final schedule of rates would require study and consultation, of course. 

Such an approach will remove the arbitrary constraints on unit size, and allow builders to incorporate 3 and 4 bedroom units, family sized units, back into their developments. It will allow flexibility to create high density suburban spaces that are not simply “Toronto lite” developments, and will create an environment for developers to generate a profit while letting the City engage in City Building.

 

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