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The Problem with Development Fees



May 08, 2008 – Comments (5)

Two of my recent posts, Municipal Bankrupcy Vote and Soaring Development Fees, are essentially about the same thing.

Without going back and pulling actual figures, I know that in my area (and certainly my reading of news from other areas indicates the same problem) the percent of municipal budgets coming from development fees has been increasing.  New developments are paying the whole shot to bring a neighbourhood up to a certain standard on those developments at the same time taxes are paying for similar upgrades to other areas.  The new developments are essentially being double taxed because these fees are so excessive.

The fees are tacked on the cost of a home.  So, in Vancouver developers have claimed up to $60k of a home is development fees.  Does this hurt the established home owner?  Hardly, the entire stock of homes goes up a proportional amount.  New and existing homes are not priced differently based on the older homes didn't have the excessive development fees and costs to build, but rather relative pricing as to what you get.  So, new homes get more expensive, but so do existing homes.  The established home owner re-coop that increase through the sale of their home.

The first time buyer see the cost of housing up the full cost of development fees.  $60k over 30 years a 6% is $129,600.  It is an extra $360/month.  This is the burden transfer essentially to younger people.  It would probably only cost existing home owners an extra $25-50/month to pay their fair share and not transfer this burden to youth.

But hey, youth are going to be able to pay that, their enormous student loans, the increased tax burden due to an aging population, that extra $25-50/month in property taxes that's going to come now anyways, and while we are at it, we can give them a lecture on their social responsibility while they feed their kids Kraft dinner.

5 Comments – Post Your Own

#1) On May 08, 2008 at 9:45 AM, dwot (28.88) wrote:

Lol, crocs in a loss...

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#2) On May 08, 2008 at 9:48 AM, dwot (28.88) wrote:

Anything that start with "Chairman of the Council of Economic Advisers under Reagan" tells me to not trust the person's judgment.  That would be Martin Feldstein.  I haven't read it yet, but the level of debt built up under Regan puts Regan on my idiot list and makes me cautious of what his advisor's have to say.

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#3) On May 08, 2008 at 1:49 PM, leohaas (30.09) wrote:

It was Ronald Wilson Reagan (you know, 666), not Donald Regan under whom our debt exploded (although Regan was one of the architects of Reagan's build-up of debt).

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#4) On May 08, 2008 at 5:09 PM, FleaBagger (27.55) wrote:

If only Reagan had not halted the Nixon-Carter Golden Age...

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#5) On May 08, 2008 at 7:28 PM, dwot (28.88) wrote:

leohaas, too many Reagans there...

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