Windsor looking at ‘staggering’ fee hikes for home builds, new development

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A consultant’s report heading soon to city council suggests Windsor development charges could increase by more than 150 per cent — sparking strong backlash from the development community.

Local builders warn the proposed fee hikes would stifle home building in the city and take home ownership — increasingly unaffordable for many — even further out of reach.

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If council approves the proposals, development charges for single-family homes would increase to $76,543 each (up 151 per cent), and to $117,086 for Sandwich South lands (up 145 per cent).

“The increases are staggering,” Windsor-Essex Home Builders Association president Brent Klundert said of the numbers in a consultant’s report.

“At a time when everyone is talking about improving housing affordability, these development charges would add ($46,000) to the cost of every single-family home in the city,” Klundert told the Star.

The Hemson Consulting report, which was presented to the Development Charges Task Force on Nov. 18, also calls for substantial development charge increases for multi-residential, semi/row and townhouses, industrial and commercial retail and office projects.

“People are obviously concerned because they see what the city’s proposed maximum rates are,” said Windsor Construction Association president Jim Lyons.

“I don’t know if they fully understand that we (builders/developers) don’t pay for this, we pass it along. It’s the customer who pays.

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“If they think adding $76,000 for single-family home is going to inspire people to buy a single-family home, they’re mistaken. In Sandwich South, $117,000 — that’s ridiculous.”

It’s going in the wrong direction

Lyons said developers and contractors understand the delicate balancing act municipalities face in funding growth and expected increases, but it’s the scale of those increases that are concerning.

He added the infrastructure deficits being faced by municipalities are a consequence of focusing on zero or low property tax increases for extended periods while not keeping up with the maintenance and expansion of that infrastructure.

“It’s going in the wrong direction (on housing affordability),” Lyons said.

Windsor Mayor Drew Dilkens told the Star that Sandwich South will need higher development charges to pay for the extension of roads and sewers to the currently undeveloped area.

However, he said he doesn’t want city-wide development charges to increase by the amount presented to the task force.

“It really is a balancing act. It is an art, not a science — I think the notion of growth paying for growth is a very important one,” Dilkens said. “We don’t want existing taxpayers to have to fund infrastructure to help support new taxpayers coming online.

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“We need to have a laser focus on the work that’s being done by the consultant and by the (development task force) committee to make sure we’re not adding any additional costs that (don’t) need to be recaptured in a five-year window.”

Development fees pay the costs associated with new growth, whether building new, or maintaining existing, infrastructure. They also help cover the costs for increased demand for services such as police, fire, emergency services, transit and libraries.

Single-family homes aside, the other development charge hikes proposed per city lot could see semis/row/townhouses increase from $43,734 (up 155 per cent) while multi-residential/apartments would increase from $38,120 (up 170 per cent).

In Sandwich South, semis/row houses/townhouses would rise to $66,897 (up 149 per cent) and apartments would increase to $58,312 (up 163 per cent).

In 2023, Windsor collected $4.9 million in development charges, while through the first 11 months of 2024 that total increased to $8.3 million.

Developers pay for the installation of all new infrastructure within their projects, such as roads, sewers, sidewalks, stormwater control, parks, landscaping and sidewalks.

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Windsor has traditionally updated its development charges every five years, with the last update made in 2021. The need for updating the fees now, city officials explain, is due to growth not seen in decades, requiring significant new infrastructure to support that expansion.

There are legislated exemptions in the DCA, administration points out, with the city required to fund some costs through the general tax levy and utility user fees.

If development charges rates are not implemented at their fully calculated rate, the amount not collected from developers will have to be funded through increases in the tax levy and utility user fees.

But concern over the size of the proposed increases led to a December 12 meeting of area developers, builders and construction associations to discuss the issues and form a committee to create a unified voice to approach the city’s Development Charges Task Force.

“It’s a runaway freight train,” said Klundert. “If they’re contemplating this, we need a serious conversation about what this is going to do to the market.”

Even before the proposed new hikes, he said development charges, permits and other fees already represent at least a third of the cost of a new Windsor home.

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In 2000, development charges for a single-family home in Windsor were $1,500. Those charges have risen at a significantly faster pace than inflation and average home prices.

“We already have a stagnant market because people deem new homes unaffordable,” said Klundert.

Inflation has been 68 per cent, according to Statistics Canada’s consumer price index, while the price of the average home in Windsor has more than quadrupled from $137,508 in 2000 to $577,867 in 2024.

“When builders talk about hidden taxes this is what we’re talking about,” said D’Amore Construction president Scott D’Amore.

“At budget time, it (development charges) is an opportunity to increase revenues for municipalities. It’s easier than raising property taxes because we can all see those on our bills.

“This is a pass-through cost, or tax. It’ll be paid entirely by customers, not developers, in the price of the home.”

The Development Charges Task Force begins public consultations in February. City council is expected to vote on new charges in March.

The task force includes city councillors Kieran McKenzie, Angelo Marignani, Ed Sleiman, Gary Kaschak and Jim Morrison. The private sector is represented by John Millar (Lester Construction), Evangelo Kalmanti (Integral Architecture), Tony Rosati (Rosati Group) and Ontario Architects Association president Settimo Vilardi (Archon Architects).

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All three industry representatives interviewed by the Star warned any substantial hikes in development charges would play a factor in developers’ future plans on where to build, with surrounding county municipalities having much lower fees.

The Hemson Consulting study reported the 2024 development charges for a single-family home lot in the county range from Leamington’s $12,105 to Lakeshore’s $34,581. Amherstburg recently announced it was increasing its development charges by $12,000 per lot, but that still leaves the municipality below $35,000 per residential lot.

In comparison to a more urban peer, London’s development charges for 2025 range from a high of $48,526 for single-family/semi-detached lots to a low of $21,463 per dwelling for an apartment unit with fewer than two bedrooms.

“Ultimately, the market is dictated by where residents want to locate,” said D’Amore, noting a buyer would save a minimum of $42,000 in choosing to build in the county.

“When costs have become more of a motivating factor, it leads to people looking at that (locating outside the city). At some point, people say a 15- to 20-minute commute is worth it for the lower cost of land and property taxes.”

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D’Amore said his company has found ways to lower home prices by working with its home building partners, but he expresses frustration that big hikes in development charges would undermine those efforts.

“We worked to shave tens of thousands, up to $100,000, off a lot depending on its size,” D’Amore said. “Our building partners trimmed their margins, so all the savings comes off the price.

“Now, we have the city come in with a sizeable increase ($46,000) on a home and thousands in higher parkland charges.”

Lyons isn’t just concerned about housing development charges. He said big fees for industry will hamper Windsor’s ability to recruit new investment, particularly with the threat of tariffs and a potential trade war looming with the U.S.

“Industry is a big concern for us,” said Lyons, noting industry and retailers already face hefty storm water surcharge increases under the city’s new plan that takes effect January 1.

“They haven’t been charging before for industry and they’ve landed all these investments. That should continue.

“Industry is creating jobs, more growth, housing and commercial activity. It’s generating more tax revenue.”

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The study list exemptions for industry and green investments as options.

However, it also contains suggestions for industrial development charges of $170.09 per square metre in Windsor and $306.65 per metre in Sandwich South should there not be an exemption. The current industrial development charge in both Sandwich South and the rest of the city is zero.

The suggested rates for non-residential (commercial office and retail development) are $275.77 per square metre in Windsor and $501.58 in Sandwich South. The existing non-commercial development charge is $19.70 for Sandwich South and $13.62 for the rest of the city.

Lyons said he’d like to see the increase in the charges phased in and tied to actual population growth.

D’Amore added there is a case to be made for eliminating or reducing development charges for a period of time to spur targeted growth.

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The new Development Charges Act contains deductions of 15, 20 and 25 per cent for purpose-built rentals based on the number of bedrooms constructed. The province is also releasing affordable/attainable targets for development charges.

D’Amore cited the success of LaSalle reducing its development charges to incentivize condo/construction development to increase housing density.

“LaSalle hardly had any condos/apartment buildings,” D’Amore said. “But they began to sprout up, because without the development charges, those projects became economically viable. My company put up three ourselves.

“Instead of me paying $3,000 per year in taxes for a piece of vacant property, they have 300 people paying that much each per year.”

dwaddell@postmedia.com

tcampbell@postmedia.com

Windsor’s development charges since 1999:

Comparing Windsor’s current and proposed development charges:

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