In the face of a housing development slowdown and a rapidly developing trade war, Toronto city hall is proposing new financial breaks for condo developers whose projects have sputtered to a halt — as long as they set aside some units to be offered at a lower cost, and can start construction within two years.
In a new report to Mayor Olivia Chow’s executive committee, which meets next Wednesday, deputy city manager Jag Sharma and chief financial officer Stephen Conforti are proposing select condo builders be allowed to defer development charges for up to four years without interest. The move is meant to lower the upfront money needed for projects, as many are stalled by high borrowing and building costs.
Eligible projects would need to include at least five per cent affordable housing, whether lower-cost rentals or owned homes. They also would need to have submitted a completed site plan for their proposed development before March 1, meaning only projects already in the works would qualify.
The report meanwhile rejects urgings from the GTA-based Building Industry and Land Development Association to offer exemptions from development charges for stalled condo developments in the current climate. “While this report does not recommend an exemption, the proposed measures aim to improve the financial viability of condominium housing projects … while considering the financial constraints to the City of Toronto,” city staff wrote.
In deferring fees for up to 3,000 new condo units, staff estimate the financial hit — in the short term — to be approximately $181.1 million. While that money would normally be collected when the first building permit is issued, the deferral would last four years or until the condo receives approval — whichever comes first.
The deferrals would mean losing some money the city could have gained by investing those funds, staff warned, estimated at a value of approximately $28.3 million.
Dave Wilkes, president of the GTA development association, said he was glad to see the city up its focus on the stalled condo-building market. “We applaud that, but we really do believe we need a more comprehensive solution,” Wilkes said, pointing to examples such as nearby Vaughan reducing its development charge rates in recent months.
He sees the ongoing trade uncertainty as a compounding risk, on top of existing challenges such as increased interest rates and construction costs.
“Nothing is getting built. And we really have to, I think, step up to the plate collectively to address the crisis we’re in, to ensure that we deliver housing for the region in 2027 and beyond,” he said. “Right now, it’s a very dire situation.”
If approved, the deferrals would be the latest city effort to spur stalled market-priced housing, provided that new developments set aside some affordable units. In the fall, city hall launched a program that offered fee waivers and a 15 per cent reduction in property taxes to rental housing developers, so long as a fifth of their new units were rented out at more moderate prices.
In recommending the new incentives, Sharma and Conforti suggested the move could help brace against the impacts of the Canada-U.S. trade tensions.
“There is an opportunity to spur construction of ownership projects with an affordable housing component faster, so people can move into these new homes sooner,” they wrote. “These actions will support Toronto and Canada’s efforts to ensure a more resilient economy, during the response to tariffs and beyond, while supporting local jobs and economic growth.”
If greenlit by executive committee, the proposal will be considered by city council during its next session, which begins March 26.
