Posted by Stu Niebergall on 2017-01-14 12:00 AM
Will the Federal, Provincial and Municipal Government price Regina entry-level home buyers out of the market? It may not be there intent, but it is the unintended consequences of their actions. If housing was an apple, government takes a big and ever bigger bite out of each new entry level home that is built. The development taxes, building fees, regulatory regimes and market interjection has never been higher in our nation’s history.
Let’s start with the Federal Government, which essentially decides who in Canada can qualify for a mortgage and sets the stage for the National Building Code to be adopted. With over a decade of ever changing mortgage rules that the feds use to heat up or slow down housing markets. Ever increasing building codes that will push towards Net Zero Energy and advance accessible requirements by 2030 provide a wider community benefit, but come at a higher cost for the new home buyer.
The Government of Saskatchewan decides how a new home will be taxed and what development taxes the municipality can charge for the building of a new home. When a new home is built in Regina all capital costs to build the infrastructure, roads, sidewalks, street lights, parks, right down to every blade of grass is paid for by the developer and ultimately the new home buyer. The municipality is allowed by the Provincial Government to charge development taxes to pay for the impact of new development on the overall system when it comes to transportation, sewer, water and greenspace. This does not seem to be enough for the municipalities in Saskatchewan, now they have begun to ask the Provincial Government for more money from new home buyers for transit, libraries, fire stations and police stations. The province will also consider adding PST to the construction labour of a new house to help resolve the provincial governments deficit.
In addition to the municipalities collection of significant development taxes, they also set zoning regulations, review and process development plans, provide building permits and inspect for compliance with the building code. We all can agree it is crucial for the City to ensure any project it allows is done right, but when the municipality does not provide consistency and approvals in a timely manner the investment risk for projects increases exponentially. Those projects and ultimately the home buyer absorb the additional cost of risk. Even if the developer has the staying power and deep enough pockets to get through the process, the proposed project is often smaller and more expensive, if they are not shaken off.
When you clump theses costs all together, you end up with the government imposing approximately 20% of $400,000 on entry level home buyers. Equally as important, projects are held up with significant red tape to only then need tens of thousands of dollars up front before a shovel ever touches the ground.
The irony in all of this is all levels of government want to create economic prosperity and more jobs, but they don’t necessarily want more housing, especially municipalities which tend to see new housing as additional demand on services. They act like those new jobs don’t create demand for those services. It is not like the new workers are going to live elsewhere. Yet the municipality and the citizens who inhabit the City have a desire to grow economically, so ultimately new housing development must be approved. Since municipalities don’t have the political will to match tax rates with the cost of services to the existing community, under growth pays for growth schemes. The municipality and provincial government choose the path of least resistance, higher and ever higher development taxes. Since Cities like Regina only get one bite at the apple, they take the biggest bite they can with those development taxes.
It is not difficult to imagine that the new and widening gap between haves and have nots in this country will be shaped by those who have access to home ownership and those who do not.
The three levels of government have a responsibility to encourage and incent a future city to its citizens that is innovative, sustainable, diverse and growing. Part of this means seeing home ownership as sound public policy in which citizens have a reasonable opportunity to own their own home.
If people keep coming to Regina, Saskatchewan and Canada, the price of entry level housing needs to be accessible, however if the decision makers continue down the current path they will make entry level housing almost nonexistent.