Like Brossard, Terrebonne will soon tax new housing. An investor found out the hard way. The amount to be paid to obtain a building permit will increase from $5,000 to $35,000 for a six-unit building in Vieux-Terrebonne.
Barring exceptions, Terrebonne will charge its builder a fee of $5,000 per dwelling. In Brossard, the royalty is $3,527 per unit. In both cities, the fees are payable upon issuance of the building permit.
“I have two lots in Terrebonne,” says Chrystian Gauvin, who contacted The Press after the publication on Friday of a text on the fee imposed on Brossard. “The bill explodes. That’s $30,000 more for the building permit. That represents about 3% of the construction cost of the six-plex, without the land. The bank does not grant financing before the issuance of the building permit. I have to advance the money myself. For a six-plex, it’s still possible. But for someone who builds 30 homes, the bill starts to increase quite a bit before you can even get financing, ”he underlines.
Like Brossard, Terrebonne uses powers that Quebec granted to cities in 2016 in order to diversify their sources of revenue.
“Terrebonne is growing, and that involves major infrastructure investments,” Mayor Mathieu Traversy explains in a quote sent by email. We have chosen to involve promoters in order to continue to improve services. »
In addition, an exemption is provided for social and affordable housing in order to encourage these constructions in a context of housing crisis.
Mathieu Traversy, Mayor of Terrebonne
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
The Mayor of Terrebonne, Mathieu Traversy
The money raised will be deposited in a fund that will be used to pay for municipal infrastructure to serve new residents. In Terrebonne, the fee must be used to finance infrastructure spending estimated at $265 million.
According to information sent by the Quebec Ministry of Municipal Affairs to the Union of Quebec Municipalities (UMQ), 20 cities have a by-law or are in the process of adopting one.
Easy to tax future citizens
For the municipal authorities, imposing a development levy is a practical way of avoiding having to increase the property tax, an unpopular gesture among voters.
“It’s easier to make citizens who don’t exist pay taxes than to make citizens who exist pay taxes, because citizens who don’t exist don’t vote,” he said over the phone. Jean-Philippe Meloche, professor and director of the School of Urban Planning and Landscape Architecture at the University of Montreal.
PHOTO ALAIN ROBERGE, LA PRESSE ARCHIVES
Professor Jean-Philippe Meloche
For its defenders, the royalty is a way of collectivizing part of the land rent rather than leaving it 100% in the hands of the private developer.
A city, through its investments over the years, creates an environment conducive to residential investment. Without the fee, the promoter who sells his dwellings at a profit keeps for himself all of this rent to which he has often not contributed. By paying a fee, the promoter is obliged to share part of his profit with the community.
Ontario cities like Toronto have been using it extensively for a long time.
Make densification fiscally acceptable
This method of taxation also has the advantage, in the eyes of associate professor of municipal management Danielle Pilette, of making densification more acceptable to existing residents, because they will not have to pay for the municipal services of future residents. Consider the need to increase the capacity of the filtration plant to serve a new district. A way to fight against the “not in my backyard” syndrome, in short.
The way the levy is designed in Quebec, a fixed amount per dwelling based on an approximate cost of services intended for new populations, has the disadvantage of “overtaxing high-density projects compared to low-density projects”, points out Professor Meloch.
How do we manage to tax new housing with a measure that further penalizes high-density projects in the midst of a housing crisis?
If we had the possibility of diversifying municipal revenues in other ways, if there was a more equitable sharing of the tax base, the cities would not be forced to use this type of taxation.
Daniel Côté, President of the Union of Quebec Municipalities and Mayor of Gaspé
The CEO of the Urban Development Institute of Quebec, lobby developers, gives him reason.
“The Government of Quebec should intervene to finance cities so that they no longer have to use a means like this which comes with consequences: increase the price for access to property and increase the price for rental doors,” criticizes Jean-Marc Fournier.
For Professor Meloche, the amount of royalties in Quebec remains modest compared to what we see in Ontario. “The main problem with access to housing in Quebec is not in the tax system, but in the heaviness of the regulations. »
Devimco taken by surprise in Brossard
Because of its plans for the construction of 8000 housing units in Brossard, Devimco speaks to the City every two weeks, supports its president, Serge Goulet. It is however by reading The Press Friday morning he learned about the new $3,527 tax on new homes. “We are reaching out to the City. We want to meet with them to discuss the terms of application of the royalty. I agree as a promoter to put the shoulder to the wheel. But can we imagine a progressive application of the fee as was the case with the fee used to finance the REM [Réseau express métropolitain] ? “, he suggests.