Mont Tremblant, Quebec, March 17, 2012 -- Municipalities that avoid hard decisions about financing infrastructure are being “irresponsible and unfair” in shifting the burden to new home buyers, Canadian Home Builders’ Association (CHBA) President Ron Olson said today.
In his inaugural address to the 69th national CHBA conference here, Mr. Olson said that in many cases the costs of operating and maintaining Canada’s cities are not matched by sound financial planning and responsible use of revenue sources.
Instead of financing through property taxes and broad-based user fees, he said, municipalities increasingly are transferring budget shortfalls into the mortgages of new home buyers through development-related levies, fees and charges. The transfer amounts to more than $5 billion each year.
Mr. Olson compared this practice to the financing choices of some European nations. “In the Greek case we call it a sovereign debt crisis. Here in Canada, it’s called an infrastructure deficit. But it’s really the same thing. We haven’t been paying for what things cost.”
Government-imposed costs are a key factor in escalating home prices, he said. “We are in a historically low interest rate environment – mortgages are cheaper – houses are not. Confusing lower interest rates with improving housing affordability is a fundamental error – one that can lead to economic calamity in the future.”
In many communities single-family homes are becoming the exclusive domain of upper income Canadians, despite evidence that the vast majority of Canadians aspire to homeownership.
Mr. Olson, a Saskatoon builder, said that in the mid-nineties his company sold a house lot for $35,000, just enough to cover the municipal levies on the same lot today. The story is similar in municipalities across Canada.
He called on the federal government to adjust thresholds of the New Home Buyer Rebate for the GST/HST which have remained unchanged for decades.
Mr. Olson said it would be his top priority to contribute to the consultations on a long-term infrastructure plan, initiated by the federal Minister of Transport, Infrastructure and Communities.
He said governments are guilty of “silo-thinking” in the many things they want from the residential construction sector, ranging from increased energy efficiency to more affordable housing for low income earners. “No attention is given to the cumulative costs involved for home purchasers and there is no capacity in place to set priorities.”
Mr. Olson, a member of CHBA since 1974, is general manager of Boychuck Developments of Saskatoon.
The Canadian Home Builders’ Association (CHBA) is the national voice of the residential construction industry, representing more than 8,000 member firms across the country. Membership comprises new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders and other professionals in the housing sector.
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