Mayor's plan for new homeownership incentive brings both skepticism, praise

A London economist is applauding Mayor Josh Morgan's plan to absorb development fees for homeowners, but some city politicians say they have questions about who will benefit from the program before they agree to support it.

Morgan announced on Wednesday that he's using his provincially-granted strong mayor powers to bring forward a new homeownership program that would have the city and builders cover development charges for homes selling below the average $630,000 selling price in London.

The city would pay for 60 per cent of development charges and the London Home Builders' Association, a lobby group representing builders, will cover the remaining 40 per cent. But the plan needs council's approval before it can move forward.

"I think it's good that the mayor is trying out some new tools to address housing for first-time homebuyers, but at first glance, it appears to me that developers would benefit the most from this approach," said Coun. Skylar Franke.

Development fees can range anywhere from $20,000 to $50,000 depending on the type of property, according to the Home Builders' Association.

Mike Moffatt, founder of the University of Ottawa's Missing Middle Initiative said it's a "fantastic idea" that will help bring costs down for attainable housing.

He commends the city and building industry for using the very limited tools municipalities have to make housing affordable for more people.

"We are seeing housing starts and new pre-construction sales in a substantial decline across southern Ontario, and the only way we're going to see more housing activity is through lower prices and lower costs. Development charges are one of those costs," he said.

"Developers are simply finding it cost prohibitive to build homes at a price point that families can afford. So this will help them get homes built, sell them at an affordable price and allow them to continue construction, keeping their staff working."

The city would have a $5 million budget to support 260 units, which will come from the Housing Accelerator Fund it gets from the Ontario government, according to a staff report.

But before committing taxpayer funds, Franke wants to know what the profit margins for developers will be and whether there's a guarantee that the savings will be passed onto buyers.

"I think whenever there's public money in the mix, we have to make sure that it's actually delivering on urgent needs in our community," she added.

Coun. Sam Trosow wants to know whether this plan would help middle-income earners, he said.

"I still need to know more about what income group this will benefit," he said. "I also have zoning concerns in terms of where these are going to go."