Couple on balcony

Bricks & Sticks

by Desi Auciello

Desi Auciello is the 2006 GTHBA President, and is also president of Cachet Estate Homes.

Provincial Budget a Step in the Right Direction

Date: March 31, 2006

"The extent to which the Greater Golden Horseshoe Growth Plan boosts or curtails the economic impact of the homebuilding industry depends largely upon whether the Province backs the words in the plan with significant infrastructure investment."
- Excerpt from Pull, Don't Push, GTHBA response to Places to Grow: The Greater Golden Horseshoe Growth Plan.

It took a while, but it looks like our provincial government is finally putting some serious infrastructure investment in place to back its Greater Golden Horseshoe Growth Plan.

The Greater Toronto Home Builders' Association has consistently said that the province's growth plan isn't worth the paper it's written on if the municipalities can't afford the infrastructure required to facilitate managed growth. Last week's provincial budget took a step in the right direction with a healthy allocation of new money for infrastructure, focused heavily on the GTA (Stephen Harper take note).

The major infrastructure investments include $670 million to extend the TTC subway to the Vaughan Corporate Centre via York University, $95 million to Brampton for express transit service and $65 million to Mississauga for extension of its Transitway.

The budget will also support York Region and the city of Toronto to conduct environmental assessments on VIVA (Phase II) and a future Scarborough subway, respectively.

While the overwhelming emphasis is on transit, there's also plans to extend Highways 404 and 410 and move towards extending Highway 427 by initiating the environmental assessment process -- all good initiatives in our view.

Why is this infrastructure investment relevant to home buyers? Well, since the growth plan dictates far more intense development within the existing urban, as well as newly developing areas, if we don't enhance our transportation capacity, gridlock will get far worse, not better, completely undermining quality of life in the GTA.

That said, this is but one budget. It's going to take a solid, long-term commitment to begin to make a dent in the massive infrastructure deficit that exists in this province.

Frankly, I hope the new federal government was paying close attention to the provincial budget and I urge them to step up to the plate in the same way. With both levels of government pulling in the same direction, investing in the economic engine of the country, the long-term payoff can be immense.

There is nothing in the federal Conservative platform to suggest they don't get it when it comes to infrastructure -- everything the federal government has said has been extremely positive, so we will look forward with anticipation to that budget in the not too distant future.

Transportation Authority

The other big related announcement in the budget, and something the GTHBA has been actively calling for, is the establishment of the Greater Toronto Transportation Authority to plan, coordinate and set priorities for public transit investment and major regional roads in the GTA. Sounds like a lot of those decisions were just made but there will be many more to make and we hope the GTTA is properly mandated to become an effective regional body.

The budget also signalled a commitment to introduce legislation to enable tax increment financing to assist with brownfield redevelopment and public infrastructure. The province plans pilot projects surrounding the subway expansion into York Region and the Toronto waterfront (West Donlands). We are open-minded to this vehicle -- subject to seeing the fine print. Our ultimate support depends on whether TIFs are a way to reinvest incremental property tax revenue as opposed to levying developers on a dollar for dollar basis of increased land value.

Gas Tax

There's one move in the budget that I find contradictory. While it's great that the province is fulfilling its commitment to share two cents per litre of gas tax revenue with municipalities, we question the decision to allow municipalities to use these revenues for transit-system operations as opposed to capital expansion. This is certainly inconsistent with the infrastructure thrust of the budget.
Rather than allow the municipalities to use the money for operating, it would have made more sense to let them put it into roads, similar to the flexibility the new federal government is proposing with respect to its five cents per litre share of gas tax revenues.

Land Transfer Tax

In reviewing the budget details, we note that provincial revenues from the land transfer tax in 2005/2006 (the provincial fiscal year ends on March 31) are forecast at a whopping $1.14 billion, a number remarkably similar to the $1.2 billion being invested in infrastructure in the budget.

This is an opportune time to remind homebuyers that the province does refund up to $2,000 of the land transfer tax payable, but only if you are a first-time home buyer and only if you are purchasing a newly built home.