City of Ottawa development fees

All this good news and excitement came with a side of serious boooooooooooo. In order to receive our permit, we had to pay a hefty city development fee. I don’t want to be a Debbie downer here (no offence to my mother-in-law, Debbie), but I need to vent.

Building is not for the faint of heart. Mark and I are determined to build our house, and I hope this blog will inspire others to do the same. But make no mistake: it ain’t cheap and unless you’ve got money to burn, you’ve got to be incredibly resourceful. No matter how resourceful we are and how many strings we pull, however, we won’t have any control over the fees or taxes — those effing soft costs.

Here’s an interesting/depressing infographic from gohba. It shows that 23% of the cost to build a house in Ottawa goes to fees and taxes. These stats are for a developer home, where the assembly-line style of building keeps actual construction costs considerably lower then a custom home. You can easily double those construction costs for a custom house build. Then you’ll get a sense of what project costs are like. Rather discouraging isn’t it? 

Image courtesy of GOHBA

When we submitted our permit last fall, our development fees were tallied up at just over $16,000. Over the course of 10 months, our development fees have skyrocketed to over $22,000 (not to mention the school-board fees which have brought our total to $25,275). That’s a jump of 37.5% in less than a year. The only thought I can muster is WTF? They claim to have raised them to help cover the costs of light rail expansion (an Ottawa project that has suffered a couple decades of viability studies and false starts). Fine. But how is a jump of this magnitude justifiable? It’s terribly prohibitive. And isn’t/shouldn’t a city be trying to encourage development and growth? Especially good development? For crying out loud, our house is going to require a mere fraction of the resources a typical house would need, and depend far much less on the city’s infrastructure. We spoke with our ward councillor Jeff Leiper briefly about this months ago. He seemed to sympathize, but acknowledged there’s nothing we can do in the short term. If we wanted to build our home, we would have to suck it up and pay, in so many words.

And so we paid. Zing.

Enough complaining. Let’s build a home.

Nasty numbers

Nasty numbers

Soft costs hit hard

As we’re getting costs and quotes in, I’m putting together a spreadsheet. There are some numbers I really dislike: the soft costs. The fees. And the HST. Oh the evil that is HST.

We initially thought we ‘did good’ by buying empty land. By doing so, we wouldn’t have the headache or the costs associated with a demolition or renovation, which could easily amount to 50K or more. HST, however, negates any potential savings. We had to pay HST on our land. If you buy a used house (even if you’re just going to demo it), you’re off the hook.

Building is expensive. The soft costs are a major culprit. Half the build cost is for services. Services which we now pay 13% on. Argh. The City of Ottawa has an $18,000 development fee they’re going to zing us with if the permit goes through. That’s on top of our $1,800 permit application. We are building a house on an urban lot. Why? What for? The $18k doesn’t even include road closures or bringing services (hydro and water) to the lot. 

The numbers are frustrating. What to do? We’re working hard on bringing our build costs down, but no matter how well we do on that end, the land purchase doesn’t change, the fees don’t change, and HST will be added. Death and taxes: what're you gonna do?

So here’s a little tip: buy land for as little money as you possibly can. Duh, right? If we wanted to build outside the downtown core, we would likely not be feeling the financial squeeze we are by buying an expensive city lot. If we took our exact house and built it in Saskatchewan, we’d immediately cut costs in half. Maybe a move is in the cards? Just jokes.