Ontario to audit municipal funding gap due to housing law, pledges to cover shortfall
Allison Jones, The Canadian Press
Published Wednesday, November 30, 2022 3:25PM EST
Last Updated Wednesday, November 30, 2022 8:35PM EST
TORONTO - Ontario is promising to make Toronto “whole,” if the city can't fund housing infrastructure and services due to a new provincial law, but it's unclear if the offer extends to other municipalities.
Municipal Affairs and Housing Minister Steve Clark wrote to Toronto Mayor John Tory Wednesday to say the province was launching a third-party audit of municipal finances, focused on reserve funds and the fees housing developers pay.
“It is critical that municipalities are able to fund and contract road, water, sewer, and other housing enabling infrastructure and services that our growing communities need,” Clark wrote.
“There should be no funding shortfall for housing enabling infrastructure as a result of Bill 23, provided that municipalities are achieving and exceeding their housing pledge levels and growth targets.”
The government has not yet identified which municipalities would be subject to the audits but is pledging to work with the association and the Ontario Big City Mayors to come up with a list. Clark wrote separately to Toronto Mayor John Tory with the promise of an audit and keeping the city “whole.”
Association president Colin Best said Clark's commitment was a “welcome and very positive development.”
“AMO is very pleased with the government's recognition of the need to ensure municipalities' access to revenues to support the joint provincial-municipal goal of increasing housing supply and affordability,” he wrote in a statement.
The bill passed Monday would, in part, freeze, reduce and exempt fees developers pay on certain builds such as affordable housing.
Those fees go to municipalities and are then used to pay for services to support new homes, such as road and sewer infrastructure and communities across the province have expressed concern that they will have to raise property taxes to fund those services.
When it introduced the bill last month, the government identified 29 municipalities in which the bulk of new housing will need to be built in order to reach its goal of 1.5 million new homes in 10 years. Ontario will require them to develop “pledges” of how they will meet their assigned targets. Toronto, for example, will need 285,000 new homes.
The Association of Municipalities of Ontario has said the changes to development charges will leave communities short $5 billion and see taxpayers footing the bill, either in the form of higher property taxes or service cuts.
But Clark has said municipalities have billions of development charge revenues in reserve and the additional costs on new homes must be “reined in.”
Clark said that since 2010, municipal fees and taxes on new homebuyers in Toronto have increased by close to 600 per cent.
He said he hopes Toronto and the province can work together on the audit.
“If there is any impact to the city's ability to fund housing-related infrastructure and services because of Bill 23, we are committing to ensuring the City of Toronto is made whole,” Clark wrote.
“This commitment includes capital costs associated with affordable and shelter housing projects supported by Toronto's Housing Services Charge.”
A spokesperson for Clark did not respond to questions about the effects on other municipalities.
Clark also told Tory that Ontario would cover up to one-third of the city's operating deficit for this year, which it estimates at $703 million.
“It is critical that you use this support and the time it provides to take action to address Toronto's forward looking operating pressures,” Clark wrote.
Tory said that the federal government now needs to commit funding.
“(We) need to have the government of Canada address its clear commitment to assist with what is an exclusively COVID-19 related shortfall being experienced in a more substantial way by Canada's largest city, with Canada's largest urban economy, Canada's largest transit system by far, and the biggest regional challenge sheltering people, including refugees,” the mayor wrote in a statement.
This report by The Canadian Press was first published Nov. 30, 2022.