Doug Ford will cut development fees on affordable housing, but municipalities could take a financial hit

Premier Doug Ford is poised to introduce further measures to expedite housing construction -- and boost density -- immediately after the Oct. 24 municipal elections, the Star has learned.

Thestar.com
Oct. 6, 2022
Robert Benzie

Premier Doug Ford is poised to introduce further measures to expedite housing construction -- and boost density -- immediately after the Oct. 24 municipal elections, the Star has learned.

Sources say Ford’s Progressive Conservatives are gearing up for the next round of changes, building on the “strong mayor” powers for Toronto and Ottawa, in order to achieve their target of 1.5 million new homes over the next decade.

To that end, the Tories are looking at eliminating development charges on “inclusionary zoning” projects, which the government hopes will encourage more affordable rental housing to be built.

But axing the charges that are designed to fund civic infrastructure -- such as roads, transit, shelters and parks -- could adversely affect municipal coffers.

As of Aug. 15, residential development fees in Toronto ranged from $25,470 to $93,978 per unit depending on the size of the home.

“That’s going to be a problem. Where are we going to find that money?” confided an official from a Greater Toronto Area municipality who is privy to the proposal.

Inclusionary zoning allows municipalities to mandate lower-cost housing units in new developments.

That would be a change from a PC administration that in 2019 passed legislation limiting municipalities from enacting inclusionary zoning policies other than near transit hubs.

Insiders, speaking confidentially in order to discuss internal deliberations, say the government is reviewing all planning processes to streamline the building of new homes and will have more to unveil after Oct. 24.

Asked Wednesday about additional moves to fast-track construction, Municipal Affairs Minister Steve Clark’s office would only say “too many families are unable to find a home that meets their needs and budget.”

“We will not shy away from the bold action needed to tackle this supply crisis,” said Victoria Podbielski, Clark’s press secretary.

“Our plan is already working, with more housing starts last year than in any year since 1987. We will continue working to improve planning policies and cut red tape to get more homes built faster,” said Podbielski.

Changes to zoning are always contentious, so the government has been seeking a compromise solution.

Many housing projects in cities are thwarted by “exclusionary zoning” rules used by NIMBYs -- “not-in-my-backyard” opponents of development -- to stop multi-unit homes from being built in traditionally single-family neighbourhoods.

In Toronto, about 70 per cent of neighbourhood streets are off-limits to anything but single-family homes, preventing the construction of duplexes and small apartment buildings.

Critics from across the political spectrum have pressed Queen’s Park to end exclusionary zoning altogether to allow for greater housing density.

Clark has pledged to fast-track construction of duplexes, triplexes, laneway suites and other projects stalled by exclusionary zoning.

During the recent legislative debate on Clark’s Strong Mayors, Building Homes Act, NDP MPP Jessica Bell (University-Rosedale) said the Tories “could and should move forward on inclusionary zoning so that when there is a new development built, there are community benefits -- parks, daycares -- as well as affordable housing incorporated into these new developments.”

“You don’t even have to take it to legislation. The minister can just approve that, and I urge you to do that,” Bell implored Clark on Aug. 11.

Tim Hudak, CEO of the Ontario Real Estate Association and a former Tory leader, has said “getting rid of exclusionary zoning will help keep Ontario’s next generation home, in the communities that raised them, bringing that dream of ownership back into reach for families.”

Instead of such a drastic step, which would prove controversial at city councils due to opposition from NIMBY homeowners, the Tories hope scrapping inclusionary zoning development charges will make it more attractive for developers to build affordable housing.

However, it remains unclear how municipalities would make up any revenue shortfall from the lost fees.

During the June 2 election, Ford promised to build 150,000 new homes annually over the next decade to meet demand even though Ontario has only reached 100,000 housing starts once in the past 34 years.

That’s why, as first reported by the Star on July 19, the premier opted to give Toronto and Ottawa so-called strong mayors this fall.

The powers, which Ford has said will be extended to other large municipalities before the 2026 civic elections, give the mayors of Ontario’s two biggest cities sweeping authority over city budgets and the hiring and firing of senior city staff.

Only a two-thirds vote of Toronto or Ottawa city council can overrule the mayor on matters deemed a “provincial priority,” such as affordable housing projects, public transit, highways and other infrastructure.

When the strong-mayor bill passed on Sept. 10, Clark emphasized the Tories were “going to fight the housing supply crisis” and the legislation was only one part of an overall strategy to build more homes.

“People are desperately looking for housing that meets both their needs and their budget, yet too many Ontarians are frozen out of the housing market,” the minister said last month.

“We believe this legislation is a piece of a larger puzzle that will help get more housing built faster for Ontarians,” he said.

On Tuesday, Clark’s ministry released the proposed regulations for the strong-mayor law, including a mayoral veto over city bylaws dealing with development charges.