‘Running out of runway’: Bill 23 will cost Richmond Hill $330M in revenue loss over 10 years

Law represents a 49-per-cent reduction in revenue from what city originally projected to receive

Yorkregion.com
Feb. 6, 2023
Sheila Wang

Two months after Doug Ford’s Progressive Conservative government passed a sweeping housing bill, The City of Richmond Hill put a figure on its colossal cost for the municipality in the near future.

Richmond Hill is estimated to lose $329.8 million in its revenue between 2022 and 2032 as a result of Bill 23, or More Homes Built Faster Act, aimed at building 1.5 million more homes in the next decade, according to a high-level presentation at a special council meeting Jan. 30.

Bill 23, which was passed on Nov. 28, 2022, has been under heavy fire as critics say it not only brings fundamental changes to planning process and land use approvals but also freezes and reduces the development fees municipalities collect from developers to fund infrastructure.

“We know this is gonna have a negative impact on our community and we're struggling to find a way out of this. And we're running out of runway,” Mayor David West said.

West made the comment at the special meeting where council adopted a resolution to send a request to Premier Doug Ford and Minister of Municipal Affairs and Housing Steve Clark for a response to the concerns outlined in a staff report presented at the Jan. 30 meeting.

The report identified a host of impacts of Bill 23 on Richmond Hill from site plan control removal, public engagement, heritage reservation and wetland protection.

“I believe this report has clearly identified that the loss of transparency and oversight in the land use planning process has the potential to harm our community and undermine our farmland, natural areas and democratic institutions where the return on the investment only appears to favour the development industry,” Ward 2 Councillor Scott Thompson said.

Resident Barbara Anderson spoke as a delegate at the meeting in support of the council's effort to address what she described as a "tsunami of change" brought by the housing legislation.

"The bar has been set very low with Bill 23 and it will dismantle a system designed to protect our future," Anderson said.

Appreciating the bill's intent and the province's need to build more affordable homes, the Richmond Hill decision-makers have warned on several occasions of the financial impact of the legislation on the city and sounded the alarm on potential tax burdens on the residents.

“The financial implications are keeping me up at night,” West said.

Bill 23 proposes a number of discounts and exemptions on development charges, cash-in-lieu of parkland dedication and community benefits, charge payments related to affordable housing units, attainable housing units, inclusionary zoning units, non-profit housing developments and purpose-built rental housing units.

These fees are the major tools for municipalities like Richmond Hill to charge the developers in order to fund major infrastructure to support growth.

Richmond Hill estimated to lose 87.7 million in development charges, 3.9 million in community benefits charges and 238.2 million in parkland dedication in 10 years, according to the staff report.

In total, it represents a 49 per cent of reduction in revenue from what the city was originally projected to receive.

Mayor West said all municipalities across Ontario are faced with similar problems arising from Bill 23 and he hoped by revealing the “actual number on the ground,” Richmond Hill would demonstrate leadership and continue to push back the legislation in unison with other municipalities.

Housing Minister Clark previously suggested that he would launch a third-party audit of municipal finances focusing on identifying reserve funds to offset the revenue loss from Bill 23.

The reserves and the reserve funds were to provide funding flexibility to mitigate risk and operate in uncertainty, City Treasure Gigi Li said in response to a question about the use of the reserves.

“If we are drawing upon the reserves and reserve funds, we're essentially foregoing that flexibility,” Li said.

There is roughly $50 million in the city’s reserve fund for development charges, which would not be able to cover the shortfall in this category, she noted.

Richmond Hill could be looking at an even higher blow to its revenue than what has been estimated.

The current forecasted loss was based on about 13,827 new residential units which Richmond Hill had previously projected to be built from 2022 to 2032.

But it only accounted for about half of the number of new homes the province has required Richmond Hill to add over the next decade.

As one of the 29 municipalities which the province has assigned housing targets, the city is required to have 27,000 new housing units.

City staff are currently working on determining the planning, engineering and financial impacts of the new growth target.

The staff report will also be sent to local MPPs, Ontario’s big city Mayors and the Association of Municipalities of Ontario.