Toronto wants assurance Ontario will pay for housing bill costs after Doug Ford cancels audits
If the province doesn't offset Toronto's losses under Bill 23, it could deliver a multibillion-dollar hit to the municipality's bottom line.
Thestar.com
Dec. 19, 2023
Ben Spurr
Toronto is seeking assurances that Premier Doug Ford will stick to his pledge to compensate the city for revenue lost as a result of provincial housing legislation, after his government cancelled audits launched to determine the financial impact of the bill.
If the province doesn't offset Toronto's losses, it could deliver a multibillion-dollar hit to the municipality's bottom line just weeks after the premier and Mayor Olivia Chow unveiled a landmark agreement they said would put the cash-strapped city on the path to financial sustainability.
"I'm terrified," Coun. Gord Perks, chair of Toronto's planning and housing committee, said of Municipal Affairs and Housing Minister Paul Calandra's announcement last Wednesday that his government was scrapping the third-party audits of Toronto and five other municipalities.
"We had an agreement with the province that they would come and audit us…Now that they're not completing the audit, we don't know how they're going to backstop our lost development charges," he said, adding that city staff have yet to get any clarity from the province. He warned that because the city uses development charge revenue to support the provision of affordable homes, if Queen's Park doesn't compensate the city for the forgone revenue, Toronto won't be able to "deliver the affordable housing that the province of Ontario claims to want."
The Ford government announced the audits late last year, after Ontario municipalities sounded the alarm over what they described as the devastating impacts of Bill 23, the More Homes Built Faster Act, would have on their budgets.
The legislation enacted in November 2022 reduced or eliminated development charges on the construction of specific housing types, including some purpose-built rental and affordable units. The province argued "out-of-control" municipal fees were adding an average of more than $115,000 to the upfront cost of GTA single-family homes, and reducing the charges would spur construction, make ownership more affordable and help meet Ontario's target of building 1.5 million new homes by 2031.
But Toronto and other cities countered that development charges are dedicated to paying for the roads, transit, water lines and other infrastructure required to support new housing, and they couldn't afford to lose that revenue stream. Toronto has estimated the development charge reductions and other parts of Bill 23 would reduce available funding for its 10-year capital plan by more than $2.3 billion.
The province said Toronto had amassed reserve funds that could absorb any losses however, and launched the audits, which were to be carried out by Ernst & Young, to assess cities' handling of development charge revenue. In addition to Toronto, the province said it would review the books of Peel Region, Mississauga, Caledon, Brampton and Newmarket.
In November 2022, then housing minister Steve Clark assured then mayor John Tory that if the audits confirmed Bill 23 made it harder for cities to pay for infrastructure and services required for new housing, the Ford government was committed "to ensuring the City of Toronto is made whole."
A spokesperson for Calandra, Justine Teplycky, didn't directly answer when asked Monday whether the government still stands by that promise. In an email, she repeated statements from the press release accompanying the minister's announcement last week that said the Ontario PC government will consult with cities on how the bill affects their ability to fund growth-related infrastructure.
The province says those consultations will include reviews of parts of provincial housing legislation that cities said would slash their revenue -- like the removal of studies as eligible costs for development charges, the requirement that charge increases be phased in over five years, and mandatory application fee refunds if cities don't meet prescribed timelines -- but that development charge reductions and exemptions will "remain unchanged."
"We will continue our historic levels of support for municipalities to help them build infrastructure, including through our $1.2 billion Building Faster Fund, the $200 million Housing-Enabling Water Systems Fund, and our $400 million Ontario Community Infrastructure Fund," Teplycky said.
Chow hasn't received confirmation from the province that it still intends to keep the city whole on Bill 23, according to a spokesperson, but the mayor "expects the province to honour their commitment."
"Staff will continue to monitor the legislative changes and revisit the estimated impacts as more information becomes available," Arianne Robinson wrote in an email.
Council is set to approve Toronto's 2024 budget Feb. 14.
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