Ontario municipalities feel impacts of housing law, worry over little audit progress

It has been more than three months since Ontario promised to make municipalities 'whole' on a loss of development charge revenue due to a new provincial law.

TORONTO — It has been more than three months since Ontario promised to make municipalities “whole” on a loss of development charge revenue due to a new provincial law, and they say they’re concerned they’ve seen little to no movement.

One large city says it is already feeling the impacts of the law financially, another is delaying a housing-related project due to the uncertainty, and municipalities across the province are passing budgets on the assumption they will be made “whole” with a dollar-for-dollar replacement.

Municipalities have been sounding the alarm for months about a housing law, that, in part, freezes, reduces and exempts fees developers pay on certain builds such as affordable housing. Those fees go into municipal coffers to pay for services to support new homes, such as road and sewer infrastructure, and the changes will leave them $5 billion short, they say.

Municipal Affairs and Housing Minister Steve Clark has expressed some skepticism about the impacts, saying the municipalities hold billions in development charge reserves.

In late November he announced a third-party audit of “select” municipalities “to get a factual understanding of their finances.”

“Together, we can use this process to get the facts, make improvements, and better serve taxpayers by exploring alternative tools for growth to appropriately pay for growth rather than continuing to raise development fees on new homebuyers,” Clark wrote to the Association of Municipalities of Ontario.

“We are committing to ensuring municipalities are kept whole for any impact to their ability to fund housing enabling infrastructure because of Bill 23.”

But since then, a list of “select” municipalities has not been finalized, auditors have not been appointed, and communities have received few updates, if any. Toronto has been in discussions with the province on the terms of reference for an audit, but that is the only municipality to report progress so far, and the city says it is awaiting a response from the province.