Soaring development charges that add tens of thousands to the cost of a new home were a big target as the province rolled out Bill 23, the More Homes Built Faster Act.
The bill impacts ten pieces of legislation, including the Conservation Authorities, Development Charges, Municipal, Ontario Heritage, Ontario Land Tribunal and Planning acts.
Key changes have been made to the fees collected from builders for future development. When it comes to certain kinds of affordable, non-profit and inclusionary zoning housing, developers will be exempted from paying municipal development charges and other fees. The act also requires municipalities to spend or allocate 60 per cent of their reserve funds annually.
In a letter to the finance minister earlier this month, Colin Best, the president of the Association of Municipalities of Ontario said these changes go against the concept that the cost of development should be covered by development.
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The purpose of Ontario’s development charges framework has always been to “balance public and private interests by ensuring growth pays for itself, thereby protecting the interests of current property taxpayers and future generations,” said Best. “The government’s current proposal shifts that balance sharply, which jeopardizes the ability for municipalities to pay for core infrastructure. With the only alternative being increased property taxes, the province and municipalities will need to work together to rebalance the scale through other means.”
Tim Van Hinte, the director of planning for Wellesley Township, says that reducing development fees that a municipality can collect will reduce the funds available for future projects.
“If you can’t collect certain development fees, then you have to figure out another way of paying for some of that infrastructure.”
The province, however, maintains the bill is needed to help tackle the housing crisis.
In a release, the ministry said Bill 23 is “part of a long-term strategy to increase housing supply and provide attainable housing options for hard working Ontarians and their families.”
The province says the plan addresses the so-called missing middle – diverse, affordable housing choices – supports growth and standardization of affordable and rental housing. It also freezes, reduces and exempts fees for building attainable, affordable and non-profit housing, streamlines bureaucratic processes and protects Ontario homebuyers from unethical developers. The province is also cracking down on land speculation and non-resident purchases of housing.
“We know that some cities have continued to increase charges on new housing. Municipal fees on new housing construction have increased on average 30-36 per cent over the past two years and these costs are being passed on to renters and first-time buyers,” said Matt Carter, a spokesperson for the Ministry of Municipal Affairs and Housing.
“Despite these drastic increases, these fees have only been accumulating in reserves. The province estimates that across Ontario municipalities have $9 billion in unspent development charge reserves,” he said.
Van Hinte said that reserve funds serve a purpose in municipalities.
“The idea of a reserve fund is putting that money into a fund for a rainy day,” he said. “For years when you maybe have a shortfall, you can maybe draw on that fund.” He said that the spending of development fees is regulated and they can only be used for certain projects, and municipalities stay within these rules.
“Whenever we’re talking about exemptions or deductions [for development charges], it’s concerning because inflation is sky high and everything is costing more for everybody, including municipalities.”
The reductions or exemptions to development charges the provincial government is proposing apply to non-profit, attainable and affordable housing and rental units. Can municipalities afford to take that loss to allow for more affordable housing to be built?
“I think everybody will be in agreement with we’re in an affordable housing crisis, and we need to figure out how to build more affordable housing. By reducing certain fees, that might help, depending on what they are and how it works,” said Van Hinte.
Carter said the province is working with the federal government to ensure municipalities continue to receive support for infrastructure needed for growth such as roads, water systems and transit.
“Planning and community building is important, and I think there’s a difference between simply building more units and building community,” said Van Hinte. “Perhaps the intent of the province here is to get more units built faster, but at the same time, you can’t forget just building units doesn’t build community.”