Ontario housing minister defends plan to cut development charges paid to cities

Ontario’s housing minister is defending his government’s plan to eliminate and reduce development charges even as municipalities warn the province its approach could significantly increase property taxes.

The Ford government’s Bill 23: More Homes Built Faster Act, introduced on Oct. 25, would curtail the fees municipalities can charge developers for the cost of building city infrastructure to support a new community.

Several municipalities are planning emergency council meetings to officially criticize the Ford government’s approach and raise questions about how to offset the funds they could lose — often estimated to be in the hundreds of millions of dollars.

Read more: Cities protest ‘staggering’ losses Ford government’s Ontario housing bill could cause

At Queen’s Park, Minister of Municipal Affairs and Housing Steve Clark refused to say whether the province would offer municipalities increased funding to fill the budgetary shortfalls created by the housing policy.

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The province sent funds to Ontario’s municipal governments throughout the pandemic to help offset losses as a result of COVID-19.

Clark claimed that waiving development charges would create “incentives” to build what the government calls attainable housing and suggested municipalities wouldn’t need to rely on increasing property taxes.

“What’s not being talked about is when those shovels are in the ground and when those homes are built, that’s an increased tax base,” Clark told reporters.

Clark said the baseline fees are “too high” and pointed the finger at municipalities for increasing development charges by “30 to 36 per cent.”

Read more: Association of Municipalities of Ontario worries about housing bill impact

“A study shows that development charges and fees add $116,900 to the cost of a home in the GTA,” Clark said.

“That ultimately results in that rent being unaffordable, or that home being out of reach for that young family or that new Canadian or that senior trying to downsize.”

The $116,900 estimate was calculated in a municipal benchmarking study published by the Building Industry and Land Development Association (BILD).

In spite of the barrier the Ford government believes development charges pose, Ontario recorded its best year for housing starts in 2021. Approximately 100,000 new homes began construction last year — the highest number in 31 years.

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Critics also point out that the government has offered no guarantees the money developers would save from reduced development charges would be passed down to consumers.

Read more: Ontario set to reduce developer charges to spur new home construction

“To think that waiving development charges is going to reduce the price of a home without guaranteeing it anyway, it’s just it’s ridiculous,” said Ontario Liberal interim leader John Fraser.

Green Party Leader Mike Schreiner said the government’s policies would actually have the opposite effect by increasing property taxes and potentially decreasing affordable housing.

“In the case of the City of Toronto, they were using a lot of those development charges to actually invest in deeply affordable housing,” Schreiner argued.

“So, it’s actually going to undermine what the City of Toronto has been doing and what other cities are doing to put money into housing that’s truly affordable.”

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