Provincial legislation passed late last year is putting money into developer pockets while wreaking havoc on municipal budgets—leaving ordinary Ontarians facing property tax hikes and cuts to cover the shortfall.
Bill 23, the presumptuously-titled More Homes Built Faster Act, eliminates some of the fees municipalities charge to developers to build certain types of homes. The province claims this will result in more, cheaper homes being built. The problem, however, is that municipalities actually use those fees, and need them to pay for infrastructure and services, like roads, sewers, public transit, parks, libraries, community centres, fire stations, and social housing.
Municipalities’ reliance on these fees is the outcome of a provincial mandate that “growth should pay for growth”—i.e. development charges should cover the costs associated with a growing population.
Wiping out this source of revenue has left municipalities reeling over the new holes in their budgets.
“We’ve had the rug pulled out from under us,” said Newmarket Mayor John Taylor. “I’m still in a state of shock.”
Mayor Virginia Hackson of East Gwillimbury called the move by the province “egregious and insulting” in a press release.
Burlington Mayor Marianne Meed Ward said Bill 23 “will devastate municipal finances and our ability to fund things such as parks, community centres, transit—all the amenities a growing community needs. Those costs will be shifted from for-profit developers to taxpayers.”
The budget shortfalls are immense. The City of Vaughan is projecting annual losses between $169 million and $174 million. Brampton expects $440 million in losses. The City of Mississauga’s website says the city stands to lose $1 billion in revenue. The Association of Municipalities Ontario (AMO), an umbrella group representing every Ontario community, has said that in total, Bill 23 will leave municipalities short $5 billion.
That leaves residents to pick up the bill, either through property tax hikes or cuts to services and infrastructure.
Municipalities across Ontario are raising property taxes to make up for the lost revenue. Aurora and Toronto are at the low-end, facing six per cent hikes, while the fast-growing East Gwillimbury will see property taxes jump more than 100 per cent. Niagara regional Chair Jim Bradley said property taxes would need to go up “by 11 per cent a year.” The other option is “to abandon projects that are no longer affordable.”
So residents will have to pay more in taxes and get less in return.
But maybe higher property taxes and fewer services is just the price residents must pay to incentivize growth. It’s indisputable that Ontario is in a housing crisis—surely making it cheaper for developers to build housing they were going to build anyways will help remedy that. At least, that’s what Municipal Affairs and Housing Minister Steve Clark would have us believe. “The central intention of Bill 23 is to build more homes our growing population can afford by discounting and exempting municipal fees and taxes,” he said in a letter to the AMO. He continued, “municipal fees and taxes currently add an average of $116,900 to the cost of a single-family home in the Greater Toronto Area before a single shovel is in the ground. That’s the size of a down payment for many families, and puts the dream of homeownership out of reach for thousands of Ontarians.” Naturally, developers will pass these savings on to home buyers rather than simply pocket them, right?
In fact, Clark’s apparent confidence in the largess of developers isn’t based in reality.
The City of Toronto has said that none of its research has shown that lower development charges would lead to lower housing prices or more housing supply.
Burlington Mayor Meed Ward also doubted that developers’ savings will be passed on to home buyers, “There is no guarantee that savings will be passed on to buyers, or that buyers are first-time homebuyers and not investors. This will simply deliver profit on the backs of residents without doing anything to increase housing supply and affordability.”
Even Dave Wilkes, CEO of the Building Industry and Land Development Association of the GTA, moderated expectations for the effect Bill 23 will have on home prices, “I don’t think we’re going to see overnight change in the cost of housing or the stabilization of the cost of housing.”
Meanwhile, in the Niagara Region, Bill 23 will actively make the housing crisis worse, as they use development charges to finance the building of affordable housing units. St. Catharines Councillor Laura Ip said the loss of development charges will have a “serious impact” on the region’s ability to build new affordable housing units. “We’re hindered even more by Bill 23,” she said. “With the loss of development charges, which is what funds our affordable housing builds, we have no funding for affordable housing.”
“Bill 23 will make Ford’s developer buddies even richer, while hurting Ontarians by making the housing crisis even worse,” said Ontario NDP housing critic Jessica Bell, and she was entirely correct.
In response to Bill 23 the NDP called on the government to increase rental housing supply, bring back rent control and spend more on non-market rate housing. But these demands don’t go far enough at all. If private developers won’t build homes without receiving a ridiculous handout from the state, then they have proven that they are parasites whose only interest is profit, not the betterment of society. Instead of giving benefits to private developers, we should be expropriating the big developers and developing a plan to guarantee the production of good quality affordable housing for all without cutting into budgets that municipalities rely upon. This could be the launching pad for the development of a province-wide plan to eliminate homelessness, which has become endemic in big cities like Toronto where one homeless person dies every two days.
The housing crisis proves that capitalism is incapable of providing for the basic human need of having a roof over one’s head. Production is geared not towards need, but towards squeezing the most money possible out of ordinary people already being squeezed by stagnant wages and inflation. Housing has to be taken out of the hands of capitalists and put under democratic control so we can provide quality, affordable housing for everyone—we need to nationalize the landlords and real estate developers.