London won't be on the tab for millions of dollars in developer fee exemptions: Mayor

London Mayor Josh Morgan's push to get next year's tax increase under five per cent is a lot closer to reality.

That's because the Ontario government has confirmed that cities won't have to use their tax money to fill the budget hole created by multi-million dollar exemptions the Ford government gave to developers.  

Development charges, also called DCs, are what developers pay municipalities to cover the cost of infrastructure required by new construction. The money is generally paid up front and kept in municipal accounts to pay for everything from roads to sewers when the building breaks ground. 

However in 2022, the Doug Ford government introduced extensive DC exemptions as a way to speed up housing construction. It left municipalities, including London, scrambling to figure out how they would pay for the new services without the upfront money from developers. 

In London's case, the city used about $32 million from reserve funds to cover the infrastructure gap in 2023 and 2024. 

Clarification fills $10 million budget hole for 2026

At a presentation to council's budget committee Wednesday, Morgan said the province has confirmed in a letter that municipalities won't have to make up the gap created by the province's exemptions to DCs. That means what was shaping up as a  $10-million hole in next year's budget is now no longer on the city's tab. 

"It puts us in a much more favourable position," said Morgan. "This is something that impacts all municipalities across the province. We don't have to use property taxes to fund these exemptions."

Morgan said he expects provincial and federal programs will have to help cover future infrastructure costs.

With the province's clarification on DCs, London's current property tax increase for 2026 drops from 6.4 per cent down to 5.7 per cent. Morgan's call for other city agencies, boards and commissions to find savings will still be needed if city is to limit next year's property tax increase to five per cent. 

Budgets already tight, agencies say

Representatives of some of those agencies told councillor's on Wednesday their budgets don't have much wiggle room. 

Among them was Middlesex-London Health Unit CEO Emily Williams. She told the committee that despite cutting 22.5 staff positions over the last two years, they're still looking at a projected deficit of $710,000 for 2026.

"Without changes to the funding model, the future public health picture for London and Middlesex is grim," she said. 

Williams said any budget cuts could force the health unit to cut services, including programs to help youth quit smoking, to clinics for new mothers and health inspections of restaurants and public swimming pools. Other services, such as contact tracing for communicable diseases, could also be affected.

"We simply can't cut further," said Williams. 

Tourism London general manager Cheryl Finn said cuts would limit London's ability to attract tourists to the Forest City. 

"Tourism is a serious economic driver," she said. "For every dollar invested, we generate three more in economic return. When we bring in conventions, sport tournaments and major concerts, we're bringing in revenue." 

Motions voted down

A motion by Coun. Susan Stevenson to find savings by having staff look at reductions in the city's heritage department was voted down. City staff are already looking at options ahead of a  2027 deadline for municipalities to either designate or de-list heritage listed properties. 

A move by Stevenson to remove $120,000 in funding to the city's advisory committees was also voted down. 

Coun. Sam Trosow said the city's advisory committees already operate under tight financial constraints. 

"I don't think this is looking for nickels," he said of Stevenson's motion. "I don't think there's a penny here."

Even with the province's clarification about development charges, $3 million in savings will still have to be found to hit the target of limiting next year's property tax increase to five per cent.

Any final tweaks to the 2026 budget will be passed by council in November.