Ford's new housing plan could lead to local tax hikes, province's civic leaders warn

Ontario's move to accelerate new home construction over the next decade has the leaders of cities and towns across the province worried local taxpayers could be stuck footing the bill for the provincial government's housing plan.

The Association of Municipalities of Ontario (AMO), which represents leaders of the 444 municipal governments, is warning of the possible financial fallout of the sweeping changes proposed by the Ford government.

The AMO said it's worried that the province's pledge to freeze or waive development charges for home builders could leave communities short. And with few options to raise revenue, many might have to hike property taxes at a time when people are struggling, said Colin Best, the association's president.

"I'm getting a lot of feedback from mayors and councillors stating that we can't afford this," Best told CBC Toronto.

"Our taxpayers already have enough to pay for through inflation and their groceries and gas bills, having, you know, huge tax increases and is not going to work for us, " he said.

On Tuesday, Premier Doug Ford announced a new plan to get housing built across Ontario. He has set ambitious targets for municipalities to ensure that the province achieves its overall goal of building 1.5 million new homes in a decade. 

Part of the plan is to streamline the development process and cut fees to encourage builders. But Best said slashing development charges means the funds used to pay for roads, sewers and transit around the new housing will dry up.

 "What we're requesting is the province to fund this infrastructure work … If they come to the table, we could possibly work on this," he said.

A spokesperson for Municipal Affairs Minister Steve Clark said the government is pushing forward with the plan because there is an urgent need to build more housing in the province.

"Reductions in these fees for particular types of homes, such as non-profits and for affordable, attainable and rental housing," would provide an incentive to increase the supply of these units, said Chris Poulos in a statement.

Some cities have increased fees on new housing and have been accumulating those in reserves, he added. 

"We are also working with the federal government to ensure municipalities continue to receive support for the critical infrastructure they need to accommodate growth such as new roads, waterworks and transit — including through the new Housing Accelerator Fund," Poulos said.

Best said while the province points to those federal funds, there's no guarantee how long the funding will be available.

"For municipalities, we have to build the roads, the bridges, the water and wastewater systems," he said. "If we don't have that money, existing taxpayers are going to have to pick up the bill," he said.

Matti Siemiatycki, a professor at the University of Toronto who focuses on urban issues, said municipalities are under a lot of financial pressure and that only increased during the pandemic. They had to provide more services and faced dramatically reduced revenues, which has made a challenging funding situation worse, he said.

"They're pressed, and at the same time then, anything that's going to cut revenue for them is going to start to reverberate through the system, and the money is going to have to be made up somewhere," he said.

Siemiatycki said while municipalities are facing those increased pressures, they have also hiked development charges at rates that have been higher than property taxes. They have used those funds to pay for a vast array of services and to keep property taxes low, he added.

"We really are now at a point of reckoning, where something's going to have to give," he said.

"Either they're going to have to find revenues from other places, or they're going to have to cut back on services. And neither of those are very appealing options."