Ontario has engaged a third party to audit the finances of six municipalities to “examine impacts of changes to development-related fees and charges included in the More Homes Built Faster Act”. Ernst & Young LLP is expected to conclude the first of the financial audits of Toronto, Peel Region, Mississauga, Caledon, Brampton, and Newmarket around the end of 2023.
Ontario is eliminating development-related charges on affordable housing units and has also eliminated charges on non-profit housing units. Development charges for family-friendly purpose-built rentals were also reduced by up to 25 per cent, in order to spur the construction of this much-needed type of housing. Development charges can continue to be levied on most market housing. The impacts of these changes will be a central area of focus for the audits.
“This next step in the audit process is a critical part of our work to rein in the soaring cost of housing across Ontario, particularly when it comes to affordable, non-profit and family-friendly purpose-built rental housing,” said Municipal Affairs and Housing Minister Steve Clark. “We want to ensure development-related charges and fees are being used in a manner that supports increased housing supply and critical housing-related infrastructure, but which does not unduly raise the cost of finding a home for hardworking Ontarians.”
Lessons learned from these audits will inform future provincial policies and programs supporting long-term municipal financial sustainability and housing-related infrastructure investments.
Development charges are typically levied by municipalities on new homes in order to pay for the cost of roads, water and wastewater facilities, and other infrastructure. However, the Housing Affordability Task Force found these charges, which have increased in some municipalities by as much as 900 per cent in less than 20 years, are a significant part of the reason housing costs have increased in many parts of the province and concluded they could create “a disincentive to build housing that is more affordable.”
A September 2022 study by the Altus Group found municipal fees added $116,900 to the cost of an average single-family home in the Greater Toronto Area in 2022, and around $100,000 to the cost of an average condo in Toronto.
The province says its changes balance these concerns by leaving development-related charges in place for most types of housing while prioritizing their reduction or elimination for affordable, non-profit and family-friendly purpose-built rental housing.
According to provincial data, municipalities province-wide have reported development charge reserves of nearly $9 billion at the end of 2021.
The province also says that the audit findings could be used to inform the transition board’s recommendations to the government on the restructuring and dissolution of the Regional Municipality of Peel in order to make Mississauga, Brampton and Caledon independent municipalities by January 1, 2025.
