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City hopes pledge to build 19,000 homes triggers financial help from province

The City of Cambridge is banking on a promise to be made financially 'whole' after Bill 23 shrinks revenues from development charges
Construction site in Cambridge

Cambridge has agreed to do its best to meet a provincial housing target that supports the construction of 19,000 new homes by 2031 with the hope that by doing so, the province will offer financial support.

The city's goal was established following the adoption of the More Homes Built Faster Act last fall. 

Also known as Bill 23, the legislation provides the framework to accelerate the construction of 1.5 million new homes over the next 10 years to increase Ontario's housing supply and improve affordability. 

In a letter to the city last October, provincial housing minister Steve Clark said the pledge will give the province the information it needs to prove the city has "strategies and actions" in place "to prioritize and accelerate housing."

"Our government intends to use your pledges to monitor and track progress so we can continue to play a role in supporting municipalities and removing barriers to housing development," he wrote.

One of the key pieces in the legislation to incentivize home construction is the reduction in the amount of development charges home builders have to pay. 

Development charges are the main revenue stream municipalities use to fund growth-related infrastructure needs like new roads, water mains and soft services like libraries and fire response.

Clark later promised to support municipalities facing budget shortfalls after hearing from several municipalities about what the legislation will do to deplete their reserve funds.

Some municipalities have decided to put the burden of replenishing those funds on city taxpayers.

In Cambridge, lost revenue from discounted development charges is estimated to be in the range of $1.5 million in 2023 alone.

Fear about Bill 23's impact on the city's financial picture led to debate during budget deliberations last month and a recommendation to increase property taxes by 1.5 per cent to make up for the loss.

Without a new revenue stream from property taxes, council heard, reserve funds to support the construction of parks, trails and libraries won't be replenished as new residential units get built and more people begin to call Cambridge home with the expectation their recreation needs will be met.

As the city's chief financial officer Sheryl Ayres explained, reserve funds for public works, growth studies, parks and recreation services and library services will be completely drained this year as Bill 23 discounts are phased in for developers.

"This isn't adding something new onto the city's coffers, this is just trying to replenish funding that we previously had calculated for and is now being removed because the province has decided developers don't have to pay DCs," Coun. Scott Hamilton explained to councillors during those talks.

But Mayor Jan Liggett expressed concern that if the city were to tax homeowners with a DC replacement levy it could make the city ineligible to benefit from the province's promise to make the city "whole" with financial support.

"My concern is that we wouldn't qualify if we pick up the tab ourselves and put it on taxpayers," Liggett said at the time, adding that a lot of details around Bill 23 are still unknown.

At a press conference in January, Premier Doug Ford said he believes any revenue lost by municipalities because of breaks for developers and the waiving of fees can be made up by finding efficiencies at city governments. 

"We're gonna bring auditors into the cities to make sure that you know, what they say they're doing, they're doing," said Ford. 

Ayres told council last month that even with the pledge she's skeptical the province will adequately address the funding shortfalls Bill 23 has created for Cambridge.

Despite that concern, the city decided last week not to tack the additional levy on this year's tax increase, and decided this week to take the premier at his word and sign on to the province's housing pledge.

The three actions the city is taking to meet the pledge for 19,000 homes include a development services review designed to streamline planning approvals and simplify zoning, new secondary plans and an official plan update that will identify areas for growth intensification, and a zoning update that will include "as-of-right" zoning for mixed use medium and high density development along the Hespeler Road corridor.

Although several multi-residential projects are already in the planning approval process to help the city reach its goal, some skepticism remains among council and staff.

"That's approximately 2,400 per year. Is this a realistic goal and what, if anything happens if we don't meet it?," asked Coun. Adam Cooper.

"This is just a pledge. We're going to try to achieve that but we have no idea whether that's going to be done by then because a lot of things come into play," Liggett said.

She cited factors like the availability of labour and housing market fluctuations impacting the advancement of development applications.

"We aren't the only players in this," she said.

The city's chief planner, Lisa Prime, said the city will be "aggressively tracking" the numbers, but based on the past couple of years "it's within range" on development approvals.

She cautioned, however that "we don't build the houses, the building permits need to be pulled."

In other words, approval doesn't necessarily result in rapid construction. 

As the city has experienced with many projects that have received council and site plan approval over the last few years, many have yet to break ground due to various factors related to changes in the housing market, financial pressures from rising interest rates, labour availability and supply chain delays.

Of the 5,318 dwelling-unit approvals granted to developers in 2021 and 2022, less than half have been issued building permits.

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Doug Coxson

About the Author: Doug Coxson

Doug has been a reporter and editor for more than 25 years, working mainly in Waterloo region and Guelph.
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