On November 28, 2022, the Province passed Bill 23, the More Homes Built Faster Act.
Mississauga is ready to work with the Province and developers to get housing built, but growing cities need new infrastructure, parks and services to build complete communities.
Ontario’s new legislation, More Homes Built Faster Act, has concerning impacts for Mississauga.
You’ve probably heard a lot about development charges and parkland fees. They’re important because they help pay for the new infrastructure and services needed to make communities healthy, safe and livable. They include things like parks, roads, trails, sewers, fire stations and more.
Developers are required to pay these fees when they build new homes or commercial buildings. Cities go through a fair and rigorous process (overseen by the Province) to set the amount of fees and charges required. They can only be used to pay for the infrastructure, parkland and services needed for new growth and nothing else. In other words, growth should pay for growth.
There’s a misconception that the City’s development charges and parkland fees are making new homes more expensive. In reality, developers set the price of new homes at the highest amount the market will pay. It’s the market that determines the price of new homes, not City fees. If cities reduce the fees, there’s no guarantee that developers will lower the price of housing. Fees are not why homes aren’t built – the market dictates that.
It’s fair for developers to contribute to the cost of new parks, roads, sewers, trails and other infrastructure needed for the new housing they’re building and profiting from. Also, these one-time fees don’t cover the full cost of growth. That means taxpayers are already paying their fair share and shouldn’t be required to further subsidize developer profits.
The City is not sitting on unallocated cash. The Province sets strict rules for how cities collect and use development charges and parkland fees. Cities must use the fees within a set amount of time but are permitted to keep some of the charges in reserve to save for future projects, such as a large piece of land for a new urban park or an important transit project. It takes time to save for the larger projects our city needs and it’s prudent fiscal planning.
In Mississauga, we’re doing our part to approve housing but Bill 23 doesn’t require developers to start construction. Our planners are approving thousands of units annually that aren’t getting built. In the past two decades, we’ve approved tens of thousands of units and we have another 40,000 that have been pre-zoned, especially in our downtown core, where there are no height or density restrictions. These lands are fully serviced and ready to go. In 2022, we had a record year in Mississauga, approving over 6,300 units. Mississauga is doing its part to get housing built.
The provincial government allows municipalities to collect fees from developers to help offset the cost of growth. Learn more about these fees, why they are collected, and how they are used.
Builders pay Development Charges to help pay for the infrastructure their new houses, condos, townhomes or offices need. This includes things like roads, sewers, transit services, fire stations, community centres and more.
Developers help pay for new parks too. When they build, they must give the City a piece of land that can be used for a park (which is called Parkland Conveyance). Or, if a piece of land isn’t feasible or suitable for parkland, they pay a fee instead (which is called Parkland Cash-in-Lieu). Either way, this makes sure the City has the right amount of parkland for everyone.
Development Charges and Parkland Cash-in-Lieu are sometimes referred to as municipal fees or growth charges. Learn more about Mississauga’s Growth Charges.
Growth charges are one-time fees. The Province’s Planning Act allows cities to collect these charges so that growth pays for growth – not existing taxpayers. However, that doesn’t mean existing residents don’t contribute as well. They help pay for the ongoing costs for the new parks and infrastructure through their annual property tax bill and service fees.
Here are a few of the checks and balances for Growth Charges:
Growth Charges have increased due to the same cost pressures faced by the building industry, like rising construction and engineering costs and land values for new parks. If fees don’t increase, we won’t have the funds to support new development.
While the City aims to ensure growth pays for growth whenever possible, we’re also committed to supporting affordable housing providers and non-profit developments in our communities. This year we launched two grant programs to provide eligible affordable rental housing developments and non-profit organizations that provide long-term care homes, hospices, shelters and transitional housing with grants to offset the City’s portion of development charges.
Municipal costs, including Development Charges and parkland fees make up a small percentage of overall building costs but have a huge impact on the quality of life in a city. In Mississauga, our residential development charges range from about $17,000 for the smallest unit up to a maximum of about $48,000 for single detached homes.
According to a July 2022 study by the Canada Home and Mortgage Corporation, developers typically earn between 10 and 15% profit once all other costs, including government fees, are paid.
Developers price housing based on what the market will pay. If cities reduce the fees, there is no guarantee that developers will lower the price of housing or pass any savings on to homeowners.
The fees we collect go into reserves that are assigned to projects in our 10-year capital plan. These are large projects that keep our city running and make it more livable.
Reserve funds must be spent in a set timeframe. Our capital plan is a public document that is discussed publicly every year during Budget negotiations.
We only collect what is needed for growth (in accordance with the Planning Act) and manage our reserves carefully. The aim is to:
The Province wants Mississauga to build 120,000 new homes in the next 10 years. According to our Parks Plan, we need about 94.6 acres of new parkland to support those homes. With Bill 23, we will receive only 18.9 acres of new parks.
As a result of Bill 23, Mississauga stands to lose up to $560 million in revenue for new parks and public spaces over the next 10 years. On top of the capped revenue, Bill 23 will also allow developers to decide where the new parks should go. That means, the City loses its ability to ensure parks are large enough to accommodate amenities, grow trees and are desirable spaces where residents want to spend time outdoors.
New parks and public spaces make our community livable. They’re just as important to building a great city as the roads, sewers and fire stations needed to service it.