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.

Impacts of Bill 23

Ontario’s new legislation, More Homes Built Faster Act, has concerning impacts for Mississauga.

  • Mississauga stands to lose almost $1 billion in revenue (over 10 years) that we use to pay for new parks and infrastructure like roads, trails, community centres, fire stations, libraries and more. The Region of Peel expects $2 billion in lost revenue, which will further impact Mississauga residents.
    • This lost revenue, which includes up to $560 million for new parks and public spaces and $325 million for growth-related infrastructure (roads, sewers, community centres, and more), results in savings for developers but doesn’t guarantee that homes will be built or be affordable.
  • An extra 8 to 10% property tax increase may be required to pay for the lost revenue. When factoring in impacts from the Region of Peel, this could mean $500 or more on average per home (valued at $730,000) and a $180 water bill increase.
  • The province wants to build 1.5 million homes over the next 10 years. Mississauga’s share is 120,000 new homes. However, there’s no process in the bill requiring developers to build homes, even if municipalities have provided approvals and granted discounts.
  • The bill doesn’t require developers to pass any of the savings they may gain onto new homeowners.
  • Bill 23 limits the few tools the City has to deliver affordable housing.
  • A new cap on Inclusionary Zoning units means at least 40% fewer affordable units than we planned for in Mississauga.
  • It also makes affordable units less accessible than before. Families will now have to earn more than $95,000 annually to be able to purchase an affordable housing unit.
  • Bill 23 caps the amount developers are required to pay for new parkland.
  • Developers, not the City, would be able to choose where to locate new parkland, and they would get credit for building privately owned public spaces that aren’t City parks.
  • Parkland is vital to our well-being and the vitality of our communities – they need to be connected to the City’s existing parkland network.
  • Bill 23 gives cities two years to review heritage properties to determine if they should be designated or removed from the registrar. Only properties on the current registrar can be reviewed – no new properties can be added.
    • In Mississauga, this means reviewing over 1,000 properties, which could actually cause development delays.
  • Bill 23 limits conservation authority powers.
  • The proposed ecological offset outside Mississauga borders could chip away at the city’s natural space.

Debunking Bill 23 myths

Myth: Cities charge developers too many fees and get to use that money for anything
Reality:

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.

Myth: High city fees make new houses more expensive
Reality:

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.

Myth: Taxpayers aren’t paying enough to bring the cost of housing down
Reality:

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.

Myth: Cities are keeping too much unspent charges in reserve
Reality:

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.

Myth: Developers would build more if cities would speed up approvals
Reality:

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.

How development fees work

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:

  • Cities follow a fair and detailed process to determine the amount of Development Charges and Parkland Cash-in-Lieu a developer is required to pay.
  • This process is outlined in the Planning Act and Development Charges Act.
  • The amount is calculated using long-term growth projections in consultation with the development industry.
  • Cities can only collect Development Charges for the percentage of the costs that apply to new growth. For example, since a new transit line benefits existing residents, the amount of Development Charges we can collect for it must be reduced so that the benefit to existing taxpayers is not included in the calculation.
  • Growth Charges must be used in a set timeframe and can only be used to pay for the infrastructure, parkland and services needed for new growth – nothing else.
  • The Province controls when and how cities can increase Development Charges and parkland fees.

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:

  • Make sure we build infrastructure and services at the most appropriate and cost-effective time to support new growth.
  • Keep one year’s worth of Development Charges revenue in reserve in case there’s a downturn in the economy.
  • Have parkland funds that reflect market value and are ready when land becomes available to acquire new parks.

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.

 


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