Waterloo puts $68M reconstruction project for housing on hold, blames Ontario legislation

A $68-million reconstruction project that would lead to the creation of 800 homes in Waterloo, Ont., has been put on hold, and councillors say it's because they're not getting answers from the province about how to fund the project.

The project would see infrastructure such as pumping stations, roads and underground sewers addedin the area of Beaver Creek Road and Conservation Drive in the northwest part of the city.That work would help spur new housing projects.

But Ward 4 Coun. Diane Freeman says questions remain about how the city will pay for it.

Last November, the province passed the More Homes Built Faster Act. The legislation freezes, reduces and exempts fees that developers pay on certain builds, including affordable housing. Those fees paid by developers would normally be used by municipalities to pay for infrastructure projects like the one in Waterloo.

The provincial government previously promised to make municipalities "whole" financially, but Freeman says it still hasn't made clear how.

Monday vote deferred

On Monday, Waterloo councillors voted to defer the reconstruction project for a year until staff could learn more. While design work that was budgeted for in 2022 will continue, tendering and construction would not move ahead until at least 2024.

"It was an incredibly challenging decision for council," said Freeman, who also chairs the city's budget committee.

"If it was another thing like a library and we couldn't afford to build it, I think the broader citizenry would ask the question'Why are you spending this money when you don't know how you're going to pay for it?'" she told CBC Kitchener-Waterloo's Craig Norris, host of The Morning Edition.

"Growth needs to pay for growth and we don't see the tools to actually secure the development charges to pay for that growth."

LISTEN|Beaver Creek Road and Conservation Drive reconstruction project deferred, now what?

City can charge fees on most housing projects: Province

Victoria Podbielski, spokesperson for Municipal Affairs and Housing Minister Steve Clark, said while the City of Waterloo can't charge development fees on some housing projects, it can on others.

"The government is eliminating development charges for affordable and not-for-profit housing, as well as inclusionary zoning and select attainable units. Purpose-built rentals will see reductions of up to 25 per cent for family friendly units," Podbielski said in an email to CBC K-W.

"To be clear, the city is still able to levy development charges on most forms of market housing. In fact, since 2020 the City of Waterloo has continued to increase its development charge rate on typical family homes."

Podbielski noted Clark has said municipalities will be "kept whole" financially from any impact from the legislation and the province is launching a third-party audit of select municipalities "to get a factual understanding of their finances, including their reserve funds and development."

It was not clear if any of the municipalities in Waterloo region will be part of that audit.

Ontario pledge tomunicipalities

In a letter to the Association of Municipalities of Ontario dated Nov. 30, 2022, Clark said it is "critical that municipalities are able to fund and contract road, water, sewer and other housing enabling infrastructure and services."

"We are committed to ensuring municipalities are kept whole for any impact to their ability to fund housing enabling infrastructure because of Bill 23," Clark wrote.

Freeman says they've heard the government's pledge to make municipalities whole financially, but the challenge for council is they haven't seen how and they need to review the regulation.

"So I don't think it's fair to say to the existing tax base, we're taking a chance that $68 million will come into the city's coffers over the next 10 years when we don't actually know that to be true," she said.

Deferring projects risky:Freeman

There's also a problem with deferring the work for a year, Freeman said, because it puts new housing projects at risk.

"We entirely agree with the assessment that more housing is needed and we want to see that happen and this development includes a mix of housing including multi-family residential and single residential. The challenge is you can't own a house and build a new one when you have no money to build it."

The appetite from developers is there. During Monday's council meeting, Trevor Hawkins of MacNaughton Hermsen Britton Clarkson Planning Ltd. in Kitchener spoke on behalf of housing developers and urged council to keep the Beaver Creek Road and Conservation Drive reconstruction in the budget for 2023.

Coun. Royce Bodaly moved the motion to defer the project, though, saying the city doesn't have extra reserve funds to cover the costs without knowing how much money the province will provide.

"In my mind, it would be financially irresponsible of us to move this project forward in 2023 without having full certainty around how [development charges] and the losses imposed upon us are going to be felt," he said.

"I think it is entirely a shame that the Bill 23, More Homes Built Faster Act, is in fact very likely to see more homes built more slowly, but these are the unintended consequences of deviating away from a growth paysfor growth model."