Ontario mayors say provincial housing fund rules unfairly penalize them

Ontario's big cities say they could lose out on millions of dollars in provincial funding for housing-related infrastructure due to factors beyond their control, unless the government makes a simple change to the criteria.

The provincial government announced in August that it would give up to $1.2 billion over three years under a Building Faster Fund to municipalities that meet at least 80 per cent of their provincially assigned housing targets.

But the Ontario Big City Mayors group has written to Municipal Affairs and Housing Minister Paul Calandra to ask him to allow municipalities to qualify for a piece of the fund based on how many building permits they issue, rather than on housing starts.

Burlington Mayor Marianne Meed Ward, who is the chair of the Ontario Big City Mayors group, said there are tens of thousands of units that have been approved by municipalities but developers haven't started construction because of high interest rates, supply chain issues or labour shortages.

"So municipalities will potentially be penalized for something that is completely out of our control," Meed Ward said in an interview.

"We are quite happy to be judged based on what we actually do. Our response is to say judge us on the number of permits issued, and then look at why developers aren't pulling permits, because there may be a role for the province and even the federal government in addressing that."

Province reviewing mayors' request

Calandra's office said it would review the request.

Calandra wrote in a letter this week to municipalities that in 2023 the province aims to see 110,000 new housing starts, ramping up to 125,000 the next year, 150,000 in 2025 and 175,000 per year in each subsequent year. The government says Ontario has 66,295 housing starts so far this year.

Housing starts will be counted based on the Canada Mortgage and Housing Corporation's definition in its starts and completions survey the beginning of construction work on a building Calandra wrote. His letter also indicates that basement suites and "other institutional housing types such as long-term care beds" will be counted as housing starts.

The Building Faster Fund is set to be used for housing-enabling infrastructure and other projects that support community growth, such as roads and water lines. It was announced after municipalities had been raising concerns for months about a provincial law that cuts some of the fees developers pay, which the communities use to fund housing-enabling infrastructure.

But the Association of Municipalities of Ontario has said that law creates a $1-billion shortfall each year for municipalities. The government cut the development charges as a way to spur more building, as it tries to get 1.5 million homes built by 2031, but the municipalities say those homes will need infrastructure such as sewer lines.

Former municipal affairs and housing minister Steve Clark contended that municipalities were sitting on billions of dollars in reserve funds and launched third-party audits of municipal finances in six communities, to see if the municipalities do indeed have a shortfall in funds for housing infrastructure. If so, the province will make them "whole," Clark said.

The first phase of those audits is set to wrap up by the end of the year.