The government of Ontario has revealed it has selected an auditor to analyze the finances of six municipalities to determine how their budgets will be affected by a housing law that was passed in 2022.
In a news release, Municipal Affairs and Housing Minister Steve Clark said Ontario had chosen accounting firm Ernst & Young LLP to audit the Toronto, Peel Region, Mississauga, Caledon, Brampton, and Newmarket.
Clark said: “The audits will help provide a clear and shared understanding of the impacts of changes to development-related fees and charges included in the More Homes Built Faster Act.”
The More Homes Built Faster Act was passed in November. The Act froze, reduced or exempted developers from paying fees charged by municipalities for some types of housing, including affordable housing, non-profit housing and inclusionary zoning units as well as some rental units. Development charges can still be levied on most market housing.
The changes were meant to decrease construction costs and incentivize developers to erect more housing, as Ontario aims to construct 1.5 million homes by 2031.
Money realized from the charges go to municipalities to pay for infrastructure to help new homes, roads and sewers. Under the principle that “growth pays for growth,” municipalities use development charges and other fees to cover the costs of infrastructure needed to accommodate new residents.
When the bill was introduced, municipalities across Ontario raised concerns that the changes would affect their budgets and limit their ability to build the infrastructure required to service new developments.
The Association of Municipalities of Ontario stated that the changes could leave municipalities short $5 billion and witness taxpayers footing the bill. They also stated that nothing in the bill would guarantee improved housing affordability.
Toronto estimated it would lose $230 million a year in development charges, community benefits charges and parkland levies if the bill is passed.
Clark made it known that at the time, the fees increased construction costs for developers, who passed those added costs on to homebuyers in the form of increased prices. He pledged to make municipalities “whole” if they can’t fund housing infrastructure and services owing to the changes.
The province said in a recent release that apart from examining the financial impact of Bill 23 on municipal finances the audit will also look at “municipal financial management practices.”
In the release, Clark said: “We want to ensure development-related charges and fees are being used in a manner that supports increased housing supply and critical housing-related infrastructure, but which does not unduly raise the cost of finding a home for hardworking Ontarians.”
In a statement, an umbrella organization which includes the Mayors of 29 municipalities with a population of no fewer than 100,000 welcomed the selection of Ernst & Young.
Marianne Meed Ward, Chair of Ontario’s Big City Mayors (OBCM) and Mayor of Burlington, said: “We welcome these audits and know they will demonstrate that municipalities are prudent with tax dollars, directing them to essential services in our communities.
“We look forward to the audit results that can be used by the province, as promised, to keep municipalities whole from the financial impacts of Bill 23.”
OBCM said it believes the audit’s outcome will reveal the “significant financial impact” the changes will have on services and on the current model for funding growth.
The province said it expects the first phase of the audits to be finalized around the end of the year.
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