Could Region raise taxes, user fees to offset Bill 23?

York Region continues to sound the alarm bell over Bill 23, warning it will result in lower development charges that pay for the service levels required to support the very growth that will be created by the controversial provincial legislation.

Bill 23, More Homes Built Faster Act, 2022 accelerates the timelines for housing construction needed to accommodate a larger population sooner and to help address affordability.

Development charges are the primary source of funding for growth-related infrastructure. But because the legislation eliminated housing services as a development charges-eligible service and provided for development charge rates to be phased in over five years, Bill 23 will result in lower development charge collections than the Region estimated in its 2023 budget.

In its 2023 Fiscal Sustainability Update, the Region estimates the reduction in development charges will total between $710 million and $1.9 billion by 2033. It’s reminding the provincial government about the request it made in March to keep York Region “financially whole” to help adapt to the changes from Bill 23. Among other things, it asked the province to confirm funding is in place to provide growth-related infrastructure and community services to support building more homes in York Region over the next decade.

At the same time, the Supporting Growth and Housing in York and Durham Regions Act changed the planned approach for dealing with wastewater in York’s northern municipalities. The Act calls for a significant expansion to the York Durham Sewage System to send wastewater to the Duffin Creek Plant in the City of Pickering. That change, as well as other recent legislative changes, will require previously planned infrastructure to be built much sooner than outlined in the Region’s 2023 master plans, the Region laments.

“York Region’s capital plans are developed to deliver the maximum amount of infrastructure within our fiscal capacity,” says Township of King Mayor Steve Pellegrini, Chair of Finance and Administration. “New housing infrastructure demands will be a source of ongoing discussion at Regional Council.”

Though Premier Doug Ford recognizes Bill 23 poses a financial challenge to municipalities and has committed to help keep municipalities “financially whole” provided housing targets are met, he hasn’t yet made any funding commitments to address shortfalls.

Without compensation, the Region says it will need to supplement future development charge collections with funding from other sources to accommodate planned growth, maintain existing assets in a state of good repair and avoid service level reductions. Those sources could include tax levy and user rate increases. “Any delay in replacing lost development charge collections will result in larger increases being required once implemented,” it warns in its fiscal sustainability update.

“Fiscal sustainability requires making financial decisions using a long-term lens,” the Region reminds. “The Fiscal Strategy strives to achieve long-term financial sustainability while maintaining a balance between current and future needs of the Region, with a focus on prudent management of the capital plan, reserves and debt.”

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