Municipalities have $10B from developers saved up. Ontario says they should spend it now

Global News

5 days ago

The Ford government is accusing Ontario's major towns and cities of 'sitting' on billions of unspent dollars amidst a growing housing crisis, telling them the money should be used to reduce the cost of building.
According to data shared by the provincial government, Ontario's 444 municipalities have roughly $10 billion in the bank between them, funds collected from developers building new housing projects.
The data, which Global News requested from the Ministry of Municipal Affairs and Housing, shows Toronto has $2.8 billion, Durham Region has $1.1 billion and the City of Ottawa has collected over $800,000.
Brampton's development charge balance, as of 2023, sits around $412,000. Vaughan's is at 543,000, while Mississauga's has roughly $414,0000.
It's money the provincial government argues municipalities should spend — and quickly — to reduce the cost of building new homes.
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'Municipalities across Ontario are sitting on $10 billion of development charge reserve funds — funds that could be used to get shovels in the ground,' a spokesperson for Municipal Affairs and Housing Minister Rob Flack told Global News.
'The changes we are making through the Protect Ontario by Building Faster and Smarter Act will ensure municipalities allocate at least 60 per cent of their development charge reserves, following the examples of Vaughan and Mississauga, who are already using these reserves to reduce building costs and support new housing.'
Developers continue to complain that it is too expensive to build new homes in Ontario, despite various fees being reduced. Housing starts across the province are down compared to 2024, which was also a decline from the year before.
Municipalities, however, argue the money they have in their reserve accounts isn't simply sitting there.
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In Toronto, for example, a spokesperson said the $2.8 billion reserve fund weighs against a 10-year building plan worth $6.1 billion. 'We are also now at a point in time where we are spending development charges at a faster pace than we are collecting them,' they said.
Similarly, Mississauga — where the mayor slashed development charges — is predicting a shortfall when spending commitments are taken into account.
A spokesperson for Durham Region said that 'funds currently held in the DC reserve funds have already been committed to capital projects that are either underway or about to commence.'
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Vaughan, which has made cuts to its DCs, said the changes the provincial government would not have a negative impact on its balance.
The Ministry of Municipal Affairs and Housing urged the cities to use the money in their accounts to unlock new housing.
'We continue to encourage municipalities across the province to use their reserve funds to build more homes in their communities,' they said in a statement.
Burlington Mayor Marianne Meed-Ward, who also chairs the Big City Mayors' caucus, said the 'narrative that development charges hold up housing or make it less affordable is a destructive distraction.'
'There's this narrative, there's a single DC rate for everybody and it's too high — without any kind of understanding DCs are developed in the community, with the development industry, based on very restrictive provincial restrictions,' she said.
'So I can't collect a DC for a community centre and spend it on my fire department. I have to spend it on what it was intended for, it's very prescribed.'
In 2022, the Ford government announced audits into the development charge accounts of major municipalities, alleging at the time that they were sitting on billions. Those audits were never made public.
Since then, the province has made a number of changes to how development charges work, what can be collected and how they can be spent.
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In its latest legislation, Ontario reduced the scope and number of studies municipalities can require for new developments, sped up certain minor variances and standardized and streamlined development charges.
It also allows municipalities to more easily reduce development charges, allows residential builders to pay those fees at the time of occupancy instead of when a permit is issued and exempts long-term care homes from the fees in order to spur their development.
Many of those changes, unlike previous tweaks, were suggested to the government by homebuilders and municipal advocates together.
Lindsay Jones, the director of policy and government relations for the Association of Municipalities of Ontario, agreed that 'municipalities are not hoarding development charges.'
She said, however, the system would benefit from changes.
'There's no question that there's been really significant shifts in the market, in the overall macroeconomic context, and in the realities of incomes for Ontarians since the development charge regime was put in place almost 30 years ago,' she said.
'No question, there are ways that it can be improved — and we are optimistic about the potential for Bill 17 to be able to have some positive impacts.'
— with a file from The Canadian Press