GTA municipalities respond to More Homes Built Faster with rate hikes up to 100%

"Obviously we're in a bit of a bind," one mayor says

GTA municipalities respond to More Homes Built Faster with rate hikes up to 100%

Municipalities in the GTA may see property tax hikes from 5% to 100% in the next year following the provincial government’s implementation of the More Homes Built Faster Act.

Bill 23, the More Homes Built Faster Act, was enacted late last year in an effort to cut through the red tape and costs of building affordable homes. The bill did away with fees municipalities traditionally levied on real property developers before they could build certain types of affordable homes within their land area.

The government said that the More Homes Built Faster Act would encourage home developers to build these types of property at a cheaper cost to buyers, in effect bridging the housing gap in Canada.

Development charges & municipal fees add $116,900 to the cost of an average home in the GTA, and nearly $100,000 to a condo in Toronto.

Our More Homes Built Faster plan cuts these costs so more Ontarians can find a home that’s right for them. 🏡

— Steve Clark (@SteveClarkPC) November 25, 2022

But Bill 23 has also left many municipalities scratching their heads over where else to source the funds for local infrastructure such as public transit, roads, and sewers, which the real-estate development charges previously helped cover. Other municipalities – especially those in parts of the Greater Toronto Area – are already looking into hiking local property taxes by up to 100% just to make up for the deficit.

In a poll conducted last December by CBC News, 25 GTA municipal governments were asked how much they stood to lose from the passage of Bill 23, and how big a property-tax rate hike they believed their municipalities would need in the coming years to fully compensate.

Toronto Mayor John Tory has already proposed a 5.5% property tax increase, while Aurora Mayor Tom Mrakas said he was studying the possibility of a 6% property tax hike in 2023, or cuts to services reflecting the projected revenue deficit caused by Bill 23 – $29 million over the next 10 years, CBC News reported.

“Obviously we’re in a bit of a bind,” Mrakas said. “That’s what I’m hearing from other municipalities too.”

Besides Aurora and Toronto, the GTA municipalities of Brampton, East Gwillimbury, Mississauga, Newmarket, Vaughan, and Whitchurch-Stoufville responded to CBC News’ poll with quantified predictions of the losses caused by the More Homes Built Faster bill at the ready. These six municipalities also disclosed the following tax rate hikes they were considering to replace lost development fees:

  • East Gwillimbury – 100%
  • Vaughan – 77 to 88%
  • Whitchurch-Stoufville – 52.3% over five years beginning 2024
  • Brampton – 9%
  • Mississauga – 8 to 10%, plus an additional $180 to the water bill and $500 to the tax bill on a house costing around $730,000
  • Newmarket – 5 to 15%

Municipal Affairs Minister Steven Clark stood firm by Bill 23, however. He said GTA municipalities had fallen into the habit of charging excessive development fees, then hiding them in municipal reserve funds instead of using them on community development projects.

“In parts of the GTA, for instance, development charges rose by more than 600% in the last 13 years,” Clark was quoted as saying in the Toronto Star. “Toronto alone has proposed another 46% increase over the next two years, even as the city sits on a development charge reserve fund of more than $2.3 billion.”

Any thoughts on the provincial government’s More Homes Built Faster Act? Let us know in the comments below.