Tory says loss of development charges would be 'devastating' for Toronto's finances

Toronto Mayor John Tory sounded renewed concern Thursday over the Ontario government’s plan to encourage housing development by giving developers a break on charges that would normally flow to city coffers.

Speaking with reporters at an announcement about an affordable development project in East York Thursday morning, Tory answered a question about the new housing legislation from the province and warned that the changes around development charges could be "devastating" for the city’s finances.

“I don't disagree for a second with actually thinking about using development charges and perhaps building in an incentive to build purpose-built rental housing for that purpose. But it can't be the case that the provincial government can pass a law that effectively gives away the city's money to accomplish that purpose,” Tory said. “If they wanted to say ‘well, we'll finance that and fill in the gap because we believe that's the best tool to incentivize the building of rental housing,’ you wouldn't hear me complaining for a second about that."

“And I will just tell you, the $200 million impact that would have on our finances would be devastating to our capital budget going forward.”

He said that impact would come on top of an already-gaping $815 million hole in the city’s budget brought on as a result of the COVID-19 pandemic.

The Ford government’s aggressive new legislation aimed at spurring housing development would exempt developers of affordable housing, rental housing and some other types of housing from the charges which municipalities typically levy to help pay for city improvements necessitated by the new structures.

“This would cause the postponement, and otherwise just not proceeding with many, many capital projects in the city,” Tory warned. “And the part of it that is so frustrating for me is that those capital projects relate to expanding the sewer pipe to accommodate those buildings, or the transit that is going to be needed to serve those buildings or the daycare that is going to be needed to look after kids who move into those buildings.”

The mayor said he spoke with Premier Doug Ford on Monday and this morning and raised the issue of the new housing legislation.

He said that while there are “serious concerns about things like rental replacement and green standards” the biggest concern he voiced “by far” is the possible financial ramifications for the city.

Tory said he also had a meeting with Ontario's big city mayors and said they will be adding their voices to the discussion soon as well.

Tory said one takeaway from his discussions with all levels of government is that everyone is committed to getting more housing built, but he added that “it just doesn't work” if one government’s plan comes at the expense of another.

Federal Housing Minister Ahmed Hussen added that the three levels of government are “all rowing in the same direction.” He didn't comment on the specifics of the Ontario government’s plans, but said “there's a lot of details that still need to be discussed.”

“But of course, there's a lot of discussions to be had in terms of how we can harmonize our different policies so that we can have the greatest impact on the ground and how we can best support municipal and local governments to do their own thing, which is to produce more affordable housing, and more rental purposes and housing,” Hussen said.

Tory and Hussen presided earlier over the opening of a new rapid housing development that will provide "deeply affordable" modular homes for 59 families and individuals who are most at risk of experiencing homelessness.

Tory, who won re-election just weeks ago, has pledged to make housing a priority in his next term. The mayor announced days after his win that he would use his new strong mayor powers to create a dedicated city department to fast-track housing development.

That move comes as the province aims to build 1.5 million homes over the next decade, 285,000 of them in Toronto.