A sobering report to Hamilton Council on affordable housing warns that the city could be on the hook for tens of millions of dollars if the Ford Government’s More Homes Built faster scheme stays as-is. With Bill23, the government has ordered that affordable housing projects be exempt from development fees. The exact impact on Hamilton has yet to be calculated, but staff released a list of affordable housing projects currently in the works that would have brought in development charges totaling $30,691,314, but which would be lost to the city with the housing bill just passed. Worse, staff say any number of future projects will also be exempt from development changes as long as they build housing units that rent at 80 percent of the going rate.
The report states, “To have a significant impact on the housing crisis, on its own, the City of Hamilton cannot be a sole investor or funder of the solution to build new affordable housing. Success requires a partnership between the Federal and Provincial governments, the City and the affordable housing provider will require innovative financing models, new investment partners and creative financing solutions to create viable projects… As the need for supplemental funding for affordable housing and homelessness is escalated, municipalities are likewise left to address competing demands in transportation, infrastructure, inflationary pressures, as examples, against a regressive form of taxation.”
During the current budget deliberations council voted to allocate $4 million a year to help address the affordable housing crisis. The staff report says if the city were to bear the burden of building units alone—the $4 Million would only result in six to eight units. Staff are recommending that ways be explored to leverage the $4 Million with federal and provincial funding. When the housing bill was first announced the government hinted that municipalities might be compensated for lost development fees in some manner but the details have not been spelt out. Finance Minister Peter Bethlenfalvy is set to release his 2023 budget in a month and he has warned that his document will stress “restraint.” The province, in passing the housing bill, suggested that municipalities are sitting on billions of dollars in development funding reserves, but municipalities say that money is needed to provide roads and sewers for new growth. Critics of urban sprawl say the development fees and additional taxes generated by sprawl don’t cover the real cost of growth as it is.
The report concludes, “while the development of purpose-built rental housing is a pressing matter, and the supply of housing is a shared interest, staff has concerns that many of the proposed changes to the DC Act through Bill 23…creates incentives to developers on the backs of municipalities and municipal taxpayers.”
The report provides another reason why Mayor Horwath needs to be unencumbered with anti-government council gestures, such as those proposed at Planning Committee, last week when she deals with the senior governments on this crisis.
The City should never have been charging development fees to below market affordable housing projects to begin with. This is a very positive change to help get shovels in the ground these desperately needed affordable housing projects.