The day after the municipal election, the Ontario government released Bill 23, bringing major changes to the planning and land use legislation in the province. A few days later, it released its amendments to Ottawa’s new Official Plan, refusing to sign off on Ottawa’s vision for walkable, transit-oriented neighbourhoods.
The changes are forcing city councillors, city planners, and engaged community associations to confront an existential problem about growth and taxes in Ottawa.
With Bill 23, the Government of Ontario seems to have compiled a list of planning policies and legislation that have been used by neighbours and activists to block development (affordable housing, watershed management, nature conservation, heritage preservation, site plan control, land tribunal appeals) and then put an indiscriminate match to it. The province could have tweaked the rules to prevent their misuse rather than eviscerate them. Instead, they ignored the housing crisis until it had reached a fever pitch and are now playing catch up with the housing stock, leaving the design of liveable communities to the law of supply and demand.
In their changes to the Official Plan, they added more expansion lands, de-fanged the transit-supportive conditions set-out by City Council to justify urban expansion, and called for more height along major corridors, removing one of the city’s tools to negotiate affordable housing units in exchange for more density.
Read alongside Bill 23, the requirement for “more homes built faster” in the revised Official Plan shows a planning horizon focused on increasing the housing supply at the cost of any other consideration, including affordability, liveability and climate resiliency. It offers a tool box with a single hammer – supply – to fix the housing crisis in Ontario.
There is a lot to unpack in Bill 23 and this post is not a line-by-line examination of its impact. If you are interested in a summary of the changes brought by Bill 23 to planning in Ontario, the AMO (Association of Municipalities Ontario) provides a good one here. For a shorter and simpler summary, you should read this summary from Ottawa City Councillor Glen Gower: Ten reasons you should care about Ontario’s new housing legislation. If you are concerned about the changes to watershed conservation and wetland management, here is a good Twitter thread from Nick Stow.
I’m focused on Bill 23’s changes to Development Charges (DCs), which would limit one of the main financing tools used by municipalities to fund the cost of growth. (In the same category are big changes to parkland dedication requirements and caps on community benefit charges, also part of Bill 23.) DCs have been a significant factor in fostering the resentment towards growth and density that is at the root of our housing crisis. Reducing them will not make housing more affordable, it will simply make building a house cheaper for homebuilders.
DCs are a one-time fee levied by municipalities on new development. They are meant to cover the cost of growth-related infrastructure such as roads, sewers, transit and — to a lesser extent — libraries and recreation facilities. Since new development happens in increments, it doesn’t immediately generate enough revenue to pay for the infrastructure and amenities it requires. Without DCs, this revenue shortfall would be pooled and shifted to existing taxpayers through higher fees and property taxes. In Ottawa, DCs on a single home amount to $43,706 or roughly 6 years of property taxes paid upfront and rolled into a homebuyer’s mortgage. Since new homebuyers also need to pay property taxes every year, you can say that they pay twice the property taxes on their homes for the first 6 years of ownership. DCs are rolled into the purchase price of every new home and are argued to contribute to the housing affordability crisis. DCs are an article of faith in Ontario, born of the gospel of Low Taxes, which states that no one should pay for anything they don’t use personally.
To be sure, there is an equity and efficiency issue with shifting the cost of growth to existing taxpayers. But in Ontario, if you say “higher taxes” three times at midnight in front of a mirror, you turn into a Canada goose. DCs have not been used to preserve tax equity but rather to protect elected officials from the unpopularity of growth in their communities. DCs comfort the homebuyers’ hope that their street will be the very last one built, their cars the last ones allowed on the street, their needs the very last ones accommodated by a community that they will be the very last ones to join. DCs also comfort the understanding that taxes should be collected strictly for the benefit of those who pay them rather than for the collectivity.
Everyone seems to be waking up to the fact that the emperor has no clothes. In a memo sent to Ottawa City Council, Ottawa planning staff concluded that:
“As currently worded, the adoption of Bill 23 will mean conclusively that growth will not pay for growth, and the burden of supporting infrastructure necessitated by growth could be significantly delayed, levels of service degraded, and/or the costs passed on to existing municipal rate payers.” (emphasis mine)
The problem with growth paying for growth is that it was never supposed to, and never did. The Development Charges Act (DCA) is replete with exemptions, discounts, loopholes, and restrictions. The DCA expects municipalities to subsidize growth by first putting money where their mouths are. The DCA limits which services are considered growth-related and discounts so-called “soft services” like libraries and affordable housing. Development Charges offered such a simple defense against anti-growth sentiment that everyone forgot that they were merely one tool and not the entire toolbox.
This “growth pays for growth” mantra has made sprawl the easy option by making it an issue for its immediate neighbours rather than an existential issue for the entire city. If existing taxpayers had to fund the cost of running a sanitary sewer 10km over that way, they would take a second look at the benefits of infill. When I flush my toilet in Stittsville, my poop gets pumped roughly 40km* over to the Robert O. Pickard water treatment plant in the east end of town, and it’s about to get longer. That should be a concern to everyone.
* I know that my poop doesn’t travel via Trans-Canada Hwy 417 E, I’m trying to make a point here, not science.
Since DCs cannot legally generate enough revenue to fund growth-related capital costs, the same timing externality that prevented property taxes on new homes to pay for the upfront cost of growth now affects the collection of Development Charges: municipalities are caught in a revenue shortfall that requires more growth to fill the gap. What does this mean in practice? When new residents move to new areas, they do not wait before they start using schools, libraries, roads and rec centres. They use nearby services in existing communities for years before their neighbourhoods are built out, enough DCs are collected, and their services fully funded. These existing services get increasingly crowded, sometimes to the point of not meeting demand. (Anyone in Ottawa who has tried to score a swimming lesson nods emphatically.)
Growth should be a benefit. Humans have been gathering in communities since the neolithic revolution to share the benefits of a reliable food supply. The process of urbanization, which has seen half of the world’s population move to cities, is the process of making the pie bigger: people trade personal space for a share of economic, educational, and cultural opportunity. Growth well done is a collective process of tradeoffs.
The one-two punch of growth in Ontario is that we separated growth from its benefits to the larger community. The funding gap caused by our over-reliance on Development Charges has made growth something that takes away from the community rather than something that adds to it. Instead of making the pie bigger, growth is making more people compete for the same pie. No wonder we have NIMBYs. (As urbanist Brent Toderian puts it, the only thing worse than NIMBYs is when NIMBYs are right.)
Development Charges have allowed municipalities to avoid difficult discussions about the good that comes from growth but also showed how entrenched anti-growth sentiment is amongst our elected officials. When I hear elected officials and city administrators say that without Development Charges we won’t be able to build liveable communities, what I hear is a failure to believe in the benefits of growth and urbanization. It’s a failure to believe in the city they represent.
When the only answer to reduced Development Charges is “I guess we won’t have parks anymore” instead of “We need to talk about how we will pay for the city we want”, we have a failure of vision and leadership, not a failure of legislation.
Ok, so I read through this twice (and I need to read it again -- why can't I be as smart?!), but I get this gist that some who work for the city and live in the city are somehow also "anti-city"? I have to read this again. Great writing, Veronique! All this municipality stuff -- I think you can crack into a huge base of readers who don't know how to understand municipal goings-on (ahem) as well as you do.