Impacts of Bill 23 on Municipal and Regional Budgets and Property Taxes

Impacts of Bill 23 on Municipal and Regional Budgets and Property Taxes

MIRANET (Mississauga Residents’ Association Network) has been closely following discussions and proposals at the Province with regards to the Conservation Authorities Act and the More Homes Built Faster Act since their inception. We have been vocal advocates for the people of Mississauga and the Region of Peel, pushing back against short-sighted and harmful policies proposed by the Ford Government. The passing of Bill 23 will have far-reaching impacts on Southern Ontario that will affect both present and future generations. Implementation of this bill will do nothing to achieve the objective of more housing stock, nor will it address the affordability issue; it will instead lead to irreversible harms to the environment and the people that it sustains and supports. The Greenbelt provides essential services whose economic value outweighs any perceived benefits from paving it over:

  • Agricultural lands to provide sustainable and reliable food sources. The impacts of fire, drought, flooding and disease on traditional suppliers in California, Florida, and western Canada call into question their long-term viability as large-scale centres of food production
  • Environmental services provided by the Greenbelt include marshes that act as carbon sinks, filter water to remove contaminants, provide downstream flood protection, and are home to critically threatened species
  • Greenspace and parkland where people can experience nature and reap the health benefits of being in the natural environment

The proposed legislation under Bill 23 will likely fail to meet the majority of its objectives:

  • Labour economists have questioned the goal of building 1.5 million homes in ten years; with the current labour shortage this goal is not realistic. They have also pointed out that there are many parcels of Municipal and Provincial land within the GTA that are sitting undeveloped. Why have these not been inventoried and earmarked for housing development? Better yet why have they not been earmarked for subsidized housing and purpose-built rental housing?
  • Many Ontario Mayors have voiced their objections to developers sitting on large tracts of land which have been slated for development with all necessary permits in place. Years after Municipal and Regional staff have reviewed development proposals, done their due diligence, and issued permits, these developers have yet to put shovels in the ground. Why does the government not require these developers to proceed within a specific time frame after receiving permits, particularly due to the demands of the More Homes Built Faster Act? What is preventing the Province from enacting legislation to require developers, with lands already slated for development and permits in hand, to proceed with their projects immediately? Would this not be a more-cost effective and rational approach to the housing shortage, while also protecting the Greenbelt?
  • Green building standards no longer need to be met. These homes will therefore not be adapted to the new climate, making them more expensive to run than their green counterparts. Only high-income earners will be able to afford them
  • The bill does not provide information on who will resource these new developments. Will residents be required to commute to established communities for groceries, healthcare, and entertainment?
  • Young people, immigrants, seniors, and the working poor will not be able to afford these new homes because prices have continued to increase while wages and salaries have remained stagnant, leading to a shift towards the rental market; inflationary factors have led to increased mortgage rates and overall increases in long-term mortgage carrying costs. The cost of rental housing is at an all-time high, therefore many young people and immigrants, despite having full-time jobs, are not able to build equity through property ownership or financial savings and investments
  • Limiting the ability of the Conservation Authorities to conduct risk assessments and make deputations is highly problematic. The Greenbelt was meant to protect downstream communities from extreme flooding events. We are currently experiencing more frequent and more intense rainfall events; the increasing amount of rainfall will lead to an increase in the geographic footprint of existing floodplains. Overland flood insurance is not provided by home insurance policies; in pursuing their plan of building homes on the Greenbelt, the Ford government threatens to put existing housing stock at risk, increasing the probability of devasting floods which could leave many Ontarians homeless and bankrupt
  • There is enough available land within municipal boundaries to address the housing shortage. This land comes with preexisting infrastructure and resources; it would therefore be substantially cheaper to develop. The current plan to build on the Greenbelt is more expensive and destructive; from a business perspective this is the worst possible option and the most financially reckless

Critics of the bill have stated that there is little evidence to demonstrate that the homes built under this plan will be more affordable. What has also become evident is that this bill is making existing housing stock far less affordable as costs previously paid by developers will now be paid by homeowners and renters. Taxpayers are essentially subsidizing the developers’ business model while reaping none of the financial benefits and all of the potential harms with no avenues of protest or redress.

Bill 23 proposes numerous changes to the Development Charges Act and the Planning Act which will significantly impact how municipal governments recover costs associated with growth. The City of Mississauga first presented their 2023 budget proposal in June 2022. The increase in municipal and regional levies in this budget were meant to address shortfalls due to Covid-19. Revenue losses due to people remaining at home during lockdown, increased expenditures for Covid supports, supply chain issues and inflationary pressures were all accounted for.  The passing of Bill 23 required a reassessment of the budget and residential property taxes. While it is uncertain how Bill 23 will impact two-tier municipalities, MIRANET used the most current data to calculate potential increases to residential property taxes.

At their recent Budget Committee meetings, the City of Mississauga approved a 3.0% budget increase for 2023 (on February 1, 2023) and the Region of Peel approved a 2.8% budget increase (February 2, 2023). These increases do not reflect the potential impacts of Bill 23 on Municipal and Regional budgets. Further analysis is required and is being carried out against the backdrop of Municipal audits to be conducted by the Province. In Mississauga and the Region of Peel, there is the added risk/unknown posed by the threat of either amalgamation (favoured by Patrick Brown) or secession (favoured by Bonnie Crombie). The Premier has stated that he will sit down with the Mayors to decide on the best approach. The only role for the electorate in this process is to foot the bill for the political aspirations of our leaders.

The benefits of secession versus amalgamation have long been debated by economists. The promises of the reduction in duplication of services and greater economies of scale are not borne out by the data. The same holds true for secession, or de-amalgamation, where the division of assets and debts can be divisive and usually ends in litigation; furthermore, the results don’t always deliver more simplified governance structures.

The residents of the Region of Peel have been here once before; when the Ford government came to power in 2018 they had plans to reimagine health care delivery in the Province, simplify the process of providing supports to families of children with autism, and find efficiencies in municipal operating budgets through amalgamation. The Province failed to provide any convincing arguments (based on good quality data and thoughtful analysis from subject matter experts as opposed to vague invocations of cost savings based on the most tenuous of grasps on reality) and public feedback was resoundingly in favour of the status quo.

According to the 2021 Census Data released by Statistics Canada, the population of the Region of Peel now stands at 1,450,000 million people. Our leaders are planning profound long-term changes to our governance structures without any real public input. Given the challenges of health care reform, inflationary pressures on the economy, increasing inequality, and municipal budget shortfalls, the Province has more than enough on its plate to deal with. The only people who should decide on changes to the governance structure are the 1.45 million people who call the region home.

Should the Province decide to ride roughshod over the democratic rights of residents and proceed with either amalgamation or secession, the potential financial and legal risks are unknown. We have no clear assessment of what the costs to the taxpayer may be.

In order to offset the impacts of Bill 23, the Province has stated that it will make Municipalities “whole” through financial compensation for the loss of development charges, but as yet, no binding agreements are in place. We have therefore provided an analysis of the hypothetical property tax impacts in the event that the Province does not address the funding gap. Table 1 summarizes the tax scenarios in the 2023 City of Mississauga and Region of Peel budgets proposed in June 2022. Table 2 summarizes the approved 2023 City of Mississauga and Region of Peel budgets, as well as hypothetical tax increases in the event of a funding shortfall.

Table 1: 2022 Proposals for City of Mississauga and Region of Peel Budgets

Table 2: 2023 Approved Budgets for City of Mississauga and Region of Peel including Potential Impacts from Bill 23

The education levy is determined by the Provincial government and this rate is projected to remain unchanged. It is also worth noting that the Region has increased the Average Utility Rate by 7.9% impacting both business and residents (further details may be found at https://www.peelregion.ca/budget/2023/pdf/2023-executive-summary.pdf)

Table 3 contains a summary of the tax levies for 2022, for 2023 (recently approved and excluding Bill 23 impacts, these numbers are hypothetical until the City and Region announce their official levies), and for 2023 including estimated potential impacts of Bill 23.

Table 3: MIRANET Calculation of Revised Municipal and Regional Tax Levies

Table 4 contains a summary of property taxes for 2022, 2023 (approved year-over-year increase, to be confirmed by the City and the Region), and 2023 (including estimates of potential Bill 23 impacts).

Table 4: Calculation of Various Property Tax Scenarios

Anyone wishing to calculate their property taxes for any of these scenarios can do so with the following formulae:

Total property taxes (TotP)

TotP =MPAC Assessed Home Value × (Total Levy ÷100)

  • Average property tax by installment (AvgP)

AvgP =TotP ÷6

Any approved changes to the property tax rate will not be reflected in the first three installments of 2023; instead, these first three payments will reflect the 2022 rates and the difference will be averaged over the final three payments of 2023. As an example, an individual whose home has been assessed at $730,000 will pay three installments of $1,009.51 each in the spring of 2023 and the remaining installments will be $1,152.96 each. While the installments collected by the City are not exact averages of the total amount owing, these numbers are very useful for personal finance and budget calculations.

The total amount of property taxes in each of these scenarios is illustrated in Figure 1 and the dollar value increase in property taxes with and without the impact of Bill 23 is illustrated in Figure 2.

Figure 1: Property Tax Increases for 2023 prior to Bill 23 and for 2023 with Bill 23

Figure 2: Property Taxes for 2022, 2023, and 2023 with Bill 23

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