Bill 23: Changes to Development Charges

The Government of Ontario passed Bill 23, the More Homes Built Faster Acton November 28, 2022. This legislation is part of the government's plans to achieve construction of 1.5 million homes by 2032.

Northumberland County is committed to working with the province and developers on the shared goals of housing availability and affordability. However, County Council is calling on the province to pause implementation of Bill 23 and work with municipalities to address concerns, to ensure plans are affordable and sustainable for local taxpayers. 

Impacts of Bill 23

Bill 23 makes fundamental changes to the land use planning system in Ontario. Municipalities have identified significant issues with the implementation of this legislation including concerns relating to the environment, heritage architecture, public consultation impacts—as well as financial impacts for property taxpayers.

Changes to development charges

Builders pay development charges to help cover the cost of the municipal infrastructure their new houses, condos, townhomes or offices need.

For example, in Northumberland, a growing population means increased demand for affordable and subsidized housing. Prior to Bill 23, development charges were providing critical funding for new affordable housing builds such as the Elgin Park Redevelopment and the Ontario Street Housing Development. These projects are no longer eligible to receive funds from development chargers as of November 28, 2022.  

Bill 23 eliminates Development Charges for housing services. With the elimination of these Development Charges, Northumberland County faces a significant budget shortfall. To close the gap, the County will either need to scale back plans for additional affordable housing-related projects for our community or raise property taxes.

Impacts for Northumberland County

Ontario’s new legislation, More Homes Built Faster Act, has serious impacts for Northumberland residents.

Bill 23 could result in a loss of $17.4 million in revenue at the County level alone

Northumberland County stands to lose $17.4 M in revenue from development charges - money that is ear-marked for local affordable and attainable housing projects.  A $17.4M shortfall could result in a potential increase to the County portion of property tax bills of about 27% over the next 2-7 years—or about $360 for the average homeowner. Lower-tier municipalities in Northumberland are also in the process of calculating financial impacts to their operations resulting from Bill 23.

Less funding to build affordable housing; no guarantee of more houses built

Northumberland County is a lead developer of affordable and attainable rental housing in Northumberland. Municipalities and municipal housing corporations in rural Ontario are uniquely positioned to deliver these types of projects. This is because there is a lack of private sector developers and non-profit housing developers with the capacity to fund, build and operate affordable rental projects. 

Bill 23 takes away the few tools the County has, to deliver critical affordable housing:

  • Northumberland County’s development charges for residential units had ranged from about $1,600-$3,800 per unit. 19% of these fees were being set aside for housing services (with the remainder divided between other allowable services like public works infrastructure, long-term care, and paramedic services). Current charges now range from about $1,300-$3,100 per unit with Housing Services having been removed from the charge. 
  • Of this amount for housing services, nearly 95% of the funds collected were directly supporting ongoing affordable housing projects, with 5% used for related studies and affordable housing and homelessness planning. 

Savings from the elimination of these fees goes back to developers. There is no process in Bill 23 requiring developers to pass any of the savings on to new homeowners, or to build more homes. On the other hand, this loss of revenue for the County will mean a funding gap that needs to be off-set by either a reduction in housing-related projects and services, or a property tax increase. Bill 23 transfers the cost from developers to the taxpayer.

250 new affordable housing units at risk for Northumberland

Without the planned revenue from development charges, the County estimates that over 250 new affordable housing units may be at risk of not being built over the next 2-7 years without significant increased funding from the provincial and federal governments.

Impacts to environment and greenbelt lands

Local conservation authorities have been assisting the County and our municipalities with development reviews and guidance for many years. We rely on their expertise and local knowledge to ensure responsible and sustainable development does not impact our unique environmental features. Under Bill 23, our conservation authority partners will now have a diminished role as it relates to conservation of land, protection of significant environmental features and matters of pollution.

Risk of loss of heritage architecture that makes our communities unique

Bill 23 proposes to remove barriers to housing by updating how heritage properties are identified and conserved by municipalities. Lower tier municipalities with such registries will have two years to review heritage properties to determine if they should be designated or removed from the registry. Only properties on the current registry can be reviewed—no new properties can be added.

This will make it much harder to keep listed heritage properties on the registry and increases the threat of removing the listed properties from the heritage register, leaving them with no heritage status or protection.

How development charges work

Learn more about development charges, why they are collected, and how they are used:

The province sets strict rules for development charges that municipalities must follow 

Development charges are one-time fees. The Province’s Planning Act allows municipalities to collect these charges so that growth pays for growth—not existing taxpayers. That doesn’t mean existing residents are off the hook. They help pay for the ongoing costs for the new infrastructure through their annual property tax bill and service fees.

Here are a few of the checks and balances for development charges:

  • Municipalities follow a fair and detailed process to determine the amount of Development Charges a developer is required to pay.
  • This process is outlined in the Planning Act and Development Charges Act.
  • The amount is calculated using long-term growth projections in consultation with the development industry.
  • Municipalities can only collect Development Charges for the percentage of the costs that apply to new growth. For example, a new bridge in Campbellford would benefit existing residents, the amount of Development Charges we can collect for it must be reduced so that the benefit to existing taxpayers is not included in the calculation.
  • Development Charges must be used in a set timeframe and can only be used to pay for the infrastructure and services needed for new growth—nothing else.
  • The Province controls when and how municipalities can increase Development Charges.   

Developers still earn a profit with or without development charges

Development Charges make up a small percentage of overall building costs but have a huge impact on the quality of life in a community.

Northumberland County’s Development Charges for residential units range from about $1,200-$3,200 per unit.

According to a July 2022 study by the Canada Home and Mortgage Corporation, developers typically earn between 10 and 15% profit once all other costs, including government fees, are paid.

Developers price housing based on what the market will pay. If municipalities reduce fees, there is no guarantee that developers will lower the price of housing or pass any savings on to homeowners.

Reserves are important when planning for municipal infrastructure and are permitted by the Provincial Planning Act

The development charges (DC) Northumberland County collects ensure service levels and community livability are maintained as the County grows.

We only collect what is needed for growth (in accordance with the Planning Act) and manage our reserves carefully. The aim is to:

  • Make sure we build infrastructure and services at the most appropriate and cost-effective time to support new growth.
  • Report annually on DC reserves and activities ensuring transparency under the Act. 

County council resolution urging the Province to work with municipalities to address concerns

Whereas Northumberland County supports action to increase the supply of housing for Ontarians and specifically to address the affordable housing crisis in Ontario; and 

Whereas The Government of Ontario introduced Bill 23, More Homes Built Faster Act, 2022 on October 25, 2022 and the Bill received Royal Assent on November 28, 2022, providing insufficient time for newly elected municipal councils to provide fulsome feedback; and

Whereas Municipalities across the province have identified significant financial, environmental, public consultation, and heritage impacts related to the measures identified in Bill 23; and

Whereas The proposed change to subsection 2(4) of the Development Charges Act, 1997 to remove “Housing Services” from the list of services that can be funded through development charges would result in the immediate removal of the housing services portion of the Northumberland County Development Charge and result in an estimated funding gap of approximately $17 million over the next 7 years for financing an estimated 250 new affordable units; and

Whereas At current building levels, an estimated 27% increase to the County portion of property taxes would be required to maintain planned investments and services, with additional tax implications anticipated for local lower-tier municipalities;

Be It Resolved That the Council of the Corporation of the County of Northumberland calls upon the Government of Ontario to pause implementation of Bill 23, and engage in meaningful engagement with municipalities and other key stakeholders to address identified concerns in order to achieve the shared goal of increasing housing supply and improving affordability and sustainability; and

Be It Further Resolved That a copy of this resolution be sent to The Honourable Doug Ford (Premier of Ontario), The Honourable Steve Clark (Minister of Municipal Affairs and Housing), The Honourable Michael Parsa, (Associate Minister of Housing), the Honourable David Piccini (Minister of the Environment, Conservation and Parks and MPP for Northumberland - Peterborough South), the Association of Municipalities of Ontario (AMO), and to all Ontario municipalities; and

Be It Further Resolved That County Council direct staff to provide information on the County website regarding the estimated impacts of Bill 23 on the County levy.”

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