After complaints, Ontario will offer cash to Toronto and other cities caught in development fee squeeze

The province will backstop Toronto and other cities if audits find new legislation exempting developers from some fees — money that would otherwise fund new roads and sewers — leaves them short of cash, says Ontario’s minister of municipal affairs and housing.

But Steve Clark acknowledged Tuesday his target to build 1.5 million new homes by 2031, and to which his promise of financial help is tied, could be hard to reach despite the housing crunch because of factors such as high inflation and interest rates.

“There’s things out of my control,” Clark said in Mississauga, where he announced an additional $202 million across Ontario this year for supportive housing, including projects that will help get homeless people off the streets.

“So, interest rates, inflation in our country is at a point where I can only control things that are in my purview,” he added.

“I want to ensure that everything I can do at the provincial (level), and also with our municipal partners, is in place so when the economy takes that bit of an upturn, that we can get shovels in the ground.”

While municipalities have been given individual targets for new home construction amid a shortage that has caused a surge in prices, the Ford government’s Bill 23 — called the More Homes Built Faster Act — has cut, frozen and exempted some fees developers would typically pay, mainly for affordable housing, as an incentive to build.

However, municipalities have complained the break on development charges will make it harder for them to service building lots, leaving them with a cumulative shortfall in revenue of as much as $5 billion.

Former Toronto mayor John Tory, for example, put the figure for the province’s largest city at an estimated $230 million last fall.

The first provincial audit on potential funding gaps caused by Bill 23 will be in Toronto, said Clark, who met Friday with Deputy Mayor Jennifer McKelvie on terms that will see third-party auditors gauge the city’s development charge revenue and reserves.

“We’re not going to hang them out to dry,” Clark told reporters.

“If we find there are revenue issues that are created because of the audits, we’re going to be partners,” he added. “It’s a collaborative process.”

Last month, Mississauga Mayor Bonnie Crombie — whose city has been given a target of building 120,000 homes — raised concerns that labour shortages, supply chain problems or financing issues could make it difficult to reach the goal.

At Queen’s Park, Green Leader Mike Schreiner said Tuesday the government housing policy is shaping up as a “failure” already and took fresh aim at Premier Doug Ford’s move to open up 7,400 acres of the protected Greenbelt for housing when other land is already available.

“We have numerous studies that have shown that we can build two million homes in the land that’s already approved for development,” Schreiner told reporters after the legislature’s daily question period.

He said it’s smarter to build “in communities where people want to live, where we already have built-up areas, and quite frankly, where we already have the services in place … we can ramp up housing much faster and in a much more affordable way.”

Rising interest rates and other market factors have dealt a setback to Ford’s plans for 1.5 million new homes by 2031, which requires 150,000 to be built annually.

Last month’s provincial budget forecast just 80,300 new housing starts this year, another 79,300 next year and 82,700 in 2025 — all just over half the annual pace needed to meet the goal.

“We’re going to do everything we can to hit that 1.5-million number by 2031,” said Clark.

Finance Minister Peter Bethlenfalvy has called on the federal government to help by deferring the harmonized sales tax (HST) on new “large-scale, purpose-built rental housing projects.”

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