Patrick Brown’s ‘reckless’ $11B debt plan would cost taxpayers almost $2K more each year; Region kills his ‘foolish’ stunt

Regional councillors wasted no time in quashing a motion by Brampton Mayor Patrick Brown which sought to push the Region of Peel $11 billion further into debt. The move came as council members labelled the idea “foolish” and “reckless”, while staff suggested it might be illegal.

A staff report presented at the July 6 Peel Region Council meeting described how the move would trigger a “significant deterioration of the Region’s financial sustainability and flexibility.”

Brown has failed to explain any details of his plan, and was largely silent on Thursday as staff and council members took turns picking his motion apart. He has refused to fund badly needed investments in Brampton since becoming mayor in 2018, and even tried to avoid a special tax for the expansion of Peel Memorial health centre, required to meet City Hall’s local-share obligation to the major healthcare expansion project.

Instead, Brown has often looked to the Region of Peel to bail out his city, previously asking for the money to expand Peel Memorial. While refusing to fund a desperately needed downtown Brampton redevelopment, which was supposed to be done in partnership with the Region, Brown instead cancelled City Hall’s previously approved investment into the project, which has moved ahead with only the Region’s share of the work to replace aging subsurface infrastructure across much of the downtown core.

Critics viewed Brown’s move to force the Region into taking on $11 billion of additional debt as a way to get infrastructure built in Brampton, so he would have something to show during his time as mayor. His pattern as a politician has been to refuse committing any spending under his role, while asking taxpayers at other levels to pay for investments needed where he has governed. There is a laundry list of Brampton projects he wants the Region, the provincial government or Ottawa to pay for, while Brown campaigns on keeping taxes frozen at City Hall.

Thursday was the latest example of the push back he has received, as other levels of government decline to have their taxpayers cover what Brown refuses to pay for. Meanwhile, major projects in Brampton, including ones he has promised and campaigned on, such as a “world class” cricket stadium, an underground LRT, the redevelopment of the downtown and the badly needed flood diversion channel for Etobicoke Creek have all either been cancelled, postponed or hanging in limbo, waiting for City Hall funds Brown refuses to provide. 

Mississauga Mayor Bonnie Crombie called Brown’s proposed motion “reckless”, while Mississauga and Regional Councillor Carolyn Parrish called it “foolish”. City of Mississauga staff estimated Brown’s move would cost its taxpayers, based on an average size home, more than $1,800 extra every year, while Brampton property owners, on average, would have to pay almost $2,000 more each year to cover the $900 million needed annually just to pay the financing cost including interest on the $11 billion debt.  

The lack of affordable housing options in Peel has many families seeking Regional assistance, causing the waitlist for housing subsidies to skyrocket. 

(Alexis Wright/The Pointer files) 

Brown introduced the heavily criticized motion on June 22, calling for Peel to immediately finance $11.1 billion in 2023 to fund the shortfall in infrastructure costs associated with new provincial housing targets. The motion was referred back to staff to study the legality and impacts of such a move.

When Brown first introduced his motion at the June meeting, the controversial mayor claimed the debt was necessary to help Peel deal with the affordability crisis in the region and to show the provincial government that Peel is serious about reaching housing targets laid out in the heavily criticized Bill 23—provincial legislation introduced immediately after the 2022 fall municipal election which left incoming and returning councillors stunned. It triggered the construction of 1.5 million new homes across Ontario by 2031, including 120,000 in Mississauga and 113,000 in Brampton, about double the amount of new homes constructed in each city annually. Later in the meeting Brown’s intentions were exposed as other members questioned his motivation to take on such enormous debt, that is likely illegal under the Ontario Municipal Act, which states municipalities cannot borrow what they cannot afford—regional staff pointed out that all other municipalities in Canada combined, borrowed less than $5 billion annually. Brown was attempting to rope the City of Mississauga into a quasi-cost sharing agreement with the City of Brampton, by tying the two together financially ahead of the dissolution of Peel in 2025. This would force Mississauga taxpayers to subsidize costs for infrastructure in Brampton, investments which Brown has neglected. He has long campaigned on promises to cut taxes while getting others to pay for spending to keep his community moving forward. 

Since the introduction of the province’s Bill 112 to dissolve the Region of Peel, Brown has repeatedly made the misleading claim that Mississauga owes Brampton between $1 billion and $3 billion in infrastructure costs. As justification, he has used a 2019 Deloitte report that was discredited after a freedom of information investigation exposed how senior Region of Peel staff, without council's knowledge, hired Deloitte to produce a report that would support their desire to maintain the status quo and keep the Region of Peel intact, undermining Mississauga’s desire to gain its independence as a single-tier municipality.  

In a July 6 report, regional staff highlighted that aside from violating the Municipal Act, the decision to go $11 billion further into debt would cost regional taxpayers approximately $900 million annually in financing costs—more than 6 times the current $145 million debt servicing fees. This level of debt is also practically impossible to obtain, staff said, pointing out that the entire Canadian municipal market can only afford $4 billion to $5 billion in annual borrowing.

“Even if the debentures could be placed in the market, there would be material cost implications as investors would demand disproportionately higher interest rates to compensate for the extreme size of the issuance and the associated uncertainty in the Region’s ability to maintain the incremental funding sources required to service the debt,” the staff report notes. 

Instead of going $11 billion in debt, staff recommended Council continue to advocate to the Minister of Municipal Affairs and Housing for the Province to create a municipal compensation fund to assist municipalities with the infrastructure costs associated with the Bill 23 housing goals.

The legislation, introduced in late 2022, calls for the soon-to-be-dissolved Region to approve a large portion of the 1.5 million homes Premier Doug Ford and the PC government have promised Ontarians by 2031. Based on the 2023 capital budget and 2023-2031 capital plan, the Region of Peel will already need to take on approximately $2.1 billion in additional debt over the next decade to support the capital plan. That is before considering any costs related to Bill 23’s housing targets and a fraction of Brown’s plan to borrow $11 billion in one year, which is not allowed according to the wording of the Municipal Act, according to staff. 

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In February and March, staff provided a presentation and report which estimated that in order to achieve the new housing targets set by the PCs, the Region would have to advance capital works beyond the current estimated 10-year capital plan. The estimated cost of $8.9 billion would have to grow by approximately $11.1 billion, increasing the 10-year capital plan to approximately $20 billion for infrastructure projects related to water, wastewater, and transportation alone. 

Premier Ford and Steve Clark, Minister of Municipal Affairs and Housing, have repeatedly said they would make municipalities “whole” and help cover these critical infrastructure costs, but have remained silent for seven months on the details of what this compensation will look like.

Brown’s “reckless” debt increase, as described by Mayor Crombie, would result in unmanageable property taxes across the region to raise enough revenue for debt interest and repayment, placing a huge burden on Brampton residents in a city whose real estate market, according to regional staff who cited reports from partner agencies, is unaffordable for 80 percent of residents. Mississauga staff estimate that Brampton homeowners would pay, on a home with an average assessed value, an extra $1,920 every year to cover the financing for the $11 billion debt. Many on fixed incomes cannot afford this, while others struggling with higher fuel costs, grocery bills and other spikes in spending would be crippled. 

The City of Brampton’s budget is already in need of a large influx of cash, which will need to come from taxpayers, to pay for the postponed downtown redevelopment, badly needed transit investments, the flood channel, a new university promised by Brown, the stadium he has failed to deliver, future local-share funding of healthcare expansion and a growing list of other needs that have been neglected by the mayor. He has been heavily criticized for using Brampton as a stepping stone in his controversial political career, claiming to be a fiscal belt tightener inside City Hall while he campaigns elsewhere. When he stopped spending time in the city to run for the Conservative Party leadership last year, while criss-crossing the country instead of dealing with Brampton’s pressing needs, he repeatedly told campaign audiences around the nation that he was the only mayor in Canada who had frozen his city’s budget, painting himself as a cost-cutting conservative. Meanwhile, he continued to ask Peel Region, Queen’s Park and Ottawa to cover Brampton’s bills, which are now coming due. 

Caledon is also in no shape for the massive tax increase Brown wants Peel homeowners to cover.

“I certainly wouldn't want to see our taxes in Caledon increasing by 20 to 30 percent,” Caledon and Regional Councillor Christina Early said. 

Caledon Mayor Annette Groves originally seconded Brown’s motion to allow discussion. But after going through the detailed staff report, she withdrew her support.

“I don't believe I read the report and I will tell you I know that, having looked at the report and the cost, the taxpayers in Caledon would not be able to support this,” she said. “In fact, if I moved ahead with it, they would shoot me.”

Estimated property tax increases in 2024 if Brampton Mayor Patrick Brown’s motion to put Peel Region $11.1 billion in debt were to pass.

(City of Mississauga-Carolyn Parrish/Twitter)

Brown was mostly silent during Thursday’s meeting. He failed to explain how he thought Peel taxpayers could afford $11 billion of additional debt, when every municipality in Canada combined cannot afford to borrow more than $5 billion annually. 

Even two of his own Brampton councillors at the Region refused to support him. Pat Fortini and Martin Medeiros voted against Brown’s plan during Thursday’s meeting, with only Brown and his usual Brampton allies, led by Rowena Santos, Michael Palleschi, Paul Vicente, Harkirat Singh and Dennis Keenan voting to take on the debt (which staff said could not even be done under the Municipal Act). 

Mississauga Mayor Bonnie Crombie’s tweet before Thursday’s Regional Council meeting. She called Patrick Brown’s motion to put Peel Region $11 billion in debt “reckless”.

(Bonnie Crombie/Twitter)

Mayor Crombie called Brown’s move “financially reckless.” 

“We need the province to step up and help fill the gap, not property taxpayers,” she said.

Regional Council members also criticized the timing of the proposed debt which, if issued, would result in taxpayers paying for borrowed money sitting in municipal coffers, without any way of being used. 

Capital projects associated with the $11 billion have neither been identified nor approved. Master servicing plans that would identify the infrastructure projects are expected to be completed in 2025. Even if the $11 billion financing request were to be approved, it would not guarantee the delivery of the housing targets. It’s unclear if there is enough labour to achieve the 1.5 million new homes in less than eight years, and provincial requirements for a range of approvals including environmental assessments, which impact the timing and ability of projects to move forward, have not even been established. The private sector has yet to account for the 1.5 million new units in applications to municipalities that also have to clear numerous planning hurdles. The staff report notes that typical practice is to issue debt when a project has reached a stage of “substantial completion”. Brown is looking for the debt to be issued before the projects have even been planned. 

“Even if we had borrowed, we'd start to pay interest right away, we wouldn't have a shovel in the ground so it didn't make any sense,” Mississauga and Regional Councillor Dipika Damerla said. 

In a desperate effort to save face, Brown tried to refer the staff report and his debt request to the newly formed transition panel that will help the Region and Province plan the upcoming dissolution of Peel’s government.

Crombie called this a “foolish” move, saying she doesn’t think the transition team would pay any attention to such a motion. 

“The report clearly speaks against the motion and I think he wants them to give consideration to the motion, so you have a conflict here,” she said.

Caledon and Regional Councillor Mario Russo pointed to the absurdity of Brown’s efforts at council, saying there was “no real need” for Brown’s request to have the transition panel deal with the $11 billion debt proposal and that the staff report recommending council members ignore Brown’s scheme should simply be accepted.

After his motion to pass the issue onto the transition panel failed, Mississauga and Regional Councillor Brad Butt moved, and Councillor Damerla seconded the final motion to approve the staff report and recommendation to quash Brown’s debt plan. It passed with 17 in favour, six opposed and one abstention by Brampton and Regional Councillor Michael Palleschi. All other Brampton councillors at the Region, except Fortini and Medeiros, voted unsuccessfully in support of Brown who wants to burden Peel taxpayers with an unprecedented $11.1 billion of new debt. 

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Twitter: @SamanahAli

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