PC expansion of housing fund still falls well short of Peel’s needs

Premier Doug Ford recently announced Ontario’s key funding mechanism for municipal housing projects will be increased from a total of $2.4 billion to $4 billion, but stakeholders are already questioning how the bump from Queen’s Park will meet the crushing demand towns and cities across Ontario are struggling with.

The announcement came at the Association of Municipalities of Ontario’s annual conference at the end of August, when the PCs pledged to expand the Municipal Housing Infrastructure Program (MHIP) which provides funding toward housing-enabling infrastructure projects. While the extra $1.6 billion was welcome news, housing advocates in the municipal space say it’s not nearly enough.

Peel, for example, needs a staggering $50 billion over ten years to meet its core housing need. In 2024, the regional government reported an $11.5 billion gap just to cover the infrastructure needed to hit the provincial housing target of 246,000 new units across Peel by 2031 (1.5 million in total throughout Ontario) a goal that, according to analysis, can not be reached, especially as Ontario continues to struggle with a lack of new housing starts. 

Brampton, Mississauga and Caledon all failed to meet the provincially assigned housing targets in 2024.

(Alexis Wright/The Pointer files)

“Growth is no longer paying for growth,” said Mississauga City Councillor Natalie Hart. “We need the provincial government, as well as the federal government, to step up and cover that gap.” 

Traditionally, the cost of infrastructure needed to support new builds comes from development charges. These are typically left up to the discretion of the municipality which sets the amounts builders have to pay so new infrastructure to support residents will be ready when they move in. It’s a balancing act—higher development charges mean developers may be unwilling to build; lower charges lead to infrastructure funding gaps that eventually have to be covered by existing property tax payers. 

Under Ford, the Government of Ontario has  passed legislation that limits the ability of municipalities to make those judgment calls on their own. 

Bill 23, the More Homes Built Faster Act of 2022, amended the Development Charges Act of 1997 to include development charge exemptions and mandated the reduction of development charges as a whole. Earlier this year, Bill 17, the Protect Ontario by Building Faster and Smarter Act, delayed when development charges must be paid and removed interest on installment payments. 

“There's a nervousness in the market about are they (buyers) going to occupy as quickly, or are they going to sell as quickly,” said Michael Fedchyshyn, CEO of the Building Ontario Fund, a Crown corporation created in 2024, during a panel at the AMO Conference. “We can take some of that risk off the table by dropping the wires and the pipes in the ground with the anticipation that those sales will eventually come.” 

Data from the Ontario government for 2024 show that less than half of the province’s municipalities hit assigned housing targets for last year.

(Alexis Wright/The Pointer files)

A Peel Region pre-budget report explained that the development charges shortfall as a direct result of Bill 23 will be approximately $1.5 billion over 10 years, and it remains unclear who will pay for all the roads, water mains, sewers, stormwater systems, community centres, libraries, policing, fire services and the other infrastructure that $1.5 billion is supposed to cover.  

In June, Peel Regional Council voted to further cut development charges in half until November 2026. The motion was originally pushed by Mississauga and opposed by Brampton and Caledon due to concerns over the lost revenue. A similar motion two weeks earlier ended with Brampton and Caledon councillors walking out of the meeting and breaking quorum. 

The motion was passed after the region was promised $1.3 billion from the Building Ontario Fund by Housing Minister Rob Flack. This is still $200 million short of the gap created by Bill 23. 

“It’s really important that we have a mechanism where growth is paying for growth,” said Laura Mirabella, Commissioner, Finance and Regional Treasurer for the Region of York, during an AMO Conference panel. “If it's not going to be development charges, then it has to be senior levels of government using their fiscal tools to provide transfer payments to municipalities that become dollar-for-dollar reductions.” 

Municipalities across Ontario have made it clear that if Ford continues to force development charge breaks for builders, while Ottawa and Queen’s Park fail to provide revenue or revenue tools to municipalities, the only way to cover all the infrastructure developers have traditionally paid for is through sky-high property tax increases, possibly even double what home owners currently pay, in some cases. 

The Building Ontario Fund is different from the Building Faster Fund, which rewards municipalities who reach 80 percent of their annual province-assigned housing goal. In 2024, 27 of the 50 municipalities given targets didn’t make it to that threshold, including all three Peel municipalities. In 2023, Brampton and Caledon earned $25.5 million and $2.8 million, respectively. 

As of August 8, 2025, all three are again falling short, with Brampton and Caledon sitting in the 60 percent range and Mississauga just under 35. 

Even with the promised $1.3 billion, MHIP and the Building Faster Fund (which Peel will likely see no benefit from), Peel still doesn’t have what it needs to make up the billions of dollars in shortfall.

Municipalities have an extremely limited pool of revenue sources and are not permitted to run deficits. The loss from the development charges will require increases in property taxes. 

“We cannot transfer the cost of growth onto existing taxpayers,” Mirabella said. “NIMBYism gets much stronger when people think that they have to pay for the infrastructure, the cost of the new communities.” 

The development charge reductions also do not guarantee an actual lowering of housing prices. An AMO report from 2019 detailed an Ottawa experiment where lower development charges were offered in a specific area, but did not see a decrease. 

“How much it costs to build a place affordable over the last few years has been shrinking and shrinking in what affordable means,” Mississauga Councillor Joe Horneck said. “At this price, they can't sell it for a profit because the construction costs are still too high. They're gonna just hold on to that project until they can.” 

The reduced development charges are an incentive for developers to build. Fedchyshyn explained that they are also there to provide an “exit path for what might have been the right intention at the time” with the changing market conditions brought on by the greater affordability crisis. 

“We're seeing a number of our members now converting condo developments going into the rental market,” Scott Andison, the CEO of the Ontario Home Builders’ Association, said during the AMO Conference panel. He added that they could no longer build at a price people could afford to buy. “They're finding ways to do that because that's where they can get the best return on capital.” 

For-profit developers cannot afford to build for free or at-cost. Municipalities cannot afford the loss of the development charges. Higher levels of government aren’t making up the difference, even though 76 percent of government fees on new homes are from provincial and federal taxes. Those taxes are also not under the same obligation as development charges, which must be paid back into growth-related costs. 

These policies apply to affordable housing. In Peel Region, one in five households is experiencing core housing need, defined as unaffordable (more than 30% of pre-tax income spent on housing) or inadequate. This is only a portion of the housing need in the region. 

Peel Region is in need of subsidized housing.  As of November 2024, 2,799 people were living in shelters or on the streets according to the Point in Time survey. Social services are underfunded by the Province by around $868 million annually compared to other municipalities.

 “We need the Province to be coming to the table, just like we do on all of our social services, where Peel is underfunded by 60 percent,” Hart said. “People are like, ‘well, you can just build some’. We can't, because we don't own the land ourselves.”

After the Second World War, the federal government heavily invested in subsidized housing. In the early to mid-90s, they dropped funding and stopped building. In 1999, the Social Housing Agreement transferred responsibility for social housing to the Province. In 2000, the Social Housing Reform Act passed it to municipalities. The Strong Communities through Affordable Housing Act, 2011, replaced it, but responsibility still largely lies with the municipalities. 

With the lack of revenue available, municipalities are reliant on not-for-profits or support from higher levels of government to afford it. 

The Building Ontario Fund is a Crown corporation, and the objective within the Building Ontario Fund Act, 2024, explains that its investments and sought investments will be for infrastructure projects that will be in the public interest and generate revenue. 

“It is not designed to be a mass, scalable system for making affordability across the province. We're just not capitalized that way. We're not set up that way,” Fedchyshyn said, explaining that the fund's managers subscribe to the housing continuum view, which supports a wide range of housing types to meet a community's diverse needs. “Building Ontario Fund is going to play on, by mandate, the more investable side of that.” 

AMO officials say they are calling on all levels of government to invest in deeply affordable community, supportive and transitional housing. The organization has criticized the provincial government’s actions and plans as insufficient for not adequately addressing the lack of deeply affordable housing or providing meaningful strategies to reduce homelessness. Data from AMO show that an additional $11 billion investment over 10 years would end chronic homelessness. 

“All cities are struggling with the way municipalities are funded, and the amount of services we have to deliver, and the fact that our only revenue source is truly property taxes,” Hart said. “A new deal for how we fund and support cities with the province is important to us.” 

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