The City of Orillia is working to mitigate a projected $12 million in losses over the next five years that are expected to result from the sweeping changes rolled out through the province’s Bill 23, the More Homes Built Faster Act.
The bill brings development charge (DC) exemptions for a wide variety of projects moving forward, the funds from which have historically been used to offset the costs of infrastructure related to new growth.
City council approved $1 million for a soon-to-be-created Bill 23 mitigation reserve fund at budget deliberations Tuesday to help offset the anticipated lost revenue.
The decision will add a .88 per cent hike to the tax levy, which will fund $600,000 of the contribution.
Staff proposed taking leftover funds from the city’s now-defunct DC incentive reserve, following the expiry of the DC incentive program at the end of 2022, which will provide the remainder of the $1-million balance.
As certain details surrounding Bill 23 are still unclear, staff estimate the city will absorb a $1-million to $3-million hit in 2023, which will likely become a cost of doing business in the coming years, staff say.
“With Bill 23, it will be an annual impact. We don’t exactly know the magnitude, but it’s not one time; it’s not once we fund them $1 million, it is done and dusted,” explained treasurer and chief financial officer John Henry. “I think it’s going to happen no matter what happens at the budget table today.
“There will be a funding requirement no matter what happens, (so it’s) prudent to proactively budget and plan for that.”
Coun. David Campbell lamented the need for the city to set aside money, but he viewed it as the right move.
“I feel that this is a sound strategy. It’s truly unfortunate that we even have to do this, (and) I hope that the province is listening to municipalities as we continually inform them of the impacts that (this) is having on us,” he said.
“As we hear more and more about it and the details become clearer, hopefully, there’s more sunshine than clouds and we can redirect these funds.”
Coun. Ralph Cipolla, however, expressed concern about setting aside $600,000 for the reserve, as the full details of Bill 23 are unknown and the corresponding tax hike would be difficult for many Orillians.
“… We’re guessing what the province is going to do … so why are we adding it now? If we ever need to do that, we could borrow $600,000,” he said. “I’m just wondering: Why put the onus on the taxpayer right now, when we don’t know what the province is going to do?”
Henry noted there is the possibility of provincial relief for DC revenue losses, but he said it is unlikely.
“From what we’ve heard from our consultants, there’s the possibility of relief, but it seems like it’s unlikely, so what we’re trying to avoid is a stockpiling of financial costs in the future,” Henry responded.
“Because of the magnitude of this legislative change, I think staff is just trying to be prudent and fiscally responsible, and trying to smooth those costs as best we can given what we know.”
Mayor Don McIsaac sympathized with Cipolla’s frustration, and argued the province would be unlikely to reimburse the city for costs it has taken care of.
“Regrettably, in this case … they’ll see we covered this, and we’ll take care of it for the province,” he said. “Is there any impetus or pressure on their side to take care of it?”
Coun. Jay Fallis suggested clarifying to taxpayers this portion of their tax bill arose from Bill 23 specifically.
“I think it’s very easy for the province to just sell it to us and dismiss it (or) ignore it, whereas if we make it as clear as we can … the province does see a bit of bad repercussions from their actions,” he said.
Other councillors supported Fallis’s idea, and Cipolla suggested writing a letter to the province.
“I’m just wondering if it’s possible if council would agree to us (sending) a letter to the premier and to the minister, and maybe to all MPPs, so that they can think what the ramifications are to the municipalities, especially small municipalities,” he said.
“I think it’s a good idea, and I think we should probably attach an invoice for $600,000, or whatever the cost is,” added McIsaac. “This is bad all the way around.”
On top of approving $1 million for its new reserve, council agreed to have the mayor’s office draft a letter to the province outlining its concerns with Bill 23.
All decisions made during budget deliberations are subject to ratification at a special meeting later this month.
