Peterborough city council is now fully behind the idea of slashing development charges in the city by 50 per cent in a bid to get a share of $8.8 billion in federal and provincial funding intended to increase housing by making it more affordable.
At its regular meeting on Monday night (June 15), with councillor Don Vassiliadis absent, council voted unanimously 10-0 to support the motion introduced by Mayor Jeff Leal at general committee the previous Monday, with three amendments subsequently brought forward by councillor Matt Crowley.
Councillors voted in favour of the motion despite the risk that the city will lose half of its existing development charge revenue over the next three years if the city’s application to the Ontario government’s new Development Charge Reduction Program (DCRP) is not approved.
City must apply to new Ontario government program by June 19
The mayor’s original motion proposed that the city apply to the DCRP, which the province announced on June 1 following the Canada-Ontario Partnership to Build agreement signed in March that includes $8.8 billion in federal and provincial funding over 10 years for Ontario municipalities that reduce and maintain low development charges, as well as a harmonized sales tax (HST) rebate.
With the intent of reducing the cost of new homes, the DCRP would provide Ontario municipalities with funding if they commit to reducing development charges by 30 to 50 per cent or greater for all residential types and maintain the reductions for at least three years.
Municipalities levy charges against new development as a primary source of funding for growth-related capital expenditures, with the City of Peterborough bringing in $6.5 million in revenue from development charges in 2025. Of the 444 municipalities in Ontario, those that currently levy development charges — over 200 urban municipalities — would be eligible to apply to DCRP, with the deadline to apply set for Friday (June 19).
After Mayor Leal introduced his motion at the general committee meeting under “other business,” some councillors expressed concerns about the process and the timing of the motion, along with questions about the implications of halving development charges for three years should the city not receive DCRP funding.
Councillor Joy Lachica’s motion to defer failed by a 3-7 vote, and the mayor’s motion passed 8-2 with councillors Lachica and Alex Bierk voting against it. Councillor Matt Crowley was absent from the meeting.
Amendments to original motion will see staff report back to council
At Monday night’s council meeting, councillor Crowley introduced three amendments to the mayor’s original motion: having city staff come back to council after submitting the city’s DCRP application with a report on selected projects and why they were selected, having any amended by-laws come to council for approval, and having staff report back to council no later than the end of September with an update on the status of the city’s DCRP application and the implementation of the reduction in development charges.
During debate on the third amendment, councillor Bierk asked finance and corporate commissioner Richard Freymond whether the city had the option of reverting back to the previous development charge rate should the report back to council indicate the city’s DCRP application was unsuccessful.
“There is no off-ramp here,” Freymond replied. “If council reduces the rates, the rates will stay in the reduced 50 per cent rate for three years.”
Freymond noted the city should know by August whether it will receive DCRP funding or not but, in either case, the reduced development charges would still remain in effect for three years.
“There is a risk here, if council determines to reduce the rates,” he added.
After councillor Bierk asked what would prevent council from reconsidering its decision to reduce development charges should it not receive DCRP, Freymond reiterated that the city, by applying to DCRP, would be making a commitment to the province to reduce development charges for three years.
“If council elects to put the rates back up, then say goodbye to any senior level federal-provincial funding for the next three years,” Freymond warned. “Council can either elect to incentivize development as is being encouraged by the provincial government and follow that directive, or we can sit on the sidelines.”
New development could offset $7.5 million revenue shortfall if province does not approve city application
Councillor Bierk expressed concerns that, should the city not receive DCRP funding, it would have a $7.5 million shortfall for infrastructure as a result of the 50 per cent reduction in development charges.
“Does that just mean we do less capital, less infrastructure, or do we dip into the residential tax base to make up that $7.5 (million)?,” Bierk asked Freymond.
“It could mean all of the above,” Freymond said. “Those will be choices that council can make, in terms of whether they want to continue to move projects forward in the absence of senior (government) levels of funding.”
Freymond then pointed out that the $7.5 million shortfall is a staff estimate based on historical revenues received from past development charges, and does not include any revenue that may result over the next three years from additional residential development incentivized by reducing the development charge rate by 50 per cent. Those additional revenues, he said, could offset some of the shortfall.
In his remarks, councillor Gary Baldwin said incentives are needed as existing development charges are not resulting in more housing, and that he “can’t imagine” the provincial government would encourage municipalities to reduce their development charges and then not provide any funding.
“I’m prepared to roll the dice,” he said.
For her part, councillor Lesley Parnell said the city is not getting any development charge revenue anyway due to the lack of shovel-ready projects, and that reduced development charges will lower the cost of housing for young families and first-time home buyers.
After some further discussion, council voted unanimously 10-0 in favour of councillor Crowley’s amendment for staff to report back to council by September 30, voting the same way for the two other amendments.
‘We’re making the right decision to be of one voice in this’
Council then briefly debated the mayor’s amended motion, with councillor Kevin Duguay noting he recently attended a meeting of the Economic Developers Council of Ontario in Windsor and that “all the city officials that I spoke to, all of their communities are actively pursuing this program.” He added that senior levels of government are watching how municipalities are responding to the DCRP.
“It would be inappropriate for us to suggest that we would participate in this program only if the federal-provincial funding is provided — we will not be successful in our application,” Duguay said, adding that new housing as a result of reduced development charges will also create new assessment, increase employment, and help the city meet its housing targets.
“This is a bold decision, but it is a necessary decision,” Duguay said.
Councillor Bierk, who earlier had thanked councillor Crowley for his work bringing forward the amendments, also thanked Mayor Leal for his original motion and councillors Parnell and Duguay for their comments.
“It’s helped me understand what we’re doing here a little bit better,” he said. “I voted against it last week because I still had some questions, and even our treasurer said it was a risk. So my questions came from that standpoint, but I do believe it’s important for us to have unity on this.”
Bierk said it has been difficult for him to “let go” of all the discussions and debate involved in council’s previous decision to raise development charges and, although there is some risk in proceeding, said he would support the motion.
Councillor Andrew Beamer spoke in favour of the motion, saying it would spur economic growth and increase affordability for first-time home buyers.
“I’m glad it’s going to be unanimous, unlike last week,” Beamer said of the pending vote.
Councillor Lachica, who voted against the motion in general committee, said she felt “confident and comfortable that we’re making the right decision to be of one voice in this.”
In his comments, Mayor Leal referred to a policy report by economist Dr. Mike Moffatt called A Blueprint to Restore Homeownership for Young Canadians that found that development charges are the number one factor driving the cost of housing, and an analysis by the Canada Mortgage And Housing Corporation that concluded a reduction of 20 to 25 per cent would spur the development of new homes.
“Last Tuesday morning, we got a call from (Peterborough property manager and developer) AON, Brad Smith,” the mayor said. “He’s going to accelerate 400 units in our community because of what we did last Monday night and (will) reaffirm this Monday night. This program will work, it will get housing for people, and it’ll make Peterborough a much better place to live, work, and play.”
Council then voted 10-0 unanimously in favour of the amended motion.
