The Ontario government says it has selected an auditor to comb over the finances of Toronto and several other municipalities, and the first phase is expected to be complete by the end of the year.
“Following a competitive procurement process, Ernst & Young LLP has been retained to examine the finances of the City of Toronto, Peel Region, Mississauga, Caledon, Brampton, and Newmarket,” the province said in a news release Wednesday.
The audits come after the provincial government slashed the development charges municipalities are able to levy against developers for some types of housing, including affordable, non-profit and purpose-built rental. The province made the move as part of efforts to spur more development in its housing plan.
However, municipalities have said that the revenue loss will be substantial. Former mayor John Tory described the move as a threat to Toronto’s finances, with city staff estimating that it could cost around $200 million a year in lost revenue. A city staff report also found that it could ironically slow the pace of development by making it more difficult for the city to pay for municipal improvements needed to support development.
The province responded and said that it would make the municipalities whole for any loss of revenue because of the legislation. However, they did not specify exactly what that meant and said that any compensation would be contingent upon examining the city’s finances to make sure that money is being spent properly.
Premier Doug Ford has previously said that the money can likely be found in “waste” at the municipal level.
“This next step in the audit process is a critical part of our work to rein in the soaring cost of housing across Ontario, particularly when it comes to affordable, non-profit and family-friendly purpose-built rental housing,” Minister of Municipal Affairs and Housing Steve Clark said in a statement.
“We want to ensure development-related charges and fees are being used in a manner that supports increased housing supply and critical housing-related infrastructure, but which does not unduly raise the cost of finding a home for hardworking Ontarians.”
The Ford government has framed a lack of housing in the province as an issue largely stemming from municipal red tape and fees.
It cited a 2022 study commissioned by the the Building Industry and Land Development Association (BILD) — a group representing developers — which found that municipal fees added $116,900 to the cost of an average single-family home in the Greater Toronto Area in 2022, and around $100,000 to the cost of an average condo in the City of Toronto.
The province said the audits will examine the impacts of the More Homes Built Faster Act on the municipalities “provided they meet or exceed their provincial housing targets, as well as municipal financial management practices.”
It also said that the audits could inform work on the restructuring and dissolution of Peel Region in order to make Mississauga, Brampton and Caledon independent municipalities. That work is expected to be complete by the end of 2024.
