How do we get 5.8 million new homes built across Canada to address the country’s smothering housing crisis? And can we do that without exacerbating other urgent problems confronting us —urban sprawl, climate change, and the fiscal crises besetting our cities? A new report from a national expert panel says we can, by emphasizing new infill construction (building in places where there are already roads and water and sewer infrastructure to serve people) and liberalizing planning rules.
The full report from the Task Force on Housing and Climate, released Tuesday morning, has a number of recommendations, many of which will be familiar to regular readers here at TVO Today. (The experts who contributed include many people this writer has cited extensively in previous reporting.) Liberalizing planning rules will not be enough to ensure that we get more homes built, according to the report: the construction industry needs to be modernized after decades of lagging productivity, and building codes need to be improved so that the new homes we build will be resilient enough for decades of unpredictable climate.
There’s another idea in the report that is notable less because of its novelty and more because it’s an idea Ontario residents in particular may hear more of in the near future. Among the many recommendations for both provincial and municipal governments to make new homes more affordable, the report urges policymakers to change the way cities pay for water and sewer connections.
Currently, municipalities pay for sewer and water service with a mix of property taxes and development charges, the latter of which have the effect of making new homes more expensive. Moreover, because major water and sewer works are paid for in the conventional budget cycle, they’re inherently political: a large wastewater-treatment plant can cost hundreds of millions of dollars, representing a major part of a municipality’s long-term capital plan. That, in turn, means that the funding and completion of these works — and the potential for new homes — is subject to the whims of elected councils across the province.
The task force’s report suggests that, instead, we should pay for water and sewer service in much the same way we pay for electricity and natural gas — through a separate agency that’s structured like a corporation, charges homeowners for the water they use, and amortizes the costs of that service with debt. This would replace the current model, which relies heavily on development charges. In principle, it could remove some of the political obstacles to expanding the infrastructure that new housing depends on.
The task force’s report isn’t the first to back the idea. In January, a report from the Ontario Real Estate Association made it part of its advocacy for “bold” ideas to get Ontario’s housing targets back on track. “In the long-term, this is one of the most important recommendations that the government ought to implement… This will eliminate unnecessary costs on housing developments, while funding these important investments in a transparent and public way,” the OREA report reads.
Both of these reports cite the province’s own Housing Affordability Task Force report from early 2022; hotly anticipated, it has largely gathered dust under current municipal affairs and housing minister Paul Calandra and his predecessor, Steve Clark. So it’s clearly an idea with some pedigree, and it would be difficult to argue that Calandra, Clark, or Tim Hudak (current head of OREA and former leader of the PC Party of Ontario) had a strong bias against the current government. This is, in short, a proposal that the Tories have relatively little reason to oppose.
But implementing it in theory is one thing; in practice, it could be knotty. It would be ideal if the province had some kind of real-world lab where it could try this idea out, work out the kinks, and then apply lessons learned to other large cities where the housing demand is highest.
Hey, remember Peel Region? That part of the GTA where Premier Doug Ford and his cabinet have taken a very direct interest in issues of regional and municipal governance — particularly those involving reforms that could speed the production of new homes? One of the key issues the government considered in terms of the dissolution of Peel was what to do with the water infrastructure. While the panel working on the future of Peel is no longer charged with making a plan for dissolution, it is still very much focused on the question of how best to manage the region’s water and sewage. And transitioning Peel to a utility model is one alternative (though not the only one) it is considering, according to sources privy to the internal debates who spoke with TVO Today off the record.
The potential savings for new homes in Peel would be substantial: the water and sewer-development charges in Peel are enormous (more than $57,000 per single and semi-detached home), and a separate corporation could plausibly borrow money from bodies like the federal infrastructure bank or the Ontario version announced in last year’s fall economic update. As a separate entity, it could also potentially borrow without being fettered by the provincial rules that constrain municipal councils. If the model were reasonably successful there, well, the government has already said it would like to apply practices implemented in Peel Region to other municipalities across Ontario.
So, while Ontarians might not have heard much about this idea until now, it’s something to keep a close eye on: whether you live in Peel Region or not, this could be coming to your city or town before long.
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