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Guelph Faces $227M Shortfall in Next Decade Due to Provincial Changes

Guelph Faces $227M Shortfall in Next Decade

Guelph is bracing for potential financial challenges in the coming years, with a projected shortfall of tens of millions of dollars for essential infrastructure projects. The situation arises from changes introduced by Ontario’s Bill 23, the More Homes Built Faster Act, which impacts the city’s ability to collect development charges from builders to fund vital city infrastructure.

A recent city council meeting discussed the updated development charge background study, mandated by provincial legislation for the collection of development charges. The report forecasts a significant funding gap of $227 million between 2024 and 2034. The shortfall is partially due to the Development Charges Act‘s modifications, which limit Guelph’s ability to collect development charges while the city is striving to increase housing in line with its strategic plan and housing pledge.

Mayor Cam Guthrie highlighted that if the entire shortfall were to be compensated through property taxes, it would translate to an eight percent annual increase, in addition to existing financial commitments.

Some council members and citizens expressed concerns about subsidizing growth through taxes, whether municipal, provincial, or federal. They argue that the pace of growth the province expects may be too burdensome for the city to handle.

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Suggestions were made to implement an interim control bylaw to halt new developments until a sustainable solution is found. Additionally, some called for reconsideration of the provincially mandated housing pledge, which calls for 18,000 new homes by 2031, a rate that would need to be doubled from the past 20 years’ construction rate.

The development charge study conducted for the city indicates that the $227 million shortfall is based on certain estimates, as some aspects of Bill 23 are yet to be clarified by the province. For instance, the exemption of affordable homes from development charges raises questions about the definition of affordability and its impact on charges in different parts of the city.

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It is expected that development charges in Guelph will see a considerable increase next year due to higher labor and supply costs, as well as major redevelopment projects, such as the Guelph Innovation District and Clair-Maltby, being factored into infrastructure costs for the next decade.

The final decision on development charges in Guelph is still pending, with the complete development charge background study slated for release in October. The city is also seeking public feedback on this matter until August 13th through an online platform. 

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