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Newmarket taxpayer unlikely to feel development charge sting — yet

Treasurer says loss of development charges due to provincial housing bill could have an impact of 5 to 15% on local taxes, but not for 2023
A townhouse development on Eagle Street.

Newmarket and York Region are preparing to set this year’s property tax increases, but taxpayers may not feel the full brunt of a loss of development charges this year. 

Newmarket council is set to have its first budget meeting Jan. 30 as it works through its 2023 budget. The exact preliminary tax levy increase is not yet available, but municipalities will face challenges such as inflation in budgeting this year.

Another pressure is the loss of development charges brought on by a new provincial housing bill, expected to cost municipalities millions. But although Newmarket treasurer and financial services director Mike Mayes has estimated that could mean between a five to 15 per cent tax rate locally, that is not likely to manifest this year.

“It is unlikely that the impacts of Bill 23 can be incorporated into the 2023 budget due to the incomplete information around the legislation,” Mayes said. “And to what degree that the province will ‘keep municipalities whole,’ as noted by Minister (of Municipal Affairs and Housing) Steve Clark.”

Among other measures meant to speed up housing development, Bill 23 allows developments to reduce or eliminate charges by building affordably, defined in the bill as 80 per cent of the market rates. That has prompted municipalities across the province to raise alarms about a loss of revenue to build out services and the likely need to raise property taxes to compensate. 

But Clark has said it would launch third-party audits for a better understanding of municipal financial pictures. 

“As we undertake this work together, we are committing to ensuring municipalities are kept whole for any impact on their ability to fund housing-enabling infrastructure because of Bill 23,” Clark said.

But some area municipalities are bracing for significant tax challenges. East Gwillimbury is putting forward a 2.8 per cent tax levy increase in its draft budget, with up to an additional 1.25 per cent to come on top for potential new initiatives. 

East Gwillimbury has repeatedly raised concern about more drastic tax increases due to the loss of development charges. Given the amount of new development expected in the municipality, it estimates it will lose between $40 million and $70 million over the next 10 years. It currently collects $27 million in property taxes annually.

To make it up, the municipality said it would likely have to raise property taxes between three and five per cent annually starting in 2024. In a December news release, the municipality floated the possibility of having to double property taxes over time to make up for the revenue shortfall. 

“While tax increases wouldn’t be immediate, over time, there could be a financial impact to residents through an increase in property taxes if we cannot find alternative funding sources,” Mayor Virginia Hackson said in a message to residents this week. “The town supports working collaboratively with the province to address this issue and continues to call on the province to repeal the financial elements of this legislation.”

Clark and the provincial government have said that municipalities have plenty in development charge reserves to pay for future infrastructure. 

Newmarket has $22 million in development charge reserves at the end of 2022. But Mayes said this does not represent a surplus, with the charges building up over time to help pay for future projects such as Mulock Park and capital library expenses that could be a new library. 

“Development charges are collected to cover the cost of new capital required as a result of growth,” Mayes said. “This is to ensure that new residents can enjoy the same level of service that existing residents have.”

The tentative budget schedule will see Newmarket approve its 2023 budget by April 3, though Mayes said that could be delayed at council discretion. 

York Region will also be beginning its budget deliberations starting Feb. 2.

“The budget day is very important. It is setting the tone for four years,” York Region Chair and CEO Wayne Emmerson told councilors Jan. 12.