Ontario moving ahead with public corporations to fund wastewater

As the homebuilding industry continues to complain about the cost of starting new projects, the Ontario government is forging ahead with its plans to set up public corporations to build new water and sewage infrastructure.

To get approval to build new homes, developers must pay fees to municipalities designed to cover the cost of running pipes to their developments and building roads, transit or community centres.

They are costs which developers say are escalating at a rate they cannot afford, but which municipalities argue they cannot live without if they are to continue building and maintaining public infrastructure.

It’s a financial conundrum Housing Minister Rob Flack is hoping he can solve through the creation of something called a municipal services corporation.

“I’d like to see them gone, but I think they just can’t be gone because we need to put infrastructure in the ground,” he explained at a recent Empire Club event.

“Growth no longer pays for growth, you can’t expect a new homebuyer to pay for the infrastructure costs into the future, the municipalities don’t have the money — they’ll tell you that — the province doesn’t, nor do the feds. So why don’t we consider setting up municipal service corps, public utilities?”

The idea will be piloted in the Region of Peel, with a plan to expand it across the province if it works.

Ontario will set up a public corporation operating under a similar model to utilities. It will be able to issue debt to build new water and wastewater infrastructure, attract investors and work to pay it off through fees.

“We’re doing Peel Region as a pilot for this. I think that’s a huge opportunity… you can amortize that investment over 50, 60, 70 years,” Flack added.

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The idea was introduced through recent legislation and promised in a letter to Peel Region councillors last year.

Scott Anderson of the Ontario Home Builders Association said it was time to look at a new approach, and said municipal services corporations could be the path forward.

“The costs of infrastructure have escalated to such a degree that it’s just impossible now to use development charges to solely raise the money for capital. These are millions of dollars in projects that are required,” he said.

“As we understand it, in working with the province on how they’re looking to design a model that will work, and Peel was an appropriate place to do that. So they set up this municipal services corporation… it really takes it out of the municipal domain and puts it into a new organization that is focused solely on infrastructure.”

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