New research calls for more integrated financial and land-use planning in Ontario municipalities for sustainable urban growth
Report by the Greenbelt Foundation studies financial tools that municipalities can use to support smart growth and reduce long-term costs to ensure the continued success of the Ontario Greenbelt
TORONTO, Oct. 18, 2022 — A new report by the Greenbelt Foundation, titled Municipal Finances and Growth Planning in the Greater Golden Horseshoe, looks at how financial and land management are closely tied together and should be mutually supportive to create a sustainable growth model for Ontario municipalities. The findings show that more efficient and integrated planning is needed to ensure municipal governments are generating revenue to address the financial needs of new development and infrastructure projects, or in other words, growth should pay for more of the costs associated with growth.
According to the Financial Accountability Office of Ontario, the municipal infrastructure backlog in the province was estimated to be $52 billion in 2020. How municipalities raise their revenue can have a significant impact on the type, form, location, and timing of growth, and therefore, on growth management goals. The study was undertaken to analyze Ontario’s municipal finance system, its impact on decision making with respect to the Greater Golden Horseshoe (GGH) Growth Plan, and to provide recommendations on how the process can be reformed to better align with the goals.
How municipalities raise their revenue can have a significant impact on the type, form, location, and timing of growth, and therefore, on growth management goals."
“Significant investment is needed to provide the municipal infrastructure and services that will be required to meet the demands of housing affordability, as well as our growing Ontario population and economy. Through this report, we are seeking to highlight where a stronger connection between municipal finance and growth goals can result in more sustainable cities and communities that can grow while also providing a high quality of life for residents,” said Edward McDonnell, Greenbelt Foundation CEO.
Nine municipalities were examined as part of this research: Halton Hills, Halton Region, Caledon, Peel Region Waterloo, Waterloo Region, Markham, York Region and Hamilton. An expert panel of academics, agricultural associations, the development industry, home builder associations, environmental organizations, and provincial and municipal staff in finance and land-use planning was engaged to examine tools and processes in four categories. The report provides insights into how some municipalities are implementing the strategies in innovative, money-saving ways and shares recommendations for further efficiencies.
1. Integrated growth planning: Planning procedures, infrastructure planning and financial considerations need to be integrated into a long-term approach for growth management decisions.
For example: Peel Region adopted a new approach in 2014, and by the end of 2020, a better integration of plans had contributed to a $584-million reduction in the infrastructure debt compared to a 2015 projection.
2. Development charges: These can help achieve smart growth objectives by better reflecting the true costs of development to encourage intensification and mixed-use development.
For example: Kitchener uses a two-zone system with different charges for suburban areas and an intensification zone in more established parts of the city. The charge differences are considerable, and the system is supported by the development industry as it is seen as more equitable than a municipality-wide approach.
3. Property taxes: There are opportunities to use the property tax system to enhance growth practices, such as applying the same tax rate on multi-residential and low-density properties, eliminating tax breaks for vacant properties and instead, providing discounts in areas designated for intensification.
For example: London has a unique Community Improvement Planning (CIP) program that combines tax-increment and development charge grants. The Downtown CIP was established in 1995 to stimulate investment, increase the supply of residential units and ensure a viable downtown population.
4. User fees: User fees can generate more reliable revenue sources for municipalities to pay for infrastructure services and incentivize smart growth outcomes.
For example: In 2016, Mississauga implemented a stormwater charge based on the total roof area of properties. The charge covers the full cost of operating and maintaining the stormwater management system for the city, discourages inefficient land use, and rewards on-site controls to reduce stormwater runoff.
There are key recommendations in the report for both provincial and municipal levels of government, including legislative amendments, the updating of provincial training modules and guidebooks, and the continual improvement of municipal guidelines and capacity building. The report offers numerous proposals but finds that there is no silver bullet – the solutions need to work together for a cumulative impact.
With the GGH region expected to grow to nearly 15 million residents by 2051, billions of dollars will be spent on creating and maintaining municipal infrastructure. The recommendations in this report could reduce costs for provincial and municipal governments and support the building of more complete communities in the region.
“Contrary to popular opinion, growth does not pay for growth in the GGH – especially when you take into account the long-term financial obligations for operating, maintaining, and refurbishing the infrastructure that growth entails. Given that compact, complete communities are usually more efficient not only from a land use but also a long-term financial point of view, one of the best ways to ensure financial sustainability is to better integrate financial considerations into growth management decisions being made today.”
Ray Tomalty, Consultant with Smart Cities Research
"The choices we make in managing the growth of our urban areas will have enduring consequences for our common future. The report provides insight into the need for municipalities to find ways to integrate financial, infrastructure and land-use planning with an eye to long-term sustainability."
Bill Hughes, Senior Fellow at the Institute on Municipal Finance and Governance
“One of the keys to ensuring municipalities are best positioned to meet the challenges of climate change, housing affordability and sustainability, is ensuring all aspects of various programs put in place by municipalities are all rowing in the same direction. The Greenbelt Foundation’s municipal finance report provides relevant and well thought through recommendations linking municipal finance measures with land-use planning objectives, thereby providing municipalities with a toolbox to draw from as they work to respond to these challenges.”
Kevin Eby, Former Director, Planning and Development, Waterloo Region
About Greenbelt Foundation
The Greenbelt Foundation is a charitable organization solely dedicated to ensuring the Greenbelt remains permanent, protected and prosperous. We make the right investments in its interconnected natural, agricultural and economic systems to ensure a working, thriving Greenbelt for all. Ontario’s Greenbelt is one of the world’s largest with over two million acres of farmland, forests, wetlands and rivers working together to provide clean air, fresh water and a reliable local food source.
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