Renaming Dundas Square Isn’t Housing Infrastructure
So why are housing taxes paying for it?
Highlights
High development charges and other municipal housing taxes are often defended on the grounds that “growth should pay for growth.”
However, these taxes are often used to finance projects that have nothing to do with growth, such as the renaming of Dundas Square or that pay for infrastructure the entire community will enjoy, such as state-of-the-art soccer facilities.
It is wholly inappropriate for municipalities to use housing taxes to fund projects that are too expensive or controversial to fund through general revenue. Governments should limit their use of these funds to growth-related purposes, which can lower housing taxes and prices.
The ethos around development charges and the alphabet soup of other Ontario municipal housing taxes is that “growth should pay for growth.” But when you dig into how these moneys are collected and spent, three things become clear:
Much of the money is spent on expenses unrelated to supporting housing growth.
Much of the money is spent subsidizing infrastructure and services for existing residents.
Much of the money could be collected in more equitable and efficient ways.
Governments have been using municipal housing taxes, from development charges to community benefit charges, to fund items that would otherwise be too expensive or too controversial to fund through general revenue.
Here are three case studies that show how municipal housing taxes go well beyond “growth pays for growth.”
1. The renaming of Dundas Square
The City of Toronto is seeking to rename Dundas Square to Sankofa Square as a way to address historical issues around slavery abolition and anti-black racism. This is a totally legitimate act, and to be clear, we are not assessing the merits of this initiative or others in these case studies.
However, how we pay for things matters as it provides insights into how our society values those things.
For some, renaming Dundas Square has become a controversial issue, as these things can become. To circumvent the controversy, Toronto’s Mayor has assured the public that no taxpayer money will be spent on the renaming; rather, it will come out of a fund called Section 37, one of the alphabet soup of municipal housing taxes and related donations.
The central principle behind “growth should pay for growth” is that new homes should pay for the cost they impose on existing residents. This expression is based on the principle that these tax measures should be set at rates that do not redistribute resources from existing residents to newcomers or vice versa.
No matter how worthy the intention behind renaming Dundas Square is, it's clear that it has nothing to do with the costs new housing imposes on Toronto. It is inappropriate to impose the costs of non-growth-related initiatives on a handful of new residents to avoid the costs and scrutiny of having those initiatives funded by the entire community.
This episode also shines a spotlight on how municipalities value new residents and the taxes they pay. Toronto is simultaneously arguing that the renaming is imperative, but it is simultaneously not worthwhile enough to be funded by all Torontonians. Toronto Deputy Mayor Jennifer McKelvie wanted to make it clear to existing residents that they would not be paying for this when she stated:
“Using developer money [section 37] is no different than using sponsorship money of corporate sponsors”
This is not the case. Unlike corporate sponsors, these costs are borne by new homebuyers and renters who have no option but to pay them. But their financial well-being is absent from the conversation.
In short, funding initiatives like the renaming of Dundas Square through new housing taxes has nothing to do with “growth paying for growth but rather is simply pushing controversial costs onto newcomers to avoid offending existing voters.
2. A state-of-the-art soccer facility
In 2024, the City of Kitchener approved a new $144 million recreation centre that included a FIFA-sized indoor soccer field. Development charges primarily paid for the centre, with some additional grant money from the provincial and federal governments. Existing residents were not asked to contribute a dime despite benefitting from the new facility.
This provides yet another case study of Ontario’s municipal culture of devaluing the contributions made by new homeowners and renters by treating the money they provide as “free.” As with the Dundas Square renaming, the hard-earned dollars of new residents were treated as being without value when the general manager of Kitchener stated that:
“Construction of this facility will have no impact on municipal taxes and will be funded through a combination of federal and provincial grants as well as revenues from development charges.”
It is simply incorrect to suggest that the facility will not be paid for by “municipal taxes.” Instead of spreading the burden across all taxpayers for a facility that the entire community will enjoy, a heavy tax burden is being placed on a handful of new residents.
3. A Brampton parking structure
Brampton is looking to build a $30 million parking structure with 550 spaces. The project would be funded through the municipality’s community benefit charges, which are similar to development charges but based on land values rather than a per capita metric.
Like development charges, infrastructure paid for by CBCs must subtract any benefits it provides to existing residents. In this case, the city claims that this structure will have no value to existing residents, placing the entire financial burden on newcomers.
The assumption that existing residents do not benefit from more parking defies all credibility. However, it also raises a larger question: Why are cities using municipal housing taxes to pay for parking garages in the first place?
Parking structures do not need housing taxes, as they can be funded through parking revenue. However, using development charges to pay for these facilities subsidizes car drivers at the expense of new home buyers and renters, many of whom may not have a car to begin with.
The fairest way to charge for parking is to charge the people who use the spots rather than the people who are purchasing homes. This would create a one-to-one connection between the action a person is taking (driving) and the costs related to that activity (parking) rather than taxing an arbitrary subset of the population.
This is just the tip of the iceberg
We have examined just three case studies, but there are countless other examples if you know where to look. In short, Ontario municipal housing taxes go well beyond “growth paying for growth.” Housing in Ontario is more expensive than it otherwise would be because municipal housing taxes are used for non-growth purposes.
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