New research commissioned by the Federation of Canadian Municipalities (FCM) estimates that, on average across the country, the cost of the municipal infrastructure required to support new housing is in the range of $107,000 per home.

When considering the 5.8 million homes that the federal and provincial governments are directing municipalities to approve by 2030, the scale of the gap could reach an equivalent of $600 billion in municipal infrastructure investment.

The Canada Mortgage and Housing Corporation (CMHC) estimates that 5.8 million housing units must be built by 2030 to restore affordability to 2004 levels—3.5 million above the 2.3 million units projected based on recent construction rates. New homes, however, are only part of the puzzle.

As Canada grows, acute national challenges such as housing affordability and infrastructure renewal are more pressing than ever.

“Municipal infrastructure is a prerequisite to building more housing,” said Scott Pearce, Mayor of Gore, Quebec and president of FCM. “We cannot build new housing without putting in place the municipal water, wastewater, transportation and community infrastructure that provides the critical foundation for Canadians’ quality of life.”

“Municipalities have limited options to pay for growth,” said Mike Savage, Mayor of Halifax and Chair of FCM’s Big City Mayors’ Caucus. “Property taxes and contributions from housing developers, generally known as Development Charges, are most often the primary sources, and the most stable. Yet the rapid pace of growth, combined with high construction prices due to inflation, means the status quo is no longer keeping up, and the gap is getting wider every day.”

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Municipalities recognize that increasing taxes and fees on property can increase the overall cost of construction, impact the business case for developers to start new projects and contribute to upward pressure on housing costs.

However, under the current framework, municipalities simply have no other way to fund the infrastructure that is essential to build housing.

That’s why FCM is calling on the federal government to convene provincial, territorial and municipal leaders to discuss a new Municipal Growth Framework that better aligns municipal revenue with economic growth and population growth. Such a framework would improve affordability and quality of life for Canadians by enabling municipalities to take concrete action on housing affordability and other pressing challenges facing the country, including homelessness and climate change.

A move toward a new Municipal Growth Framework starts with new federal infrastructure investments in Budget 2024. Since the current round of federal-provincial infrastructure funding ended last year, FCM has been calling for the next generation of federal infrastructure investments. A baseline commitment on closing the infrastructure gap starts with FCM’s recommendations, which include scaling up the Canada Community-Building Fund and increasing its annual growth rate to bring it in line with economic growth—giving municipalities a much-needed tool to address inflation and renew and expand infrastructure.

New federal investments—and a commitment to convene a national conversation amongst orders of government—in Budget 2024 can form the basis of federal-provincial/territorial-municipal negotiations towards a modernized Municipal Growth Framework—one that will better support the needs of Canadians in their growing communities.

Featured image: (Government of Canada)

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