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Construction crews build new housing in Brampton, Ont., on April 27.Christopher Katsarov/The Globe and Mail

Ontario is offering $1.2-billion over three years to municipalities as an incentive to achieve annual housing targets, while also offering to extend the strong mayor powers to more local governments.

The new incentive, announced Monday by Premier Doug Ford at the Association of Municipalities of Ontario (AMO) Conference in London, will be available to 50 large municipalities that have been given housing targets by the province. The total value of the funding will be $400-million a year.

Municipalities that reach 80 per cent of their yearly targets will become eligible for funding based on their share of Ontario’s goal of building 1.5 million new homes by 2031, according to the announcement, while those that exceed their target will receive a bonus on top of their allocation. Municipalities with a population of less than 50,000 and without a set housing target will split $120-million.

Governments across Canada are grappling with a housing crisis and leaning on municipalities to speed up development. Ottawa launched a similar initiative earlier this year through a $4-billion housing accelerator fund for municipalities to fast-track the building of 100,000 homes. Federal Conservative Leader Pierre Poilievre has pledged to reward municipalities that get homes built quickly and punish others by withholding federal infrastructure dollars if targets aren’t met.

Mr. Ford’s announcement follows controversy surrounding his government stemming from a decision last year to remove land from the Greenbelt. A recent report from the province’s auditor-general found the land swap that removed 3,000 hectares from the protected area was a “biased” process led by one senior political staffer and “favoured certain developers.” Mr. Ford and his Housing Minister Steve Clark have defended the action as being necessary to build 50,000 homes amid the province’s housing crisis.

The Premier didn’t specifically address the Greenbelt report in Monday’s address, but reiterated the government’s focus on tackling the lack of housing. He said the new fund is intended to allow for more homes to be built faster by providing municipalities with money to build housing-enabling infrastructure, such as road and utility projects. The province-wide housing target for this year is 110,000 new housing starts and would set a new annual record.

“We have two choices. We can sit back and ignore the crisis or we can build more homes. Our government is choosing to build homes,” Mr. Ford said.

The province is also expanding strong-mayor powers to the heads of council of an additional 21 municipalities that commit to meeting their new provincial housing targets. These powers allow mayors to introduce and pass select bylaws with one-third council support, veto bylaws and budget amendments passed by council, and hire and fire top officials.

Mike Moffatt, an assistant professor at the Ivey Business School and founding director of the PLACE Centre, a think-tank at the University of Ottawa, supports Ontario’s new funding plan, saying it mirrors one recently announced by the Labor Party in Australia.

“I think it makes a great deal of sense that you can come up with these kind of win-win solutions where federal or provincial governments can get the needed reforms. And municipal governments can get the cash,” he said.

Still, Prof. Moffatt said he has concerns about whether $1.2-billion is enough to fund infrastructure projects across 443 municipalities – and that there shouldn’t be strings attached to the money.

Ontario Official Opposition NDP Leader Marit Stiles took issue with the government’s new program, arguing it doesn’t make up for an estimated $1-billion municipalities could lose annually as a result of previous legislation. The province’s Bill 23, passed last November, exempts non-profit housing developments and affordable units from paying fees to municipalities to cover the cost of associated infrastructure, such as roads and water treatment facilities.

“It’s more than a little backwards to effectively punish municipalities for not building housing when they don’t have the funding or the provincial partner they need to do so,” she said.

The province has pledged to make municipalities “whole” and cover any shortfall caused by Bill 23, but is first conducting audits of six municipalities to determine what the impact will be. The results are due around the end of the year.

AMO executive director Brian Rosborough told The Globe and Mail that the new fund is a welcome step but that municipalities are worried about the loss of development charge revenues, which “is having an impact on their planning and their ability to move forward.”

With a report from Laura Stone

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