Growth Cost Revenue Gap
Area of Focus: Thriving
Cumulative Deficit of the Growth Program
Source: Region of Peel, Finance Department.
Why is this important?
- Ontario's Places to Grow Plan calls for development across the Province that supports economic prosperity, protects the environment, and helps communities achieve a high quality of life.
- Peel is updating its Regional Official Plan for population planning, servicing, and financing to accommodate an additional 500-600,000 people and 970,000 jobs in Peel Region by 2041.
- Over the past decade, Peel has made generational investments in Water and Waste Water systems to support growth to 2031 and beyond.
- The Region of Peel has accumulated $1.1 billion in net outstanding debt to pay for growth-related infrastructure in advance of development.
- This debt is expected to reach a high of $1.9 billion in 2018, and be eliminated through development charges related to future development by 2031.
How is this measured?
- Historical data from Peel's Finance Department is used to calculate the cumulative deficit of the Region's growth program.
- The historical data used to derive this measure includes:
- Gross debt less accumulated principal payments and sinking fund contributions including interest;
- Year-end development charge (DC) reserve cash balances; and
- Year-end DC Out of By-law reserve cash balances (internal borrowing).
What progress are we making?
- Since the recession in 2008, the Region's planned revenue from development has not been realized, largely due to underperformance of the non-residential sector, as well as lower than expected high-density residential growth.
- In 2016:
- The deficit was reduced for the first time in ten years.
- The Region of Peel collected more Development Charges (DCs) than it spent on growth-related infrastructure.
- Through the Plan and Manage Growth Term of Council Priority, the Region of Peel is closely managing the financial risk that comes with investing in infrastructure to support expected growth.
- The Region is aiming to reduce the projected cost-revenue gap in order to increase ability for growth to pay for growth infrastructure, and be at zero growth related debt by 2041.