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Funding Strategy Overview
During the preparation of the 2024–2027 Multi-Year Budget (MYB), staff built the 10-year capital budget and forecast based on the updated service delivery master plans, factoring in the high inflation of the previous few years. As part of the MYB, significant increases were built into the budget for capital funding, including phased-in adjustments to address inflationary gaps, greater investment in infrastructure renewal to reduce the asset management funding gap, and building up funding for projects supported by the 100RE and Service Enhancement strategies.
To prioritize affordability in the 2025 Budget Confirmation, the tax-supported capital funding increases were reduced by $5.7 million on average for 2025, 2026 and 2027. Further, an assumption was made that this lower level of increase in capital funding would also be fixed for the duration of the capital budget and forecast. These changes resulted in a reduction of approximately $243 million of tax-supported capital funding over the 10-year capital budget and forecast period. This was a critical decision that provided the foundation for capital prioritization work, deferring capital spending to fit within the revised projected funding envelope. These foundational assumptions will be revisited through the next MYB cycle (2028 – 2031). The following are key revenue assumptions built into the forecast:
- The increases in the tax-supported transfer for the Growth Strategy to support the creation of new housing units by funding development charge revenue losses are maintained from the MYB levels.
- Funding for Infrastructure Renewal would be protected as much as possible, given the City’s known and growing infrastructure backlog.
- The Service Enhancement, Brownfield Renewal and 100RE funding envelopes were reduced to accommodate the Growth and Infrastructure Renewal increases.
These assumptions, together with the City’s capital prioritization criteria and framework, guided a comprehensive capital prioritization process, where every project in the City’s capital budget and forecast was prioritized in alignment with the criteria established. Once the budget adjustments were made to defer and re-sequence capital projects, the tax-supported funding flowing into the Infrastructure Renewal, Service Enhancement, and 100RE reserve funds were adjusted between the reserve funds to align with the prioritized capital projects.
The 2025 Budget Confirmation introduced significant adjustments across all financial strategies over the 10-year forecast period. Building on that foundation, the 2026 Budget Update maintains consistency with the above noted approach, however with refinements limited to specific strategies.
Figure 4 shows how the transfers to capital under each of the strategies change over time.
Figure 4 Transfers to capital reserve funds (2024-2029) ($ millions)
View Figure 4 data
| Reserve Fund | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|---|
| Infrastructure Renewal (#150) | 26.0 | 32.5 | 40.1 | 42.0 | 44.5 | 47.6 |
| Parking Capital (#151) | 1.8 | 1.8 | 2.5 | 2.5 | 2.5 | 2.5 |
| Water Capital (#152) | 18.9 | 21.5 | 28.3 | 36.0 | 41.6 | 46.8 |
| Wastewater Capital (#153) | 17.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 |
| Brownfield Renewal (#155) | 3.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| Growth (#156) | 5.8 | 8.3 | 9.0 | 10.6 | 10.8 | 11.2 |
| Service Enhancement (#159) | 8.2 | 7.3 | 5.3 | 5.3 | 6.0 | 6.7 |
| Stormwater Capital (#165) | 10.6 | 12.1 | 13.6 | 15.5 | 17.4 | 19.4 |
| 100RE (#355) | 3.2 | 5.7 | 3.2 | 3.6 | 4.6 | 5.7 |
Here are some highlights that can be seen in Figure 4:
- To maintain the required transfers to the Service Enhancement and 100RE reserve funds necessary to fund service enhancement and 100RE capital projects and debt servicing costs, the increase in the transfer to the Infrastructure Renewal reserve fund needs to be slowed down in 2027 compared to the increases in 2025 and 2026.
- In 2026, the tax-supported investment in the Growth reserve fund to fund DC exemptions is more than the investment in Service Enhancement and 100RE combined. This represents the property tax contribution toward supporting the creation of new housing units by funding growth-enabling infrastructure and amenities.
- The commitment to closing the infrastructure gap is evident through the continued increases in the transfers to the Infrastructure Renewal, Water, and Stormwater reserve funds. The Wastewater Capital reserve fund transfer is flattened because of the strategy developed to re-balance Water and Wastewater capital funding, while ensuring that sufficient resources remain to support infrastructure renewal for wastewater services as well. To balance this with managing affordability, tax-supported investment in Service Enhancement, 100RE, Brownfield Renewal and rate supported Parking Capital investment have declined or have modest increases over this six-year period.
The individual financial strategies provide more detail about the reserve fund positions, projects funded, and any significant changes. The updated plan relies on inter-reserve fund borrowing, and the use of debt throughout the forecast at the same level projected through the 2025 Budget Confirmation. The City continues to have an ambitious capital plan, and it will require ongoing monitoring of capital reserve fund positions each year. Minimum reserve fund balance targets will not be met in some years, and there is potential for adjustments to capital project timing through future annual budget updates or future MYB cycles, if required based on updated reserve balances and other changes that impact reserve forecast assumptions such as DC collections.
Infrastructure Renewal strategy
The Infrastructure Renewal (IR) Strategy funds the planned maintenance and replacement of City-owned assets. This strategy is directly linked to asset management planning—how we plan for and prioritize our infrastructure needs to maintain assets in a state and condition that support consistent and reliable municipal services for our community. Asset management planning is an ongoing and long-term process that estimates the financial requirements to maintain the City’s assets in a state of good repair, including operation and maintenance, renewal, replacement, and disposal.
The Infrastructure Renewal Strategy is funded from multiple sources:
- Property taxes;
- Water, wastewater, stormwater, and parking rates;
- Canada Community-Building Fund (previously federal gas tax);
- Dedicated Gas Tax Funds for Public Transportation (provincial gas tax); and
- Dividends from the City’s two wholly owned subsidiaries: Guelph Municipal Holdings Inc. (GMHI) and Guelph Junction Railway (GJR).
Sustainable funding level
According to the City’s most recent Asset Management Plan 2025 (AMP), the sustainable funding level for infrastructure renewal is $189 million. The AMP also identified an infrastructure backlog of $355 million.
The analysis in the AMP projects that the tax-supported services can reach the sustainable funding level by 2043 or 2044, while the non-tax-supported services can reach sustainable funding by 2031 based on infrastructure renewal funding projected through the 2025 Budget Confirmation. These estimates have been recalculated and the changes made through the 2026 budget update did not result in a change in these estimates. Figure 5 and 6 show the projected Infrastructure Renewal funding in comparison to the sustainable funding levels for tax-supported and non- tax-supported services, respectively.
Figure 5 Annual sustainable funding level gap, tax-supported ($ millions)
View Figure 5 data
| Year | 2026 Budget Update tax-supported infrastructure renewal funding | Sustainable annual tax funding |
|---|---|---|
| 2025 | 52 | 112 |
| 2026 | 58 | 115 |
| 2027 | 61 | 118 |
| 2028 | 63 | 122 |
| 2029 | 67 | 126 |
| 2030 | 70 | 130 |
| 2031 | 74 | 134 |
| 2032 | 78 | 138 |
| 2033 | 83 | 142 |
| 2034 | 88 | 146 |
| 2035 | 96 | 150 |
| 2036 | 104 | 155 |
| 2037 | 113 | 160 |
| 2038 | 123 | 165 |
| 2039 | 134 | 170 |
| 2040 | 146 | 175 |
| 2041 | 158 | 180 |
| 2042 | 171 | 185 |
| 2043 | 185 | 191 |
| 2044 | 199 | 197 |
Figure 6 Annual sustainable funding level gap, non-tax-supported ($ millions)
View Figure 6 data
| Year | 2026 Budget Update non-tax-supported infrastructure renewal funding | Sustainable annual non-tax funding |
|---|---|---|
| 2025 | 52 | 77 |
| 2026 | 59 | 80 |
| 2027 | 68 | 82 |
| 2028 | 74 | 84 |
| 2029 | 81 | 87 |
| 2030 | 88 | 90 |
| 2031 | 95 | 93 |
Tax support for the Infrastructure Renewal Strategy
For tax-supported services, infrastructure renewal activities are funded from property taxes through the Infrastructure Renewal (150), Library Capital (157), and Police Capital (158) reserve funds, as well as external funding from upper levels of government, including the Canada Community-Building Fund (CCBF) and Dedicated Gas Tax (DGT).
Table 26 summarizes the annual infrastructure renewal funding for tax-supported services. The City maximizes the use of these external funding sources to lessen the impact on property taxes.
Table 26 Annual capital funding transfers – tax-supported Infrastructure Renewal Strategy funding ($ millions)
| Funding source | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|
| Infrastructure Renewal (150)* | 35.4 | 40.1 | 42.0 | 44.5 | 47.6 |
| Library Capital (157) | 0.3 | 0.3 | 0.4 | 0.4 | 0.4 |
| Police Capital (158) | 4.4 | 5.2 | 5.4 | 5.5 | 5.7 |
| DGT (342) | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 |
| CCBF (343) | 9.4 | 9.4 | 9.8 | 9.8 | 10.2 |
| Total | 52.6 | 58.0 | 60.6 | 63.2 | 66.9 |
*In 2026, the transfer to the Infrastructure Renewal reserve fund (150) includes $4.1 million in projected dividends from GMHI and $168 thousand in projected dividends from GJR.
In 2026, the IR Strategy will continue increasing with inflation plus the approved IR Strategy of adding 1 per cent of the overall tax levy annually on top of inflation. This is possible due to a reduction in the tax-supported funding for the 100RE strategy in 2026. However, the prioritized capital budget continues to include significant investment in Service Enhancement and 100RE initiatives, and therefore the overall envelope of tax-supported capital funding increases was split among these strategies, meaning that the 1 per cent annual increase in addition to inflation are not possible at the current overall level of tax-supported funding in 2027 and beyond. After that time, funding will continue to increase with inflation plus a varying portion of the increase required to close the infrastructure gap.
As shown in Table 27, the Infrastructure Renewal reserve fund (150) has a positive balance at the end of 10 years but goes into significant deficits in 2029-2033, where it will need to borrow from other reserve funds. This will be closely monitored, as having a deficit in the reserve fund will reduce the City’s ability to manage unplanned asset failures.
Table 27 Infrastructure Renewal reserve fund (150) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 44.7 | 2.7 | 15.9 | 21.6 | 3.9 | (19.2) | (20.9) | (18.6) | (18.4) | (10.0) | 13.5 |
| Revenue from operating budget | 35.4 | 40.1 | 42.0 | 44.5 | 47.6 | 51.0 | 54.5 | 58.3 | 62.3 | 66.6 | 74.4 |
| Capital expenditures | (77.4) | (26.8) | (36.4) | (62.3) | (70.7) | (52.6) | (52.3) | (58.1) | (53.9) | (43.1) | (46.2) |
| Closing balance | 2.7 | 15.9 | 21.6 | 3.9 | (19.2) | (20.9) | (18.6) | (18.4) | (10.0) | 13.5 | 41.7 |
Rate-supported Infrastructure Renewal Strategy funding
The Infrastructure Renewal Strategy provides rate-supported funding through annual transfers to the respective reserve funds for the following services:
- parking;
- water;
- wastewater; and
- stormwater.
Parking
A summary of the reserve fund forecast is provided in Table 28 below. The reserve fund still builds up over the duration of the capital budget and forecast based on the planned capital works from 2026 through 2035; it also provides a source of funds for potential parking partnership opportunities that may arise, and for major replacement/renewal work on the City’s parkades planned beyond the 10-year forecast.
Table 28 Parking Capital reserve fund (151) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | (5.8) | 6.7 | 7.7 | 8.4 | 9.0 | 9.6 | 10.1 | 10.8 | 11.4 | 12.1 | 12.8 |
| Transfers from operating | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 |
| Capital expenditures | 10.0 | (1.5) | (1.9) | (1.9) | (1.9) | (2.0) | (1.9) | (1.9) | (1.7) | (1.9) | (2.0) |
| Closing balance | 6.7 | 7.7 | 8.4 | 9.0 | 9.6 | 10.1 | 10.8 | 11.4 | 12.1 | 12.8 | 13.2 |
Utility (water, wastewater and stormwater) rate supported services
Funding for both the Infrastructure Renewal Strategy and Growth Strategy is transferred to each of the Water Capital (152), Wastewater Capital (153) and Stormwater Capital (165) reserve funds. The following tables show the transfers to Water Capital, Wastewater Capital, and Stormwater Capital reserve funds for both the Infrastructure Renewal Strategy and the Growth Strategy. The corresponding reserve fund forecast is also provided for each service.
Staff made a recommendation through the 2025 Budget Companion Report to investigate the customer impact of adjusting the Water and Wastewater utility rates with the objective of eliminating the deficit in the Water Capital reserve fund (152) and reducing the positive balance in the Wastewater Capital reserve fund (153). The 2026 budget update accomplishes this by pausing the increases to the Wastewater Capital reserve fund and attributing the forecasted increases to the Water Capital reserve fund. By following this strategy, the 10-year forecast for the Water Capital reserve fund achieves a forecasted positive balance by 2032. This is a long-term strategy to bring these reserve funds into a balanced position and updates to the strategy will be made annually as required. Table and Table show the updated reserve fund forecasts for the Water Capital and Wastewater Capital reserve funds.
Table 29 Water Capital reserve fund (152) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 46.2 | (29.4) | (27.9) | (42.9) | (39.7) | (41.0) | (38.7) | (7.3) | 24.0 | 15.0 | 68.9 |
| Revenue from operating budget | 21.5 | 28.3 | 36.0 | 41.6 | 46.8 | 52.6 | 58.8 | 65.6 | 73.0 | 78.9 | 83.1 |
| Capital expenditures | (93.7) | (23.2) | (47.8) | (35.0) | (44.8) | (47.0) | (25.2) | (31.4) | (79.0) | (22.7) | (7.7) |
| Transfer to other reserve funds | (3.4) | (3.6) | (3.3) | (3.3) | (3.3) | (3.3) | (2.3) | (3.0) | (3.0) | (2.2) | (2.2) |
| Closing balance | (29.4) | (27.9) | (42.9) | (39.7) | (41.0) | (38.7) | (7.3) | 24.0 | 15.0 | 68.9 | 142.1 |
Table 30 Wastewater Capital reserve fund (153) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 114.5 | 91.3 | 53.3 | 51.1 | 52.1 | 45.1 | 44.1 | 47.0 | 39.8 | 36.2 | 40.5 |
| Revenue from operating budget | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 19.4 | 19.4 | 19.4 | 19.4 | 19.4 |
| Capital expenditures | (40.9) | (55.6) | (20.0) | (16.9) | (24.8) | (18.8) | (14.6) | (24.2) | (20.7) | (13.3) | (9.7) |
| Transfer to other reserve funds | (2.6) | (2.8) | (2.6) | (2.6) | (2.6) | (2.6) | (1.8) | (2.3) | (2.3) | (1.7) | (1.7) |
| Closing balance | 91.3 | 53.3 | 51.1 | 52.1 | 45.1 | 44.1 | 47.0 | 39.8 | 36.2 | 40.5 | 48.5 |
As shown in Table 31, the Stormwater Capital reserve fund has a positive balance throughout the forecast, other than 2033. The balance in this reserve fund is being used as an informal lender to other reserve funds when positive.
Table 31 Stormwater Capital reserve fund (165) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 28.1 | 19.3 | 19.5 | 29.1 | 27.9 | 18.2 | 5.7 | 10.4 | 0.7 | (5.2) | 19.5 |
| Transfers from operating | 12.1 | 13.6 | 15.5 | 17.4 | 19.4 | 21.0 | 22.7 | 25.7 | 29.0 | 32.7 | 36.9 |
| Capital expenditures | (20.7) | (13.2) | (5.6) | (18.5) | (28.9) | (33.3) | (18.0) | (35.1) | (34.6) | (7.9) | (16.5) |
| Transfer to other reserve funds | (0.2) | (0.2) | (0.2) | (0.2) | (0.2) | (0.2) | (0.1) | (0.2) | (0.2) | (0.1) | (0.1) |
| Closing balance | 19.3 | 19.5 | 29.1 | 27.9 | 18.2 | 5.7 | 10.4 | 0.7 | (5.2) | 19.5 | 39.8 |
Growth Strategy
The purpose of the Growth Strategy is to fund growth-related costs. The City uses growth-related revenues to pay for the costs of growth to the extent allowed by legislation. Growth revenues used to pay for growth-related capital expenses are collected from:
- Cash-in-lieu of parkland dedication;
- Community benefit charges;
- Development charges;
- Property tax assessment growth; and
- Utility rate revenue growth.
Development charges
Development charges (DCs) are the largest funding source for growth-related capital costs. The City’s current DC bylaws, (2024)-20866 through (2024)-20880, as amended, were passed in January 2024 and amended in November 2024. As part of that process, new DC rates were calculated and approved as part of the 2023 Development Charges Background Study dated January 26, 2024.
There have been numerous changes to DC legislation over the past several years. Here is a summary of the significant changes related to DCs that the City has experienced leading up to the 2025 Budget Confirmation:
- In 2022, Bill 23 was passed, which altered DC revenue in several ways including; a phase-in of DC rates, the introduction of new DC exemptions and discounts for affordable housing and rentals, and the removal of growth studies as a DC eligible expense.
- In 2023, the City completed the DC Background Study, which was approved in January 2024; the new DC rates and growth assumptions were integrated into the 2024-2027 MYB.
- In 2024, Bill 185 was passed which reinstated growth studies as a DC eligible expense and repealed the mandatory phase-in of DC rates.
Since the 2025 Budget Confirmation, there have been the following significant events related to DCs:
- In November 2024, the DC by-law was amended to add growth studies back into the DC rate.
- The City incurred a DC collection shortfall of $42.9 million, while experiencing high DC exemptions for 2024, as discussed in the 2024 Long-term Financial Statement: Reserves and Debt.
- In April 2025, Council approved the Municipal Service and Financing Agreements (MSFA) Policy which added a tool to advance development faster.
- In June 2025, Bill 17 was passed which introduced new legislation for DCs. This bill may have wide ranging impacts on the requirements and methodology used in the development of DC background studies and the timing of collection of DCs. The DC changes from Bill 17 have not yet come into effect, as further enabling regulation or orders in council, as well as other legislative changes are required.
There have been several other events and changes that have occurred but are not listed here as the financial impact on the Growth Strategy is less significant.
In the MYB, projections for DC collections were based on the 2023 DC Background Study, which uses the analysis completed through the Growth Management Strategy. The 2025 Budget Confirmation continued using the 2023 DC Background Study as the basis for the DC collection forecast, which forecasted $304.5 million in DC collections from 2025 to 2029. This revenue projection is a foundational piece of the reserve fund forecast that is used to guide the fiscal capacity of the capital budget.
DCs are a volatile funding source, and the City has experienced the downside of this volatility in 2024 and 2025 to date. In 2024, the DC collection shortfall was $42.9 million and through the second quarter of 2025, the City collected only $5.2 million of a projected $53.8 million. Given the current trends in the construction industry, staff revised the estimate of DC collections from 2025 to 2027 downward in the updated reserve fund forecast. Staff will continue to refine these projections and incorporate the impact of the Bill 17 changes to defer collections to occupancy into the 10-year forecast and will update forecast collections again through the 2027 Budget Update. Overall, the revision made to 2025 through 2027 collection assumptions results in an estimated $200.0 million in DC collections from 2025 to 2029. This estimate also includes an adjustment to add growth studies back to the DC rate. The projections for 2028 to 2035 continue to be based on the 2023 DC Background Study and will require further revision if slow growth and reduced development activity continues beyond 2027.
With a $104.5 million decrease in forecast DC collections from 2025 to 2029, the fiscal capacity to deliver the capital budget and forecast as updated through the 2025 Budget Confirmation was reduced. As noted in the Capital Budget section of this website, this revision resulted in capital project deferrals from 2026 to 2028.
In April 2025, Council approved a policy for the use of Municipal Servicing and Financing Agreements (MSFA) to accelerate growth related infrastructure beyond the City’s current fiscal capacity. Officially launched in August 2025, the MSFA program enables the City to work with developers to build the infrastructure to allow growth projects to proceed without being limited by the City’s project timing, which is otherwise constrained by available DC funding.
Bill 17 introduced new legislation for developers to defer payments of DCs on residential development from the time of building permit issuance to the time of occupancy. Although not yet enacted, if this change proceeds, it will significantly impact the timing of DC collections. Approximately 71 per cent of projected DC collections are residential, therefore the budget exposure in 2026 from this change is a loss of is $15.2 million. This could occur if all residential developers defer their DC payment and occupancy is greater than one year from the time of building permit issuance for each development. The timing and details of implementation are currently unknown. The province continues to consult on how to implement this change as there are several issues to be considered, but it could delay collection of DCs for single and semi-detached homes by approximately 8 months, and for multi-residential towers by up to 3 years. This impact will be incorporated into the work to forecast the DC collections for the City in the 2027 Budget Update.
Table 32 presents a forecast of the consolidated DC year-end reserve fund balances based on the growth-related capital projects included in the 10-year capital budget and forecast. These balances are net of project-specific debt approved in prior capital budgets as well as debt attached to specific projects in the 2026 and future capital budget and forecast, but do not reflect the debt capacity earmarked for DC projects as outlined in the Debt Strategy.
Table 32 Forecasted year-end Growth Revenue Reserve Fund balances ($ millions)
| Reserve fund grouping | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 3031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Parkland dedication | 19.7 | 20.5 | 21.2 | 22.0 | 22.7 | 23.5 | 1.3 | 2.1 | 2.6 | 3.1 | 3.5 |
| Community benefit charges | 1.3 | 1.7 | 2.1 | 2.6 | 3.0 | 3.5 | (1.1) | (0.8) | (0.3) | 0.1 | 0.5 |
| Development charges | (5.5) | (95.1) | (80.5) | (49.4) | (21.8) | (10.1) | (14.7) | (16.5) | (24.0) | (14.0) | (87.7) |
In the reserve fund forecast, the DC reserve funds as a group are projected to remain in a deficit position throughout the forecast period. This is due to the significant investment in Water, Wastewater and Public Works growth infrastructure from 2025 to 2027. Table 33 outlines the Development Charges reserve funds as a group.
Table 33 Development Charge reserve funds (group) forecast 2025-2035 ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 106.8 | (92.2) | (174.2) | (202.6) | (163.7) | (127.0) | (106.0) | (101.0) | (98.3) | (101.2) | (86.4) |
| Capital expenditures | (228.3) | (122.8) | (79.0) | (46.4) | (51.3) | (69.5) | (60.9) | (65.2) | (72.8) | (50.2) | (135.5) |
| DC collections | 11.7 | 21.4 | 32.2 | 66.3 | 68.3 | 70.4 | 51.9 | 49.2 | 50.6 | 49.7 | 51.2 |
| DC exemptions and discounts | 17.6 | 19.4 | 18.4 | 19.0 | 19.6 | 20.2 | 14.0 | 18.7 | 19.3 | 15.2 | 15.7 |
| Closing balance | (92.2) | (174.2) | (202.6) | (163.7) | (127.0) | (106.0) | (101.0) | (98.3) | (101.2) | (86.4) | (155.0) |
| Outstanding debt | 86.8 | 79.1 | 122.0 | 114.3 | 105.2 | 95.9 | 86.3 | 81.9 | 77.2 | 72.4 | 67.4 |
| Closing balance (after debt) | (5.5) | (95.1) | (80.5) | (49.4) | (21.8) | (10.1) | (14.7) | (16.5) | (24.0) | (14.0) | (87.7) |
Staff will continue to monitor balances closely, and report on collections through the quarterly budget monitoring reports. Lower than budgeted DC collections may result in the deferral of projects or use of the reserved debt capacity later in the 10-year forecast to manage cash flows. Staff will also consider if additional growth projects can be accommodated in the later part of the 10-year forecast depending on actual collection experience through future MYB cycles.
Tax-supported revenues
Some growth-related costs are not eligible for funding through dedicated growth revenue streams. Additionally, development charge exemptions and discounts are required to be funded through other sources: property taxes for tax-supported services, and utility rates for rate supported services.
They City maintains the tax-supported Growth Reserve Fund (156) to fund non-DC eligible growth capital costs, and exemptions and discounts for tax-supported services. Actual overall exemptions and discounts have been comparable to the projected exemptions and discounts; however, to date, exemptions for additional dwelling units have been far more significant, and exemptions for affordable units have been far less significant than the projections prepared as part of the 2023 DC Background Study. Additionally, the approach to building up tax-supported funding for these exemptions was a phased in approach, resulting in a declining Growth Reserve Fund (156) balance until the level of funds going into the reserve from property tax contributions levels out with the funds going out of the reserve fund for DC exemptions and discounts.
Throughout 2025, there has been significant discussion among municipalities and the province regarding the requirement to fund statutory DC exemptions and discounts. In the first quarter of 2026, staff are planning to bring Council an update to the DC Exemption Policy including information about the implications of different approaches that may be possible.
Consistent with slower growth trends, assessment growth for 2026 is at risk of falling short of the budgeted assessment growth increase of 1.15 per cent or $4.0 million. Per the Revenue Budgeting Policy, any surplus or deficit from assessment growth is reflected in a transfer to or from the Growth Reserve Fund. As of October 2, 2025, assessment growth for 2026 was at 0.62 per cent (just under $2.2 million), with just under a month left for updates to be processed by MPAC for the 2026 assessment roll. A shortfall in assessment growth puts additional pressure on the Growth Reserve Fund, drawing the expected balance further into the negative. A 2026 shortfall will impact the tax levy in 2027 and further, as assessment growth is a lagging indicator. The slow development charge and Ontario Building Code revenue collection in 2024 and 2025 are early indicators that the assessment growth assumptions for 2027 and 2028 will need to be revised downward through the 2027 budget update and 2028 – 2031 MYB.
The foundational assumptions in the reserve forecast for the Growth Reserve Fund (156) have remained consistent with the 2025 Budget Confirmation, with the exception of an improved overall position from the re-addition of growth studies as an eligible DC service. As shown in Table 34, transfers into the Growth Reserve Fund are consistent with the proposed transfers through the 2024–2027 MYB. The projected balance continues to be negative throughout the forecast period until 2034, as shown in Table 35. Similar to DC collections, the costs of DC exemptions depend on the timing of eligible building activity and will fluctuate accordingly. Actual exemptions will continue to be monitored closely and reported on through the quarterly budget monitoring reports.
Table 34 Annual capital funding transfers – Growth reserve fund ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|
| Total transfer to reserve fund | 8.3 | 9.0 | 10.6 | 10.8 | 11.2 |
Table 35 Growth Reserve Fund (156) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2031 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | (5.2) | (9.0) | (11.9) | (12.1) | (12.4) | (12.3) | (11.6) | (10.0) | (7.4) | (4.2) | 1.0 |
| Transfers from operating | 8.3 | 9.0 | 10.6 | 10.8 | 11.2 | 11.5 | 11.8 | 12.2 | 12.6 | 12.9 | 13.3 |
| Capital expenditures | (1.3) | (0.3) | (0.1) | (0.4) | (0.4) | (0.1) | (3.1) | (0.4) | (0.1) | (0.6) | (0.1) |
| Transfer to other reserve funds | (10.8) | (11.6) | (10.7) | (10.7) | (10.7) | (10.7) | (7.1) | (9.2) | (9.2) | (7.1) | (7.1) |
| Closing balance | (9.0) | (11.9) | (12.1) | (12.4) | (12.3) | (11.6) | (10.0) | (7.4) | (4.2) | 1.0 | 7.1 |
Service Enhancement Strategy
The Service Enhancement Strategy supports investments to advance Council’s strategic plan and approved service delivery master plans to increase service levels for the community. This strategy is funded from property taxes through an annual transfer from the operating budget to the Service Enhancement reserve fund (159). The funding transfer consists of a recurring portion as well as time-limited transfers earmarked for specific purposes.
The strategy currently funds projects in the following categories:
- Baker District
- Active transportation network including the Cycling Master Plan
- City facilities and other corporate plans and initiatives
- Guelph Trail Master Plan, Urban Forest Management Plan, and open spaces
- Investment in digital services and customer service
- Transit Route Review and other service enhancements
- Downtown Streetscaping
- Solid Waste Management Master Plan recommendations
As outlined in the Funding Strategy Overview section, the increases to the overall tax-supported capital funding envelope were slowed in the 2025 Budget Confirmation and forecast. To continue to prioritize transfers into the tax-supported Infrastructure Renewal and Growth Strategies, recurring funding for the Service Enhancement Strategy was reduced in 2025 and 2026. The total funding provided through this strategy is significantly reduced, and the Service Enhancement reserve fund is projected to go into a negative balance in 2028 until 2035, based on the capital projects that are funded from this source. Funding for this strategy will be revisited through the 2028 – 2031 MYB cycle, and if additional funding is not a priority for Council at that time, additional deferrals of service enhancement capital works will be required.
The time-limited transfer for the Service Enhancement Strategy relates to phasing in operating costs of the Baker District and the South End Community Centre. Given the significant operating costs associated with the new facilities, the phase-in gradually adds the costs to the tax levy to smooth the impact when the facilities are opened. Through the 2026 Budget Update, the phase-in transfer was reduced by $169 thousand, and this will result in a higher impact on the tax levy timed with the first full year of operations for the facility in 2027.
Table 36 shows the annual time-limited and recurring transfers to the Service Enhancement Strategy in the 2026 Budget Update.
Table 36 Annual capital funding transfers – Service Enhancement Strategy ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|
| Time-limited transfer | 1.9 | 0.4 | 0.0 | 0.0 | 0.0 |
| Recurring transfer | 5.4 | 4.9 | 5.3 | 6.0 | 6.7 |
| Total updated transfer | 7.3 | 5.3 | 5.3 | 6.0 | 6.7 |
Table 37 is the list of capital projects that are funded by the Service Enhancement reserve fund (159) and the amount of service enhancement funding in the project. This is not the total project cost, but the service enhancement portion of the costs. For roads projects, the service enhancement portion is related to separated cycling infrastructure and downtown streetscaping costs.
Table 37 List of capital projects funded by Service Enhancement ($ millions)
| Project | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|
| GG0269 Accessibility Improvements | 0.0 | 0.2 | 0.2 | 0.4 |
| GG0284 Decision Support System Acquisition and Implementation | 0.0 | 0.0 | 0.5 | 0.6 |
| IT0061 Fibre Data Connection | 0.0 | 0.1 | 0.6 | 0.1 |
| IT0115 Customer Relationship Management system | 0.0 | 0.0 | 0.0 | 0.6 |
| IT0118 Cyber Security Program of Work | 0.0 | 0.1 | 0.0 | 0.8 |
| PL0087 Urban Design Guidelines | 0.0 | 0.0 | 0.1 | 0.0 |
| PN0041 Macdonell St Reconstruction – Norfolk to Wellington | 0.4 | 0.5 | 2.1 | 0.0 |
| PN0048 Quebec St Reconstruction – Norfolk to Wyndham | 0.0 | 0.0 | 0.1 | 0.1 |
| PN0060 Wyndham St N Reconstruction – Farquhar to Woolwich | 0.3 | 0.0 | 0.0 | 0.0 |
| PN0082 Exhibition Area Reconstruction – Ph 2 | 0.2 | 0.0 | 0.0 | 0.0 |
| PN0798 Yarmouth St Reconstruction – Woolwich to Quebec | 0.0 | 0.0 | 0.1 | 0.1 |
| PN0893 Douglas St & Cork St Reconstruction | 0.0 | 0.0 | 0.2 | 0.2 |
| PO0033 Recreation Trails Renewal – Active Transportation | 0.2 | 0.1 | 0.5 | 0.1 |
| RD0378 Eramosa Rd protected bike lanes (ICIP-GUE-05) | 0.0 | 0.0 | 0.1 | 0.4 |
| RD0385 Cycling Master Plan Implementation | 0.1 | 0.2 | 0.4 | 0.7 |
| RD0465 TMP-Quality Transit Network Implementation | 0.0 | 0.0 | 0.0 | 0.5 |
| RD0469 Gordon Street Phase 1- Waterloo to College (ICIP-GUE-05) | 0.0 | 0.0 | 0.1 | 0.3 |
| RD0476 Active Transportation Studies | 0.1 | 0.0 | 0.1 | 0.1 |
| RD0478 Gordon Street Ph. 3 Cycling – South Ring Road to Edinburgh (ICIP-GUE-05) | 0.0 | 0.0 | 0.0 | 0.1 |
| SS0030 St. Georges Square Self Cleaning Washroom | 0.0 | 0.0 | 0.3 | 0.0 |
| TC0043 Bus Shelter Purchase | 0.0 | 0.2 | 0.2 | 0.2 |
| TC0095 New/Upgrades to IT Software – Transit | 0.0 | 0.2 | 0.0 | 0.2 |
| TC0098 Route Review – Refurbished Buses | 1.0 | 0.0 | 0.0 | 0.0 |
| TF0032 Accessible Pedestrian Signals | 0.0 | 0.1 | 0.1 | 0.2 |
| TM0010 Mobility Van – Growth | 0.1 | 0.1 | 0.0 | 0.0 |
| WC0043 Solid Waste Masterplan Recommendations, Assessments and Policy Development | 0.0 | 0.0 | 0.0 | 0.7 |
| WC0044 Solid Waste Master Plan Environmental Programs Implementation | 0.0 | 0.2 | 0.2 | 0.3 |
| WC0057 Downtown Public Space Waste Containers | 0.0 | 0.2 | 0.0 | 0.3 |
| Other Projects (less than $50 thousand annually, PK0125, PL0078, RD0377, RD0486, and WC0059) | 0.1 | 0.1 | 0.1 | 0.1 |
| Total | 2.4 | 2.3 | 5.7 | 7.0 |
In addition to directly funding capital projects, debt principal and interest payments for the service enhancement portion of projects that have debt financing attached to them will come out of the reserve fund over time. Table 38 estimates debt payments over the 10-year forecast that will be paid out of the Service Enhancement reserve fund.
Table 38 Debt payments estimated from service enhancement reserve fund ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Baker District debt payments | 0.4 | 1.4 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 |
| Wyndham St. Streetscaping debt payments | – | – | – | – | 0.3 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 |
| Total debt payments | 0.4 | 1.4 | 2.8 | 2.8 | 3.1 | 3.2 | 3.2 | 3.2 | 3.2 | 3.2 | 3.2 |
The entire downtown streetscaping costs of $17.1 million were previously debt financed, however, with projects spanning multiple years throughout the 10-year forecast, the administration of issuing debt on this set of projects is not practical. Debt has remained attached to the project for the streetscaping of Wyndham Street North (PN0060), and the remainder of the previously assigned $17.1 million debt has been reassigned to support the 100RE strategy, specifically the Guelph Transit and Fleet Services Facility.
Table 39 details the reserve fund forecast for the Service Enhancement (159) reserve fund. In years where the reserve fund balance is over committed, the reserve fund will rely on inter-fund borrowing.
Table 39 Service Enhancement reserve fund (159) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 0.9 | (0.4) | 0.7 | 0.8 | (1.9) | (5.4) | (6.1) | (9.9) | (8.0) | (9.1) | (3.5) |
| Revenue from operating budget | 7.3 | 5.3 | 5.3 | 6.0 | 6.7 | 7.5 | 8.2 | 9.0 | 9.9 | 10.7 | 11.0 |
| Capital expenditures | (8.6) | (4.2) | (5.3) | (8.6) | (10.3) | (8.1) | (12.0) | (7.2) | (11.0) | (5.1) | (5.3) |
| Closing balance | (0.4) | 0.7 | 0.8 | (1.9) | (5.4) | (6.1) | (9.9) | (8.0) | (9.1) | (3.5) | 2.2 |
Brownfield Renewal Strategy
The Brownfield Renewal Strategy funds activities required to monitor and clean up environmental contamination at City-owned sites. The strategy funds projects related to monitoring, investigation, and risk assessment in addition to site remediation. As noted in the budget manual, the goal of this strategy is to reduce the contaminated sites liability to less than $5 million over the next 10 to 25 years.
The strategy in the 2026 Budget Update is consistent with the re-set strategy in the 2025 Budget Confirmation. In the 2025 Budget Confirmation, transfers into the Brownfield Renewal reserve fund (155) were reduced by $3 million, and re-set at a level of $0.3 million annually beginning in 2025. This reduction in the transfer to the reserve fund has provided relief to the tax levy and utility rates and has better aligned the amount going into the reserve fund with the costs projected to be incurred. The uncommitted reserve fund balance provides a buffer for managing unexpected costs arising from investigations.
The value of the liability for contaminated sites as of the end of 2024 was $24.4 million, in addition to the $6.3 million landfill obligation now included in the asset retirement obligation liability. Limited progress toward reducing this liability is expected to continue within the 10-year forecast, and further resources will be required to clean-up known City-owned contaminated sites. Table 40 outlines the projected balance in the reserve fund over the 10-year forecast.
Table 40 Brownfield Renewal reserve fund (155) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 17.3 | 11.1 | 11.4 | 11.2 | 10.5 | 10.3 | 10.1 | 9.9 | 9.7 | 9.6 | 9.6 |
| Revenue from operating budget | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| Capital expenditures | (6.5) | 0.0 | (0.4) | (1.0) | (0.6) | (0.4) | (0.5) | (0.4) | (0.4) | (0.3) | (0.3) |
| Closing balance | 11.1 | 11.4 | 11.2 | 10.5 | 10.3 | 10.1 | 9.9 | 9.7 | 9.6 | 9.6 | 9.6 |
100 Per Cent Renewable Energy (100RE) Strategy
The 100 per cent Renewable Energy (100RE) strategy funds projects that reduce emissions and support Guelph’s Race-to-Zero goal to become a net-zero carbon community by 2050.
An overview of focus projects for City emissions reductions, as well as City supports for community-led reductions, was outlined in the Information Report 2022-223 – Cities Race-to-Zero Four-Year Interim Targets published in June 2022. An updated Community Call to Climate Action was presented to and endorsed by Council in May 2025, and a Corporate Energy update is forthcoming.
As discussed in the Funding Strategy Overview, during the 2025 Budget Confirmation, the transfers to the 100RE reserve fund were reduced in the forecast to continue increasing transfers into the IR and Growth strategies. Table 41 below outlines the transfers from 2025 to 2029. After a decrease in the transfer in 2026, the transfer from operating increases annually to support the projects funded under this strategy.
To have a positive balance in the 100RE reserve fund by 2035, the tax-supported transfers needed to be realigned between IR and 100RE in the 2025 Budget Confirmation and further realigned in the 2026 Budget Update. As a result, the transfers into the Infrastructure Renewal reserve fund are slowed compared to the MYB over the forecast, however the 100RE strategy is funded over the 10-year forecast. These transfers will be realigned in future annual budgets as the capital budget is updated to ensure that the strategy is funded over 10 years.
Table 41 Annual capital funding transfers – 100RE strategy ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|
| Updated transfers from operating budget | 5.7 | 3.2 | 3.6 | 4.6 | 5.7 |
Table 42 provides an overview of the categories of projects that advance the City’s emissions reductions. A forthcoming report to Council on the Corporate Climate Action Plan will provide greater detail. The upcoming report also discusses the proposed timing of the projects and the implications on the Race to Zero and the 100% Renewable Energy targets.
Table 42 Focus projects to reduce emissions from City operations
| Projects | Capital project number | Project status | Estimated emissions reduction |
|---|---|---|---|
| Guelph Transit electrification | TC0059 TC0064 TC0077 | Executing | 6,700 tCO2e |
| Anaerobic digestion upgrades at Organic Waste Processing Facility to produce renewable natural gas | WC0048 | Deferred beyond 10-year capital budget | 3,000 tCO2e |
| Water Resource Recovery Centre upgrade to produce renewable natural gas (rate funded) | ST0009 | Deferred beyond 10-year capital budget | 2,000 tCO2e |
| 100RE initiatives – pooled funding | GG0261 | Deferred beyond 10-year capital budget | Varies by project. Many of the initiatives will be executed through various projects as infrastructure replacements are made. |
Table 43 presents the projects that are funded through the 100RE strategy in 2026 through 2029. This is not the total project cost, but the 100RE portion of the costs. These projects are part of the electrification of Guelph Transit and will contribute to reducing the City’s emissions. Staff will continue to build and evaluate the business cases for large-scale projects and will actively consider other funding opportunities where possible.
Table 43 Capital Projects funded by the 100RE Strategy 2026-2029 ($ millions)
| Project | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|
| TC0059 Guelph Transit and Fleet Services Facility (ICIP-GUE-03) | 1.1 | 0.0 | 0.0 | 0.0 |
| TC0064-013 Route Review – Year 6 (ICIP-GUE-01) | 1.1 | 0.0 | 0.0 | 0.0 |
| TC0064-014 Route Review – Year 7 (ICIP-GUE-01) | 0.0 | 1.4 | 0.0 | 0.0 |
| TC0064-015 Route Review – Year 8 (ICIP-GUE-01) | 0.0 | 0.0 | 1.2 | 0.0 |
| TC0064-016 Route Review – Year 9 (ICIP-GUE-01) – Contingency | 0.0 | 0.0 | 0.0 | 0.3 |
| TC0077 Transit Bus Replacement – w/ Electric | 0.0 | 0.0 | 0.0 | 6.5 |
| Total | 2.2 | 1.4 | 1.2 | 6.8 |
In addition to the funding for capital projects listed above, staff revised the 100RE funding of the Guelph Transit and Fleet Services (GTFS) Facility after progressing on detailed design of the project. The 100RE funding in the project represents estimated costs for electrical distribution due to the chargers and solar panels. Of these estimated costs, $17.0 million is debt financed as outlined in the debt strategy.
Table 44 outlines the planned debt servicing costs on future debt issuances from the 100RE reserve fund. This debt spreads the impact of the GTFS Facility over the years where the benefit of the facility will be incurred.
Table 44 Debt payments estimated for 100RE reserve fund ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Guelph Transit and Fleet Services Facility | – | – | – | – | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 |
Table 45 shows the forecast for the 100RE reserve fund is able to remain in a positive position throughout the 10 years. As discussed in the Fleet Electrification, Transit and Facility Needs, ICIP Funding and Budget Update report, the City changed the strategy for bus replacements, resulting in a decommitment of ICIP funds and focusing on refurbishment of existing diesel buses, rather than replacement with electric buses. The result from this change is an improved reserve fund position in 2025.
Table 45 100RE reserve fund (355) forecast ($ millions)
| Description | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 5.3 | 1.9 | 2.9 | 5.1 | 8.5 | 6.1 | 4.8 | 4.3 | 3.5 | 3.4 | 4.2 |
| Revenue from operating budget | 5.7 | 3.2 | 3.6 | 4.6 | 5.7 | 6.7 | 7.8 | 8.9 | 10.1 | 11.3 | 11.8 |
| Capital expenditures | (9.2) | (2.2) | (1.4) | (1.2) | (8.1) | (8.0) | (8.3) | (9.7) | (10.1) | (10.5) | (14.0) |
| Closing balance | 1.9 | 2.9 | 5.1 | 8.5 | 6.1 | 4.8 | 4.3 | 3.5 | 3.4 | 4.2 | 2.1 |
| 2026 Budget Update |
|---|
| Council reports |
| Budget board |
Related pages
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October 16: Mayor Cam Guthrie’s draft 2026 Budget Update Released
October 29: Special Council – 2026 Budget Update
November 18: Special Council – 2026 Budget public delegations
November 26: Special Council – 2026 Budget amendments
December 17: Special Council – 2026 Budget local boards and shared services