A major Ontario municipality was forced to stop borrowing money to invest in various projects for two years because of “perceived uncertainty” caused by policies and reversals put forward by the Ford government.

The Region of Peel, one of the province’s largest local governments, didn’t borrow any money in either 2023 or 2024 because of instability brought about by the province’s attempts to split up the municipality.

The admission that government policy and reversals had a direct impact on the Peel Region’s ability to borrow was contained in briefing documents prepared for Rob Flack, the minister of municipal affairs and housing.

“As a result of perceived uncertainty related to any potential restructuring, Peel Region has experienced challenges accessing financing from capital markets,” the documents, obtained by Global News using freedom of information laws, said.

“Peel Region and the lower-tier municipalities are seeking stability on the future state of service delivery.”

That uncertainty stems from the Ford government’s semi-reversed attempts to disband the Region of Peel and give all its powers to its member municipalities, Brampton, Caledon and Mississauga.

The split was first announced in May 2023, with a transition board created and an aggressive timeline to have it complete by the beginning of 2025.

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A year before that was set to happen, however, the government announced it was reversing the split. In the end, after an intervention from the chair of the transition board, the government settled on a watered-down, partial breakup of the local government.

The reversals and policy shifts left the Region of Peel in a sticky spot. In particular, part of the Hazel McCallion Act — tabled in 2023 to dissolve the region — gave the transition board planning the move significant power.

“The original Hazel McCallion Act, unfortunately, had a clause in it that said the transition board could amend things, and that clause had an unintended consequence that we didn’t feel we could enter the capital markets,” Mississauga and Peel Coun. Joe Horneck explained.

“If the legal clause was there, the transition board could renegotiate things. Someone purchasing our debt might say, ‘Well, how do I know they won’t decide to execute that option and my money vanishes?’”

As a result, Peel was out in the cold and unable to borrow for all of 2023 and all of 2024.

Horneck said the clause had left the local government exposed to a potentially difficult situation.

“We were able to utilize the reserves we had,” he said. “We were kind of in the fall coming into a point where we would have been worryingly low, but we were able to get out from under the legislation in time.”

Horneck said that if changes had not come, the region could have been forced to ask the province for “some kind of bridge financing” or — in a scenario both the local and provincial governments would have looked to avoid — delay or cancel construction plans.

The transition board was dissolved in December 2024, allowing the region to start borrowing again, which it did in April.

A spokesperson for the Ministry of Municipal Affairs and Housing said the Ford government had “made record investments” in the area and would “continue to work collaboratively with Mississauga, Brampton, and Caledon to support them through the transition process.”

They did not directly address questions about borrowing issues or delays in tabling legislation to complete the Peel Region transition.

Ontario NDP municipal critic Jeff Burch characterized the split as “chaotic and irresponsible” from when it was first announced in May 2023.

“This has been a sloppy, unprofessional mess from the beginning,” he said. “It’s no surprise that no one, including financial markets, has any confidence in this government’s ability to manage the situation.”

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