It’s the most ambitious and expensive election promise made during this mayoral race.
And over the past few weeks, it’s become a flashpoint between the leading contenders.
At press conferences late last month, Brad Bradford proposed a revamp of Toronto’s budget.
He pitched turning the city’s water division into a corporate utility, like Toronto Hydro. The move, he said, would allow the city to reduce residents’ water bills. Major capital projects, which are currently funded using money taken from those bills, would instead be paid for through debt financing.
He said dividends from the new corporate utility, meanwhile, would help pay for another campaign promise: a cut to the city’s municipal land transfer tax.
Bradford has said he believes he could accomplish the water utility change in 2027.
Incumbent Olivia Chow has accused Bradford of wanting to privatize Toronto’s water. It’s a move, she said, that could risk dirtying some of North America’s cleanest drinking water. She even got environmental titan David Suzuki involved.
Bradford has repeatedly rejected those claims and accused Chow of fear-mongering.
“I would resign my seat if Toronto Water was ever privatized,” he said in the pair’s final head-to-head debate. As for dirtying the water, “you know that’s not true … You have just engaged in all these wild accusations, misinformation.”
It’s a lot, it’s complicated and it’s all being debated in the midst of a dead-heat electoral race.
The Star has talked to legal and government finance experts, who have reviewed Bradford’s proposals. They say the ideas are ambitious and worth debating. They also say that without a business plan, they’re high risk. There are also some promises being made that would require, they note, stars to align that aren’t all within a mayor’s control.
Will Toronto’s water be ‘privatized’?
Currently, the city’s water system is a municipal government department, the head of which reports directly to the city manager and mayor. Major infrastructure decisions and rates are decided by city council.
Bradford’s proposal would change that. It would create a corporation in charge of Toronto’s water.
“The Ontario government has passed legislation necessary to do it. The door is wide open and available,” Bradford said. “So why hasn’t Toronto walked through it?”
Generally, a corporate water utility is like a publicly owned company where the government owns the shares and any revenue goes back into maintaining pipes and plants.
In contrast, “privatization” would mean selling the system or its operations to private companies, whose primary goal is to generate profits for outside investors.
Bradford has said privatization “will never happen” under his plan and has promised to create bylaws to ban it.
Last year, the province brought in new legislation called the Water and Wastewater Public Corporations Act. It’s intended to create a public corporation model for water and wastewater services so lower-tier municipalities, many with small or mid-sized water entities, can consolidate their networks into an arm’s-length regional corporation.
The purpose is to shift capital borrowing onto the corporation’s balance sheet rather than the municipality’s, protecting local credit ratings and freeing up debt capacity for other projects.
One sentence in the law has raised eyebrows: that “no shares of the corporation are held by a person other than a municipality, the Province of Ontario, the Government of Canada or an agent of any of them.”
Bradford and his team say the law, in several places, expressly prohibits privatization.
Joel Bakan, a longtime law professor at the University of British Columbia and the author of The Corporation: The Pathological Pursuit of Profit and Power, sees it differently. He notes that the regulations don’t define what can be designated as “an agent.”
What qualifies as “an agent” could be a private company, a public-private-partnership or an entity like the Canada Infrastructure Bank, which facilitates private investment in infrastructure projects, Bakan said. (The office of the minister of municipal affairs and housing, Rob Flack, who would oversee these utilities, did not respond to questions asking for clarification Friday.)
Echoing other lawyers the Star consulted, Bakan said that while the law calls these entities public corporations, it does not explicitly outlaw private-sector participation or ownership structures. In other words, Bill 98 limits who can own shares but doesn’t guarantee lasting public ownership.
“At a minimum, it’s definitely commercializing water services,” said Bakan, who has law degrees from Oxford, Dalhousie and Harvard. “So it isn’t technically privatization, in the sense that it’s a purely private owner. But it is an entity that would be operating on commercial principles rather than delivery of public service principles.”
Bakan said that raises the spectre of a company with a primary goal of generating profit — the type of scenario critics worry could lead to cutting corners on things such as safety and cleanliness.
Bradford’s team disputes Bakan’s characterization and says that no privatization would ever be allowed under the law.
What would happen to water bills?
Creating a water utility, Bradford has said, is intended to immediately reduce residents’ water bills by no longer charging Torontonians the portion that currently goes toward long-term infrastructure projects, such as flood protection, pipes and treatment plants.
Instead of relying on that money, under Bradford’s plan, the city would borrow the billions needed to pay for those projects, like a mortgage.
The savings for Torontonians would amount, Bradford has said, to 25 per cent on the first $1,500 of your bill. For the average household, that’s about $300 a year.
Peter Weltman, Ontario’s former financial accountability officer, said it’s “perfectly legitimate to discuss” Bradford’s idea.
There are scenarios where there could be a “significant return” of ratepayer money in the short term, he said. There are also scenarios where water rates could go up in the medium- to long-term to pay off debt or emergency repairs, he said.
At a Sept. 28 press conference to first introduce the idea, Bradford said: “An independent board will set the rates, not the politicians. And the rates will be lower than today’s.” While speaking to the Star’s editorial board on Oct. 14, Bradford said: “We will have city councillors sitting on the board.”
Complicating the rate question is the fact that, under the new provincial law, it could be the province that ends up approving or rejecting rate plans the corporation submits, according to Section 7 of the legislation.
Whoever sits on the board will also have a fiduciary obligation to put the corporation and shareholders’ interests ahead of ratepayers to keep it afloat, because that’s what corporate law demands, said Bakan.
Bradford’s team insists that the city of Toronto would be the sole shareholder and that, as a result, the city’s interests will be primary. That should allay fears, his team says, of profits being elevated over safety or other things.
“How independent is this board if you’re telling them, ‘Your first job is a rate cut and the second is to pay the city dividends for the (municipal land transfer tax) revenue loss’?” questioned Almos Tassonyi, a senior associate with the Institute on Municipal Finance and Governance who also studied economics.
Tassonyi said creating the utility by 2027 would be “unrealistic” in a large city like Toronto, as institutional changes take time and there are transitional costs involved.
Bradford’s team insists its timeline is feasible.
What about other local taxes?
Bradford contends the water corporation would also help his administration to cut the municipal land transfer tax on the first $1.1 million of the purchase of a home.
He estimated that would cost the city about $300 million a year. He said that he plans, in part, to pay for it with dividends the corporation would produce. Bradford said it would operate just like Toronto Hydro.
What this could mean for ratepayers down the road is unclear.
To the degree dividends are being generated from ratepayers, like Toronto Hydro, then “in order for the dividend to materialize, at some point, those water rates have to increase,” said Janice Baker, a former city manager at Mississauga and former chief administrative officer of Peel Region.
Baker said it’s possible a business plan finds this proposal can reduce rates for the next few years, but, she said, “as soon as I’ve built up those initial tranches of debt, as soon as I have interest in carrying costs on that debt, and that debt comes due for repayment, I have to raise my rates to cover that.”
Or “are you cross-subsidizing it from the property tax base?” Tassonyi questioned.
But Bradford’s team says that rates don’t need to rise to pay for the cut or the dividend.
“The rate cut and the dividend come out of an over-collection that already exists,” the campaign said.
“In 2024 the system cost $909 million to run, including the cost of wearing out its assets, and billed $1.32 billion. Reserves have grown from $141 million in 2009 to about $2 billion. Toronto Water carries no debt.”
Baker counters that, eventually, “you’re going to have to rebalance the books and something’s going to have to give.”
Tassonyi noted hydro utilities have the Ontario Energy Board to regulate rates, whereas there is no regulatory authority for water. So, he continued, there are many variables that need to be sorted, including how rating agencies would react to Toronto’s new approach to debt-financing.
In an interview with the Star’s editorial board, when asked about what he would do in the future, if various factors were at play, such as rising interest rates or a downgraded credit rating, Bradford said: “I think you would assess it based on the context and the situation at the time.”
Are other cities doing this exact thing?
Bradford has said Edmonton, Windsor, Kingston, Peel Region, Niagara Region and Calgary have all already done or are doing what he’s proposed.
Various utilities across Canadian cities do exist and use debt financing for some capital projects, but municipalities aren’t using them to cut water rates and cut local taxes. Their set-ups, histories and scopes are very different.
When pressed by the Star at an Oct. 1 campaign stop, Bradford conceded these cities “do this a little bit differently” and “just because it hasn’t been done, doesn’t mean we can’t figure it out. We’re going to figure this out in Toronto.”
Correction — Oct. 25, 2026:
This article has been updated. An earlier version of this story incorrectly identified Metrolinx as a public-private partnership. It is a Crown agency that regularly uses P3 partnerships.
Clarification — Oct. 25, 2026
This article has been revised to include additional context from Brad Bradford’s team, and updated to clarify that the final say for water rate increases could be at the province’s discretion under the province’s new legislation, but that framework is not currently in place.
