Announced in the fall federal budget, the government has earmarked $12.2 billion over 10 years, and is seeking matching contributions from provinces, to lower development charges by up to 50 per cent.
Governments should seize this moment to deliver long-lasting structural reform to the development charges (DCs) system in Ontario and create a reformed mechanism that permanently lowers costs, ensuring future generations of new homebuyers have access to more affordable housing.
Development charges have been with us in Ontario for three and a half decades, and in that time, we have seen a huge escalation in the price of new homes, as well as DC rates. Those two factors are not unrelated.
Development charges are municipal and regional charges applied to the cost of a new home upfront to pay for municipal and regional services and infrastructure. They are just one of the municipal fees and charges added to new homes and now range between $95,000 and $163,000 per single-family home, depending on the Greater Toronto Area (GTA) municipality.
For new home owners in high-land value areas like the GTA, the charges are especially significant. In the GTA, DCs have increased on average by a shocking 327% since 2009, with some areas, like the City of Toronto, seeing a rise of over 1000% during that same period.
First, some infrastructure currently funded through DCs could be shifted to higher orders of government. Transit is an obvious example.
In the GTA, most municipalities embed a significant transit cost within their DCs. Brampton’s transit portion exceeds $14,000 per single-family home, most York Region municipalities exceed $21,000 and the City of Toronto’s is $54,000.
However, new transit infrastructure and equipment benefits entire communities, not just new home owners, so re-orienting these infrastructure and equipment costs (not operating costs) to higher orders of government would effectively spread the cost over the entire tax base, and materially lower housing costs.
Second, there are services that really should not be upfronted and should instead be spread over a 20-to-25-year period of use for the new home. Water and wastewater infrastructure immediately come to mind here – this is how it’s done in Quebec (where housing costs are materially lower than Ontario) and vast swaths of the United States.
The Ontario government has been actively exploring this for some time and in a paper developed by Keleher Planning & Economic Consulting Inc (KPEC) for BILD and the Ontario Home Builders’ Association in 2025, it is estimated that this change could lower DCs by 25-30%.
Existing homes are not impacted as the charge applied to new homes is on a go-forward basis. Spreading the cost also results in a lower cost to the homeowner versus a lump sum that is incorporated into a mortgage.
Lastly, how do you control or reduce the remaining costs? If the first two changes are implemented, then the DCs that are left are those suited for the municipal level of government (roads, libraries, community centres, and emergency services).
www.torontosun.com/life/homes/bild-lets-not-miss-a-historic-opportunity-to-create-lasting-change
