Council approves plan to cut fees on new Ottawa homes by thousands of dollars

Construction workers build new homes in a development in Ottawa on Monday, July 6, 2015.

The City of Ottawa will cut fees by $30,000 on new single-family homes built in the capital over the next three years to take advantage of millions of dollars in federal-Ontario infrastructure funding.

Council voted 23 to one to approve the city’s application for the Development Charge Reduction Program, with the city cutting development charges by 54 per cent over the next three years. Coun. Shawn Menard voted against the plan, while four councillors dissented on the list of infrastructure projects being submitted for funding.

Staff estimate the plan will lead to nearly 12,000 new homes being built each year.

“The city has an opportunity to reduce residential development charges for a limited time while advancing housing enabling infrastructure that supports growth across Ottawa,” staff said.

Development charges are one-time fees levied by municipalities on new residential and non-residential properties to help pay for a portion of the growth-related capital infrastructure requirements.

Ottawa’s development charge fees for single-detached and semi-detached homes are $55,982 inside the Greenbelt and $62,568 in the suburbs, while development charges for townhouses and row houses are $44,707 inside the Greenbelt and $49,085 in the suburbs.

The $8.8 billion Development Charge Reduction Program launched by the Ontario and federal governments last month urged municipalities to cut residential development charges by a minimum of 30 to 50 per cent for three years and submit a list of shovel-ready projects for funding to support housing-enabling infrastructure.

The report for council recommended the city cut residential development charges by 54 per cent, retroactive to Jan. 1. To achieve the reduction, residential developments must be ready for occupancy by March 30, 2030.

Staff estimate the reductions will result in an average of 11,984 new homes built a year over three years, with a total of 35,951 homes added by March 2029.

Mayor Mark Sutcliffe said it’s a “big opportunity for housing and infrastructure” in Ottawa.

“If it’s approved by council on July 15, and by the provincial government after that, we’ll be able to reduce development charges by more than 50 per cent, dramatically lowering the cost of new homes in Ottawa, while still investing hundreds of millions of dollars in critical new infrastructure, including roads, transit, water, and wastewater systems,” Sutcliffe said on X.

Staff say while the rate reduction will result in approximately $478.3 million in “forgone residential development charge revenue” over three years, its application to the Development Charge Reduction Program seeks to cover the full amount of lost revenue.

The city’s application outlined several projects for funding, including the widening of Brian Coburn Boulevard and Carp Road, the realignment of Greenbank Road, 20 intersection-focused projects to support growth, the expansion of the Bowesville Park and Ride lot, the Riverside South Recreation Facility, and sewer and pump station improvements.

Staff told council the infrastructure projects submitted for funding must be shovel-ready and completed by 2033.

The development charges will drop to $25,752 for single-family homes and semi-detached homes inside the Greenbelt, and $28,781 for homes in the suburbs.

The temporary residential development charge reduction will take effect as of Aug. 15, once the city’s application is approved.

Coun. Jeff Leiper expressed concerns the savings on development charges won’t be passed on to homebuyers.

“There’s not going to be for a couple of tens of thousands of dollars in the development charge reductions, some large supply of housing that comes onto the market to the point that it disciplines pricing,” Leiper said.

“These DC reductions are not going to result in more affordable housing for Ottawa residents. I think what it might do is help spur a bit more housing to be built, but let us not pretend this is a measure to bring down the cost of the housing we’re all concerned about for our kids, our grandkids and ourselves.”

City staff say the City of Ottawa already has some of the lowest development charge rates in Ontario, noting the rates exceed $140,000 for a home in the Greater Toronto Area.

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