‘Historic agreement:’ Feds, Ontario invest $8.8 B to cut development charges in half

The federal and provincial governments will jointly spend $8.8 billion to lower municipal development charges that drive up housing costs over the next decade, with the initial funding expected to cut those charges in half for the next three years.

“Today’s historic agreement with Ontario means that development charges across the province will be reduced by half for three years, and the essential infrastructure will still get built,” Carney said in a speech in Etobicoke, alongside Ford and Toronto Mayor Olivia Chow.

Carney said the federal government will invest $4.4 billion over 10 years through the Build Communities Strong Fund and that will be matched by Ontario. The money will be used to build housing-enabling infrastructure and reduce municipal development charges.

Municipalities levy development charges to help pay for the infrastructure associated with growth – things like sewage systems, transit and roads. However those charges drive up costs for developers, which are in turn passed on to homebuyers.

Ford said the move will shave thousands of dollars off housing costs, making it easier for people to buy a home.

He also said municipalities that have already heeded his calls to slash development charges will be prioritized.

“Funding will be prioritized for municipalities that agreed to cut DC’s (development charges) by up to 50 per cent, as well as municipalities that have already lowered DC’s in recent months,” Ford said. “So to all my great 444 mayors and people in the municipalities, if you don’t cut DC’s, you aren’t getting any money.”

Municipalities have pushed back against efforts to slash development charges without compensating them. Chow lauded the investment Monday and said it would result in more homes being built in the city.

“This historic announcement will mean thousands of new homes that can be built right here in Toronto,” Mayor Olivia Chow said. “For people who just want a home they can afford, this will make a real difference. It lowers the cost of building. That means more homes built faster.”

The move comes amid efforts to boost the lagging housing market.

Speaking at a separate news conference Monday, Ontario Housing Minister Rob Flack acknowledged that “the housing industry has been on its back,” despite the government’s stated desire to boost housing starts.

In another recent move, both governments announced they would remove the HST from new homes, saving all new home buyers up to $130,000.

Flack said sales offices “are booming” since that announcement and predicted the spring market will “some really good results.”

Both the investment to reduce development charges and the move to slash the HST are part of a raft of measures included in an agreement signed by Ford and Carney, dubbed the Canada-Ontario Partnership to Build.

The agreement also includes three-way cost-sharing between the federal government, the province and the city for a Waterfront East transit plan; A commitment to work together to boost passenger service around the Greater Golden Horseshoe region as part of the GO 2.0 plan; cooperation on high-speed rail along the Toronto-Quebec City corridor; and joint funding for various transit projects around the GTHA.