Municipalities weigh development charge reductions amidst $8.8 billion funding opportunity, builders hopeful

The Canadian Home Builders' Association wants the federal government to extend the amortization period for insured mortgages to 30 years for new construction, arguing it would help with affordability and spur more homebuilding. New homes are constructed in Ottawa on Monday, Aug. 14, 2023. THE CANADIAN PRESS/Sean Kilpatrick

A joint $8.8 billion spend by the federal and provincial government to lower development charges (DC) is being applauded for the stimulus it could provide to the housing market.

Over the next 10 years, municipalities will have an opportunity to tap into the billion-dollar fund to lower development charges, but it comes with a catch.

“Funding will be prioritized for municipalities that agree to cut DCs by up to 50 per cent,” Ontario Premier Doug Ford said on Monday.

“To all my great 444 mayors and people in the municipalities, if you don’t cut DCs, you aren’t getting any money.”

Development charges help municipalities pay for the infrastructure like sewers, transit, and roads, but these charges drive up costs.

“We know that this added cost at this particular point in time, especially when there’s the level of uncertainty out there is pausing a lot of development projects for moving forward,” said Windsor mayor Drew Dilkens.

A report due next month focuses on Windsor’s ability to freeze development charges on apartment buildings stuck in the queue because the money doesn’t make sense. Dilkens said the effort is being done to get those buildings started this year.

“We know there will be money coming from the province and the federal government to help support the development charges that we would freeze for this discrete period of time and then we would be the beneficiary from property taxes in perpetuity,” he said.

Dilkens said the development charges for the Sandwich South lands does not play into the equation.

“In Windsor, we have two different development charge rates. One development charge rate for the whole city, except Sandwich South, and then one development charge rate for Sandwich,” Dilkens said.

“We need to collect the money from development charges but if the province and the federal government want to make us whole by at least 50 per cent, if we cut that, great, we’re happy to receive the money from one pot or another. It just has to be paid because we don’t want existing taxpayers funding new growth.”

Lakeshore Mayor Tracey Bailey told CTV News without development charges, costs could shift to taxpayers, and a fair balance is needed.

“I’m interested in learning more about how the program will be implemented. As a council, we will also need to understand the financial impact of reducing or waiving development charges,” she said.

“Any changes to development charges must come with a clear and sustainable financial plan that accounts for Lakeshore’s short-term and long-term needs.”

In Amherstburg, mayor Michael Prue is on the same page. He says the town is awaiting information from the association of municipalities of Ontario to determine what the regulations will encompass.

He said development charges vary across the province and not enough is known about how the Ford government would reimburse individual municipalities.

Builders are hoping municipalities unlock funding for the region.

“We mainly focus with commercial and industrial clients, this is really going to help our customers reduce overall charges and reduce government fees on their projects,” said Vince Rosati, VP of Project Development for the Rosati Group.

“When we’re building projects, we’re building factories that provide new jobs. We’re doing expansions that provide jobs or even small commercial areas that have a couple, spin off retail jobs that are that are great, like, everything’s important.”