How many times have you heard or read this: Ontario has a housing crisis; or Canada has a housing crisis; or housing costs are through the roof? Many times. Unless you’ve been living under a rock for the past half-decade, you’ll know that the cost of buying a home or building a home, or renting a home, is through the roof.
There are lots of areas to blame for this: people moving from the city to the country during the pandemic, low mortgage rates, increased immigration, radical population migration, inflation, you name it. Rents are between double and triple pre-pandemic rates, and home values have doubled or more. The system is broken, and we need more housing.
For at least two years, the Ontario government has said it is going to build homes and make it easier to build homes. It has been called many things: cutting red tape or red tape reduction or some nonsense branding buzzwords. One of the biggest roadblocks to increased development, outside of high property costs and inflated material costs, are development charges.
Development charges are municipal fees, in addition to building permit fees and utility connection fees, that cities, towns, and townships can charge to pay for future growth.
Development charges were first allowed by the Ontario government in 1997. These charges were another way for municipalities to tax residents while then-Premier Mike Harris balanced the provincial budget. Similar shifts like downloading welfare administration, off-loading thousands of kilometres of provincial highways, and making municipalities responsible for land ambulance services were also accomplished at this time.
The mantra of “Growth pays for Growth” was used as many municipalities adopted these development charges. The municipality I call home is just in the process of implementing development charges, just as the snowball of residential and commercial growth is starting down a long hill.
In many urban communities, development charges can add upwards of $100,000 to the cost of a new home. Locally, these are projected to add another $10,000 to the cost of building – whether you live in a village with water and sewer infrastructure or the country where you need a well and septic system. Understandably, developers are upset about this. Current residents who own their homes, or rent and will never own a home, do not seem to care because it likely will never affect them. If a developer wants to build an apartment building, the development charges are projected to be about $7,000 per unit – making new rental housing unaffordable to build.
Talking to a councillor from a neighbouring municipality, they reported that development charges have not stunted any of their township’s growth. But that township also had a high level of growth and many developments started when it put in these charges. Their snowball is further down the hill, picking up speed, and a lot bigger than where I live.
Development charges are, in a sense, forced savings. New homes are charged a set fee, which is then placed into a reserve. A municipal government can then tap that reserve if they can justify that what is needed supports or is because of the growth that paid for it.
One township recently paid for most of a new fire truck from development charge reserves. The township had grown, and they needed more equipment. That makes sense, but the money used was saved for years – counted in the budget, and likely earning interest for the municipality.
Would you buy a new car if the dealership said in addition to the cost of the vehicle and all the licencing and finance costs, you had to pay a percentage of the overall cost into a savings account controlled by the dealership to help them buy a new garage when they need it? No, you would probably never buy a new vehicle again. That money is better in your pocket – that applies to local governments too.
Adding development charges this late in the game, when housing needs are the greatest, will make development more expensive and stunt any potential growth. But municipalities really shouldn’t be in this position in the first place.
Remember back to Premier Ford saying that we need to “cut the red tape.” Ford has repeatedly said that municipalities need to look at their red tape (fees) and cut them. During the April federal election campaign, both Mark Carney and Pierre Poilievre identified development charges as hampering building housing units. Development charges are a provincial matter, and the solution is at the hands of Ontario’s Premier. Ford could cut all development charges in half, or remove them altogether by amending or repealing the act.
In both cases, Ford could fix the problem with the stroke of a pen – but does not – why? Who would he shake his fist at to blame then?
Development charges add to the cost of housing – period. They will stunt growth and scare away needed investment – the exact opposite of what any community needs.
This column was originally published in the May 28, 2025 print edition of the Morrisburg Leader.
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