While house prices may be stagnating, the housing crisis remains in full force: Ontario is facing a massive shortfall of homes and pent-up demand, while at the same time, developers are unable to build new homes at a price homebuyers can afford amidst high construction costs, an uncertain regulatory environment and high taxes on development. Municipalities have begun to pay close attention to their development charges, or DCs, which in many cities have grown exponentially over the past 15 years, and in some cases can make up a quarter of a new home’s purchase price. In recent months, both Hamilton and Burlington have taken steps to address escalating DCs.

Development charges review

Hamilton began its review of DCs in April, following the lead of Vaughan and Mississauga which reduced rates in the months prior. Over the summer, the City conducted a review of forecasted building starts, forecasted DC collections, financial impacts on municipal budgeting and engaged with stakeholders including the development industry. In August, the City of Hamilton approved a 20-per-cent reduction in DCs city-wide, applicable to all types of development, for two years from September 2025 to August 2027. This equates to DCs for a single-detached homes in Hamilton being reduced from $98,511 to $78,809.

Burlington took action as part of the 2024 DC Review, which saw long-term projects removed, thus reducing the total amount of DCs that would need to be collected over the 10-year term of the DC by-law. Burlington began a new review in September, with Finance staff conducting an analysis for a reduction in DCs for a two-year period. The City will be discussing the results of the analysis at its October Pipeline to Permit Committee meeting.

Housing enabling infrastructure

All levels of government have a role to play in addressing the issue of high DCs. While municipalities are responsible for local service delivery, they are limited in their ability to raise revenue and rely primarily on property taxes and user fees such as water rates. The provincial and federal governments must play a larger role in funding housing enabling infrastructure. Through the recently passed Bill 17, the Ontario government has indicated it will explore the establishment of a new kind of municipal service corporation dedicated to water and wastewater. This would enable municipalities to more efficiently build and maintain infrastructure more equitably by spreading costs across all users in the municipality.

All levels of government must work together with the development industry to create a tax environment that enables homebuilders to actually build housing at a cost that consumers can afford. Without action, the housing crisis will continue to escalate, jobs losses in the construction sector will get worse and more individuals and families will be prevented from accessing housing that meets their needs.