Toronto, Jan. 28, 2025 (GLOBE NEWSWIRE) ) -- A new report entitled The State of Development Charges in Ontario was released by Keleher Planning + Economic Consulting (KPEC) for the Building Industry and Land Development Association (BILD) and the Ontario Home Builders' Association (OHBA). This study recommends that the Province update the Development Charge system to reduce housing costs and improve efficiency The report acknowledges the important role that DCs play in facilitating the provision of housing across the province but more specifically where it needs to change legislation rather than ask for its removal. To read the full report, click here.

"Ontario has had its Development Charges (DC) system for more than 35 years," David Wilkes, President and CEO of BILD, noted. "In the past 10 years, it has significantly increased municipal fees on new homes, which is problematic for construction costs and bad for housing affordability. Adding $100,000 to $150,000 per single-family home from DCs across the Greater Toronto Area is just untenable. The complexity of the system and the changing needs of Ontarians demand immediate action regarding the DC law."

Development Charges are intended to assist in the recovery of costs related to the provision of infrastructure and other municipal services necessary for new housing. Development Charges are determined and regulated as per the provisions of the Development Charges Act. Municipalities charge residential builders and developers DCs for each unit, and these charges form part of the total cost of h ome paid by the new buyer. The DCs are very important because the increase in housing depends on proper infrastructure. Together with its associated procedures, the DC Act creates one of the major legal frameworks for the control and allocation of the financial burdens that are connected with growth-related capital infrastructure across Ontario.

The Study of Development Charges in Ontario concludes:

Major changes are needed in the DC model to effectively shift the burden of capital costs and lower development charges (DCs) without destroying the rigorous and transparent system that has been established. This includes changing the method of financing water and sewer DCs from a general revenue approach, modifying how land value is incorporated into the calculations for determining DC rates, and allowing only actual 'incurred' land expenses to be paid for by DCs rather than allowing cost predictions based on long-term forecasts of future land acquisition costs, which frequently exaggerate significantly. Additionally, amendments to the DC Act would include better provisions for clarity and simplification of legal disputes, including local service policies to be made and certain specific elements standardized for better interpretation. The "Benefit to Existing" allocation should have less subjectivity and variability by promoting standardized calculations and guidelines for estimation methodology. Service level calculations at historical inputs should be standardized; the values used to determine DC rate caps should align with similar financial documents that municipalities typically prepare, such as Financial Information Returns and Asset Management Plans. Greater oversight from the province is needed through the changes proposed.
"While there are numerous advantages to Ontario's Development Charge system, many aspects urgently require updating and integrating best practices from other regions could significantly streamline the system, adjust costs for new homes, and modernize the legislative framework," Scott Andison, CEO of OHBA, stated. "The existing system serves to increase the cost of housing because of the development methodology in charging."

Much has changed since the 1997 version of the Development Charges Act, which remains the guiding legislation. Amendments have made it more complicated to calculate and administer DC rates, affecting everyone. The system needs to be simpler, allowing easier understanding and eliminating varying interpretations that lead to conflicts and legal disputes.

Also, different places across Canada and North America use different ways to pay for the growth and housing-related infrastructure. Because you find some of the highest municipal costs tied to new homes in that region within the Greater Toronto Area and Ontario, changing this law would allow the province to look for better practices in other regions and adopt them. More specifically, this opens a door to look at different and better ways that might fit into the current system to change Development Charges, lower expenses, and eventually help with affordability.

"The DC system in Ontario is critical, both legally and in terms of supportive housing infrastructure," remarked Wilkes. "Given the large financial scale of DCs, the current housing crisis, the need to streamline processes, and the opportunity to take best practices from other regions, it is clear that the DC Act needs to be updated and that this should be done urgently."

BILD speaks for the 1,000 member firms in home building, land development, and professional renovation sectors in the Greater Toronto Area. This industry is a large contributor to the region, providing 256,000 jobs and generating an investment value of $39.3 billion. BILD also has links with the Ontario Home Builders' Association and the Canadian Home Builders' Association.

Formed in 1962 the Ontario Home Builders' Association is the generic voice representing the residential construction industry in Ontario. It comprises more than 4,000 member firms involved in home building, land development, professional renovation, and related services through 28 local chapter associations across the province. OHBA promotes the interests of its members to key stakeholders provides a range of benefits and training for its members and fosters innovation and professionalism in the residential construction industry.

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To book an interview or for more details, contact Janis McCulloch at jmcculloch@bildgta.ca, 416-617-7994, or Andres Ibarguen at aibarguen@ohba.ca, (416) 443-1545 ext. 323.

The Status of DCs in Ontario - January 2025 - KPEC

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