{"id":433,"date":"2026-10-02T13:36:49","date_gmt":"2026-10-02T13:36:49","guid":{"rendered":"https:\/\/blackcreekgroup.ca\/blog\/?p=433"},"modified":"2026-10-27T15:43:21","modified_gmt":"2026-10-27T15:43:21","slug":"what-changed-for-development-charges-in-ontario","status":"publish","type":"post","link":"https:\/\/blackcreekgroup.ca\/blog\/what-changed-for-development-charges-in-ontario\/","title":{"rendered":"Development Charges in Ontario, Who Pays and What Changed in 2026"},"content":{"rendered":"\n

Why does a new apartment building or house in Ontario carry a fee that most renters and buyers never see on a price sheet? The fee is called a development charge, and the rules behind development charges in Ontario have shifted twice since the spring of 2025, first through provincial legislation and then through a federal and provincial funding program in 2026. For anyone weighing a rental project, the changes affect how much cash a builder needs up front, when that cash is due, and how long the lower rates last.<\/p>\n\n\n\n

What Development Charges Are and Who Pays<\/strong><\/h2>\n\n\n\n

Municipalities charge builders a one-time fee on new development to help pay for the roads, water and sewer lines, transit, fire halls, and libraries that growth requires. The idea behind it is often summed up as growth paying for growth, a principle that Andrew Sancton of the C.D. Howe Institute described in a 2022 memo<\/a> as rarely questioned in municipal circles. Councils across the province have relied on that logic for decades, which helps explain why the charges grew into one of the higher up-front costs on a new building.<\/p>\n\n\n\n

The builder pays the charge, usually when the building permit is issued, but the cost rarely stays with the builder. Sancton argued that development charges in Ontario are levied on developers yet really paid by the purchasers of new buildings, and he noted that as of 2022 they added as much as $135,000 to the cost of a new house in some parts of the Greater Toronto Area. Municipal leaders make the opposite case, that without the charges the cost of new pipes and roads would fall on existing property taxpayers. Purpose-built rental follows a different schedule, with charges paid in annual installments that begin at occupancy instead of all at once at permit.<\/p>\n\n\n\n

The Provincial Law Behind the Charges<\/strong><\/h2>\n\n\n\n

A 1997 provincial law gives municipal councils the power to pass a by-law that charges new development for the added capital costs of growth. The law limits which services qualify, with water supply, wastewater, stormwater, roads, transit, fire protection, and libraries among them. The More Homes Built Faster Act of 2022 then extended the life of a by-law from five years to 10, removed housing services from the list of eligible costs, and created a tiered discount on charges for purpose-built rental units that gives larger units a larger discount.<\/p>\n\n\n\n

What Bill 17 Changed in 2025<\/strong><\/h2>\n\n\n\n

The Bill 17 development charges changes became law on June 5, 2025, when the Protect Ontario by Building Faster and Smarter Act received final approval. The bill exempted long-term care homes from the charges and gave builders of non-rental residential projects the option to pay at occupancy instead of at permit, a timing option that rental housing already had. It also limited the interest municipalities can charge on deferred payments and changed the rate freeze that locks in a charge when a planning application is filed, so that a builder pays the lower of the frozen rate or the rate in place at the time of payment. On top of that, the province gained the authority to define which services count as local services that cannot be charged and to set a method for measuring how much a new piece of infrastructure benefits existing residents, since that share reduces what new development can be asked to pay. Some of these provisions take effect only on a date the province names.<\/p>\n\n\n\n

The 2026 Federal and Provincial Funding Program<\/strong><\/h2>\n\n\n\n

On March 30, 2026, Prime Minister Mark Carney and Premier Doug Ford announced up to $8.8 billion in cost-matched funding over 10 years, with the stated aim of cutting municipal development charges in half for three years. Full program details<\/a> arrived on June 1, 2026, when the Development Charge Reduction Program opened to applications from the more than 200 Ontario municipalities that levy charges, with a deadline of June 19. Funding goes first to municipalities that reduce charges on all residential types by 30 to 50 percent or more and keep the cut in place for at least three years, and each municipality contributes at least 10 percent of project costs. The money pays for infrastructure projects, which is how the senior governments offset a portion of the revenue municipalities give up. A separate, temporary expansion of HST relief on new homes of up to $130,000 was announced as part of the same partnership.<\/p>\n\n\n\n

The program is voluntary, so the headline about charges being cut in half does not describe every municipality. Each council decides whether to apply and how deep to cut, and the cuts exist only where a by-law has been amended. Builders’ associations say lower charges restore project viability, while municipal groups welcomed the funding and stressed that participation should stay voluntary and flexible. Because the funding offsets only a portion of the lost revenue, how municipalities replace the rest of the money behind development charges in Ontario is the open question for property taxpayers.<\/p>\n\n\n\n

Toronto Development Charges Under the New Program<\/strong><\/h2>\n\n\n\n

The City of Toronto announced on June 23, 2026, that it would receive up to $1.5 billion through the program in return for cutting charges by 40 to 60 percent between 2026 and 2029, depending on unit type, with the deeper cuts going to larger units. That is steeper than the 30 to 50 percent the program required. Council adopted an amended by-law on July 30, 2026, and the reductions apply to building permits issued from March 30, 2026, once the funding contract between the city and the province, known as a transfer payment agreement, is fully signed. The by-law also pauses annual indexing from 2027 through 2029, so the reduced rates stay flat over that period. Builders should confirm the current status with the city, since the reductions take effect only when the agreement is in place.<\/p>\n\n\n\n

Barrie Development Charges and the 50 Percent Cut<\/strong><\/h2>\n\n\n\n

Barrie’s council<\/a> approved a 50 percent reduction in residential development charge rates on September 16, 2026. The reduced rates took effect the next day and apply retroactively to building permits issued on or after March 30, 2026. On September 28, the Ontario and federal governments announced up to $129 million in funding for the city, tied to keeping the cut in place from March 30, 2026, to March 31, 2029, with the money directed to wastewater treatment infrastructure. The announcement estimated the reduction could lower the cost of building a new home in Barrie by up to $62,223, and the city estimates the cut and the infrastructure investment could support 23,364 new homes.<\/p>\n\n\n\n

What This Means for Rental Projects<\/strong><\/h2>\n\n\n\n

For a purpose-built rental project, development charges sit among the larger up-front items in the budget, so a 40 to 60 percent cut in Toronto or a 50 percent cut in Barrie can change the arithmetic on whether a site works. Rental housing already follows a payment schedule that pushes charges to after occupancy, which means the cuts mainly lower the total owed instead of changing when cash leaves the project. Anyone underwriting a purpose-built<\/a> project in these markets should check which permit date and which rate schedule the assumptions rely on, because the reductions are temporary and tied to building permit dates. Lower charges also do not change construction costs, financing terms, or the rents a building can support, and conditions in each municipality may change.<\/p>\n\n\n\n

Conclusion<\/strong><\/h2>\n\n\n\n

Lower charges are now available in parts of Ontario, but they are temporary, set city by city, and in some cases still waiting on final agreements. The rules for development charges in Ontario now depend on the municipality a project sits in, the unit types it includes, and the date its building permit is issued, with Toronto and Barrie both committing to deep cuts that run into 2029. For a rental project, those cuts can improve the numbers on a site, though they rest on funding agreements and by-law conditions that anyone underwriting a deal should read directly. Black Creek Group tracks changes like these because the cost of getting a purpose-built rental building to permit and occupancy is one of the first numbers a capital partner asks about.<\/p>\n\n\n\n

FAQs<\/strong><\/h2>\n\n\n\n

Is Toronto reducing development charges?<\/strong>
Yes. The city, the province, and the federal government announced on June 23, 2026, that Toronto would receive up to $1.5 billion in return for cutting charges by 40 to 60 percent between 2026 and 2029, depending on unit type. Council adopted the amended by-law in July 2026, and the reductions take effect once the transfer payment agreement with the province is fully signed, applying to building permits issued from March 30, 2026.<\/p>\n\n\n\n

What is the Development Charges Act, 1997?<\/strong>
The provincial law lets municipal councils pass by-laws that charge new development for the capital costs that growth creates. It sets which services qualify, how the charges are calculated, how long a by-law lasts, which projects are exempt, and when payment is due.<\/p>\n\n\n\n

How did Bill 17 change development charges in Ontario?<\/strong>
Bill 17 became law on June 5, 2025. It exempted long-term care homes, gave non-rental residential builders the option to pay at occupancy instead of at permit, limited interest on deferred payments, and changed the rate freeze so a builder pays the lower of the frozen rate or the current rate. It also let the province define local services and set a method for measuring the benefit that new infrastructure gives existing residents, and some provisions take effect on a date the province names.<\/p>\n\n\n\n

Did Ontario cut development charges in 2026?<\/strong>
Partly, since the federal and provincial governments committed up to $8.8 billion over 10 years to fund municipalities that cut residential charges by at least 30 to 50 percent for three years. The program is voluntary and application-based, so the cuts apply only in municipalities that adopt them, and Toronto and Barrie are two that did.<\/p>\n\n\n\n

Is Barrie reducing its development charges?<\/strong>
Yes. Barrie’s council approved a 50 percent cut to residential rates on September 16, 2026, effective September 17 and retroactive to building permits issued on or after March 30, 2026. The Ontario and federal governments announced up to $129 million in funding for the city on September 28, tied to keeping the reduction in place until March 31, 2029.<\/p>\n","protected":false},"excerpt":{"rendered":"

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