Toronto business group calls for sweeping reform of development charges to unlock housing
Development charges across the Greater Toronto Area have become “one of the largest government‑imposed costs” on new housing, a new report from the Toronto Region Board of Trade has warned, arguing that the current system pushes the next generation out of the market and stalls badly needed construction.
In Priced Out: The High Cost of Development Charges, the Board said fees has climbed 176% across the GTA since 2011, with tens or even hundreds of thousands of dollars in charges now embedded in the price of a single detached home.
The Canada Mortgage and Housing Corporation (CMHC) found development charges could represent 8 to 16% of a new condo price in Ontario alone, and up to 9% of the cost of a single-detached home in Toronto.
This has coincided with mounting infrastructure pressures and a growing exodus of young households to more affordable regions.
“Today’s homebuyers faced the opposite” of earlier generations, the report said, arguing that record home prices are now paired with an expectation that first purchasers would pre‑pay for 50‑ to 75‑year public assets through development charges rather than finance them over time through broad‑based taxes.
“This is ultimately a question of intergenerational equity,” the report said.
Giles Gherson, president and CEO of the Board, framed the issue squarely as a competitiveness problem for the region’s economy as well as for borrowers and lenders.
“This means that we were seeing building slow, just as we needed it to leap forward. That’s why a full‑scale rethink was needed. Vancouver’s proposal to cut development charges by 20 percent showed the kind of bold action needed to spur building. We needed that same urgency here, because affordability would not improve until we reformed our system too.”
Municipalities, the report said, faces between $250 billion and $290 billion in infrastructure needs over the next decade, including more than $100 billion tied directly to population growth.
It said current federal and provincial transfers – along with roughly $3.5 billion a year in development charge revenue – covers “only a fraction” of the cost of growth.
To rebalance the system, the Board called for five main reforms. It urged the province to modernize the Development Charges Act, narrow what qualified as growth‑related spending, and standardize assumptions used in municipal background studies.
It also recommended removing water and wastewater from development charges so those long‑lived systems could be funded over their life span, a change the report said could cut fees in the GTA by 30% to 50% depending on the municipality.
Transit‑related development charges should be uploaded to provincial and federal governments, the report said, describing transit as a regional public good whose benefits extend well beyond the first buyer of a home.
The Board further called for expanded municipal financing tools – including revenue‑backed borrowing and tax‑increment style models – and for senior governments to rebuild long‑term, formula‑based infrastructure transfers to municipalities.
“Regions could not grow their economies without the ability to house their workforce,” the report said, adding that rising charges and cancelled projects risk shrinking the pool of borrowers and dampening demand for new‑build mortgages.
Federal Housing minister Gregor Robertson previously sidestepped a direct commitment to the Liberal government’s election pledge to halve municipal development charges.
“Development charges are a significant challenge for the cost of building across Canada, and that's why we made a commitment to reduce those charges. We initially were looking at 50% reduction in partnership with provinces and territories. We're working through that process now across the country.”
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