Scrapping municipal development charges could increase housing starts by as much as 14% in some of Canada’s most expensive housing markets, according to new analysis from Canada Mortgage and Housing Corporation.The federal housing agency said reducing or eliminating the fees would make more construction projects financially viable, especially in cities where high costs have made new housing harder to build.“New analysis shows reducing or eliminating development charges could increase viable projects by up to 14% in some cities,” said CMHC’s Housing Observer report.Blacklock's Reporter says the report said eliminating development charges could increase housing starts by 14% in Burnaby, B.C., 10% in Vancouver and Toronto, and 3% in Ottawa. A 50% reduction in the charges would produce a smaller but proportional impact, CMHC said.“Reducing development charges increases the viability of housing construction projects in all cases,” said the report, Development Charges: Not All Cities Are Created Equally.“However in cities where housing markets are more financially constrained, it’s harder to develop financially viable projects.”Development charges are mandatory fees levied by municipalities on new construction and are often used to pay for infrastructure and services. Builders have long argued the fees are passed on to buyers and renters, adding tens of thousands of dollars to the cost of new homes.A 2024 Municipal Benchmarking Study by the Canadian Home Builders’ Association found development charges averaged $78,000 in Ottawa, $93,000 in Calgary, $104,300 in Vancouver, $112,000 in Saskatoon and $195,300 in Toronto..The Senate banking committee also criticized the fees in a January 20 report, Out Of Reach: Unlocking Canada’s Housing Affordability Crisis, saying development charges were a major obstacle to faster homebuilding.Senators endorsed a Conservative proposal to require municipalities to roll back development charges as a condition of receiving federal housing aid.Municipal fees were “a significant cost barrier, preventing a much-needed acceleration in housing construction,” the committee wrote.The Canadian Human Rights Commission also called for federal action on development charges in a May 22 report, Building Homes, Upholding Rights: A Human Rights Approach To Housing Agreements.“Canada has an alarming housing crisis,” said the commission.The commission said there are “currently no legal mechanisms to hold any level of government in Canada legally accountable” for increasing housing supply.“Over 4.8 million homes are needed to restore affordability, rents are rising in double digits in most major cities and homelessness continues to grow,” it wrote.
