Overview

In May 2019, we launched a five-point plan to increase the supply of housing. This included making the cost of development more predictable.

To do this, the More Homes, More Choice Act, 2019 and COVID‑19 Economic Recovery Act, 2020 made changes to multiple statutes, including:

This resulted in a new and enhanced funding framework for municipalities to help:

  • make costs of building more predictable
  • build new housing faster
  • provide more housing options for Ontarians

Municipalities can help pay for the important local infrastructure, services and parkland that growing communities need through:

  1. development charges
  2. community benefits charges
  3. parkland dedication

Municipalities and builders have up to September 18, 2022 to transition to this new framework to fund local infrastructure and services in growing communities.

Development charges

Municipalities can apply development charges on a new development to help pay for the capital costs of infrastructure to support new growth.

Development charges are discretionary fees. This means that municipalities can choose whether to use development charges and, if they are used, which services or infrastructure they want to include from the list of eligible services in the Development Charges Act, 1997. These services are:

  • water supply services, including distribution and treatment services
  • wastewater services, including sewers and treatment services
  • storm water drainage and control services
  • services related to a highway as defined in subsection 1 (1) of the Municipal Act, 2001 or subsection 3 (1) of the City of Toronto Act, 2006, as the case may be
  • electrical power services
  • Toronto-York subway extension, as defined in subsection 5.1 (1) in O. Reg 192/07 Toronto-York subway extension
  • transit services other than the Toronto-York subway extension
  • waste diversion services
  • policing services
  • fire protection services
  • ambulance services
  • services provided by a board under the Public Libraries Act
  • services related to long-term care
  • parks and recreation services, but not the acquisition of land for parks
  • services related to public health
  • child care and early years programs and services under part VI of the Child Care and Early Years Act, 2014 and any related services
  • housing services
  • services related to proceedings under the Provincial Offences Act, including by-law enforcement services and municipally administered court services
  • services related to emergency preparedness
  • services related to airports, but only in the Regional Municipality of Waterloo

How municipalities can implement a development charge

Municipalities must pass a by-law to set development charges for different types of development. Before passing a development charge by-law, a municipality must prepare a development charge background study as set out in legislation.

Municipalities must calculate development charges separately for each eligible service, or class of services, detailed in their development charge by-law.

To ensure they have the resources to support growth, municipalities can fully recover the eligible costs for eligible services or infrastructure that they need for their growing community. Development charges do not apply to the creation of additional units subject to rules in regulation.

To give more predictability and certainty about development charges:

  • rates are frozen either at the time of site plan or zoning application and will remain frozen for a period of two years after the relevant application is approved.
  • multi-year deferrals of payments apply for certain types of development, such as:
    • rental housing
    • non-profit housing
    • institutional developments such as long-term care

Development charge by-laws may be appealed to the Ontario Land Tribunal. The application of development charge by-laws to specific sites may also be appealed to the Tribunal following a complaint to municipal council.

Community benefits charges

This is a flexible new tool under the Planning Act that helps municipalities tackle the costs of higher density in communities with new developments. This tool replaces the former section 37 height and density bonusing in the Act, subject to transition rules.

Municipalities can use community benefits charges to fund the capital costs of any public service associated with new growth, including parkland, if those costs are not already recovered from development charges and parkland provisions.

How municipalities can implement a community benefits charge

To set a community benefits charge, municipalities must:

  • develop a community benefits charge strategy
  • pass a by-law

Requirements for a community benefits charge strategy are included in regulation.

Community benefits charges on a development cannot exceed 4% of the value of the land. Single-tier and lower-tier municipalities can levy these charges for developments with 10 or more residential units and five or more storeys.

Community benefits charge by-laws may be appealed to the Ontario Land Tribunal. Disputes about whether a charge exceeds the maximum allowable amount can be resolved through the land value appraisal process set out in legislation.

Parkland dedication

The Planning Act lets municipalities fund the growth-related costs of land for parks and other recreational purposes.

This ensures that residents in growing communities will continue to have access to parks and greenspace.

How municipalities can implement parkland provisions

Municipalities can get land for parks using the basic parkland dedication provisions (up to 2% of the land proposed for development or redevelopment or the cash equivalent for commercial or industrial development or 5% for any other type of development or redevelopment).

In certain circumstances municipalities can also use the alternative rates (up to 1 hectare of parkland for every 300 dwelling units or if cash-in-lieu, a ratio of 1 hectare of parkland for every 500 dwelling units).

Parkland by-laws that use alternative rates may be appealed to the Ontario Land Tribunal.

Parkland by-laws that only use basic parkland rates cannot be appealed.

When a parkland requirement is imposed as a condition of approval of a plan of subdivision or consent, it may be appealed like any other condition.

When municipalities require cash-in-lieu, the value of land may also be appealed to the Tribunal.