Across Waterloo Region, municipalities are signalling or implementing increases to development charges (DCs). While the pressure shaping these decisions is real, the cumulative effect risks undermining the very growth communities are working to support.
Municipalities rely on DCs to fund the infrastructure needed for new and current residents: roads, water systems, transit, parks and community facilities. In fast-growing regions like Waterloo, these demands have only intensified. Rising construction and infrastructure costs, combined with the provincial rules set out in the Development Charges Act, have pressured municipal budgets and pushed council to implement higher rates.
The Region of Waterloo has already applied multiple increases to its development charge (DC) rates, including a 4.8% indexation in 2024 and a scheduled 3.9% increase for December 1, 2025. Local municipalities, including Waterloo, Cambridge, Kitchener, and the townships, maintain their own DC by-laws as well, and most have implemented rate increases in recent years.
This is not a single-city problem. Rising DCs are affecting every new residential and non-residential project across the Region, urban and rural alike.
In theory, the principle behind DCs is simple: “growth pays for growth”. In practice, however, this principle has become muddled. Across Ontario, DCs have skyrocketed in the past decade, outpacing both inflation and market capacity. According to the Missing Middle Initiative, between 2011 and 2023, DCs on single-detached homes rose by 208 per cent in the GTA’s 10 largest municipalities. Meanwhile, Ontario municipalities have collectively obtained over $10 billion in unspent infrastructure funds.
When fees rise faster than market realities can absorb, they risk achieving the opposite of what they are meant to do: stalling projects, cancelling proposals and increasing already-high prices.
Developers are already contending with steep interest rates, construction cost inflation, labour shortages and global supply chain pressures. Adding further DC increases tighten margins even more. At a certain point, projects simply stop being feasible. When that happens, the development pipeline narrows, fewer homes move forward, and we fall further behind housing targets.
And ultimately, DC increases don’t stay with the developer; they are absorbed into project costs, which flow directly to higher home prices and rent. For buyers, that means stretched affordability; for renters, it means slower progress toward more purpose-built rental supply.
Right now, every level of government is calling for more housing and adding cost pressures at a local level sends the opposite message.
We believe the time has come for a bold reset; DCs should be significantly reduced, not simply slowed or phased in. Instead of relying on upfront fees from builders, municipalities should begin exploring alternative models of funding growth-related infrastructure.
Among its provincial counterparts, Ontario stands alone in how heavily it leans on DCs. In other provinces, infrastructure is funded through a mix of mechanisms that balance responsibility across the public and private sectors.
In British Columbia, municipalities use Development Cost Levies and Community Amenity Contributions (CACs), providing municipalities with flexibility and predictability while giving builders clearer cost certainty early in the process. The City of Vancouver, for example, uses transparent CAC policies tied to density increases, ensuring developers contribute fairly without discouraging projects altogether.
A model like this reflects growth as a shared investment. Infrastructure benefits everyone, current and future residents alike, so its costs should be distributed fairly, not concentrated at the front end of development. A reduced DC model paired with alternative revenue tools would allow Kitchener to maintain the infrastructure it needs without jeopardizing housing affordability or supply.
The Region of Waterloo’s growth story has always been rooted in partnership between the public and private sectors, between planners and builders and between vision and logic. That partnership works best when polices make it possible to keep building.
If the goal is to support sustainable growth, we need a system that funds infrastructure through shared responsibility, not by overburdening the very builders tasked with creating homes.
Growth can’t pay for growth if builders can’t afford to build.