Ontario’s housing crisis has many causes, but one issue has become impossible to ignore: the rising cost of building housing.
Over the last decade, development charges (DCs) have increased dramatically across many municipalities, adding tens, if not hundreds of thousands of dollars to the cost of new housing projects. Those costs are ultimately passed on to future homeowners and renters, making housing less affordable at the exact moment governments are trying to increase supply.
That is why the Canada–Ontario Partnership to Build Fund is an important and welcome step.
The program has the potential to reduce development-related costs for eligible projects by as much as 50 per cent, helping remove one of the biggest financial barriers to getting new housing built. If implemented effectively, it could become one of the more meaningful housing supply initiatives introduced in recent years.
But there is a significant catch: municipal participation will determine whether the program succeeds or struggles.
Development Charges Have Become a Major Housing Affordability Issue
Development charges were originally intended to fund growth-related infrastructure required to support new communities — things like roads, pipes, wastewater systems, and parks directly tied to population growth. That principle makes sense. Growth should help pay for growth.
Over time, however, development charges have expanded far beyond their original purpose. Across Ontario, municipalities have increasingly relied on DCs not only to support essential housing-enabling infrastructure but also to help fund broader municipal priorities and capital ambitions. In some cases, this has included projects with a far less direct connection to new housing growth.
In Waterloo Region, for example, development charges have been connected to funding associated with the regional airport — a significant economic asset, but one that raises legitimate questions about whether housing costs should be used to subsidize infrastructure that serves a much broader economic development function.
This is part of a growing concern across the development industry: when development charges become a catch-all municipal funding tool, the cost of housing rises dramatically, while accountability around what qualifies as “growth-related infrastructure” becomes increasingly blurred.
A Good Program Needs Municipal Buy-In
The Canada–Ontario Partnership to Build Fund recognizes that something needs to change.
The challenge now is ensuring municipalities actively participate in the program and do not unintentionally undermine its effectiveness.
Right now, there is still considerable uncertainty around how the program will work in practice. Questions remain around eligibility, municipal obligations, implementation timelines, and how projects will qualify for offsets or reductions. That uncertainty is already affecting the market. Some developers are delaying projects while they wait to understand whether meaningful cost reductions will materialize. Municipalities, meanwhile, are continuing to pass updated DC bylaws designed around full cost recovery models.
Without clarity and cooperation, there is a risk the industry enters a “wait-and-see” environment where projects slow down rather than accelerate.
That would defeat the purpose of the program entirely.
Municipalities Need Incentives — and Accountability
If the Province wants this initiative to succeed, municipalities need both strong incentives to participate and clear expectations around implementation.
That includes:
- Ensuring municipalities are not financially penalized for participating;
- Providing timely clarity around eligibility and timelines;
- Preventing municipalities from simply increasing charges elsewhere to offset reductions;
- Requiring transparent reporting on how DC revenues are being used;
- Focusing DCs on core growth-related infrastructure that directly enables housing supply.
The reality is that municipalities are under financial pressure, too. But housing affordability cannot improve if every level of government continues relying on new housing as a revenue tool.
Turning Good Intentions Into Real Housing Supply
Build Urban supports the intent behind the Canada–Ontario Partnership to Build Fund and believes it could help unlock stalled housing projects across Ontario. But for the program to work, the Province must move quickly to provide certainty and ensure municipalities are fully engaged partners in the process.
The development industry, municipalities, and the Province all agree that Ontario needs more housing. The challenge now is making sure policy design aligns with that goal.
Reducing the cost of building housing is not the only solution to the housing crisis — but it is an essential one.e off.