Impacts of Development Charges on Housing Challenges

April 15, 2025

York Regional Council is exploring several options to help address housing challenges.

Development charges are a cost recovery tool municipalities use to help fund vital growth-related, housing enabling infrastructure, including water, wastewater, roads and transit. In York Region, development charges fund about two thirds of growth infrastructure within the 2025 Capital Plan.  

While the suggested measures below may provide some relief to the Region’s housing challenges, everyone has a role to play and advocacy work with all levels of government will continue.

Actions Council put in Place on April 3

Enhanced/New Development Charge Deferrals

Council approved immediate action to defer development charges on highrise buildings for up to four years, with no interest being charged for the first two years. The development charges for lowrise buildings payable at subdivision registration are also deferred, interest free, until the building permit is issued. These deferrals are in effect as of April 3, 2025.

Preliminary Cost Implications
  • May require debt issuance to cover up to ~$290M DCs deferred annually  
  • Potential for up to ~$0.6 billion of deferral-related debt at occupancy  
  • Annual interest impact of up to ~$13M per 4,500 units  
Next Steps

Detailed deferral policies are expected in a June Council report.

Actions to be Explored in June Council Report

Potential New Development Charge Deferral for Rental

New rentals could have development charges deferred, until their use changes, provided they agree to operate as a non-luxury rental for a minimum of 40 years. This initiative aims to increase the rental supply across all nine local municipalities.

Preliminary Cost Implications
  • ~$19M DCs deferred annually per 500 units, assuming current rates and historic apartment splits
  • Annual interest impact of up to $0.8M per 500 units, assuming borrowing of the deferral amount
  • Would not require direct tax levy and user rate funding  
Next Steps

York Regional Council referred this recommendation to the expected June Council report. York Region will work with stakeholders on implementation details associated with this recommendation, including the definition of non-luxury rental. If approved, this deferral would apply retroactively to April 3, 2025.

Potential First-Time Homebuyers’ Development Charges-Equivalent Rebate

York Region will advocate for funding from the federal and provincial governments towards a potential First-Time Homebuyers’ Development Charges-Equivalent Rebate. This initiative would directly pass on savings to new homeowners, making home ownership across the Region more accessible.

Preliminary Cost Implications
  • Assuming 7.5% of apartments qualify, given a price threshold equal to or under $1 million, is equivalent to approximately 250 units per year
  • Represents a potential cost of $11 million  
  • Equivalent to 0.73% of the 2025 tax levy
Next Steps

York Regional Council referred this recommendation to the expected June Council report. York Region will work with stakeholders on implementation details associated with this recommendation.

Potential Repeal of Interest Policy on Frozen Development Charges

York Region will advocate for funding from the federal and provincial governments towards the potential repeal of its interest policy on frozen development charges and installment payments. This initiative is intended to reduce developer and homebuyer costs, making housing projects more viable and affordable.

Preliminary Cost Implications
  • $8M/year, assuming average annual interest collected from 2020-2024  
  • Equivalent to 0.3% of the 2025 tax levy and 0.9% on the user rate
Next Steps

York Regional Council referred this recommendation to the expected June Council report.

Suggested actions to be reviewed with the 2026 DC Bylaw 

Options to mitigate development charges rate increases continue to be reviewed as part of the 2026 Development Charges Bylaw, such as the review of:

  • Services and capital projects included in the 2026 DC Bylaw
  • Statutory deduction assumptions, including the benefit to existing and post period benefit shares
  • Growth assumptions, including population and residential/non-residential shares
Continued advocacy work with the federal and provincial governments

Senior levels of government have the greatest financial tools available to them. York Region’s continued advocacy is critical to secure increased, direct and predictable funding for housing priorities, including housing enabling infrastructure and community housing developments and incentives.

Advocacy work will continue for: 

  • Making upper-tier municipalities eligible for the Building Faster Fund, Housing Accelerator Fund, removing the Development Charge Freeze requirement on the Canada Housing Infrastructure Fund and providing access to additional funding
  • Updating the First-Time Homebuyer HST rebate to reflect market conditions and raise the price threshold
  • Incentivizing purpose-built rental through the federal tax system
  • Contribute funding share for new community housing units

New, increased and predictable infrastructure funding could also potentially help alleviate future development charge rate increases as grants would be deducted from project cost assumptions used for the development charges rate calculation.

Special Council Meeting – April 3, 2025

View the presentation at the special Council meeting - Impacts of Development Charge Reductions and Mechanisms to Increase Housing Affordability in York Region

Related Pages