If you are building a new house, building or expanding a non-residential building your construction will likely be subject to Development charges. Development charges are one-time fees paid by developers at the time a building permit is issued to help pay for municipal services to new developments, such as roads, transit, water and sewer infrastructure, community centres and fire and police facilities. The Development Charges Act provides the legislative authority for the collection of development charges.
The principle behind development charges is that growth should pay for growth. Development charges ease the financial burden on existing taxpayers to fund new services as a result of growth. Without development charges, the costs for additional infrastructure would be at the expense of existing property owners in the form of higher property taxes and user fees. Development charges are used by most municipalities in Ontario.
The Development Charges Act, 1997 (Act) provides Council with the authority to pass a by by-law to impose Development Charges. The Act requires that a Development Charges Background Study a new Development Charges By-law must be completed at least once every five years.
The background study takes the following into account:
- A forecast of the amount, type and location of the development, population
- The historical level of capital service levels A review of future capital projects to provide for the expected development.
- The Act also requires that the municipality must hold at least one Public Meeting to present the updated Development Charges Background Study and proposed Development Charges Rates.
Once all of the requirements are met a new by-law is passed based on the results of the background study. The act and the by-law provide for an annual adjustment, on January 1st of each year, of Development Charges Rates. The act and the by-law also provide exemptions for certain types of development. The Development Charges By-law should be reviewed for these exemptions.
Development Charges Effective January 1, 2022 - December 31, 2022
Development Charges Effective January 1, 2021 - December 31, 2021
Development Charges Effective January 1, 2020 - December 31, 2020
Development Charges Effective October 15, 2019 - December 31, 2019
Funds collected for Development Charges must be held in a separate Reserve Fund for each service to which the levy applies – for example, funds collected for roads must be held in a Development Charges for Roads Reserve Fund.
These funds can only be spent on paying for the growth-related capital costs for which the funds are intended – for example, the funds collected for roads can only be spent on growth-related capital costs for roads. Development Charges may not be used to fund operating costs.