Listen to this article
Estimated 3 minutes
The audio version of this article is generated by AI-based technology. Mispronunciations can occur. We are working with our partners to continually review and improve the results.
As the provincial and federal governments announced a new deal to cut home prices on Monday, Premier Doug Ford said he was dangling a carrot for municipalities.
Ottawa city councillors say they need to know more before taking a bite.
The federal and Ontario governments are offering a combined $8.8 billion over 10 years to fund municipal infrastructure, but with a catch. For the most part, the money will go to municipalities that agree to cut development charges by 30 to 50 per cent for three years.
Development charges are fees on newly built homes that are meant to fund the cost of municipal water, sewer, road and transit infrastructure.
In Ottawa, the fees run as high as $62,568 for a single-detached home outside the Greenbelt.
Jason Burggraaf of the Greater Ottawa Home Builders’ Association said those fees have doubled in the past decade and are driving up the price of construction.
“If you’re cutting that in half, that’s another $30,000 or more for a typical house across Ottawa,” he said. “So it’s a significant saving.”
Jason Burggraaf, the executive director of the Greater Ottawa Home Builders’ Association, says the intended reduction of development charges would be substantial, and welcome. (Guy Quenneville/CBC)
But it isn’t clear whether the infrastructure money on offer will be enough to make up for the revenue hit cities would take by cutting the fees.
A background document from the Ontario government says the funding will offset “much of” the financial impact, but municipalities will also be expected to “support increased housing supply and affordability.”
Stittsville Coun. Glen Gower, who chairs council’s transit committee, said development charges are a crucial source of funding for the city. He said municipalities need to be sure they’ll be made whole for what they lose.
“From a responsible financial planning [perspective], we just need to have confidence that there is an alternate source of revenue,” he said. “So far those details are pretty vague, so I’ll be interested to see in the coming days what exactly they’re proposing.”
Beacon Hill-Cyrville Coun. Tim Tierney, who chairs council’s public works and infrastructure committee and is also first vice president of the Federation of Canadian Municipalities, said he wants to know whether municipalities might lose more than they gain.
“There’s always devil in the details,” he said. “I’ll wait. I’ll listen and see what the detail actually is. But from the initial reports, there is a concern if there’s a reduction in development charges.”
City of Ottawa staff say they are still assessing the implications of the announcement.
“Staff will be looking to understand how the proposed funding would work in practice, including how infrastructure needed to support growth would continue to be funded, as development charges are an important tool in supporting that growth,” according to an emailed statement from Marcia Wallace, the city’s general manager of planning, development and building services.