December 2024 – Mike Collins-Williams

The phrase “growth paying for growth”, once a defensible policy for funding infrastructure through development charges, has devolved into an empty political slogan that stifles building homes. It now represents policies that unfairly burden younger generations while obstructing efforts to build homes quickly and affordably. If you wanted to build a new single-family home in Hamilton – you would need to pay nearly $100,000 to the City.

The charges we levy on new housing exacerbate the housing crisis – shifting the cost of infrastructure onto newcomers and first-time buyers. Municipalities say this is required to fund infrastructure – but when these charges aren’t properly managed – the effect is forcing new home buyers to absorb the costs of infrastructure designed to last 50 years into their amortized mortgages. This is profoundly unfair on an intergenerational level to download the costs of infrastructure built to last generations into the mortgages of young people and newcomers.

Examples of this injustice abound:

  • In Hamilton, charges levied on development finance parking lots, landfills, airport expansion and other services that benefit the City as a whole – not just new residents.
  • In Kitchener, new homebuyers funded a large $144 million athletic facility through development charges, a facility that is open to all residents.
  • In Toronto, Scarborough and Etobicoke condo purchasers face a $4,000 charge for a subway extension to Vaughan that was completed seven years ago.

What does “growth paying for growth” even mean anymore? Young families building their financial foundation should not be subsidizing established residents’ property taxes for services used by all.

Over the past two decades, development charges in Ontario have spiraled out of control, becoming a regressive revenue stream for municipalities that have amassed $10 billion in development charge reserve funds. Taxes on housing now account for 25-30% of the cost in Ontario, driving generational inequality. Politicians conveniently claim these charges are paid by developers, but these taxes are passed on to homebuyers, inflating prices.

The numbers reveal an alarming trend. While inflation rose by less than 30% in the past decade, development charges surged by 227% in Hamilton. In the last year alone, despite the current housing crisis, Hamilton increased development charges by 41%. The Development Charge to build a house in Brantford is $42,847, whereas in Hamilton it is $94,539 – this price differential is one of the reasons families are leaving Hamilton for Brantford. A two-bedroom condo in Toronto now faces development charges of $80,690, up from $1,348—a staggering 6000% increase over the past 25-years. The steepest hikes hit the smallest housing types, disproportionately affecting younger, lower-income, and often racialized residents, though many politicians falsely claim these policies are progressive.

If these out-of-control trends continue, some Ontario municipalities could impose development charges exceeding $1 million per home by the mid-2030s. This imbalance has made housing construction financially unsustainable, directly contributing to Canada’s housing crisis. At a time we need it most, housing starts are plummeting because the math no longer adds up. Taxing home construction like cigarettes or alcohol only worsens the problem.

Ontario’s housing starts fell sharply in 2024, with 2025 shaping up to be even worse. Nationally, single-detached housing starts are at their lowest level in nearly 70 years. Interest rate reductions won’t solve this; affordability must improve. Simply put, achieving middle-class housing affordability is impossible with the current tax burden on new housing. Fortunately, we don’t need to look very far for solutions.

Some Cities are showing bold leadership to address this. Last May the City of Burlington reversed the trend – lowering the costs to build new housing. They didn’t do this by raising taxes – they actually took a hard look at what their development charges were paying for. In response to the crisis – they removed projects that had no reasonable hope of being built in the next ten years from the calculations. Addressing excessive taxes is not just an economic imperative—it’s a moral one, crucial for restoring generational equity and tackling the housing crisis head-on.