On June 23, 2026, the City of Toronto became the first municipality in Ontario to receive funding under the federal-provincial Development Charge Reduction Program (DCRP), securing $1.5 billion to lower development charges over three years. In exchange, Toronto committed to reducing its development charges by 40 to 60 percent, bringing them from among the highest in North America down to levels last seen in the mid-2010s.
Program Aims to Revitalize Housing Construction
The DCRP, jointly announced in March 2026 by the provincial and federal governments, targets declining housing starts in Ontario. Many projects have stalled due to high construction costs eroding economic viability. The program uses a straightforward lever: reducing municipal development charges (DCs), which are one-time fees developers pay to fund infrastructure like roads, sewage, transit, and parks. These fees are typically passed on to homebuyers.
Municipalities had until June 19, 2026, to apply for funding by submitting a list of infrastructure projects normally funded by DCs. To qualify, they had to commit to lowering DCs by 30 to 50 percent for three years and fund at least 10 percent of the submitted projects. The federal and provincial governments cover the remaining costs.
Multiple Benefits for Participating Municipalities
According to Dave Wilkes, President and CEO of the Building Industry and Land Development Association (BILD), the program offers several advantages. First, it dramatically increases the economic viability of housing projects, leading to more housing starts, increased supply, and greater consumer choice. While current market conditions show elevated inventory and lower sales, Wilkes emphasizes that new housing development is a multi-year pipeline. Supporting projects now will deliver homes post-2029, preventing a future supply shock.
Second, municipalities benefit from employment and economic activity. For every 1,000 housing units built in the Greater Toronto Area (GTA), 2,500 person-years of employment are created, along with $800 million in economic activity and nearly $400 million in GDP. In Toronto, tens of thousands of units expected to start over three years will generate significant economic benefits.
Third, municipalities achieve a win-win: they stimulate much-needed housing while remaining financially whole for infrastructure delivery. Fourth, participating municipalities gain revenue certainty for infrastructure projects over three years, independent of development charge flows, ensuring income stability despite housing market fluctuations.
Collaboration Across Government Levels
Wilkes notes that the building industry has long advocated for such collaboration. The alignment of municipal, provincial, and federal efforts has enabled DC reductions starting in Toronto, with more municipalities expected to follow. He states, "The leadership shown between municipal, provincial and federal officials is what will continue to help make homes easier to build and more attainable for any new homebuyer." Permanent change, he adds, will come from continued cooperation to achieve the goal of building accessible communities.
