Development charges in Toronto: exploring the disconnect between planning policy and fiscal policy

Abstract

A development charge is a one-time fee that municipalities in Ontario levy on developers to recover growth related costs associated with new development. In Toronto, development charges have increased rapidly amongst surmounting fiscal pressures for growth related capital infrastructure. Research has found that development charges put an upward pressure on housing prices (Ihlanfeldt & Shaughnessy, 2004; Ihlanfeldt & Shaughnessy, 2006; Bryant, 2017), increase the cost of existing housing, (Sishir, 2007) and reduce local economic development activities (Ihlanfeldt & Shaugnessy, 2004; Jones 2015). This paper argues that future increases to development charge rates in the City of Toronto work counterintuitive to its planning policies. The recommendations provided are based on the idea that municipalities must carefully consider the impacts of high development charges alongside planning policy objectives that they aim to achieve. Key Words: Development Charges, Planning Policy, Fiscal Policy, Housing Affordability