Federal, Ontario government dangle incentives to lower DCs
Posted June 2, 2026
Municipalities across Ontario are being offered a share of up to $8.8 billion in federal and provincial infrastructure funding if they agree to significantly reduce development charges (DCs), one of the largest upfront costs embedded in the price of a new home.
Applications for the Development Charge Reduction Program, aimed at lowering housing construction costs and accelerating homebuilding, are being accepted until June 19. Municipalities that reduce DCs on all residential housing types by at least 30 per cent, and ideally 50 per cent or more, for a minimum of three years will be prioritized for funding.
Under Ontario’s new program, municipalities seeking funding will be evaluated on the size of their development-charge reductions, the number of homes expected to result from the relief and the municipality’s financial contribution toward infrastructure projects.
Housing-enabling projects, including water, wastewater and transportation infrastructure, will receive priority consideration, particularly where they support significant housing growth.
In New Tecumseth, a new single-detached home connected to municipal water and sewer currently carries development charges of $111,560. Of that amount, $90,502 is collected by the Town of New Tecumseth, $14,975 goes to Simcoe County and $6,083 funds education-related charges.
Townhouse and multiple-unit developments face charges of $79,178 per unit, while apartments with two or more bedrooms are charged $55,515 per unit. Smaller apartment units are assessed at $43,684.
New Tecumseth's DC revenue stream has slowed the past few years, impacting the water and wastewater component, dipping into multi-million dollar deficits.
The federal contribution will flow through the Build Communities Strong Fund, a national program designed to accelerate infrastructure construction and reduce development costs.
The development-charge initiative complements Ontario’s temporary enhanced HST relief on new homes, which the province says could reduce the cost of a newly built home by as much as $130,000.
Provincial officials are encouraging municipalities to pursue the largest reductions possible, arguing that lowering development charges can remove a major barrier to new housing construction while unlocking infrastructure funding for growing communities.
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