Canada-Ontario Development Charge Reduction Program Launches

Announcement Highlights

Today, the federal and Ontario governments announced details of the Canada Ontario Development Charge Program, aimed at reducing the province's development charges (DCs). Municipalities remain committed to increasing housing supply and affordability, and we welcome this federal–provincial effort to lower housing construction costs and boost to construction sector employment.

Because growth patterns, infrastructure capacity, and DC bylaws vary, the program’s financial impact will be uneven across municipalities. AMO encourages municipalities considering participation to assess potential DC revenue losses, weighing housing supply priorities against long-term fiscal impacts as they develop applications and negotiate funding agreements with the province.

AMO will continue working with the province to clarify outstanding questions and support members interested in participating in the program. We remain committed to helping municipalities make this initiative a success for the developers and taxpayers in their community.

Responding to AMO’s calls for fair access to Canada-Ontario Partnership to Build, the province committed to also making funding available for rural, small and northern municipalities, with more details to be announced at a later date.

Top Insights

• The Canada-Ontario Development Charge Reduction Program launched today. Municipalities have until June 19, 2026 to submit projects for funding consideration.   Final transfer payment agreements between individual municipalities and the province will lock in a 3-year development charges reduction and secure federal/provincial funding to offset a portion of the lost revenue. 
• The province committed to also making Canada-Ontario Partnership to Build funding available for rural, small and northern municipalities.

Program Details 

The Ontario and federal governments announced today detailed program parameters for the Canada-Ontario Development Charges Reduction Program (DCRP). The $8.8 billion application-based program is available to the over 200 municipalities that levy development charges.  

The program's design responded to AMO advocacy by recognizing the differing infrastructure needs of communities by providing funding for both housing enabling and community infrastructure, such as new roads and water systems as well as transit. The promised carve out for rural/small/northern also responds to AMO’s call for fair access to new funding, as these communities face different infrastructure needs than their faster growing peers.  

There are some open questions on program design, including: 

• How offset funding will be determined
• How past voluntary DC reductions will count towards the new 3-year DC reduction requirement, and
• If municipalities will get credit for having suppressed DC rate growth

The program has a short program intake window, from June 1 to June 19. AMO anticipates transfer payment agreements to be finalized as soon as this summer. This timeline was set to align DC reductions with the one-year provincial HST vacation for new homebuyers to increase market demand for unsold housing inventory and spur housing starts.  

Many of the high-level program parameters first announced in March are unchanged. For example, participation is voluntary, municipalities will have to cut their DC rates by 30 to 50% for three years, and program funding is paid out over 10 years. 

Today’s announcement provided greater clarity on eligible housing enabling infrastructure projects, eligible project costs, cost-share ratios, and assessment criteria. Eligible projects include roads, water/wastewater, and transit. Municipalities will be required to fund at least 10% of project costs and these can include soft costs such as front-end engineering and design work. The size of municipal contribution along with the level of DC reduction and number of housing units enabled are the main criteria that will be used to assess applications.   

AMO will provide additional guidance to help members evaluate the program’s cost-benefit to their community.