After reaching an $8.8 billion agreement on March 30 to cut development charges, the Governments of Canada and Ontario have been busy finalizing agreements with local governments to implement the changes.
The initiative is officially known as the Development Charge Reduction Program (DCRP) and applications opened on June 1, as previously reported by STOREYS.
The program “will deliver federal and provincial funding over 10 years for housing-enabling infrastructure projects, with funding prioritized for municipalities that reduce development charges for all residential types by 30 per cent to 50 per cent or greater and maintain the reductions for at least three years.”
Municipalities levy development charges on new construction to fund infrastructure, and this program will see the federal and provincial government fund that infrastructure, allowing municipalities to lower the levies.
The first announcements were made in late-August, with Hamilton receiving $572 million and Vaughan receiving $697.2 million.
Hamilton has committed to eliminating development charges on all residential developments from March 30, 2026 to March 31, 2029, reducing the cost of building new homes by up to $100,442 per home.
The $572 million in funding — with the federal government cost-matching the provincial government — will go toward projects like the widening of Barton Street into a five-lane multi-modal road from Fruitland Road to Fifty Road, widening Rymal Road, widening Garner Road, expanding the Woodward water and wastewater treatment plant, and upgrading the capacity of the Greenhill Water Pumping Station.
A few more announcements were made in September, but the pace of announcements hit another gear this month, with agreements with 11 municipalities announced. To date, agreements announced include:
- Hamilton: $572 million
- Vaughan: $697.2 million
- Bradford West Gwillimbury: $94.8 million
- Mississauga: $404.1 million
- Barrie: $129.2 million
- St. Thomas: $19.6 million
- Orillia: $11.3 million
- Guelph: $48.3 million
- Sudbury: $45.3 million
- Essex County: $51.2 million
- LaSalle: $25.4 million
- Essex Town: $8.8 million
- Lakeshore: $11.8 million
- Kingsville: $8.4 million
- Windsor: $77.6 million
- Tecumseh: $6.8 million.
In total, the announcements amount to $2.2 billion in infrastructure funding. In most cases, the agreements will see the local government reduce development charges by 30% to 100% from March 30, 2026 to March 31, 2029.
One announcement that was slightly different was that for Mississauga, whose agreement runs from January 29, 2025 to March 31, 2029, reflecting the fact that Mississauga had previously implemented a development charge incentive program on its own, prior to the Canada-Ontario agreement.
Another announcement that was a bit more unique was that for the County of Essex, whose agreement runs from March 30, 2026 to December 31, 2030. According to the announcement, Essex County is reducing development charges on a staggered timeline. The reduction will be 100% for 2026 and 2027, 75% for 2028, 50% in 2029, and 25% in 2030.
The range of infrastructure projects the $2.2 billion in funding will go towards include road, bus, water, and wastewater infrastructure projects that are described as “housing-enabling.”
Ontario is also home to municipalities that do not levy development charges, however, and the $8.8 billion Canada-Ontario agreement recognizes that as well. In mid-August, the two governments announced a Non-Development Charge Municipalities Stream (Non-DC Stream) that will allow those governments to also receive infrastructure funding that will enable new housing development.
“Municipalities that do not levy development charges often face challenges funding infrastructure projects because they do not have access to this revenue tool,” said the two governments in the announcement. “At the same time, these municipalities face high construction costs, aging assets and significant infrastructure backlogs.”
The Development Cost Reduction Program began accepting applications under the Non-DC Stream on October 29, 2026, with additional intakes expected to be announced at a later date.
The Development Cost Reduction Program is, of course, just one half of the Canada-Ontario deal, with the other being the 13% HST rebate from April 1, 2026 to March 31, 2027. The HST relief has sparked market activity in certain areas and segments of the market, although the market has still been fairly subdued.
The HST has also been the envy of the real estate industry in British Columbia, which has continued to push for similar relief. The Governments of Canada and British Columbia reached a deal in June that was similar to the $8.8 billion Canada-Ontario deal, but it did not include the tax relief component. The deal did include development charge relief, but the program and agreements were not finalized prior to the snap election held earlier this month.
