With Toronto’s new condo segment still remarkably downcast, and tariffs adding more uncertainty to the homebuilding equation, the City of Toronto is looking to introduce a measure to help get “stalled” condo projects with an affordable component out of the development review pipeline.
A report prepared by the Deputy City Manager, Development & Growth Services Jag Sharma and Chief Financial Officer & Treasurer Stephen Conforti will go to the City’s Executive Committee next week, and proposes a deferral of development charges (DCs) for “multi-unit ownership housing projects” that have submitted a complete Site Plan Application as of March 1, 2025, and include at least 5% to 10% affordable housing.
In order to be eligible, the project must also be on private land and expected to start construction within the next two years.
According to city staff, this is “an opportunity to spur construction of ownership projects with an affordable housing component faster, so people can move into these new homes sooner,” while getting ahead of the drag tariff disputes are anticipated to have on construction projects, and the overall economy.
The report, which will be considered by the Executive Committee on the March 19, followed by City Council between March 26 and 28, explains that the DC deferral would be “payable, interest-free and at June 2024 DC rates, four years following approval of the deferral or at the time of condominium approval” — whichever comes first.
Assuming an average unit mix of 25% studios, 45% one-bedrooms, 20% two-bedrooms, and 10% three-bedrooms, the City is estimating that “the average payable DC for a condominium unit today is $60,716, based on current rates (which are DC rates effective as of June 6, 2024)” and that this proposed DC deferral “could provide a financial benefit of up to $18,792 per unit” over a four-year period.
“This includes up to $16,788 per unit associated with an interest-free deferral period and up to $2,004 per unit associated with applying June 6, 2024 rates,” the report says. “The avoidance of this upfront financing cost for developments could help to advance or unlock stalled projects. Actual benefits will vary on an individual development basis, depending on their financing rates and construction timelines.”
The report estimates that there are at least 14,000 units in the development review pipeline that could qualify for this measure, however, the City says it has the “current financial capacity” to unlock a maximum of 3,000.
“This would represent a maximum upset limit for the City of $182.1 million in deferred cash flow and $28.3 million in foregone investment returns, which can be accommodated without impacting planned capital investments,” says the report.
City staff would report back in Q2-2025 “with the results of the implementation process” and Q2-2026 “with an updated financial impact, based on approved projects.”
Toronto City Council approved a similar incentive in November 2024 for planned purpose-built rentals that include at least a 20% share of affordable units. Qualifying projects will receive “an indefinite deferral” of development charges, so long as they remain rental in tenure, and a “recommended” property tax reduction of 15% for 35 years. The City revealed the outcomes of the first call for applications in December.
