Feds, Ontario pool $8.8B for housing infrastructure to cut development fees

OTTAWA — The federal and Ontario governments said Monday they will together invest billions of dollars in local infrastructure spending to help cities cut costly development fees and get more homes built.

Prime Minister Mark Carney and Premier Doug Ford joined Mayor Olivia Chow in Toronto to unveil a plan for the province and federal government to each spend $4.4 billion on housing-related infrastructure in the province over the next 10 years.

The funding deal is the first to be announced through the federal government’s $51 billion Build Communities Strong Fund and is meant to help municipalities cut development charges, or DCs, by as much as 50 per cent for the next three years.

“If you don’t cut DCs, you aren’t getting any money,” Ford said in a message to mayors across the province Monday.

“But if you do, we will be there to support you.”

Municipal development charges are fees imposed by a city on a developer that usually help to build the infrastructure new housing developments need, such as transit, water or sewer systems. Experts warn these fees have ballooned in recent years, inflating the cost of homebuilding and making it harder to build much-needed supply.

David Amborski, director of the Centre for Urban Research and Land Development at Toronto Metropolitan University, said development charges became a convenient way for cities to expand services for their growing populations without irritating residents by increasing property taxes.

“If you have development charges, it’s more of a hidden, indirect tax, and to some degree is imposed on people who may not even live in the jurisdiction yet. So politically, it’s a safer way to go,” he said.

Funding will be granted based on a list of projects suggested by a municipality and will be prioritized for high-growth cities where housing shortfalls are most acute. These municipalities will have to commit to cutting development charges by 30 to 50 per cent for three years in order to be eligible for money through this stream.

Because the funding will be doled out over 10 years, Carney said these agreements will spread out the burden of paying for infrastructure over time.

Ontario also unveiled a plan with the federal government last week to waive the harmonized sales tax on eligible new builds for the next year.

Taken together, the federal and Ontario governments estimate that these new agreements will save up to $200,000 in taxes and fees on the cost of a new home.

Both the Carney and Ford governments have set ambitious targets to rapidly scale up available housing supply over the coming years.

Nationally, housing starts rose 5.6 per cent annually in 2025, despite outright declines in Ontario, the Canada Mortgage and Housing Corp. reported earlier this year.

But the agency said in its updated forecasts last month that it expects the national pace of construction to fall for the next three years amid high construction costs and weak buyer demand.

Ontario in particular — with some of the highest development charges in the country — faces construction headwinds, CMHC noted.

Conservative Leader Pierre Poilievre said in a social media post Monday that Canada needs “results not rhetoric” with the pace of homebuilding forecast to slow. He said he suggested incentivizing lower development charges and cutting taxes on homes years ago.

The Ontario Home Builders’ Association hailed the federal-provincial partnership as “historic” in a media statement Monday and said that lower development charges will improve the viability of projects, as well as affordability.

Carney said he expects competitive forces in the market will push developers to pass on cost savings from the development charge relief to homebuyers.

Amborski said whether developers end up passing reduced costs on to homebuyers will depend on the state of the market when the policy is enacted.

If it’s a hot market and home prices are rising, it’s easy for a developer to turn a discount on input prices into a profit without turning away buyers, he said.

“If developers could charge $10,000 more because the market’s going up, they’re not going to reduce the cost — they’re going to take a $10,000 profit,” Amborski said.

But prices are falling in many local resale markets across Canada right now, Amborski pointed out. He said that cut in upfront costs can help convince buyers who are sitting on the sidelines that they can turn even a slim profit on a new build priced at what the market can bear.

Amborski said he wasn’t sure whether the $8.8 billion on offer from Ottawa and the provinces will be sufficient to cut development charges in half. He also said there’s no silver bullet for housing affordability right now.

“Bottom line is, it’s got to help. It’s got to help (with) reducing the cost of housing,” he said.

The latest funding announcement comes a few days after Ottawa announced it was earmarking $1.7 billion for all provinces and territories to boost housing supply however they see fit.

Finance Minister François-Philippe Champagne cited declining home prices and the need to encourage builders to break ground on new projects when he announced that funding last week.

This report by The Canadian Press was first published March 30, 2026.