Understanding the fees behind new housing—and the debate around them
Development charges (DCs) have become a central issue in the housing debate. Politicians, industry groups, and policy experts are increasingly weighing in, with some calling for their reduction or even elimination as a way to improve housing affordability.
Among the most prominent critics are developers, often represented by organizations such as the Building Industry and Land Development Association (BILD). Their position is also reflected in opinion pieces and policy discussions, as well as indirectly through platforms like the Missing Middle podcast hosted by Mike Moffatt.
To understand the debate, it helps to start with a basic question: what exactly are development charges, and why do cities use them?
What Are Development Charges?
Development charges are fees collected when new housing is built. They are intended to cover the cost of infrastructure and services required to support growth—such as roads, water and sewer systems, libraries, fire protection, and policing.
In areas where this infrastructure does not already exist, it must be built before residents can move in. DCs are one way municipalities fund these upfront costs associated with new development.
Development Charges in Numbers (Richmond Hill, 2025)
| Housing Type | Development Charges (city portion) | Development Charges (total, incl. Region, Schools etc) |
| Single / Semi-detached home | about $49,340 | can reach roughly $90,000–$100,000+ per unit depending on type |
| Apartments / condos | >700 sq ft: about $31,161 <700 sq ft: about $22,120 | |
| Townhouses, multiples | Around $41,022 per unit | |
| Area-specific charges (for new communities): | Can exceed $375,000 per hectare of land in some areas | |
| What’s included: | Roads, water/sewer infrastructure Fire and emergency services Parks and recreation Libraries and growth-related studies |
1 . These numbers vary by housing type, location, and indexing, and are updated regularly by the city.
2. The total cost a builder pays often includes municipal + regional + school board charges, which is why the all-in number is much higher than the city portion alone.
source: City of Richmond Hill 2025 Development Charges brochure and schedules.
The Core Question: Who Pays?
At the heart of the discussion is a straightforward question: who should pay for this infrastructure?
There are three main approaches:
- Developers and homebuyers: Developers typically pay DCs at the time of construction, and these costs are often reflected in the final price of homes.
- Existing residents: Costs could instead be spread across the tax base, which would mean higher property taxes or reallocation of municipal spending.
- Higher levels of government: Provincial or federal governments could provide funding through grants or infrastructure programs.
Each approach shifts the financial burden in different ways, which is why the issue remains contested.
Why Developers Oppose DCs
Developers, including those represented by BILD, have argued that development charges increase the upfront cost of housing. In their view, these added costs can affect project viability and reduce affordability for buyers.
Even if the charges are ultimately passed on to purchasers, industry voices say higher prices can limit demand and slow the pace of new construction.
Developers, including those represented by BILD, have argued that development charges increase the upfront cost of housing.
Different Perspectives Among Buyers
Some prospective buyers, particularly younger ones, express a different concern. They argue that if development charges are reduced or eliminated, the costs would likely be absorbed by municipalities and, in turn, existing taxpayers.
From this perspective, shifting costs away from new buyers and onto the broader tax base raises questions about fairness between generations—especially given long-term increases in property values that have benefited existing homeowners.
The Municipal Perspective
For municipalities such as Richmond Hill, development charges are a significant source of revenue tied directly to growth.
In a recent council discussion, staff presented a scenario in which development charges were reduced or removed. According to that discussion, the city would need to consider alternatives such as increased borrowing or reallocating funds to meet infrastructure needs associated with growth.
Municipalities generally have limited revenue tools, with property taxes serving as their primary source of ongoing income. This constraint shapes how cities approach funding for new infrastructure.
A Broader Financial Challenge
Beyond the initial cost of building infrastructure, municipalities also face the long-term responsibility of maintaining and replacing it.
Some policy analysts note that the revenue generated from property taxes does not always fully cover these long-term costs, particularly in lower-density areas. This creates ongoing financial pressures that extend beyond the initial funding provided through development charges.
The Bottom Line
Development charges are one of the main tools municipalities use to fund the infrastructure required for growth. While critics argue they contribute to higher housing costs, others point out that removing them would shift those costs elsewhere.
Understanding this trade-off helps explain why development charges remain a key part of municipal finance—and why the debate around them continues.