If Developers Don’t Pay, Who Does?

Development Charges, Housing Affordability, and the Question No One Wants to Answer

Recently, a series of social media ads by CMHC have been circulating, featuring one of their Chief Economists, Mathieu Laberge, asking a seemingly straightforward question: Do development charges impact homebuyers and renters?

Mr. Laberge is quick to answer with a confident “Yes!” In the next slide, he explains that municipal development fees are paid by developers who rarely absorb the cost. The implication is clear: if developers don’t absorb the cost, they pass it on to buyers and renters.

But this framing raises an immediate and critical question: if developers are not supposed to pay development charges, then who is?

The Missing Link in the Argument

CMHC’s post goes on to list what development charges (DCs) pay for: transit and roads, water and sewage, parks, libraries, and more. These are not abstract line items—they are the physical systems that make new housing possible in the first place.

Under the heading “Why They Matter,” Mr. Laberge claims DCs “significantly increase upfront cost” of building because developers bake these charges into their prices. That may be true in a narrow accounting sense, but the post never explains the alternative. If development charges are reduced or eliminated, the cost of that infrastructure does not disappear. It simply shifts.

And CMHC never tells us where it should go.

Apples, Oranges, and Infrastructure Reality

Mr. Laberge then compares development charges for a two-bedroom unit in Markham and Ottawa, claiming Markham’s charges are roughly three times higher. The comparison is jarring—but also misleading.

It ignores a basic reality: the cost of building infrastructure is not uniform across municipalities. Land costs, soil conditions, servicing distances, transit investments, parkland requirements, and existing infrastructure capacity all vary dramatically. Many of the items funded by DCs in Markham may simply cost far more than in Ottawa.

Comparing development charges without comparing what they actually pay for is not serious analysis—it’s marketing.

“Hard to Compare Costs”? Really?

Mr. Laberge further claims that because each municipality uses a different fee structure, “it’s hard for builders to compare costs,” and therefore calls for development charge standardization.

This is difficult to take seriously.

Large development firms operate nationally, even internationally. They employ teams of economists, accountants, planners, and lawyers. They routinely evaluate land, zoning, financing structures, market risk, and long-term returns. The idea that they cannot understand different development charge structures strains credibility.

What they are actually asking for is not clarity—it’s lower and more predictable costs, regardless of whether those costs reflect real infrastructure needs.

Standardization for Whom?

CMHC frames this as the first step toward more standardized data to “expand and refine our data collection,” arguing that standardization will help all levels of government support housing affordability.

But when this standardization is based on comparing fundamentally different municipalities—as if Markham and Ottawa are interchangeable—it risks producing policies detached from real-world infrastructure economics.

The post concludes with a quote from Mr. Laberge:

“Because of development charges, municipal finance is housing finance.”

It’s probably a good thing they attached his name to that quote, because on its own, it’s hard to see what it actually means. Municipal finance has always been tied to growth decisions. The real question is whether that growth pays for itself—or leaves future residents holding the bill.

The Question CMHC and BILD Won’t Answer

The other enthusiastic proponent of eliminating or reducing development charges is BILD, the development industry’s primary lobbying organization. Yet neither CMHC nor BILD explains where the money for new infrastructure should come from if DCs are removed.

This omission is not accidental.

Even the highest development charges typically only cover the initial construction of infrastructure required for new development. They do not cover the long-term upkeep, repair, and eventual replacement of roads, pipes, sewers, and public facilities.

That cost shows up later—often 20 to 30 years down the line—when the infrastructure begins to fail.

Strong Towns and the Growth Ponzi Scheme

Strong Towns has been warning about this pattern for years. It’s what they call the Growth Ponzi Scheme: municipalities fund new infrastructure with upfront fees and optimistic growth assumptions, while ignoring the long-term maintenance liabilities they are quietly accumulating.

When the bill comes due, cities are left with only one major revenue source: property taxes.

And everyone knows how politically toxic property tax increases have become. Municipal officials delay maintenance, defer repairs, and hope the problem lands on someone else’s watch.

This is not hypothetical. It has driven many municipalities in the United States into insolvency. Canada has its own cautionary examples—Winnipeg being one of the most frequently cited.

Richmond Hill’s Warning Signs

STRH recently conducted a financial analysis of the City of Richmond Hill using Strong Towns tools. While Richmond Hill is not currently facing a debt crisis, the analysis shows a worrying trend: maintenance is being postponed.

That may keep budgets balanced today, but over time it leads to broken infrastructure, ballooning replacement costs, and financial instability. This is exactly the long-term risk that development charges are meant—imperfectly, but intentionally—to mitigate.

Demand-Side Fixes and Developer Windfalls

This is not the first time CMHC policy guidance has raised red flags. Any policy that focuses on demand-side pressure—such as eliminating development charges while hoping savings are passed on to buyers—may offer a short-term price dip.

But in constrained housing markets, that “relief” quickly turns into higher prices. More purchasing power chases the same limited supply. That’s when developers benefit the most.

BILD and the development industry are not confused about this dynamic. They understand it very well.

A History We Shouldn’t Ignore

The problematic role of CMHC is not new. Alongside Fannie Mae and Freddie Mac in the United States, CMHC has long justified market-inflating policies under the banner of affordability. The result has been decades of rising prices, increased household debt, and growing financial fragility.

If CMHC economists—paid with public funds and entrusted with public interest—are serious about housing affordability, they must look beyond short-term price optics and industry talking points.

The Real Strong Towns Question

Strong Towns asks a simple but uncomfortable question: Does this development pay its own way over time?

If the answer is no, then eliminating development charges doesn’t make housing affordable—it just socializes risk, privatizes profit, and pushes today’s costs onto tomorrow’s residents.

That is not affordability.
That is deferred insolvency.

And it’s time CMHC started acting like it understands the difference.