Part 1 — The Spider Web Beneath the Streets: What Development Charges Really Fund
A two-part exploration of how development charges shape Canada’s housing and infrastructure debate.
1 The Invisible Invoice
Picture a new subdivision breaking ground on the edge of town—fresh pavement, tidy curbs, marketing banners promising modern lakeside living.
Most of us assume the developer covers the costs and the town collects a tidy fee before handing over building permits. But what happens to that money once the backhoes move in? Who pays for the deeper things—the water mains, storm sewers, fire-hall upgrades, and the new bus route that will one day serve the families moving in?
Every new home tugs at a thread in a much larger web of public infrastructure. When one strand—say, a development-charge freeze or a fee hike—is pulled, the whole web quivers. Municipal budgets stretch, provincial rules adjust, federal grants appear or disappear, and everyone from homebuyers to taxpayers feels the vibration in some way.
Understanding that web is the only way to understand Canada’s housing debate. Behind every home price is a plumbing of costs and responsibilities that connect three levels of government and thousands of kilometres of pipe.
2 The Idea That Growth Should Pay for Growth
Development Charges (“DCs”)—the one-time fees builders pay when new homes or commercial projects are approved—exist so that growth pays for growth.
Those dollars are legally ring-fenced: every municipality must keep them in dedicated reserve funds that can be spent only on approved “growth-related” capital—things like water and wastewater pipes, storm drainage, roads, fire trucks, parks, libraries, and transit vehicles.
Across Canada, the principle is the same even if the numbers vary.
In big cities, a single detached home can carry over $100 000 in development charges; in smaller towns the fee might be $15 000–$30 000. But those numbers don’t vanish into bureaucracy—they sit in municipal reserve accounts until the corresponding infrastructure project moves ahead.
In Ontario, the rules are set by the Development Charges Act, which requires municipalities to
prepare a background study quantifying growth and infrastructure needs,
hold public hearings before setting rates, and
keep and publish annual reserve-fund statements.
So while the line on a building permit looks simple, the accounting behind it isn’t.
3 Where the Money Goes
Think of a new subdivision as a starter-kit for a miniature city.
Before anyone moves in, the town must size water pipes, widen roads, extend streetlights, and expand fire-response coverage. Those upfront costs can run into tens of millions, and development-charge revenue is what allows towns to borrow or budget responsibly to cover them.
A typical breakdown in mid-sized Ontario municipalities looks roughly like this:
Water & Wastewater – 35 %
Roads – 25 %
Parks & Recreation – 15 %
Fire & Emergency – 10 %
Library, Transit & Other – 15 %
Each of those buckets is tracked separately. Money collected for parks can’t pave a road, and road dollars can’t fund a fire hall. This separation keeps development fees from being treated as general-revenue cash grabs.
In larger centres such as Mississauga or Vaughan, DCs may fund hundreds of capital projects each year. Smaller towns like Wasaga Beach, Ontario see fewer, but the principle is the same.
4 The Layers of Responsibility
Municipalities collect DCs and deliver the infrastructure but can’t levy income or sales taxes. Their fiscal toolbox is limited to property taxes, user fees, and these one-time charges.
Provinces set the rules—deciding what services are eligible, how rates are calculated, and how long municipalities must phase them in. Ontario’s Bill 23 (2022) and subsequent housing legislation required phased-in fee reductions, effectively lowering municipal revenue.
Ottawa has entered the game with the Canada Housing Infrastructure Fund (CHIF) and Housing Accelerator Fund (HAF), which tie federal infrastructure grants to commitments like fee moderation or streamlined approvals.
So when a province caps fees to spur housing, or Ottawa offers funding only if towns freeze them, the web shifts.
Municipalities still have to build the pipes but now rely on uncertain senior-government transfers to fill the gap.
A 2023 Federation of Canadian Municipalities study estimates that for every $1 in new-housing investment, $0.87 of resulting tax revenue flows to senior governments and only $0.13 stays local.
That imbalance explains why even booming communities can feel broke.
5 Fee Freezes and the Myth of Affordability
Developers often argue that high fees inflate home prices. It’s partly true—but only partly. Economic studies show that less than half of a fee change typically passes through to the buyer; the rest is absorbed through land costs or profit margins. In hot markets, prices are set by demand, not fee structure.
Freezes aren’t automatically reckless either. When higher levels of government step in with matching infrastructure grants, a temporary freeze can make sense. The danger arises when freezes happen without replacement funding—because infrastructure still has to be paid for, just later, through higher property taxes or deferred maintenance.
So the real question isn’t whether to charge, but who ultimately pays when we don’t.
6 A Local Lens: Wasaga’s Balancing Act
Wasaga Beach, Ontario illustrates the dilemma faced by many small towns.
Its growth is seasonal and its economy tourism-heavy. The town must maintain big-city infrastructure—water, wastewater, shoreline protection—on a small-town tax base.
Development-charge revenue helps bridge that gap, funding water-system expansion, road improvements, and recreation amenities that serve both residents and visitors. Yet the town’s public documents don’t spell out exactly how much sits in reserve or which future projects depend on those funds. That opacity is common among smaller municipalities that lack the staff to produce dashboards like Toronto’s or Mississauga’s.
It isn’t corruption; it’s capacity. But it matters—because citizens can’t have an informed debate about fee freezes or affordability if they can’t see the numbers.
7 A System Too Complex for Slogans
Canada’s housing conversation often drifts toward slogans—“cut red tape,” “build faster,” “scrap the fees.” But development charges aren’t a speed bump; they’re part of the suspension. Remove them without strengthening other supports and the whole vehicle rattles apart.
The truth is messy but manageable:
Growth can be made more affordable if senior governments share their tax windfalls.
Fee reductions can help if they’re replaced by predictable infrastructure transfers.
Transparency can rebuild trust if municipalities show where the money goes.
Each of those “ifs” connects to another strand in the web.
8 Where We Go Next
Our municipalities build the bones of growth, but our fiscal system leaves them under-fed.
Understanding development charges isn’t about defending fees or attacking builders; it’s about seeing the spider web for what it is—a delicate network that only works when every strand holds.
In Part 2 — When One Strand Trembles, we’ll follow that web to the shoreline: how fee freezes, land sales, and senior-government conditions play out in Wasaga Beach’s waterfront redevelopment plans—and what they reveal about the price of sustainable growth in Canada.
Kitchen-Table Reflection
When you look out over a growing town—a new cul-de-sac, a repaved road, a rebuilt boardwalk—remember: someone paid for every foot of pipe beneath it. The only honest question is who.
Answering that, fairly, may be the hardest construction project we face.
This article is part of Between the Lines Canada’s longform investigation, Who Pays for Growth? The full canonical version — including references, sources, and additional context — is published at
👉 Between-the-Lines.ca: “Who Pays for Growth? The Spider Web Beneath the Streets.”
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