Ontario Launches New Development Charge Reduction Program

Note: Richmond Hill Council will hold a Special Council Meeting on June 17, immediately following the Committee of the Whole meeting, to consider the Development Charges Reduction Program (DCRP).

The Ontario government has launched a new Development Charge Reduction Program (DCRP) to encourage municipalities to lower development charges and help reduce the cost of building new homes. The federal and provincial governments have committed up to $8.8 billion over 10 years for housing-related infrastructure projects.

Development charges are fees that builders pay to municipalities to help fund infrastructure such as roads, water and wastewater systems, parks, fire stations, libraries, and community facilities. These costs are often passed on to homebuyers through higher home prices.

How the Development Charge Reduction Program Works

• Municipalities can apply for funding if they agree to reduce development charges by at least 30% to 50% or more for all residential housing types retroactive to March 30, 2026.

• The reduced development charges must remain in place for at least 3 years.

• Municipalities must contribute at least 10% of eligible project costs which must be funded from non-DC sources (i.e. reserves, property taxes)

• The program does not directly reimburse municipalities for development charges they give up. Instead, municipalities receive funding for eligible infrastructure projects.

How Applications Will Be Evaluated

Municipalities will be scored based on:

• How much they reduce development charges.

• How many new homes are expected to be built because of the reduction.

• How much money the municipality contributes itself.

• Municipalities that offer larger reductions will generally receive higher priority for funding.

• Projects that support housing growth, such as water, sewer, roads, and other infrastructure needed for new housing, will be prioritized.

What Does This Mean for Richmond Hill?

Participating in the program could provide access to significant infrastructure funding for projects such as roads, water, wastewater, stormwater and transit-supporting infrastructure. It could also help support housing construction and affordability goals.

However, there is an important trade-off. Reducing development charges means the City would collect less revenue from new development. While provincial and federal funding is intended to offset some of this loss, it is not yet clear whether funding would fully replace the development charge revenue Richmond Hill would give up. Per the program, the City would also need to contribute 10% for the infrastructure costs.

Several important details also remain uncertain, including how funding allocations will be calculated, when funding payments would be received.

What Happens if Richmond Hill Applies and Is Selected?

Municipalities who are accepted do not need to implement DC rate reductions at the time of application.  Once the Province advises the City of the specific funding amount, staff will assess the viability of proceeding. Only if the City is satisfied does it sign the TPA and the reduced DC charges go into effect. infrastructure grants.

What Happens if Richmond Hill Applies but Is Not Selected?

Submitting an application does not automatically reduce Richmond Hill's development charges. If the application is denied then the development charges will stay as is.

York Region's Development Charge Reduction Program Proposal

Separately, York Region is preparing its own DCRP application for the North York–Durham Sewage System Expansion (NYDSS), a $1.93‑billion wastewater project supporting about 50,000 new homes in northern municipalities. Even with 90% provincial funding, the Region must contribute roughly $193 million through water and wastewater rate‑supported fees.

Because Richmond Hill receives Regional water and wastewater services, any Regional rate increases would be passed on to local residents and businesses.

View Staff Report here.

This Regional cost impact would be in addition to any financial implications if Richmond Hill participates in the DCRP as well.