Toronto city council approved a motion Wednesday evening to lower development charges by 40 to 60 per cent, with larger units receiving the greatest reductions, in an effort to provide relief to the struggling new condo market.
The City of Toronto, Province of Ontario and Government of Canada announced that Toronto will receive up to $1.5 billion in funding in recognition of the city’s commitment to reduce development charges by 40 to 60 per cent for more than three years.
The funding comes through the Development Charge Reduction Program, which was introduced by the federal and provincial governments on March 30. The initiative is designed to help municipalities reduce development charges while still maintaining investments in the infrastructure needed to accommodate future growth.
The money will help lower the city’s dependence on development charge revenues to support existing capital projects. This will allow Toronto to introduce development charge reductions of 40 to 60 per cent between 2026 and 2029, depending on the type of unit, surpassing the program’s required reduction range of 30 to 50 per cent.
The cuts are aimed at reducing construction costs, making more projects financially feasible and encouraging the creation of additional housing supply across Toronto.
Mayor Olivia Chow said the move could help unlock the construction of an additional 40,000 homes for 100,000 people. She said many of these projects are already “shovel ready” but have been stalled because developers cannot make the numbers work.
“It can be built faster, it can be built in a more affordable way,” she said. “That’s what this development charge exemption is all about.”
Chow previously said that larger units will receive bigger breaks because they are more cost-effective to build on a per-unit basis.
“The bigger the units, the more affordable it is to build,” Chow said while announcing the agreement Tuesday at a press conference with federal Minister of Housing and Infrastructure Gregory Robertson and Premier Doug Ford at a condo construction site near Bloor and Yonge streets.
Earlier this year, the federal and provincial governments announced a combined $8.8 billion commitment to reduce development charges by 50 per cent or more.
Chow also said builders that include one in five units as affordable housing will qualify to have 100 per cent of development charges waived, up to 10,000 units, through the city’s Purpose-Built Rental Incentives Stream.
Wednesday’s motion instructed the city’s chief financial officer and treasurer to report back to council in July with proposed bylaw changes. Those amendments would provide a 40 per cent discount on current development charges for all one-bedroom units, while units with two bedrooms or more independent rooms would receive a 60 per cent reduction.
Toronto’s condo market has been facing a historic slowdown. For the first time in 30 years, there were zero new condo projects launched in the Greater Toronto and Hamilton Area during the first quarter of the year, according to real estate research firm Urbanation.
At Tuesday’s announcement, Robertson said the industry is facing “tough times,” with the downturn affecting construction activity and keeping workers off job sites in both Toronto and Vancouver.
“I think we’re all having to adjust a lot faster and deeper than we might have expected,” Robertson said, adding that governments need to “try and make the best moves that we can possibly make to rebound and get our housing market back on track,” while improving affordability.