Development Charges Overview

What are development charges?

Development charges are fees imposed on land development and redevelopment projects to help pay for the capital costs of infrastructure that is needed to service new development.

Is my project subject to development charges?

You may be required to pay development charges for land development or redevelopment projects, if you are:

• constructing a new building
• making an addition or alteration to an existing building that increases the number of residential units or the non-residential gross floor area
• redeveloping a property or making interior alterations that result in a change of use to all or part of a building

For a fulsome list of exemptions and reductions reference should be made to the bylaw and legislation.

What are the City's development charge rates?

Refer to the City’s current development charge rates.

How do I know what rate applies to my project?

Development charges (DCs) vary depending on the type and timing of your project.

• Residential development: DCs are based on the number and type of dwelling units.
• Non-residential development: DCs are based on the floor area of the building.

Determining the applicable DC rate

The DC rates applicable to a development are determined as follows:

1. Is there a Section 27 Agreement?
   1. If your development is subject to a Section 27 agreement, DCs are calculated according to the terms of that agreement.
2. Do the planning application DC rates apply?
   1. If your development is not subject to a Section 27 agreement, consider the following:
      1. Was a planning application* submitted on or after January 1, 2020?
      2. Has no more than 18 months passed from the date the planning application was approved to the date of first building permit issuance?
      3. Would the DCs payable, if calculated using the planning application DC rates plus interest under s.26.2 (3)**, be less than the DCs payable using the permit DC rates***?
   2. If the answer is yes to all the above, then the planning application DC rates apply.

3. Do the permit DC rates apply?

1. 1. If there is no Section 27 Agreement and the planning application DC rates do not apply, then DCs are calculated at the rate in effect at the time of first building permit issuance***

Notes:

*Planning application refers to the site plan application.  If there is no site plan application, the rezoning application applies.  The date used is the date the application was deemed complete.

**Interest under Section 26.2(3) of the DC Act accrues from the date the planning application was deemed complete to the date DCs are payable, excluding any days for which s.26.1 interest applies.  The Council-adopted interest rate is based on the rate set in Section 26.3 of the DC Act (prime + 1%) and is fixed as of the date the planning application was deemed complete.

***This comparison is for DCs of the same development that are payable at the same time.  The DC rate is based on the DC bylaw in effect on the date the planning application was deemed complete.

What is a Section 27 Agreement

A Section 27 Agreement is a legal arrangement under the DC Act that allows for flexibility in the timing of DC payments. It enables developers and municipalities to agree on either early or late payment of DCs and establishes the date used to determine the applicable DC rate.

Are development charges indexed?

The DC rates in the 2022 DC bylaw are indexed annually on May 1, based on the change in the Non-Residential Building Construction Price Index (Toronto).  However, City Council removed indexing for 2025 and 2026 (EX24.2).

When are the development charges payable?

Development charges are payable as follows:

1. With a Section 27 Agreement: DCs are payable based on the terms set out in the agreement.
2. Without a Section 27 Agreement:

1. 1. Non-residential: Payable at time of first building permit issuance.
   2. Non-rental Residential: payable upon the issuance of an occupancy permit.
   3. Rental & Institutional: payable in six equal annual installments, beginning upon the earlier of issuance of an occupancy permit or first occupancy.

For more details visit: Non-rental Residential Development Charges and Rental and Institutional Development Charges.

Deferral Program for Laneway and Garden Suites: The City offers a DC deferral program for laneway and garden suites. Learn more about eligibility and the application process: Laneway and Garden Suite Development Charges Deferral Program.

Other City Programs: The City offers other DC deferral and incentive programs to support housing initiatives.  Please refer to the City’s website for more information.

Who do I contact for calculation and payment of development charges?

Toronto Building Customer Service
Telephone: 416-397-5330

What is the process if I have concerns about the calculation of a development charge?

View the City's process for responding to concerns about the calculation of the applicable development charge.

When did the current bylaw come into effect?

Council of the City of Toronto enacted Development Charges Bylaw 1137-2022  on August 15, 2022 in accordance with the requirements of the Development Charges Act  and related Regulations.

What services are included in the development charges bylaw?

Development charges help pay for growth-related capital costs for the following municipal services.

• Spadina Subway Extension
• Transit
• Roads and related
• Water
• Sanitary sewer
• Storm water management
• Parks and recreation
• Libraries
• Affordable housing
• Shelters
• Police
• Fire
• Ambulance services
• Development-related studies
• Child care
• Waste diversion
• Long term care

Through the Bill 23 changes to the DC Act, effective November 28, 2022, the City is no longer collecting DCs for affordable housing and shelter services.

What reductions and exemptions are available for development charges?

Development charges exemptions and reductions are available under both provincial legislation and the City’s DC bylaw, policies and programs.

Legislative exemptions

• A board of education
• Any municipality or local board thereof
• The enlargement of an existing dwelling unit
• The creation of additional dwelling units in existing and new residential building, as prescribed
• The enlargement of an industrial building up to a maximum of 50 per cent of the original gross floor area of the structure that existed before the date the development charges bylaw came into effect
• Land intended for use by a university that receives regular and ongoing operating funds from the government
• Affordable housing that meets legislated requirements and is subject to an executed agreement pursuant to section 4.1 of the Act
• Housing developed by an eligible non-profit corporation
• Inclusionary zoning units

Legislative reductions

• Removal of housing DC services – effective November 28, 2022
• Reduction for rental housing developments – effective November 28, 2022
  • 25% reduction for units with three or more bedrooms
  • 20% reduction for two-bedroom units
  • 15% per cent reduction for 1 bedroom or bachelor units

• Mandatory phase-in discount of DC rates – effective November 28, 2022 to June 6, 2024
  • Bill 23 changes to the DC Act introduced a mandatory phase-in of DC rates for any DC bylaw adopted on or after January 1, 2022. The discount schedule was 20% in year 1, 15% in year 2, 10% in year 3, 5% in year 4 and full rates in year 5. This provision was repealed by Bill 185 effective June 6, 2024, meaning the phase-in discount no longer applies on a go-forward basis.  However, for planning applications submitted during the discount period, the phase-in still applies when calculating the planning application DC rates for the relevant time.

Non-statutory exemptions in the City of Toronto’s DC bylaw

• Public hospitals, as defined
• Non-profit hospices, as defined
• Industrial uses, as defined
• Colleges, as defined
• Non-ground floor non-residential uses
• Housing or facilities provided pursuant to a municipal capital facilities agreement
• Places of worship, including one clergy residence located in a place of worship, cemeteries or burial grounds
• Temporary sales offices or pavilions associated with the sale of new residential development to the public
• Accessory uses not greater than 10 square metres
• Dwelling rooms within a rooming house
• If not exempted by legislation, the second, third, fourth, fifth and sixth unit in developments of up to six units (effective July 24, 2025)

Non-statutory reductions and rebates in the City of Toronto’s DC bylaw

• A two-year phase-in of DC rate increases
  • No change in the rate on the bylaw’s effective date (August 15, 2022)
  • 50 % of the increase effective May 1, 2023
  • Full rates effective May 1, 2024
• Reductions for rental housing development (rates remain unchanged from bylaw adoption date, except for annual indexing, where applicable)
• Reduction for inclusionary zoning developments (rates remain unchanged from bylaw adoption date, except for annual indexing, where applicable)
• Rebates for projects meeting the requirements of the Toronto Green Standard
• Removal of annual indexing for 2025 and 2026 (indexing resumes after 2026)
• Credits for redevelopment of land

The owner or applicant is required to provide evidence to the satisfaction of the City that the owner or applicant is entitled to any exemption or reduction from the payment of DCs. Consult the bylaw and the legislation for the full list of exemptions.

What were the legislative changes affecting the development Charges

This is intended only as a summary of key changes. Some changes came into effect immediately upon Royal Assent of a bill, while others required implementing regulation, had transition provisions, or came into effect later based on the date proclaimed by the Lieutenant Governor.  Please refer to the official legislation for complete details.

Bill 108, More Homes, More Choice Act, 2019

View Bill 108.

Effective: June 6, 2019 (s.26.1 and s.26.2 came into force on Jan 1, 2020)

Key Changes:

• Restricted DC-eligible services
• Introduced s.26.1 instalment payments for rental, institutional, industrial, commercial and non-profit housing
• Introduced s.26.2 planning application DC rate as long as permit is issued within two years of planning approval

Bill 138 – Plan to Build Ontario Together Act, 2019

View Bill 138.

Effective: Dec 10, 2019
Key Changes:

• Removed industrial and commercial development from Section 26.1

Bill 197 – COVID-19 Economic Recovery Act, 2020

View Bill 197.

Effective: Jul 21, 2020
Key Changes:

• Amended list of DC-eligible services
• Removed mandatory 10% deduction for “soft services”
• Clarified relationship between DCs and Community Benefit Charges

Bill 213 – Better for People, Smarter for Business Act, 2020

View Bill 213.

Effective: Dec 8, 2020
Key Changes:

• Added exemption for land intended for use by a university receiving government operating funds*

Bill 23 – More Homes Built Faster Act, 2022

View Bill 23.

Effective: Nov 28, 2022 (some pending regulation and proclamation)
Key Changes:

• Introduced mandatory five-year phase-in of DCs (retroactive to bylaws adopted Jan 1, 2022)
• New exemptions: non-profit, affordable, and attainable housing
• Removed housing services from DC eligibility
• Capped DC interest

Bill 134 – Affordable Homes and Good Jobs Act, 2023

View Bill 134.

Effective: Dec 4, 2023
Key Changes:

• Amended definition of affordable residential unit to include income- and market-based criteria

Bill 185 – Cutting Red Tape to Build More Homes Act, 2024

View Bill 185.

Effective: June 6, 2024
Key Changes:

• Repealed DC phase-in on a go-forward basis
• Reinstated studies as an eligible capital cost
• Reduced lapsing timeline for planning application DC rate to 18 months (from two years)

Bill 17 – Protect Ontario by Building Faster and Smarter Act, 2025

View Bill 17.

Effective: June 6, 2025 (certain changes to s.26.1 and s.26.2 came into effect on Nov 3, 2025. Additional changes are pending regulation)
Key Changes:

• Added exemption for long-term care homes
• Streamlined DC bylaw amendment process where DC rates are reduced
• Amendments to section 26.1 (timing of payment) to:

• • Expand payment at occupancy to non-rental residential
  • Remove the requirement to immediately pay rental DCs upon change of use
  • Interest is limited

• Amendments to and 26.2 (determination of DC amount) to:

• • Require “lower of” planning application DC + s.26.2 interest and permit DC rates

• Changes authorized through regulation:

• • Limits to eligible capital costs recoverable through DCs
  • The definition of “local services”
  • Grouping of service categories for credit allocation
  • Acceptable forms of security for payment at occupancy
  • Methodologies for calculating benefit to existing development

Bill 60 – Fighting Delays, Building Faster Act, 2025

View Bill 60.

Effective: Not yet in effect

Key Changes Proposed:

• New requirement to establish local service policies for each DC service
• New rules for DC Background Study calculations
• Rules for annual financial statements on DCs

*changes to the Ministry of Training, Colleges and Universities Act