Today, the City of Toronto, Province of Ontario and Government of Canada announced that Toronto is receiving up to $1.5 billion in recognition of the City’s commitment to reduce development charges by 40 to 60 per cent for more than three years.
The funding is part of the Development Charge Reduction Program, announced by the federal and provincial governments on March 30, to help municipalities reduce development charges while continuing to invest in the infrastructure required to support growth.
The City worked with the province to identify eligible housing-enabling infrastructure projects and successfully secured $1.5 billion in funding over 10 years. The funding will support projects already approved through the City’s 10-Year Capital Plan, including investments in transit capacity, water and wastewater infrastructure and road network expansion.
The funding will reduce the City’s reliance on development charge revenues to fund existing capital investments. As a result, the City will be able to implement development charge reductions of 40 to 60 per cent between 2026 and 2029, depending on the unit type, exceeding the program requirement of a 30 to 50 per cent reduction.
The development charge reductions are intended to lower development costs, improve project viability and support increased housing supply across Toronto.
In March 2026, the Province of Ontario and the Government of Canada agreed to a cost-matched structure to provide a combined $8.8 billion over 10 years for infrastructure investments in Ontario, with Canada’s share of the funding flowing through the Build Communities Strong Fund.
As part of the Canada-Ontario Partnership to Build, the Development Charge Reduction Program is delivering funding over 10 years for housing-enabling infrastructure projects. Funding is being prioritized for municipalities that reduce development charges for all residential types by 30 per cent to 50 per cent or greater and maintain the reductions for at least three years.
Purpose-Built Rental Housing Incentives
With the greater financial certainty provided through the $1.5 billion in federal and provincial infrastructure funding, the City is launching a new phase of its Purpose-Built Rental Housing Incentives Stream using City resources. The program provides an indefinite deferral of development charges for projects that include a minimum of 20 per cent affordable housing, helping to accelerate the delivery of new purpose-built rental homes across Toronto.
The first phase of the program, launched in fall 2024, supported more than 8,000 rental homes, including more than 2,000 affordable homes. Building on that success, the second phase of the program will support up to 10,000 new rental homes, including a minimum of 2,000 affordable rental homes. The City will prioritize shovel-ready projects, with applications being reviewed and approved on a rolling basis in the coming weeks and months.
Reducing Development charges
Since 2024, the City has implemented multiple targeted actions and programs to reduce the cost of development and support increased housing supply by enhancing project viability. These initiatives include targeted development charge relief, alongside complementary property tax and fee waivers. Combined, these actions have represented $1.2 billion in financial contributions by the City as of 2026 Q1 and include:
Today’s announcement builds on these efforts and further supports the City’s efforts to increase housing supply while maintaining investments in critical infrastructure.
Quotes:
“People should be able to afford a home in our city. Today’s announcement will make that easier while creating tens of thousands of good jobs in Toronto. Through our strong partnership with the Provincial and Federal government, we’re reducing the cost of building new homes and ensuring the City can keep investing in the infrastructure we need to support communities. This funding will help create more homes for Torontonians and support growth across our city.”
— Mayor Olivia Chow
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