Development Charges

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Overview

Development charge rates will be adjusted by a base amount of 1.3 per cent as of April 1, 2025

Statistics Canada released their Building Construction Price Index (BCPI) report for the third quarter 2024.  Based on the 2024 DC By-law 2024-451 under Section 18, the City’s Construction Price Index, which is used as the basis to adjust the various development charge rates was 1.3 per cent (1st quarter 2024 compared to 3rd quarter 2024).  In addition, the various DC rates being applied to Sanitary (Wastewater), Water, and Corporate Studies will not be adjusted using the 1.3 per cent BCPI as of April 1, 2025.  The overall adjustment for other service categories may be lower as well depending on the amount of debenture payments being excluded from the April 1, 2025 indexation calculations.

Treasurer’s Statement

The Development Charges Act (DCA) requires the Treasurer of the municipality to provide an annual year-end summary of development charge reserve fund balances and transactions to Council.  The City’s annual statement also fully documents the various capital projects that received growth-related funding by service category.  In accordance with recent changes made to the DCA, a copy of the statement and attachments have been posted below for public availability.

Treasurer’s Report on 2022 Growth Related Revenues

Amendment to: City of Ottawa Development Charges Background Study, Corporate Studies (New Zoning By-law project) – September 10, 2021

2019 Stormwater Management (SWM) Development Charges Background Study: Area C-1 [ PDF 1.111 MB ]

Nepean - South Urban Centre Stormwater Amending Development Charges By-law [ PDF 404 KB ]

2022 Amendment Village of Manotick Area-Specific Development Charges Background Study [ PDF 714 KB ]

2022 Village of Manotick Area-Specific Development Charges By-law [ PDF 1.505 MB ]

Development charges are one-time fees levied by municipalities on new residential and non-residential properties to help pay for a portion of the growth-related capital infrastructure requirements. Development charges are determined and accounted for by type of service component. Growth-related spending authority is approved annually as part of the City's budgeting process with only those capital projects included in the current Development Charges Background Study being eligible for funding. Reserve fund balances are monitored through the capital budget approval process to ensure they are in compliance with the overall funding policies adopted by Council.

Going forward, the City is attempting to balance financial incentives with the commensurate negative impact these policies have on the timing of the construction of growth-related infrastructure projects. Therefore, certain policy refinements have now been introduced into the background study and by-law. 

So, Development Charges can be a very complicated and sensitive topic, 
so let me start by telling you how Development Charges are defined.
Development Charges are a fee charged by the municipality
for the recovery of growth costs.
Growth costs are recovered to build new infrastructure supporting growth,
to pay down existing debt for past growth works,
and to avoid taxpayers paying for costs that serve growth.
Development Charges do not pay for operating costs or infrastructure renewal;
that's paid for by new taxes from new homes and businesses
(also known as assessment growth).
Development Charges must be paid when a building permit
is issued for most new buildings.
Development Charges would be charged for new buildings,
expanded buildings, and converted buildings,
and are split into different groups and classifications. (Residential, Commercial, Institutional, Industrial)
Let's look at a hypothetical example of a subdivision development
and Development Charges in action:
we will get to how Development Charges are calculated in a moment.
In order for this area to undergo development,
it will need a stormwater management facility, major water mains,
sanitary sewers and sewer pipes (also known as “trunks”).
With these major services now available, the developer of the land can undertake
the planning needed to layout street patterns and other servicing needs.
These other services required are paid for by the developer
and not Development Charges.
Building of new homes or commercial enterprises can begin.
Over several years, the subdivision is populated, built-out,
and may require a district park and community centre.
These items would be partially funded by Development Charges.
It is now time to look at how Development Charge rates are calculated,
which can be the most complicated item, but first,
it's important to know that all municipalities in Ontario.
must follow the Development Charges Act,
which outlines rules municipalities must follow
for setting a Development Charge rate.
The main focus of Development Charge calculation
is recovering the appropriate amount of money
from individuals who are sparking City growth.
In simple terms, the rate is calculated as follows:
The total dollar value of major growth projects which is made up of:
the number of major growth projects, timing of projects,
and post period benefit –- as well as other factors.
This is then divided by the projected growth to be sparked by projects,
which is made up of the amount of forecasted units and space,
and splits by development type.
Okay. Let's recap what we have learned:
One. Development Charges are fees collected by a municipality
for the recovery of growth costs. new infrastructure,
pay down existing debt for past works
and/or avoid tax payers paying future costs that serve growth
Two. Development Charges are governed by the Province of Ontario
under the “Development Charges Act”
Three. Development Charges only pay for the initial capital cost
of major growth-related services
that have been identified as part of the rate setting process.
Four. Development Charges are paid by individuals or entities
looking to construct new buildings, expand buildings
or convert buildings for a different use.
Five. Development Charge rate calculations are based on the dollar formula of:
total dollar value of major growth projects,
divided by the projected growth to be sparked by those projects.
And that explains how your city uses Development Charges to pay for growth.

Draft 2024 Development Charges Amendment Background Study for Water and Sanitary (Wastewater) Services

The attached Draft 2024 Development Charges Amendment Background Study dated August 30, 2024, reflects recent changes made to the list of water and sanitary sewer (wastewater) projects because of the passage of the City’s new Infrastructure Master Plan (IMP) in June.  The amendment includes updated capital projects, which reflect new timing, costing and scope of work. In addition, the planning horizon has been extended to 2046 from 2031 to align with the City’s Official Plan.  The IMP was not available at the time the original 2024 Provisional Development Charges Background Study was approved on May 15, 2024.

Draft 2024 Development Charges Amendment Background Study [ PDF 4.148 MB ]

Exemptions and discounts from municipal development-related charges

Through the More Homes Built Faster Act, 2022, we introduced exemptions and discounts from municipal development-related charges (MDRCs) for affordable residential units. These exemptions and discounts come into effect on June 1, 2024.

Affordable Residential Units for the Purposes of the Development Charges Act, 1997 Bulletin

This bulletin is effective June 1, 2024 and applies until replaced by a new bulletin (anticipated June 1, 2025).

This bulletin sets out the market-based (that is, average purchase prices and market rents) and income-based thresholds that are to be used to determine the eligibility of a residential unit for an exemption from development charges and exclusions from the maximum community benefits charge and parkland dedication requirements.

Applicable units must be subject to agreements that provide for them to remain affordable residential units for 25 years. Units must also be sold or rented on an arm's length basis.

For ownership housing, a unit would be considered affordable when the purchase price is at or below the lesser of:

  • Income-based purchase price: A purchase price that would result in annual accommodation costs equal to 30% of a household’s gross annual income for a household at the 60th percentile of the income distribution for all households in the local municipality; and
  • Market-based purchase price: 90% of the average purchase price of a unit of the same unit type in the local municipality.

For rental housing, a unit would be considered affordable when the rent is at or below the lesser of:

  • Income-based rent:  Rent that is equal to 30% of gross annual household income for a household at the 60th percentile of the income distribution for renter households in the local municipality; and
  • Market-based rent:  Average market rent of a unit of the same unit type in the local municipality.

In cases of disagreement, a person (or person’s agent) required to pay a development charge may complain to the council of the municipality imposing the development charge that there was an error in the application of the development charge by-law.

City of Ottawa Affordable Residential Units

Affordable purchase price of a detached house $438,300
Affordable purchase price of a semi-detached house $438,300
Affordable purchase price of a row/townhouse $438,300
Affordable purchase price of a condominium apartment $438,300
Purchase price based on income $438,300
90% of the average purchase price of a detached house $801,000
90% of the average purchase price of a semi-detached house $666,000
90% of the average purchase price of a row/townhouse $513,000
90% of the average purchase price of a condominium apartment $441,000
Average purchase price of a detached house $890,000
Average purchase price of a semi-detached house $740,000
Average purchase price of a row/townhouse $570,000
Average purchase price of a condominium apartment $490,000
Threshold used for a detached house; and substitution Income; Base
Threshold used for a semi-detached house; and substitution Income; Base
Threshold used for a row/townhouse; and substitution Income; Base
Threshold used for a condominium apartment; and substitution Income; Base
Affordable monthly rent of a bachelor unit $1,172
Affordable monthly rent of a 1-bedroom unit $1,415
Affordable monthly rent of a 2-bedroom unit $1,713
Affordable monthly rent of a 3+ bedroom unit $2,118
Rent based on income $2,210
Average market rent of a bachelor unit $1,172
Average market rent of a 1-bedroom unit $1,415
Average market rent of a 2-bedroom unit $1,713
Average market rent of a 3+ bedroom unit $2,118
Threshold used for a bachelor unit; and substitution Rent; Base
Threshold used for a 1-bedroom unit; and substitution Rent; Base
Threshold used for a 2-bedroom unit; and substitution Rent; Base
Threshold used for a 3+ bedroom unit; and substitution Rent; Base

2024 Development Charges background studies and by-laws

Introduction to 2024 Interim Development Charges (DC) Background Study

The City of Ottawa 2024 Interim Development Charges Background Study is being presented as part of the process to lead to the approval of new DC by-laws in compliance with the Development Charges Act, 1997 (DCA). The study is prepared in accordance with the DCA enforce at this time, including Bill 23, More Homes Built Faster Act, 2022, which received royal assent on November 28, 2022. The 2024 DC Background Study is intended to be an interim update.  The city has not completed a comprehensive update to the 2013 Transportation Master Plan and Infrastructure Master Plan, and as such the capital costs and development forecasts are consistent with these documents which were used as the basis for the City’s past DC Background Studies.  The analysis contained in the study is consistent with the capital projects and various calculation methodologies included in the 2019 Interim DC Background Study.  It is anticipated that the City’s next DC Background Study will be completed once relevant master plans, capital planning documents and local servicing guidelines have been updated.

2024 Consolidated City-wide and Area Specific Development Charges Background Study [ PDF 9.908 MB ]

2024 Stormwater Management Area-Specific Development Charges Background Study [ PDF 1.687 MB ]

2024 Draft Development Charges By-law [ PDF 3.361 MB ]

2024 Draft Development Charges By-law October 30 Amendment 2024-451 [ PDF 4.355 MB ]

2024 Development Charges By-law November 27 Amendment Development Related (Corporate) Studies [ PDF 770 KB ]

Development-Related Studies Development Charge Calculation Memorandum [ PDF 637 KB ]

2024 Draft Cardinal Creek Erosion Works By-law [ PDF 192 KB ]

2024 Draft Feedmill Creek Rehabilitation Area By-law [ PDF 2.122 MB ]

2024 Gloucester Urban Centre By-law [ PDF 199 KB ]

2024 Inner Greenbelt Ponds By-law [ PDF 275 KB ]

2024 Leitrim - South Urban Centre By-law [ PDF 203 KB ]

2024 Monahan Drain By-law [ PDF 203 KB ]

2024 N5 and Channelization [ PDF 193 KB ]

2024 Nepean Ponds in Parks [ PDF 220 KB ]

2024 Nepean South Urban Centre [ PDF 440 KB ]

2024 Riverside - South Urban Centre [ PDF 179 KB ]

2024 Shirley's Brook [ PDF 186 KB ]

2019 Approved Development Charges Background Studies and Amendments

The City’s of Ottawa’s 2019 Draft Background Study has been prepared pursuant to the requirements outlined within the Development Charges Act, 1997 (DCA) and is being made available to the public more than 60 days prior to the passing of the By-law and Background Study. The rates calculated represent those which can be recovered under the DCA based on the City’s spending plans and other assumptions that are in line with the legislative requirements of the DCA.

2019 City wide Development Charges Background Study

Addenda to 2019 City wide Development Charges Background Study

2019 Stormwater Management Area Specific Development Charges Background Study
2019 Development Charges by-laws

Amendment to: City of Ottawa Development Charges Background Study, Corporate Studies (New Zoning By-law project) – September 10, 2021

2019 Stormwater Management (SWM) Development Charges Background Study: Area C-1 [ PDF 1.111 MB ]

Nepean - South Urban Centre Stormwater Amending Development Charges By-law [ PDF 404 KB ]

2022 Amendment Village of Manotick Area-Specific Development Charges Background Study [ PDF 714 KB ]

2022 Village of Manotick Area-Specific Development Charges By-law [ PDF 1.505 MB ]

Legislative changes to when Development Charges are collected and calculated

Under Bill 138, Plan to Build Ontario Together Act, 2019 which received royal assent on December 10, 2019, municipalities are now required under the Development Charges Act (DCA) to allow for:

The payment of development charges in annual instalments for eligible development types (Section 26.1 of the DCA)

A change in the timing of the calculation of the amount of development charges payable for eligible applications (Section 26.2 of the DCA)

Applicable interest rate

The proposed calculated rate of applicable interest the City will apply under both Section 26.1 annual installments and 26.2 timing of the amount payable as of April 1, 2024 will be 8.2 per cent.

Redevelopment of Land Credits (Development Charge Credits)

A municipal redevelopment credit may be available if demolition of an existing structure occurs within 10 years of the issuance of a building permit for a new building. After this period, no credit is possible. The time limit was set at 10 years with the enactment of the City's 2014 development charges by-law (Section 9 Redevelopment of Land Credits). Beginning January 1, 2019, the time limit will be limited to development that occurs within a five year period. Thus someone who demolished a building on or before December 31, 2013 will have no entitlement to a credit as of January 1, 2019.