Development Charges

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Various development charge rates will be indexed as of October 1, 2023, by 9.9 per cent.

The Development Charges Act identifies a prescribed Statistics Canada construction price index for the City of Ottawa, which is listed under the Building Construction Price Index (BCPI) to allow municipalities to offset the impact of increasing costs associated with growth-related capital expenditures. The BCPI adjustment for 2022 that was released for the City of Ottawa was 9.9 per cent. The current by-law provides for annual indexing of the charge on April 1 of each year without requiring an amendment. This timeline was extended in 2020 to October 1 of each year. The development charge rates, therefore, currently in effect will be adjusted by approximately 9.9 per cent on October 1, 2023.

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

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 ]

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.

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.