Development Charges

The principle behind development charges is that growth should pay for growth. Development charges ease the financial burden on existing taxpayers to fund new services as a result of growth. Without development charges, the costs for additional infrastructure would be at the expense of existing property owners in the form of higher property taxes and user fees.Development charges are used by most municipalities in Ontario.

The Development Charges Act, 1997 provides the legislative authority for the collection of development Charges.

The Development Charges Act, 1997 provides Council with the authority to pass a by-law to impose development charges.TheActrequires that aDevelopment Charges Background Studya new Development Charges By-law be completed at least once every five years.

The Background study takes the following into account:

• A forecast of the amount, type and location of development, population
• The historical level of capital service levels
• A review of future capital projects to provide for the expected development.

TheAct also requires that the municipality must hold at least one Public Meeting to present the updated Development Charges Background Study and proposed Development Charges Rates.Once all of the requirements are met a newBy-lawis passed based upon the results of the Background Study.

TheActand theBy-lawprovide for an annual adjustment, in June of each year, of development charge rates.TheActand theBy-lawalso provide exemptions for certain types of development.The Development Charges By-law should be reviewed for these exemptions.

Funds collected for development charges must be held in a separate Reserve Fund for each service to which the levy applies. These funds can only be spent on paying for the growth-related capital costs for which the funds are intended. For example, funds collected for roads must be held in a Development Charges for Roads Reserve Fund and can only be spent on growth-related capital costs for roads. Development charges may not be used to fund operating costs.