Slashing municipal development charges would not be enough on its own to make homes affordable again across Canada, says a new analysis from the federal housing agency.
Development charges are fees cities impose on developers that are mainly used to pay for infrastructure that supports new builds.
The federal government is spending billions of dollars to encourage municipalities to cut development fees in half to boost housing supply and improve affordability.
The Canada Mortgage and Housing Corp.'s chief economist Mathieu Laberge published a report Wednesday that says reducing or eliminating development charges could increase the number of viable projects, but the numbers vary by city.
Targeting those fees is not a cure-all for Canada's housing affordability woes, he found.
"Reducing or even eliminating development charges wouldn’t solve the housing crisis facing Canada," Laberge wrote.
"While it may incent greater supply, the increase is not enough to reach pre-pandemic affordability levels in many cities."
Toronto would see a boost of more than 10 per cent to the number of viable projects if development charges were cut by 90 to 100 per cent, the CMHC projections say. That increase moderates to roughly five per cent with a 50 to 60 per cent reduction to development charges.
Burnaby, B.C. would see the biggest bump, with a 14 per cent increase in viable projects following the near-elimination of development charges. In the same scenario, Ottawa would only see a three per cent increase in the number of viable projects.
Laberge said development fees have a place in some cities' fiscal plans, given their modest influence on housing supply.
Picture Courtesy: THE CANADIAN PRESS/Sean Kilpatrick
