When Mike Moffatt is confused about Canada’s housing policy, the rest of Canadians should be alarmed.
Moffatt is arguably Canada’s foremost authority on housing policy. An assistant professor at Western University, he is also founding director of the Missing Middle Initiative and a regular advisor to governments on public policy.
In a series of tweets last week, Moffatt took aim at the federal government’s recent decision to put $283 million toward Toronto’s Black Creek sewage project, an investment that the government says will “catalyse the construction of up to 63,000 new homes.”
One issue, Moffatt notes, is that Toronto had already committed to funding the project in its entirety, with the money coming from general revenue and development charges.
The federal government has vastly more demands on its purse strings than it has money to give. So why put scarce dollars towards a project Toronto was ready to pay for itself?
More than that, though, Ottawa ignored its own funding conditions.
The $283 million will come out of the $5.7 billion Canada Housing Infrastructure Fund. Launched in 2024, this fund aims to accelerate housing-related infrastructure development by entering funding agreements with the provinces, or by funding projects directly through a “direct delivery stream.”
To be eligible for direct delivery, large municipalities such as Toronto are required to meet just two conditions. They must permit fourplexes as-of-right in low-density residential areas. And they must freeze development charges at or below April 2024 levels, the government’s website says.
The problem is, the city hasn’t frozen its development charges at or below April 2024 levels. It’s raised them.
“Toronto doesn’t meet the second conditions!” Moffatt tweeted. “Depending on the type of unit, development charges in Toronto are 20-40% higher than they were in April 2024. So they shouldn’t qualify!”
“I don’t see how this initiative builds a single more home, and I’m unclear how the federal government’s decision to waive its own development charge freeze condition will help lower homebuilding costs,” he added bleakly.
Yikes. A quarter of a billion dollars, for nothing? This should give Canadians pause.
We acknowledge that development charges serve a purpose. Municipalities use them to fund infrastructure needed to support new developments, such as roads, libraries, parks and utilities.
But as Moffatt has written, these charges are also “often used to finance projects that have nothing to do with growth.” Often, he says, they are used to fund items that would be too expensive or controversial to fund through general revenue. For example, Toronto used municipal housing charges to cover the costs of renaming Dundas Square to Sankofa Square.
Why this matters is that development charges are one reason homes have become so costly to build in Canada. The charges vary by city, but are often substantial.
In Toronto, for example, the development charge for a single-family home was set at $137,846 this June. For a one-bedroom apartment, it’s $52,676.
In Vancouver, the average development charge on a single-home family is $29,000; in the nearby city of Langley, it’s $87,000.
These charges don’t only drive up home prices for new homebuyers; they dampen the creation of new housing supply, keeping costs elevated for everyone.
It is Toronto’s prerogative to keep raising its development charges. But if the city consistently flouts Ottawa’s requests to reduce barriers to new housing, it shouldn’t be rewarded by Ottawa for doing so.
Federal politicians like to talk about the housing crisis — and how to fix it — in national terms. We get it; the affordability problem is felt across the country.
But the reality is that local factors are a key driver of the affordability crisis. Local development charges, local land-use restrictions and local building requirements have driven up costs and choked construction.
If the Carney government is going to deliver on one of its core domestic policy promises of making homes more affordable, it must force municipalities to address their own impediments to growth.
And that means sticking to its guns — not rewarding cities that aren’t themselves trying to fix the problem.
If we don’t close the floodgates to uncontrolled immigration we will continue having a housing problem. Before this was allowed to happen, there was a natural growth that allowed for a progressive offer in the housing sector. But now this is out of control and the rent prices have risen uncontrollably as well.