Cutting development fees alone won't fix housing, feds told
The federal housing agency says slashing municipal charges would boost only marginal supply in most cities and isn't a cure-all for affordability.
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The federal government's plan to slash municipal development charges won't be enough on its own to restore housing affordability across Canada, the Canada Mortgage and Housing Corporation said this week.
The CMHC released new analysis showing that reducing or eliminating development charges — fees cities impose on developers for infrastructure — could increase viable housing projects by up to 14 per cent in cities with already-high charges. But for most municipalities, the gains would be marginal.
"Development fees have a place in some cities' fiscal plans and it's unrealistic to think that eliminating those charges would restore affordability," the agency said in its analysis.
The federal government is spending billions encouraging municipalities to cut development fees in half as part of its housing supply strategy. The CMHC report suggests the incentive works best in cities that already rely heavily on development charges — but that broader affordability challenges require multiple interventions beyond fee reduction alone.