CashNews.co
The Hub’s second annual Hunter Prize for Public Policygenerously supported by the Hunter Family Foundationfocused on solving Canada’s housing affordability crisis. A diverse group of ten finalists have been chosen from nearly 300 entries, with the finalists and winners chosen by an esteemed panel of judgesincluding Amanda Lang, Ben Rabidoux, and Mike Moffatt. The Hub is pleased to run essays from each finalist this week that lay out their plans to help solve this persistent policy problem.
It’s no secret that Canada’s housing market is in crisis. What’s less understood is how the way municipalities fund growth is part of the problem. Development charges and property taxes, meant to help cover the costs of growth, are instead driving up the price of housing for owners and renters alike, particularly in urban areas where housing demand is highest.
Addressing this housing crisis effectively means rethinking how municipalities levy these charges. By revising how we apply development charges and property taxes, we can improve the system so that it encourages the construction of more affordable homes while ensuring municipalities remain financially sustainable.
The problem: development charges and taxes are driving up costs
Municipalities use development charges to pay for infrastructure that supports new housing—things like roads, utilities, and schools. In theory, these charges ensure that new developments “pay for themselves.” But in practice, they often act as barriers to building the types of housing we need most, such as condos, apartments, and other multi-family units.
Across Canada, urban centres like Toronto and Vancouver have much higher development charges for higher-density developments than for single-family homes. This makes it more expensive to build the kinds of denser, more affordable homes that our country needs. It’s a system that unintentionally favours lower-density development at a time when more Canadians need housing they can afford than ever before.
Property taxes compound the issue. While everyone understands the need to fund municipal services, the current system places a disproportionate burden on denser developments. For example, while a single detached home assessed at $1,000,000 may pay $6,000 per year in property taxes, the same lot with six $250,000 townhomes would contribute $9,000 per year total to the municipality—50 percent more per lot. Together these two factors disincentivize the construction of multi-family housing and ultimately limit housing options for those seeking affordable rentals or starter homes.
The solution: aligning charges and taxes with housing needs
The path forward is clear: reform development charges and property taxes to better reflect today’s housing realities. Our proposal, the Revise and Reform Financing Fund, offers a practical, low-cost way to do this at a national scale.
The Fund is an opt-in program that provides municipalities with the technical expertise and access to solutions that allow them to revise their approaches to property taxation and development charges. Municipalities can choose between two forms of support: technical expertise or pre-established kit-of-parts solutions. The former requires municipalities to apply for ad-hoc consulting services that will help them develop localized solutions. The latter offers ready-made, easy-to-implement reforms for smaller municipalities. The program can be delivered through third-party organizations such as the Federation of Canadian Municipalities, the Association of Municipalities of Ontario, or others. The technical expertise would be provided by a team of retained private sector municipal finance, servicing engineering, transportation engineering, and urban planner experts.
The Revise and Reform Financing Fund offers municipalities the flexibility to adopt these changes voluntarily, with senior government support. It allows them to make smart adjustments to development charges and property tax rates without undermining their financial stability. In doing so, they can attract new housing development and make progress toward addressing the housing shortage in their communities
What makes the Revise and Reform Financing Fund so compelling is its simplicity. The reforms are low-cost, straightforward to implement, and don’t require drastic changes to existing municipal finance structures. This approach works because it doesn’t require massive new spending or complex legislation. Instead, it uses existing tools more effectively to ensure that housing developments align with the growing demand for urban, multi-family homes. Developers can build more homes at lower costs, municipalities maintain their financial health, and Canadians benefit from more affordable housing options.
Importantly, this approach isn’t about removing necessary charges or taxes. It’s about adjusting them to encourage the kinds of housing developments that meet the needs of our growing population and the challenges of our present affordability crisis.
Conclusion: a balanced approach to housing affordability
Canada doesn’t need to look far to find examples of how municipal finance reform can spur housing development. Edmonton’s initiative to increase property taxes on derelict buildings, for instance, saw 15 percent of those properties improved within the first year. Calgary’s downtown office conversion program has led to the ongoing redevelopment of 11 office towers into residential units, projected to add over 1,400 homes to the city’s housing stock. South of the border we’ve seen other cities like Nashville use similar reforms to encourage denser, more affordable development by shifting tax burdens. These success stories show that well-designed municipal incentives can make a real difference in boosting housing supply.
Canada’s housing crisis requires pragmatic, balanced solutions like these. The Revise and Reform Financing Fund delivers exactly that. Reforming development charges and property taxes is a straightforward way to make it easier for developers to build the homes Canadians need while ensuring municipalities remain financially stable.
These reforms offer a win-win for municipalities and residents alike. By making smart adjustments to how we fund growth, we can reduce the barriers to constructing more housing, expand the range of available homes, and improve affordability across the country for homeowners and renters alike. Now is the time to act—let’s take the necessary steps to create a housing market that works for all Canadians.