Kitchener’s Growth Faces Uncertainty After Charge Changes

Kitchener’s future growth now hangs in the balance.

This week, city staff informed councillors about significant financial gaps between the development charges collected and what was expected.

Cities charge development fees, a one-time cost, for new homes and buildings to fund infrastructure such as roads, water systems, and sewage services.

Changes made by the province since 2019 have introduced exemptions, discounts, and deferrals for certain projects regarding these charges. Staff told council that this has led to a $69 million revenue gap for the city from 2022 to 2025.

If no measures are taken to address these losses, the city could face a potential shortfall of $175 million by 2032.

“We need to be very careful with our spending moving forward because there’s a huge uncertainty regarding our future, which is quite disappointing,” said Coun. Scott Davey, who also chairs the finance and corporate services committee during Monday night’s meeting.

Dan Chapman, the city’s chief administrative officer, mentioned that residents might need to bear some costs in light of this situation.

“If the city continues growing and there are associated service costs for that growth, current taxpayers will end up covering part of those costs,” Chapman explained to councillors.

The council decided to extend the city’s development charges bylaw-which determines fees for new developments-until 2032 while staff work on a financial plan with recommendations for the 2027 budget.

Effects of Changes in Development Charges Legislation

Katie Fischer, director of financial reporting for Kitchener, shared with councillors that before these legislative changes were enacted, the city could collect around $1 million in development charges upfront for a project featuring 100 rental units.

However, due to recent discounts available on rental developments-and depending on how many bedrooms each unit has-the city now collects about 20 percent less on similar projects than before.

Additionally, payments on development charges are deferred for rental developments until occupancy begins. These payments get spread out over six years.

“With this reduced amount stretched over that time frame means we won’t see any [development charge] collections until year three [since] larger developments can take up to two years on average to construct,” Fischer noted.

“Our complete [development charges] wouldn’t be collected until then-by year eight.”

A construction worker in downtown Kitchener. (Carmen Groleau/ CBC)

She also pointed out potential challenges when it’s time to collect future development charges.

“It’s estimated that around 50 percent of our [development charges] due will face some level of collection issues so part of that burden will likely fall onto property taxes later,” Fischer stated.

The region’s water capacity limitation identified in December within Mannheim Service Area adds more complexity regarding how Kitchener forecasts its development charge revenues according to Fischer.

She indicated that Waterloo Region has communicated sustainable operations won’t return until 2027 which will restrict construction activity further influencing when Kitchener can gather development charges.
WATCH | Ontario and Ottawa will spend billions to help cut municipal development charges:<img src="https://ontariochronicle. ca/wp-content/uploads/2026/04/1776744863_76_default. jpg" alt="" class="thumbnail" loading="lazy"/

Ford , Carney pledge $8.8Bto kickstart Ontario housing buildsPrime Minister Mark Carney and Ontario Premier Doug Ford each pledged $4.4 billion dollars to spur housing construction in Ontario by cutting municipal development charges in half for three years.

Cuts To Development Charges Announced

Earlier This Week , Ontario Premier Doug Ford And Prime Minister Mark Carney Announced Their Governments Will Be Investing A Combined $8.8 Billion To Cut Municipal Development Fees In An Effort To Spur New Builds Across The Province.

The Deal Will Cut Development Charges In Half For Three Years , Carney Said.

The Fund Is Intended To Help Cover Infrastructure Costs For Municipalities That Lower Development Charges , But Municipalities Will Also Be Expected To Help Pay For The Cost Of Reductions.

Richard Lyall , President Of The Residential Construction Council Of Ontario , Told CBC Kitchener-Waterloo ‘s The Morning Edition Host Craig Norris On Wednesday That Development Charges Across The Province Are Higher Than Other Provinces And His Group Welcomes The Change.<

“The Idea Is To Reduce The Hit To First Time Homebuyers Or Renters.. So I Think This Will Be Positive , But The Devil Is In The Details , How Is This Going To Work ? And How Quickly Will It Become Effective ?” Lyall Said.

“There Are Some Challenges Ahead We Need Some Clarity On This But I Think This Is Good News Overall Because These Are Bugaboos That We ‘ve Long Said Needed To Be Addressed.”

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