Canadian cities will need to freeze their development charges if they want infrastructure fund money
Here's some positive news. This past week, the Government of Canada announced additional details around its $6 billion Canada Housing Infrastructure Fund (CHIF). The goal of the fund is to accelerate the construction of housing-supportive infrastructure (water, wastewater, stormwater, and solid waste), and the plan is to deliver it through two distinct funding streams.
The first is what they are calling a "direct delivery stream", and this is how the first $1 billion is going to be allocated. Municipalities and Indigenous communities will need to apply, and the funds are expected to be distributed over the next 8 years. But to be eligible -- and this is the positive news -- municipalities will need to have done the following:
Adopt zoning permitting "four units as-of-right" per lot in all low-density residential areas that have municipal servicing
Implement a three-year freeze on development charge increases beyond whatever rates were in place on April 2, 2024 (which is when the initial CHIF announcement was made)
Toronto has already done number one. But many/most other municipalities have not, so this should provide a further incentive. As for requirement number two, my understanding is that this is not (yet) in place pretty much anywhere. I haven't heard of any municipalities committing to this. So I'm taking this as incremental good news. (Please correct me if I'm wrong.)
There are, however, important caveats: item number two only applies to municipalities with populations greater than 300,000 people. This seems unnecessarily high. And I can speak from firsthand experience working in communities below this threshold.
Three-years also isn't very long when it comes to development timelines, especially in this market. A complicated rezoning process might take 3 years, or even 10 years. So this is very much for small-scale projects, which may be impactful or it may not be, depending on quickly the market responds to policy changes like requirement number one.
The last thing I will say, and this relates to yesterday's post, is that freezing is good, but lowering is obviously better.