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"These fees have been rising in recent years, worsening housing affordability in the process, since development costs are ultimately passed on to homebuyers in the form of higher home prices."

August 9, 2018 - Canadian municipalities are hurting housing affordability by imposing expensive water charges on development, according to a new report published by the C.D. Howe Institute. In “Hosing Homebuyers: Why Cities Should Not Pay for Water and Wastewater Infrastructure with Development Charges”, author Benjamin Dachis argues cities should revamp development charges to improve housing affordability across the country.

Many Canadian municipalities impose development charges on homebuilders – around $80,000 per single-detached home in some large Canadian cities. The largest single component of these charges in many municipalities is for water and wastewater construction. These fees have been rising in recent years, worsening housing affordability in the process, since development costs are ultimately passed on to homebuyers in the form of higher home prices.

The report recommends:

  • Municipalities should replace the largest single component of these charges – financing for water and wastewater construction – with fees based on actual use of the service rather than high up-front fees.
  • Municipalities should create region-wide, standalone utilities that can take advantage of the scale economies available in the sector.
  • Provinces should also create independent regulators to ensure that cities, and potential private water and wastewater utilities, are setting appropriate prices and meeting environmental standards.

Click here to read the full report

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

For more information please contact: Benjamin Dachis, Associate Director of Research, C.D. Howe Institute; or Laura Bouchard, Communications Coordinator, C.D. Howe Institute, 416-865-9935 or lbouchard@cdhowe.org