Development Charges in Ontario:Is Growth Paying for Growth?

Adam Found
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Adam Found: University of Toronto

No 41, IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance

Abstract: Ontario’s Development Charges Act (DCA) provides the legal framework within which municipalities recover growth-related capital costs from the new development giving rise to such costs. While the purpose of the DCA is to ensure that growth pays for itself, the way the DCA is designed prevents it from achieving its obvious goal. Because of its overly prescriptive and complex provisions, and because it forces municipalities to charge existing ratepayers for some of the costs of growth, the DCA undermines municipal efficiency, equity, and accountability. One barrier to legislative reform of the DCA is the absence in the literature of a rigorous economic rationale for funding growth-related capital works with development charges. This paper develops such a rationale by comparing development charges to alternative methods of cost recovery for growth-related capital works. A review of the shortcomings of the DCA leads to a recommendation that the DCA be replaced by a new development charges section in the Municipal Act and City of Toronto Act that would enhance municipal efficiency, equity, and accountability, and ensure growth really does pay its own way

Keywords: development charges; growth; property taxes; user fees; municipal finance (search for similar items in EconPapers)
JEL-codes: H21 H54 R11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2019-01
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (1)

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https://tspace.library.utoronto.ca/bitstream/1807/ ... ound-Jan-16-2019.pdf First version, 2019

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Persistent link: https://EconPapers.repec.org/RePEc:mfg:wpaper:41

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