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With council approval on July 15th, the City of Ottawa will apply to Ontario’s Development Charge Reduction Program (DCRP) for $692.2 million in infrastructure funding. In return, Ottawa has committed to a 54 percent, three-year reduction in residential development charges (DCs). This effectively means the City will cut the fees for developers to build new housing.
Normally, DCs are charged with each project, helping to fund infrastructure needs associated with the development and its surrounding community, such as the costs of additional stormwater and sewage management or greenspace upkeep. It appears that the DC reduction program would reduce charges for all developments and then allocate the provincial funding in lieu of these fees to specific projects. The question is, will this exchange lead to building the right type of housing and infrastructure in the right locations and meet the City’s growth plan?
Growing inward, not outward – The City’s 2023 goal
For several years, the City has set out a consistent policy direction for its future growth: intensification along transit corridors, complete communities within the existing urban boundary, adding family-friendly gentle density in existing urban and suburban neighbourhoods and less reliance on car-dependent development at the city’s edge.
This direction is written into the City’s Official Plan. It champions the 15-minute neighbourhood planning concept for compact, well-connected communities where residents can access daily needs, such as groceries, schools, parks, and transit, within a 15-minute walk from home. The 2025 Housing Acceleration Plan reaffirmed many of the City’s transit-oriented and density policies to grow inward.
Unfortunately, the DRCP funding package for Ottawa is predominantly tied to car-dependent outward growth, potentially working in opposition to the City’s stated goals.
What the money funds
At $692.2 million, this is among the largest infrastructure packages the City has assembled outside of light rail transit, and nearly all of it is directed toward enabling greenfield subdivisions rather than the transit-oriented infill housing the City has identified as its stated priority. It’s also worth noting that a separate, secondary application has asked the province to consider funding up to $1.5 billion in development-charge–eligible costs tied to the City’s planned upload of LRT infrastructure to the province, a request that is still pending. Given the City’s own ambition to grow more sustainably, meet its municipal climate goals and provide Ottawans with more housing and transportation choices, it would make sense to frontload transit- and infill-related funding.
And yet, none of the five main infrastructure project bundles in the package is located inside the Greenbelt or along a planned rapid-transit corridor. The application that council approved instead includes the widening and extension of arterial roads: the Carp Road widening sits near Kanata’s western edge; the Brian Coburn Boulevard extension serves growth toward Navan and Orleans; and the Greenbank Road realignment runs through Barrhaven toward Manotick.
Twenty intersection projects are similarly concentrated in the City’s designated growth areas outside the Greenbelt. The Airport Parkway sewer and Acres Pump Station upgrades serve those same southern communities. In turn, the Bowesville Park & Ride and Riverside South recreation complex both sit within Riverside South, a greenfield growth area rather than an established, transit-served neighbourhood.
Does it replace DC revenue?
The DCRP is a new provincial program, funded through the $8.8-billion Canada-Ontario Partnership to Build, that trades infrastructure funding for lower development charges. Municipalities in Ontario that cut residential DCs by at least 30 to 50 percent for three years become eligible for federal and provincial funding, covering up to 90 percent of costs, for shovel-ready projects already identified in their DC Background Study. Ottawa’s application proposes a 54 percent cut, well above the program’s minimum.
The 54 percent DC reduction is expected to eliminate roughly $478.3 million in development charge revenue between January 2026 and March 2029; staff expect DCRP funding to fully offset that loss. But DCRP payments are tied to project milestones over ten years, while the revenue loss begins immediately, a timing gap staff estimate may cost the City about $17 million in carrying costs by 2033 and may require temporary borrowing, adding to the City’s debt servicing. If the province approves the application, the Transfer Payment Agreement is expected to be signed by August 15, 2026, with the rate reduction and refunds on DCs already paid in 2026, taking effect shortly after.
It’s worth noting that the 54 percent development charge reduction is universal: it applies equally to new single-family homes or an infill midrise near a future LRT station. But a rate reduction alone doesn’t build housing; it only enables housing where servicing capacity exists to support it. That’s where the $692.2 million in infrastructure funding becomes significant: the package prioritizes very specific sites or land for development-enabling infrastructure.
Paying for Growth
Development charges have long provided critical revenue for cities to pay for the infrastructure needed to service the new development. And these have never been perfect, as expert planner Pamela Blais explained in her still highly acclaimed 2011 book, Perverse Cities, where she argued that more accurate pricing and better policy and market-oriented tools are needed to curb sprawl and promote efficient sustainable cities. The DCRP approach seems to further remove the tools from the results. Alternatively, tying the City’s DCRP application to locations and infrastructure priorities that support infill housing close to transit access, near existing communities, and inside the Greenbelt would support growth and sustainability.