The Ford government’s decision to allow developers to defer the fees they pay municipalities until people move into new homes will stall almost $2 billion from Toronto’s long-term building plan, the city’s financial blueprint warns.
The 2026 budget, unveiled with a 2.2 per cent tax increase on Thursday, suggests staff plan to delay hundreds of millions from spending strategies for parks and libraries to deal with the gap.
Toronto’s financial plan lays out that the current level of revenue from developer fees is “insufficient to support approved and planned spending.”
The squeeze on money into city coffers comes partly as the housing industry grinds almost to a complete halt, with new provincial policies also providing an immediate blow.
Leading into the summer of 2025, Housing Minister Rob Flack passed Bill 17, a wide-ranging law, which — among other things — allowed homebuilders to delay when they pay cities.
Developers are required to pay substantial sums to municipalities when they construct new homes to cover the cost of providing services like roads, wastewater, parks and libraries.
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The fees used to be paid when a project began construction, but, after a sustained pressure campaign from the development industry, they now have to be paid only when new residents are ready to move into the finished projects.
The change will push $1.9 billion from Toronto’s 10-year capital plan, according to its budget. Although the city still expects to receive the funds eventually, it can no longer rely on them in the short-term.
As a result, the latest budget has reduced the capital plan for parks and recreation by $214 million, libraries by $76 million and waste by $6 million.
“We have deferred mostly community centre projects,” Toronto’s chief financial officer Stephen Conforti said. “What you’re looking at is cascading across the entire plan, where project one may get pushed out by 18 months, then project two and so on and so forth.”
Conforti said the city had decided not to take out extra debt, which would be repaid when the delayed development charges come in, because it was close to its responsible debt ceiling.
“The plan that we have today is already maximizing a reasonable amount of debt,” he said.
Allowing developers to delay the payment of fees to municipalities until they have sold the homes they are building has been pushed by the homebuilding industry as a change needed to get stalled or cancelled projects off the ground.
A collapse in the condo market and massive drop-off in pre-construction purchases, particularly in the GTA, has left many developers warning that new homebuilding could cease altogether.
Developers have argued that taxes and fees from government are too high for them to make projects financially viable for their own bottom line or to convince banks to back them.
As part of a package of measures which the Ford government hopes will reboot the housing market for the spring, development charge deferrals were introduced.
A spokesperson for the province did not say if the government was open to lending Toronto money to cover its short-term development charge gap, but highlighted various spending commitments the province has made to the city.
“Our Protect Ontario by Building Smarter and Faster Act reduces duplication and streamlines processes to lower the cost of new housing projects, including deferring development charges to increase the viability of new build projects,” they added.
“As our government continues to make record investments in our 444 municipalities, we will work collaboratively to give them the tools they need, any requested, to get more homes built faster.”
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