Development Charges Reduction Program: Funding for Municipal Infrastructure Supporting New Housing

The Development Charges Reduction Program (DCRP) is designed to help Ontario municipalities reduce development charges and advance infrastructure projects that support new housing development.

Delivered through the $8.8 billion Canada-Ontario Partnership to Build, the program provides funding for growth-related infrastructure projects that allow municipalities to reduce development charges for residential development while investing in the infrastructure needed to unlock new housing supply.

The deadline to apply is June 19, 2026 at 10:00 a.m. ET.

Program Overview

The DCRP supports Ontario municipalities that are prepared to reduce development charges while advancing eligible infrastructure projects that enable new housing.

Through the program, eligible project costs may be funded up to 90% by federal and provincial governments, with municipalities responsible for at least 10% of eligible project costs.

Funding is expected to be provided on a milestone basis, with Transfer Payment Agreements expected to be executed prior to August 15, 2026. This creates a very short review and approval window following the application deadline.

Who Can Apply?

Eligible applicants include Ontario municipalities, including:

• Single-tier municipalities
• Upper-tier municipalities
• Lower-tier municipalities

Applicants must have an active development charges by-law in place as of March 30, 2026.

Municipalities that have already demonstrated retroactive development charge reductions are also eligible to apply.

Applicants may submit more than one application, either individually or jointly with other municipalities. Within each application, there is a limit of five eligible projects.

Development Charge Reduction Requirements

Applicants must provide an agreement-in-principle at the time of application confirming that they will reduce development charge rates as of March 30, 2026 and maintain the reduction for three years.

The development charge reduction must:

• Be at least 30% to 50%
• Apply to all residential development types
• Be maintained for three years

Actual development charge reductions are expected to take effect immediately following the execution of the Transfer Payment Agreement. If an applicant is not approved for funding, they are not expected to be required to implement the reduction.

Eligible Projects

Eligible projects must primarily enable the construction of new housing units and be tied to new housing development.

Projects must involve either:

• New infrastructure; or
• Work that increases the capacity, size, scope, or reach of existing infrastructure assets or systems to accommodate new growth

Projects that only extend the life, quality, functionality, or safety of an existing asset are not eligible. To qualify, the work must be tied to new housing developments.

Eligible projects must also:

• Have a construction start date no later than July 31, 2030
• Be completed by October 31, 2035
• Be informed by the applicant’s capital plan
• Be considered in the next update of the applicant’s asset management plan, including the plan to fund or finance lifecycle costs
• Support provincial land use planning outcomes

Projects must also be included in the applicant’s most recent development charges background study as a project that will begin by July 31, 2030. Only costs identified as recoverable through development charges in the background study will be considered as project costs for an eligible project.

For applicants with retroactive development charge reductions, eligible projects do not need to be included in the development charges background study.

Eligible Asset Types

There are seven eligible asset categories under the DCRP.

Potable Water

Eligible potable water assets include:

• Drinking water treatment facilities
• Drinking water storage assets
• Drinking water pump stations
• Local drinking water pipes
• Transmission drinking water pipes

Stormwater

Eligible stormwater assets include:

• Drainage pump stations
• Storage assets
• Pipes
• Diversion, retention, and protection assets

Wastewater

Eligible wastewater assets include:

• Treatment facilities
• Pump stations
• Lift stations
• Storage tanks
• Collection and/or conveyance assets

Fixed Transportation

Eligible fixed transportation assets include:

• Maintenance and storage facilities, including charging stations
• Roads and streets
• Bridges
• Tunnels
• Public transit exclusive assets listed above
• Transit shelters and drop-off facilities

Transportation Rolling Stock

Eligible transportation rolling stock assets include:

• Railcars and subways
• Streetcars
• Public transit buses
• Cutaway vehicles

Public Safety and Emergency Services

Eligible public safety and emergency services assets include:

• Fire stations
• Fire pumpers and aerials
• Police detachments
• Paramedic station spaces

Community Infrastructure

Eligible community infrastructure assets include:

• Community centres
• Libraries
• Cultural centres
• Parks
• Local aquatic centres and pools
• Sports and recreation centres
• Child and youth centres
• Senior day centres
• Performing arts centres

Eligible Costs

Eligible project costs include:

• Hard costs
• Land acquisition costs for the provincial share of funds only
• Environmental assessment and Duty to Consult costs incurred after February 26, 2026

Where required, Duty to Consult requirements must be completed prior to site preparation and construction. Projects must also meet the requirements of the Ontario Building Code.

Ineligible Projects and Costs

Projects that have already started construction are not eligible.

Projects are also ineligible if they only rehabilitate, repair, or extend the life, quality, functionality, or safety of an existing asset without increasing capacity or supporting new housing growth.

Ineligible costs include:

• Design
• Engineering
• Legal fees
• Permitting
• Insurance

Stacking Rules

Municipalities may combine DCRP funding with other provincial and federal programs, provided the other funding is not from housing-enabling infrastructure programs.

Stacked funding does not count toward the required municipal contribution.

High-Priority Projects

Projects that are shovel-ready at the time of application will be prioritized.

Applications may be more competitive if the project demonstrates:

• Strong alignment with housing-enabling infrastructure
• A high number of housing units enabled
• A development charge reduction greater than the minimum requirement
• A municipal financial contribution greater than 10%
• Clear project readiness
• Strong alignment with provincial land use planning outcomes

Application Preparation

Municipalities should be prepared to provide detailed project, financial, and planning information as part of the application.

Key application materials and considerations may include:

• A reasonable estimate of the number of housing units enabled
• An estimate of the number of housing units benefiting from development charge relief
• Confirmation of applicant ownership of the asset
• A financing strategy to cover upfront project costs and potential cost changes
• Evidence of shovel-readiness, such as environmental assessment, land acquisition, conceptual engineering, detailed engineering, planning and design, or tender/contract award status
• A project map in KML format identifying all project components
• Land use planning information related to the proposed housing development
• Confirmation that the housing enabled by the project aligns with and supports provincial land use planning outcomes
• Commitment to complying with applicable Buy Canadian or Buy Ontario procurement requirements

How GrantMatch Can Help

The DCRP presents a significant opportunity for Ontario municipalities to advance housing-enabling infrastructure while reducing development charges for new residential development.

GrantMatch can help municipalities assess applicant and project eligibility, review development charge reduction requirements, evaluate project readiness, prepare application materials, and position infrastructure projects for competitive evaluation.

With the application deadline set for June 19, 2026 at 10:00 a.m. ET, municipalities should begin reviewing eligible projects, confirming development charge reduction commitments, and preparing application materials as soon as possible.