The City of St. Thomas has agreed to cut the development charges builders pay on new homes, in return for up to $19.6 million from the federal and Ontario governments. However, the deal is not final. At council on Monday, October 19th, City staff said the province has not yet sent the agreement that will set out its terms.
Development charges are fees the City collects from new construction to help pay for the costs of growth, such as water and wastewater, roads, recreation, library services and fire protection. They are generally paid when a building permit is issued.
The deal was announced on October 15th. In return for the money, the City committed to cut development charges by 30 per cent for single-detached homes and multi-unit housing, and by 50 per cent for other unit types, for three years. The governments estimate the cut will lower the cost of building a new home in St. Thomas by up to $5,961 per home. The City estimates the savings and the new infrastructure would unlock 6,196 new homes.
The $19.6 million is for “the design and construction of a new wastewater treatment facility.” In June, council told staff to apply for the Dalewood Water Reclamation Facility, the city’s second wastewater plant, and on Monday staff told council the money can be applied against it. As LocVox reported in August, Dalewood is expected to cost about $440 million and is the largest single item in the City’s Yarmouth Yards financial plan. Dalewood is already under construction, and in June that was staff’s main worry: the program wants projects where construction has not started, so staff warned the plant might be “technically ineligible.”
The money still comes with conditions. Both governments must sign a Canada-Ontario agreement and do more checks, and Ontario and the City must sign a transfer payment agreement. The City’s June report says the cuts only take effect once the transfer payment agreement is signed, which gives the City a chance to see what it was offered and what it would be committing to “before determining whether to proceed.” The City must also put in at least 10 per cent of the part of the project the program counts as eligible. In June, staff estimated that eligible part of Dalewood at about $87 million at most.
The timing can look backwards. The program requires the cut to reach back to March 30th, 2026, so the three years run from that date to March 31st, 2029, even though nothing has been signed yet. Because the cut waits on the transfer payment agreement, the City’s development charges page still listed the full rates in effect since April 1st, 2026, as of Tuesday morning, with no mention of the cut. Neither the October 15th announcement nor the City’s June report says what happens to charges builders have already paid since March 30th.
The City also has to watch the math. In June, staff estimated that a 30 per cent cut over three years would cost the City about $35.3 million in development charges. Because a grant would let the City borrow less for Dalewood and save on interest, staff figured a grant of about $20.4 million would offset that cut. They recommended asking for about $25 million, which included a $4.6 million cushion. The award is up to $19.6 million, a little under that $20.4 million estimate. The deal also goes deeper than that 30 per cent scenario, with 50 per cent off some unit types. Staff priced a 50 per cent cut across the board over three years at about $44.2 million in lost charges. The June report warned that any lost revenue the grant does not cover “will ultimately shift costs to property taxpayers and utility ratepayers.”
On Monday, a councillor asked what happens if, a few years in, the City finds the $19.6 million should have been more. Staff said the City could be shortchanged if growth runs ahead of expectations, with the cost of taking part ending up higher than the grant. They called that a real threat, and said nothing they expect in the agreement would address it. However, staff also pointed out that development charges are not guaranteed either, and that having $19.6 million in hand is safer than counting on collecting the same amount in charges over three years.
Will the savings reach home buyers? The same councillor asked how the City will make sure they are passed on. Staff said they cannot answer until the agreement arrives and will report back to council once it is in hand. The June report itself says there are “differing opinions” on whether lower development charges lead to lower prices or rents, and that the effect on local affordability “is difficult to quantify.”
St. Thomas was starting from a low base. The June report noted that in a number of Greater Toronto Area municipalities, development charges on a single detached home range from about $80,000 to more than $180,000.
Sources: Canada and Ontario Making Homes More Affordable in St. Thomas (news release, October 15, 2026) · Report CMO-50-26, Application to the Development Charges Reduction Fund (June 15, 2026) · City of St. Thomas council meeting, October 19, 2026
By Anthony Zruna · About the LocVox Newsroom
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