Development charges - draft

What changes are being introduced to allow deferred municipal development charges for non-rental residential buildings?

The Protect Ontario by Building Faster and Smarter Act, 2025 (Bill 17) amended the Development Charges Act, 1997, (DCA) for payment of the municipal (local/lower tier and regional/upper tier) portion of development charges for non-rental residential developments to be deferred from building permit issuance to either (a) before issuance of an occupancy permit or (b) before first occupancy of the building.

To operationalize this policy and improve collection certainty, the Minister of Municipal Affairs and Housing amended Ontario’s 2024 Building Code (Ontario Regulation 163/24). Effective November 3, 2025, occupancy permits are now required for all non-rental residential projects with deferred development charges.

A municipality cannot issue the occupancy permit until it confirms the deferred development charges for non-rental residential buildings are paid in full.

The Protect Ontario by Building Faster and Smarter Act, 2025 (Bill 17) amended the Development Charges Act, 1997 (DCA) to allow the municipal portion of development charges for non-rental residential developments to be deferred.

Under these changes, eligible municipal development charges (local/lower-tier and regional/upper-tier) may be paid later, either:

• before an occupancy permit is issued, or
• before the building is first occupied.

To support this change and ensure payment is collected, the Minister of Municipal Affairs and Housing amended the Ontario Building Code (Ontario Regulation 163/24).

Effective November 3, 2025, an occupancy permit is required for all non-rental residential projects with deferred development charges.

The municipality cannot issue an occupancy permit until it confirms that all deferred municipal development charges have been paid in full.

What development charges continue to be due when the building permit is issued and what development charges can now be deferred to occupancy for buildings subject to a deferred development charge under subsection 26.1 (3.1)? 

For buildings where an applicant for a non-rental residential building selects to defer municipal DCs under s. 26.1(3.1), certain DCs are deferred to occupancy and others are due at permit issuance as was done before November 3, 2025.

Deferred to occupancy (for the eligible non-rental residential portion):

• municipal DCs (local/single tier and regional/upper tier) levied under the DCA

Still due at building-permit issuance (no change): 

• education development charges levied by school boards under the Education Act
• community benefit charges
• park land dedication
• DCs on non-residential buildings and non-residential portions of mixed-use buildings
• any project not selecting the s. 26.1(3.1) deferral

Rental DCs (unchanged):

• existing rental and institutional deferrals under the DCA continue to apply as under current law

Which development charges are due when the building permit is issued, and which charges can be deferred to occupancy?

Under subsection 26.1(3.1) of the Development Charges Act (DCA), applicants for non-rental residential buildings may choose to defer certain municipal development charges.

When this option is selected, some development charges are deferred to occupancy, while others remain due when the building permit is issued, as was done before November 3, 2025.

Deferred to occupancy (for the eligible non-rental residential portion):

• municipal DCs (local/single tier and regional/upper tier) levied under the DCA

Still due at building-permit issuance (no change): 

• education development charges levied by school boards under the Education Act
• community benefit charges
• park land dedication
• DCs on non-residential buildings and non-residential portions of mixed-use buildings
• any project not selecting the s. 26.1(3.1) deferral

Rental DCs (unchanged):

• existing rental and institutional deferrals under the DCA continue to apply as under current law

No Written Agreement Needed

Is an agreement between the builder and the municipality required to defer municipal development charges for a non-rental residential building? 

No written agreement is required. Under DCA s. 26.1(3.1), eligible non-rental residential DCs shall be deferred to occupancy, the builder may however choose to pay all municipal DCs at building-permit issuance as was done before November 3, 2025 or may choose to pay anytime during the inspection timeline (prior to occupancy).

Applicable Law

Are deferred development charges under DCA s. 26.1 (3.1) applicable law under the Ontario Building Code?

Yes. The Development Charges Act remains “applicable law” under the Ontario Building Code. What changes is the timing of payment of the municipal development charges, which can be deferred until occupancy. It will still be necessary to complete the calculation of deferred DCs and the amount deferred at building permit issue so that these can be collected at occupancy.

Issuing Building Permits

Can municipalities continue to issue a building permit for a building subject to deferred development charges under s. 26.1 (3.1)?

Yes. Issuing building permits will continue exactly the same way as prior to November 3, 2025. The DCA/OBC change is a timing shift, not a new approval requirement. However, municipal building permit systems or workflows may need to be updated to reflect this change, including the requirement for an occupancy permit. For buildings subject to deferred municipal DCs, an occupancy permit will be required for these projects and must be withheld until deferred DCs are paid and validated.

No Written Agreement Needed

Is an agreement between the builder and the municipality required to defer municipal development charges for a non-rental residential building? 

No written agreement is required. Under s. 26.1(3.1) of the Development Charges Act (DCA), eligible non-rental residential development charges are deferred to occupancy.

A builder may also choose to pay all municipal development charges when the building permit is issued, as was done before November 3, 2025.

Applicable Law

Are deferred development charges under DCA s. 26.1 (3.1) applicable law under the Ontario Building Code?

Yes. The Development Charges Act continues to be an applicable law under the Ontario Building Code.

What has changed is the timing of payment. Eligible municipal development charges may now be deferred until occupancy. However, the deferred development charges must still be calculated when the building permit is issued, so they can be collected before occupancy.

Issuing Building Permits

Can municipalities continue to issue a building permit for a building subject to deferred development charges under s. 26.1 (3.1)?

Yes. Municipalities may continue to issue building permits in the same way as before November 3, 2025. The changes under the Development Charges Act (DCA) and the Ontario Building Code affect the timing of payment, not the building permit approval process.

For buildings with deferred municipal development charges under s. 26.1(3.1), an occupancy permit is required. The municipality must withhold the occupancy permit until all deferred municipal development charges have been paid and validated.

Affected Buildings

What buildings are eligible for deferred municipal development charges under s. 26.1 (3.1)?

The Development Charges Act, s. 26.1(3.1) allows builders to defer municipal DCs for all non-rental residential buildings:

• non-rental residential (or in other words, ownership) buildings in municipalities that levy DCs, where the applicant has selected the s. 26.1(3.1) deferral
• in mixed-use projects, the requirement of 26.1 applies to the portion of the building containing the non-rental residential units for which DCs are deferred. There are no changes to existing residential rental deferred DCs

No changes to the following existing DC framework:

• residential rental and institutional developments under s.26.1 of the DCA
• non-residential components (industrial, commercial, and other institutional – paid as per current rules)
• municipalities without a DC by-law
• projects with a section 27 agreement setting a different payment date(s)
• projects with building permits issued before November 3, 2025

What buildings are eligible for deferred municipal development charges under s. 26.1 (3.1)?

Under s. 26.1(3.1) of the Development Charges Act, builders may defer municipal development charges for non-rental residential buildings when the deferral option is selected.

This includes:

• non-rental residential (ownership) buildings in municipalities that levy development charges, where the applicant has selected the s. 26.1(3.1) deferral
• mixed-use projects, where the deferral applies only to the portion of the building containing non-rental residential units
• there are no changes to existing deferred development charges for residential rental units

There are no changes to the following existing development charge framework:

• residential rental and institutional developments under s. 26.1 of the Development Charges Act
• non-residential components (industrial, commercial, and other institutional – paid under current rules)
• municipalities without a development charge by-law
• projects with a section 27 agreement that sets different payment dates
• projects with building permits issued before November 3, 2025

10-day inspection window

What buildings are included in the exception to allow up to 10 days to undertake an occupancy inspection following receipt of a prescribed notice of occupancy or completion? What about reinspection?

The extended window for an occupancy inspection following a prescribed notice applies only to buildings with DC deferral under DCA s. 26.1(3.1). All others remain on the standard 2-business-day timeline.

Why allow up to 10 business days (initial inspection):

• to verify full payment of the deferred DC amounts with finance/DC staff
• to prompt/encourage payment where funds have not yet been received
• to update permit records and workflows so the occupancy permit can be issued promptly after a successful technical safety inspection and payment confirmation

Operational considerations:

• if deferred DCs are already paid and validated, municipalities should maintain the 2-business-day inspection timeline
• where payment is not yet validated, the up to 10-business-day timeline may be used to complete the verification and administrative steps above

Reinspection: 

After an initial occupancy inspection identifies outstanding items (e.g., technical safety corrections), municipalities are encouraged to complete occupancy re-inspections within 2 business days of notice where deficiencies have been addressed, and payment is validated.

Occupancy Permit Changes

What are the new requirements for an occupancy permit for a building subject to s. 26.1 (3.1)?

All buildings subject to a non-rental residential DC deferral under DCS s. 26.1(3.1), will require an occupancy permit. These changes come into effect for building permits for non-rental residential buildings issued after filing of the amendment to Ontario’s Building Code on November 3, 2025.

10-day inspection window

What buildings are included in the exception to allow up to 10 days to undertake an occupancy inspection after a prescribed notice of occupancy or completion? What about reinspection?

The extended timeline for an occupancy inspection following a prescribed notice applies only to buildings with a development charge deferral under s. 26.1(3.1) of the Development Charges Act.

All other buildings remain subject to the standard two-business-day inspection timeline.

Why up to 10 business days may be used for the initial inspection:

• to verify full payment of the deferred development charge amounts with finance or development charge staff
• to prompt or encourage payment where funds have not yet been received
• to update permit records and workflows so the occupancy permit can be issued promptly after a successful technical safety inspection and payment confirmation

Operational considerations:

• if deferred development charges are already paid and validated, municipalities should maintain the 2-business-day inspection timeline
• where payment has not yet been validated, the up to 10-business-day timeline may be used to complete the verification and administrative steps

Reinspection:

If an initial occupancy inspection identifies outstanding items (for example, technical safety corrections), municipalities are encouraged to complete occupancy re-inspections within 2 business days of notice, once deficiencies have been addressed and payment is validated.

Occupancy permit changes

What are the new requirements for an occupancy permit for a building subject to s. 26.1(3.1)?

All buildings subject to a non-rental residential development charge deferral under s. 26.1(3.1) will require an occupancy permit.

These requirements apply to building permits for non-rental residential buildings issued after the amendment to the Ontario Building Code came into effect on November 3, 2025.

First occupancy

What is considered to be first occupancy of a building subject to DCA s. 26.1 (3.1) non-rental residential deferred development charge?

Bill 17, the Protect Ontario by Building Faster and Smarter Act, 2025, amended the DCA to defer payment of DCs until the earlier of:

• the day the permit is issued under the Building Code to authorize occupation of the building; and
• the day the building is first occupied.

The DCs would be payable in full for the non-rental residential portion of a development prior to the building in which the residential units are located receives the first occupancy permit.

DCs for a non-residential portion of a building would be payable as was done before November 3, 2025, generally on issuance of a building permit.

Multiple use buildings

What are the occupancy requirements for a building where only some of the building is subject to subsection 26.1 (3.1) deferred development charge (e.g. other parts of the building are rental, non-residential or other uses)?

The new occupancy-permit requirement applies only to the non-rental residential building/portion for which a valid DCA s. 26.1(3.1) deferral is selected. Other parts of the project follow existing occupancy rules.

Payment

What constitutes payment of deferred DCs? Does payment include both local and regional DCs?

“Payment” has the same meaning as already used for DC collection in comparable circumstances under the DC by-law, or in other words full remittance of the deferred DCs owing for the non-rental residential portion. This includes both local/single-tier and regional/upper-tier DCs.

To issue an occupancy permit the municipality would consider:

• standard municipal proof of payment (as is already used): confirmation from finance/DC staff that the net deferred amount is paid in full, using the municipality’s usual criteria (e.g., cleared EFT/cheque, certified funds, etc.)
• if partial or pending funds do not satisfy payment
• where a DCA s. 27 agreement sets a different timing/amount, continue to follow that agreement

Occupancy without payment of deferred DCs

Can a building subject to subsection 26.1 (3.1) deferred development charge be occupied if the deferred development charge has not been paid?

No. For projects where a valid s. 26.1(3.1) deferral is selected, the building cannot be occupied until an occupancy permit is issued, and the Chief Building Official must withhold the occupancy permit until the municipality confirms full payment of all deferred municipal DCs—this includes both local/single-tier and regional/upper-tier DCs.

Compliance for occupancy without a permit

What are the municipal enforcement options for a building subject to subsection 26.1 (3.1) deferred development charge that has been occupied without a permit?

Occupying a building without the required occupancy permit is a Building Code Act contravention. The city’s standard enforcement sequence may be initiated with an Order to Comply, then escalate in keeping with municipal practices if non-compliance persists. If a development charge or any part of it remains unpaid after it is payable, the amount unpaid including any interest payable in respect of it in accordance with the DC Act may be added to the tax roll and collected in the same manner as taxes.

First occupancy

What is considered first occupancy for a building subject to a non-rental residential deferred development charge under s. 26.1(3.1) of the Development Charges Act (DCA)?

Bill 17, the Protect Ontario by Building Faster and Smarter Act, 2025, amended the DCA to defer payment of development charges until the earlier of:

• the day a permit is issued under the Building Code to authorize occupation of the building; or
• the day the building is first occupied.

Development charges must be paid in full for the non-rental residential portion of a development before the building containing the residential units receives its first occupancy permit.

Development charges for any non-residential portion of a building remain payable as they were before November 3, 2025, generally when the building permit is issued.

Multiple use buildings

What are the occupancy requirements for a building where only some of the building is subject to subsection 26.1 (3.1) deferred development charge (e.g. other parts of the building are rental, non-residential or other uses)?

The new occupancy-permit requirement applies only to the non-rental residential building/portion for which a valid DCA s. 26.1(3.1) deferral is selected. Other parts of the project follow existing occupancy rules.

Payment

What constitutes payment of deferred development charges? Does payment include both local and regional development charges?

“Payment” has the same meaning as is already used for development charge collection under the Development Charges Bylaw. This means full remittance of the deferred development charges owing for the non-rental residential portion, including both local or single-tier and regional or upper-tier development charges.

To issue an occupancy permit, the municipality would consider:

• standard municipal proof of payment, including confirmation from finance or development charge staff that the net deferred amount has been paid in full using usual criteria (for example, cleared electronic funds transfer, cheque, or certified funds)
• whether partial or pending funds satisfy payment requirements
• whether a section 27 agreement under the Development Charges Act sets a different payment timing or amount

Occupancy without payment of deferred development charges

Can a building subject to a deferred development charge under s. 26.1(3.1) be occupied if the charge has not been paid?

No. Where a valid deferral under s. 26.1(3.1) is selected, a building cannot be occupied until an occupancy permit is issued. The Chief Building Official must withhold the occupancy permit until the municipality confirms full payment of all deferred municipal development charges, including both local or single-tier and regional or upper-tier charges.

Compliance for occupancy without a permit

What municipal enforcement options apply if a building subject to a deferred development charge under s. 26.1(3.1) is occupied without a permit?

Occupying a building without the required occupancy permit is a contravention of the Building Code Act. The city’s standard enforcement process may begin with an Order to Comply and escalate in line with municipal practices if non-compliance continues.

If a development charge, or any part of it, remains unpaid after it becomes payable, the unpaid amount, including any applicable interest under the Development Charges Act, may be added to the tax roll and collected in the same manner as taxes.