Taking it to the limit? Hamilton’s Latest Development Charge Gamble Raises a Bigger Question: Who Is Really Paying for Growth?

Hamilton council’s decision to increase its development charge exemption from 20 per cent to 24 per cent may appear, on the surface, to be a relatively modest adjustment designed to position the city for access to billions in provincial and federal infrastructure funding. But beneath the policy mechanics lies a much deeper and more politically significant question: who should ultimately bear the cost of Hamilton’s growth?

Council’s move reflects the increasingly difficult balancing act municipalities across Ontario now face. On one hand, senior governments are aggressively pressuring cities to accelerate housing construction and infrastructure expansion. On the other, municipalities remain heavily dependent on property taxes and development charges to fund the very infrastructure growth requires — roads, sewers, fire halls, transit, recreation facilities, and water systems.

Hamilton is now attempting to thread a narrow political and financial needle: appear sufficiently “pro-development” to qualify for outside funding while avoiding the perception that taxpayers are subsidizing private-sector profits. That tension was visible throughout council’s debate.

Supporters of the exemption framed the decision as strategic positioning. Councillor Brad Clark’s “pay to play” characterization reflects a growing municipal reality in Ontario: cities increasingly feel compelled to align themselves with provincial housing priorities to remain competitive for infrastructure dollars. In many respects, municipalities are no longer merely governing communities — they are competing in an intergovernmental funding marketplace.

The challenge is that the public often hears two seemingly contradictory messages at the same time:
• developers say projects are becoming financially unviable;
• municipalities say they desperately need development charges to pay for growth.

Both statements can simultaneously be true. The development industry is facing genuine pressures. High borrowing costs, softening condo demand, rising labour costs, material inflation, and market uncertainty have slowed projects across Ontario. Hamilton is not immune. If projects stall, housing targets become harder to achieve, construction employment weakens, and broader economic activity slows.

At the same time, municipalities cannot simply waive billions in infrastructure-related revenue without consequences. Roads still need widening. Pipes still need replacement. Emergency services still need expansion. Someone pays eventually.

That is why Councillor Nrinder Nann’s concern deserves particular attention. Her warning about normalizing exemptions year after year goes to the heart of long-term municipal sustainability. Temporary incentives can quickly become politically difficult to reverse once industries begin pricing them into future expectations. The broader issue may not actually be Hamilton’s decision itself, but rather the structural dysfunction of municipal finance in Ontario.

Cities are being asked to solve national housing affordability problems using local tax tools that were never designed for challenges of this scale. Municipalities possess limited revenue powers, yet are increasingly expected to absorb responsibilities tied to housing, homelessness, transit expansion, infrastructure renewal, climate adaptation, and population growth.

The result is predictable: councils are forced into uncomfortable tradeoffs where every option carries political and financial risk.

Mayor Andrea Horwath’s remarks about all three levels of government attempting to solve the same problem point toward an important reality. The housing crisis cannot realistically be solved by municipalities alone, nor can cities fully fund the infrastructure needed to support rapid growth without meaningful and sustained provincial and federal partnership. 

Still, skepticism from councillors like Alex Wilson reflects a legitimate public concern. Residents who already feel strained by rising property taxes may reasonably question why additional concessions are being extended to developers without guaranteed returns in affordability, housing starts, or infrastructure outcomes.

Ultimately, Hamilton’s vote is less about four per cent than it is about the evolving role of municipalities in Canada’s housing economy. Cities are increasingly being asked to function simultaneously as regulators, infrastructure providers, economic stimulators, housing accelerators, and fiscal shock absorbers — all while relying primarily on property taxes. 

That model may be reaching its limits.