5 (1) The following is the method that must be used, in developing a development charge by-law, to determine the development charges that may be imposed: 1.  The anticipated amount, type and location of development, for which development charges can be imposed, must be estimated. 2.  The increase in the need for service attributable to the anticipated development must be estimated for each service to which the development charge by-law would relate. 3.  The estimate under paragraph 2 may include an increase in need only if the council of the municipality has indicated that it intends to ensure that such an increase in need will be met. The determination as to whether a council has indicated such an intention may be governed by the regulations. 4.  The estimate under paragraph 2 must not include an increase that would result in the level of service exceeding the average level of that service provided in the municipality over the 15-year period immediately preceding the preparation of the background study required under section 10. How the level of service and average level of service is determined may be governed by the regulations. 5.  The increase in the need for service attributable to the anticipated development must be reduced by the part of that increase that can be met using the municipality’s excess capacity, other than excess capacity that the council of the municipality has indicated an intention would be paid for by new development. How excess capacity is determined and how to determine whether a council has indicated an intention that excess capacity would be paid for by new development may be governed by the regulations. 6.  The increase in the need for service must be reduced by the extent to which an increase in service to meet the increased need would benefit existing development. The extent to which an increase in service would benefit existing development may be governed by the regulations. 7.  The capital costs necessary to provide the increased services must be estimated. The capital costs must be reduced by the reductions set out in subsection (2). What is included as a capital cost is set out in subsection (3). How the capital costs are estimated may be governed by the regulations. 8.  Repealed: 2019, c. 9, Sched. 3, s. 3 (2). 9.  Rules must be developed to determine if a development charge is payable in any particular case and to determine the amount of the charge, subject to the limitations set out in subsection (6). 10.  The rules may provide for full or partial exemptions for types of development and for the phasing in of development charges. The rules may also provide for the indexing of development charges based on the prescribed index.  1997, c. 27, s. 5 (1); 2019, c. 9, Sched. 3, s. 3 (1, 2); 2022, c. 21, Sched. 3, s. 5 (1). Transition, par. 4 of subs. (1) (1.1) For greater certainty, paragraph 4 of subsection (1), as it read immediately before the day subsection 5 (1) of Schedule 3 to the More Homes Built Faster Act, 2022 came into force, continues to apply in respect of a development charge by-law in force on that day. 2022, c. 21, Sched. 3, s. 5 (2). Capital costs, deductions (2) The capital costs, determined under paragraph 7 of subsection (1), must be reduced, in accordance with the regulations, to adjust for capital grants, subsidies and other contributions made to a municipality or that the council of the municipality anticipates will be made in respect of the capital costs.  1997, c. 27, s. 5 (2). Capital costs, inclusions (3) The following are capital costs for the purposes of paragraph 7 of subsection (1) if they are incurred or proposed to be incurred by a municipality or a local board directly or by others on behalf of, and as authorized by, a municipality or local board: 1.  Costs to acquire land or an interest in land, including a leasehold interest, except in relation to such services as are prescribed for the purposes of this paragraph. 2.  Costs to improve land. 3.  Costs to acquire, lease, construct or improve buildings and structures. 4.  Costs to acquire, lease, construct or improve facilities including, i.  rolling stock with an estimated useful life of seven years or more, ii.  furniture and equipment, other than computer equipment, and iii.  materials acquired for circulation, reference or information purposes by a board within the meaning of the Public Libraries Act. 5., 6.  Repealed: 2022, c. 21, Sched. 3, s. 5 (4). 7.  Interest on money borrowed to pay for costs described in paragraphs 1 to 4.  1997, c. 27, s. 5 (3); 2020, c. 18, Sched. 3, s. 2; 2022, c. 21, Sched. 3, s. 5 (3, 4). Transition (3.1) For greater certainty, subsection (3), as it read immediately before the day subsection 5 (4) of Schedule 3 to the More Homes Built Faster Act, 2022 came into force, continues to apply in respect of a development charge by-law in force on that day. 2022, c. 21, Sched. 3, s. 5 (5). Capital costs, leases, etc. (4) Only the capital component of costs to lease anything or to acquire a leasehold interest is included as a capital cost under subsection (3).  1997, c. 27, s. 5 (4). (5) Repealed: 2019, c. 9, Sched. 3, s. 3 (5). Restriction on rules (6) The rules developed under paragraph 9 of subsection (1) to determine if a development charge is payable in any particular case and to determine the amount of the charge are subject to the following restrictions: 1.  The rules must be such that the total of the development charges that would be imposed upon the anticipated development is less than or equal to the capital costs determined under paragraphs 2 to 8 of subsection (1) for all the services to which the development charge by-law relates. 2.  If the rules expressly identify a type of development they must not provide for the type of development to pay development charges that exceed the capital costs, determined under paragraphs 2 to 8 of subsection (1), that arise from the increase in the need for services attributable to the type of development. However, it is not necessary that the amount of the development charge for a particular development be limited to the increase in capital costs, if any, that are attributable to that particular development. 3.  If the development charge by-law will exempt a type of development, phase in a development charge, or otherwise provide for a type of development to have a lower development charge than is allowed, the rules for determining development charges may not provide for any resulting shortfall to be made up through higher development charges for other development. 4.  In the case of a development charge by-law passed on or after the day subsection 5 (6) of Schedule 3 to the More Homes Built Faster Act, 2022 comes into force, the rules must provide that, i.  any development charge imposed during the first year that the by-law is in force is no more than 80 per cent of the maximum development charge that could otherwise be charged in accordance with this section, ii.  any development charge imposed during the second year that the by-law is in force is no more than 85 per cent of the maximum development charge that could otherwise be charged in accordance with this section, iii.  any development charge imposed during the third year that the by-law is in force is no more than 90 per cent of the maximum development charge that could otherwise be charged in accordance with this section, and iv.  any development charge imposed during the fourth year that the by-law is in force is no more than 95 per cent of the maximum development charge that could otherwise be charged in accordance with this section.  1997, c. 27, s. 5 (6); 2022, c. 21, Sched. 3, s. 5 (6). Special rule (7) Subsection (8) applies to a development charge imposed by a development charge by-law passed on or after January 1, 2022 and before the day subsection 5 (7) of Schedule 3 to the More Homes Built Faster Act, 2022 comes into force, unless the development charge was payable before the day subsection 5 (7) of Schedule 3 to the More Homes Built Faster Act, 2022 comes into force. 2022, c. 21, Sched. 3, s. 5 (7). Same (8) The amount of a development charge described in subsection (7) shall be reduced in accordance with the following rules: 1.  A development charge imposed during the first year that the by-law is in force shall be reduced to 80 per cent of the development charge that would otherwise be imposed by the by-law. 2.  A development charge imposed during the second year that the by-law is in force shall be reduced to 85 per cent of the development charge that would otherwise be imposed by the by-law. 3.  A development charge imposed during the third year that the by-law is in force shall be reduced to 90 per cent of the development charge that would otherwise be imposed by the by-law. 4.  A development charge imposed during the fourth year that the by-law is in force shall be reduced to 95 per cent of the development charge that would otherwise be imposed by the by-law. 2022, c. 21, Sched. 3, s. 5 (7). Same, interpretation (9) For the purposes of subsections (7) and (8), a development charge is deemed to be imposed on the day referred to in subsection 26.2 (1) that applies to the development charge. 2022, c. 21, Sched. 3, s. 5 (7). Section Amendments with date in force (d/m/y) 2002, c. 17, Sched. F, Table - 01/01/2003 2006, c. 32, Sched. C, s. 12 (1) - 01/01/2007; 2006, c. 33, Sched. H, s. 1 - 04/05/2007 2015, c. 26, s. 3
- 01/01/2016 2018, c. 3, Sched. 5, s. 16 - no effect - see 2019, c. 1, Sched. 3, s. 5 - 26/03/2019 2019, c. 1, Sched. 4, s. 14 - no effect - see 2019, c. 9, Sched. 3, s. 15 (2) - 06/06/2019; 2019, c. 9, Sched. 3, s. 3 (1, 2, 5) - 18/09/2020; 2019, c. 9, Sched. 3, s. 3 (3) - no effect - see 2020, c. 18, Sched. 3, s. 12 - 21/07/2020; 2019, c. 9, Sched. 3, s. 3 (4) - 06/06/2019 2020, c. 18, Sched. 3, s. 2 - 18/09/2020 2022, c. 21, Sched. 3, s. 5 (1-7) - 28/11/2022 Toronto-York subway extension