Previous studies have looked at cities such as Hamilton, Kingston Kitchener Waterloo, London, Oshawa, and Windsor. They state that most of the population growth taking place in these municipalities occurred in outer suburbs. There are many reasons for these trends but when analyzing the effectiveness of Smart Growth policy, University of Waterloo professor, Pierre Filion found that much of the middle class still has a preference for dispersed development, which is mirrored by developers who adamantly advocate sprawling subdivisions.

Also countering this point of view is data that shows that some of the fastest growing municipalities in the province also have some of the very highest development charges (for example, Vaughan at $121,076). There are many reasons why people choose to live where they do. The data does not support the view that relatively lower development charges is one of the main reasons.

View: Decreasing fees will lead to more development in Windsor thus increasing the amount of property tax revenues to the City.

As indicated above, some of the fastest growing municipalities also have some of the highest DC rates. Therefore, it can be inferred that development charges are generally not the deciding factor relative to where growth will take place. Therefore, it follows that reducing the charges, all else being equal, will not likely be a major deciding factor in the decision to develop in a certain municipality. More important considerations appear to be related to lifestyles, socio-economic circumstances, cultural trends, amenities in the city core, etc.

Additionally, development charges are typically one of the smallest components of the cost of a home. Using rounded general figures, the $30,000 cost of DCs represents approximately 7% of a typical $425,000 home. Once this costs is amortized over a period of say 25 years, the annual costs becomes even less of a financial factor to the homeowner.

Even if the charge in a neighbouring municipality was, say, less than half of the noted $30,000 development charges, it would account for a difference of only 3.5% of the total price. This type of difference would most likely be of secondary importance to the other noted reasons that drive development in a particular municipality or neighbouhood. In other words, it is not likely to be the driving reason for a decision on the location of the development. Similar comments apply to the other development categories.

There is another interesting dynamic at play. Economic theory and research suggests that if the development charges in the above illustrative case were to be cut in half (i.e. reduced by $15,000), the price of the home would not likely decrease by a similar amount (which would make the home more affordable and likely lead to greater demand and development). Rather, the value of the land would likely increase by $15,000 and the price of the home would remain unchanged. This is because no rational person would sell a home that has a market value of $425,000 for $410,000.

Generally, even if two sides of the street had different development charges fees, it is expected that the market would dictate that similar properties be sold at the same price. This would drive down the value of the land on the side of the street with the higher development charges in order for the overall price to stay competitive in the market.

It is possible that lower land values could at times reduce the urgency of the owner to sell the land or to develop it. However, this would have to be weighed against the ongoing costs of maintaining the undeveloped land (property taxes, etc.). It is not likely that the decision to