Sharing the Costs of a Growing City: The Case for Development Charges

New development is essential to supporting a growing city but it also leads to added costs for municipal governments. New housing developments often require new or expanded infrastructure, including roads, sewers, and water treatment plants.

There is ongoing debate on how cities should pay for this growth-related capital. Some argue that user fees and property tax revenues are sufficient to cover these costs, and that development charges on developers will likely result in increased housing prices.

On March 19, economist Adam Found argued that, in fact, development charges offer the best way for cities to pay for growth-related capital because they limit the burden on both new and existing residents and fulfill a basic principle of municipal finance: that growth should pay for growth. Found presented research indicating that relying on user fees and property taxes to pay for growth-related capital is, in comparison to development charges, inefficient and unfair.