The federal and Ontario governments officially opened an $8.8 billion infrastructure fund Monday aimed at encouraging municipalities to slashing development charges and lower the cost of homebuilding. 

Housing Minister Gregor Robertson was joined with Ontario Housing Minister Rob Flack and Ontario Finance Minister Peter Bethlenfalvy in Ottawa to announce the Canada-Ontario Municipal Development Charge Reduction Program. 

The program, under a larger ‘Build Canada Homes’ umbrella, sets to remove 13 per cent HST on new homes in Ontario that are valued up to $1 million. It was first announced in late March, though the fund officially opened to applicants on Monday. 

READ MORE: Ottawa, Queen’s Park dangle $8.8B ‘carrot’ to get cities to lower development charges

“By reducing these fees, we are bringing down the cost for a new home in Ontario up to $200,000 and this will be done through that combo of reduced development charges and HST relief for home buyers,” Robertson said. 

Between Ottawa and Queen’s Park, the announcement aimed at lowering upfront costs of building homes in Ontario. Under the agreement, municipalities that reduce development charges by at least 30 per cent will gain access to a new $8.8-billion infrastructure fund over the next 10 years. 

Robertson also noted the program would reduce development charges up to 50 per cent for three years, as Ontario is one of the “fastest growing cities.” 

Flack said development charges, traditionally used by municipalities to fund infrastructure upgrades and expansion, have increasingly driven up construction costs. 

“Development charges have been an important tool used to pay for this needed infrastructure,” Flack said. “However, in some municipalities, development charges have become overly inflated, adding well over six figures to the cost of a new home.” 

He added municipalities participating in the program could qualify for infrastructure funding with local contributions as low as 10 per cent, while promising approvals move at “lightning speed.” 

“Governments don’t build homes,” Flack said. “We do create the conditions to get housing built faster and built affordably.”