Ottawa development charges: $36.03 a foot, due on permit day

The number that lands before the first shovel

Everybody underwriting a commercial build in Ottawa prices the land, the hard construction and a contingency. Then the development charge invoice arrives at building permit, and on a small building it is bigger than the contingency.

The City's non-residential schedule took effect April 1 this year. Read it properly and a new serviced non-industrial building inside the Greenbelt owes $36.03 a square foot. Outside the Greenbelt it is $36.10. On a 5,000 square foot retail building that is $180,150, payable before you are allowed to start.

One warning about the City's own table. It prints a Total of $39.18, but that row stacks the citywide lines on top of all three area lines at once, and no building sits inside the Greenbelt and outside it and in the rural area. Add the citywide rows to the single area that applies to your site and you get $36.03 or $36.10. The City splits its residential schedule onto separate pages by area for exactly this reason. The non-residential schedule is one table, so the arithmetic is yours to do.

Just under 80 cents of it is roads and buses

Pull the line items apart.

Roads and related services, citywide, is $15.20 a foot. Public transit, citywide, is $12.80. Add the inside-the-Greenbelt roads line and transportation alone is $28.68 of the $36.03. That is just under 80 cents of every development charge dollar on a new Ottawa commercial building.

Everything else is rounding next to it. Sanitary sewer $3.51. Recreation 74 cents. Police 60 cents. Fire 28 cents. Ambulance 15 cents. Libraries 4 cents.

None of this is hidden. The rates were reset on March 4 this year to fund the updated Transportation Master Plan, using a new method of splitting each transportation project between growth and existing residents. Council took the recommendation on March 11 and the schedule came in April 1. Non-residential rates fell about 3 per cent citywide in that pass. Residential fell 1 per cent inside the Greenbelt and 2 per cent outside.

Industrial pays 44 cents on the dollar

Same table, right-hand half. A serviced industrial building inside the Greenbelt is $15.80 a foot, $15.63 outside. That is 44 per cent of what the store pays for the identical floor area.

Five thousand square feet as retail is $180,150. The same 5,000 square feet as industrial is $79,000. A hundred thousand dollars of the difference between those two businesses is settled before either one opens its doors.

Now hold it against rent. Colliers had Ottawa office asking $17.17 a foot net in the second quarter and industrial asking $16.87, so the two are within thirty cents of each other. On development charges one is more than double the other. The $36.03 is a little over two years of net office rent, handed over on permit day. The $15.80 is about eleven months of industrial rent. That gap is a real part of why small-bay industrial keeps getting built here and small retail does not.

Every break since 2022 has gone to housing

Read the relief measures in order.

Council resolved last October 8 that development charges become payable at the first occupancy permit rather than at building permit, interest free. The City's page states the limit in the same sentence: residential occupancies only.

The province's Bill 17 deferral came into force November 3 last year. Non-rental residential.

The Development Charges Act discounts rental housing outright. Twenty-five per cent off a three-bedroom rental unit, 20 per cent off a two-bedroom, 15 per cent off everything else. Residential.

The affordable-unit exemptions that started June 1, 2024. Residential.

Commercial and industrial got a 3 per cent rate cut in April and nothing else. You still write the full cheque at permit issuance, before a single square foot of your building exists.

For scale on the other side of the ledger, a single or semi inside the Greenbelt is $57,827 per unit and a one-bedroom apartment is $22,613. Those are bigger numbers per unit. They are also the ones four years of provincial legislation has worked to defer, discount and exempt.

Three places the money actually sits

Enlarge an industrial building and the first half is free. Section 4 of the Development Charges Act sets the charge at zero on an enlargement of 50 per cent or less of the existing industrial floor area. Above that line the statutory formula reduces to the full rate applied only to the footage past the halfway mark. A 10,000 foot plant adding 5,000 feet pays nothing. Adding 6,000 pays $15,800, which is the rate on 1,000 feet. If your expansion sits near the line, the drawing is worth redoing.

Check when the old building came down. Ottawa allows a redevelopment credit for demolished floor area, but only where the demolition happened within five years of the building permit for the new structure. Buy a cleared lot where the building came down six years ago and the credit is gone. Nobody raises this at the listing stage.

Know that the rate freeze is 18 months, not two years. Under section 26.2 your charge is set by the by-law as it read the day your site plan or rezoning application was filed. That protection lapses once more than 18 months has passed since the application was approved, and the municipality may charge interest on the frozen amount in the meantime. Rates index upward every April 1, so a stalled approval is a rising number.

Four questions before you go firm

Get the gross floor area the City will count. Get the area designation for the site. Get the industrial or non-industrial classification. Get the demolition date if the lot is bare. Four answers, and together they move the charge by six figures on a modest building.

Then remember it is a one-time cost sitting on top of everything that recurs. Additional rent is already half the cheque on an Ottawa office lease, and the commercial tax bill is still struck on 2016 assessed values waiting for a reassessment nobody has scheduled. The development charge is the one you pay in a lump, at the worst possible moment for cash flow, with no financing attached.

I have watched buyers grind three dollars a foot off a purchase price while a hundred thousand dollars of development charge sat unopened in the same file. On a small commercial build it is the largest single cost nobody checks.

If you are looking at a site in Ottawa and want the charge run before you go firm, send me the address and the square footage. I will pull the rate for the area and the class and put the number in writing. 613-262-6545 or fil@613realtor.ca. Or see what is on the market right now.