Ottawa cut $16,661 a home off development charges, and the waiting eats it in twelve months

Here is the whole argument in four lines.

In July, Ottawa cut the development charge on a two-bedroom apartment from $30,853 to $14,192. Every home a builder puts up inside the Greenbelt is $16,661 cheaper.

But money costs money while you wait. Holding a half-built project costs about $1,407 a month per home in interest. So the City's gift lasts 11.8 months.

The register says a project sits for 19.9 months after it has been approved.

The gift runs out eight months before the waiting does.

Why waiting costs anything at all

This is the part that is easy to skip, so: a developer borrows the money to build. From the day the loan starts, interest runs — whether or not anything is happening on the site.

A home in an Ottawa mid-rise costs about $272,400 to produce before you buy the land. Borrow that at 6.2% and you are paying roughly $1,407 every month, per home, for nothing but time.

A 100-home building therefore burns $140,700 a month standing still.

That is why a delay is not an inconvenience. It is a line item, and it is a large one.

Is $16,661 actually a lot?

It is real money and it is not the main event. Drawn against what a home costs to build:

Construction is fifteen times the development charge. The charge is about one twentieth of the bar — which is why cutting it in half helps, and why it cannot be the answer on its own.

The two numbers that decide the answer are both verified. The two in the middle are ordinary ratios, and moving either by a third does not change anything below.

So the cut is worth less than the delay

The wait is worth 1.7 times the cut. A builder who saved the full $16,661 in July, and then sat for the register's median, has spent all of it and $11,346 a home more.

This is not an argument against the cut

It is an argument about where the next one has to come from.

A development charge is a lever the City can pull in a budget meeting. One number changes and every project in Ottawa gets the benefit the same afternoon. That is why it gets pulled, and pulling it was right.

Time is a lever nobody owns. There is no vote that shortens a clearance queue and no line item for it. It is a hundred small handoffs between a planner, a lawyer, an engineer and a bank, and every one of them is somebody's ordinary Tuesday.

Which is exactly why it grows, and why it is now the bigger number.

What we cannot tell you

Whose fault the wait is. A site stuck at Agreement / legal clearance is waiting on the City, or on the applicant's own conditions and financing, or both — and the register shows the same blank either way. Some of those months are a developer who has chosen to hold. We wrote about that here. It does not change the arithmetic: the interest runs whoever is causing it.

Whether the cut has worked yet. It is eight weeks old. We read the register every fortnight, and the thing to watch is whether filings run above the 2025 rate. We will publish that when it is a number and not a hope.

What the finished home is worth. About $383,700, at the CBRE mid-point cap rate of 4.75%. We deliberately left it out of the table above, because the difference between it and $272,400 is not profit — land, financing, leasing and the developer's return all come out of it. Quoting that gap as margin is the most common way these numbers get abused.

Argue with the 6.2%

It is our assumption, and it is the one to push on first.

At any rate a lender will actually quote in this market, the waiting costs more than the City just handed back.