Drowning the baby
With green shoots appearing in new homebuilding, County council ponders big increase in charges
It has a cost, say County staff. By discounting development charges by 50 per cent, as the County has done since 2013, Shire Hall has forgone $1.2 million it might have otherwise generated, had the full amount been charged over these past five years. County staff, along with consulting economist Andrew Grunda, want council to end the discount. They want the development charges reset from $3,272 to $6,686 (for a single detached home larger than two bedrooms) by the end of this year.
When development charges are combined with connection charges (for access to the municipal waterworks system) the total payable is about $19,608* for a single home—that’s before the building permit is issued or a hole is dug. That’s 128 per cent more than Quinte West. Seventy-two per cent more than Belleville.
Grunda argues that neither the proposed increase nor the County’s eyewatering charges are significant factors in the price of the home or the cost of a mortgage. But builders argue that this misses the point. They say that every dollar makes a difference, and that Prince Edward County simply isn’t competitive with Quinte West, Belleville and Brighton for new homebuilding.
Some, like Mayor Robert Quaiff, believe the County has turned the corner, that after a decade of ever-shrinking homebuilding starts, the County has experienced two years of solid growth. Quaiff appears ready to shed the discount and push development charges higher.
Graham Shannon, president of Sandbanks Homes, the single largest builder of new homes in the County over this period, has a different view.
“Yes, we are starting to see some traction, after some very difficult years,” said Shannon. “But, why would you want to throw cold water on it now, just as it getting going?”
He points to the way the federal bank manages interest rates.
“They nudge them up a quarter of a per cent at a time, then watch what it does to the market,” said Shannon. “They don’t just slam the market with an unbearable increase, and hope for the best.”
Others, like Councillor Kevin Gale, urged caution.
“We have made inroads,” said Gale. “But we could really screw this up.”
Gale said he doesn’t consider the discount a financial loss, but rather an investment in future growth.
County chief James Hepburn reminded council that the discount extended to new homebuilders is paid for by other residents. He noted that over the past five years the County has dipped into the Rate Stabilization Fund to cover the lost revenue.
But other councillors point out that the development charge is small change—that it’s a one-time fee—that the true prize is a growing tax base. And that the County must be competitive in terms of rates, performance and service in order to win that tax base.
“I’m afraid we are pricing the County out of the homebuilding market,” said Councillor Roy Pennell.
The County will host one more public meeting on February 7, 2018 at Shire Hall to hear views for and against. It is set to make a final rate decision on February 27.
Park model homes revisited
It’s harder to tax things that move
Is it a recreational trailer or a park model home? Both offer living spaces on wheels. Both are used in the summer months—providing a getaway place, typically in the countryside near water and beaches. Both are found in places like Quinte Isle Campark. But they have one important distinction. One, the park model home, pays municipal taxes. Trailers do not.
For this reason, council decided in 2009 not to levy development charges against park model homes, fearing such fees would discourage park model homes (and the tax base they generate) in favour of trailer homes.
But time has passed and Shire Hall, supported by its consulting economist, Andrew Grunda, want to revisit this potential revenue stream.
The truth is the County has a plan to manage and adapt to growth. The plan has a price tag that must be accorded fairly to various groups: existing taxpayers, new arrivals and users of the County’s various services. It is Grunda’s job to figure out how to do that.
Currently the County doesn’t generate enough in development charges fees to meet the needs of the plan. So, Grunda and County staff are looking under every rock. They propose a development charge of $3,092 per park model home—equivalent to a small apartment.
But Tim Ward of Quinte Isle says these folks are missing the forest for the trees. He noted that the tax base from a park model home would surpass the development fee in a couple years and then continue to generate revenue for the County. He suggested prospective buyers would be discouraged by the charge and either choose to locate in another community or choose a trailer and pay no property taxes.
“We are in a competitive market,” said Ward, to council on Friday morning.
Ward pointed out that in communities including Niagara region, Kawartha Lakes and Lambton Shores, they exempt park model homes from development charges. In other tourist communities such as Muskoka and Gravenhurst the development charge ranges from $309 to $1,682.
Only one community—Springwater, near Wasaga Beach—levies development charges in the vicinity ($4,096) of that proposed by Shire Hall.
Councillor Lenny Epstein asked about issues of portability of these units—is it liable to pay development charges if it moves within the park? Within the County? What happens when a unit is upgraded? Built homes don’t tend to move—homes with wheels raise a nest of issues.
Which likely explains why most municipalities exempt these types of dwellings. And why County council did in 2009.