Not competing

Council keeps discount on development charges

A discount of development charges will remain in place until March 2018 or until Shire Hall conducts a full study of these rates and their impact. In the meantime, there will be an intense examination and consideration of residential building in Prince Edward County. Is it good? Is it bad? Is it desirable? And what role, if any, should the municipality play in encouraging new homebuilding?

Council’s decision last week, to extend the 50-percent discount on development charges to new homes in municipally serviced areas for two more years, merely prolongs the current situation until this examination is completed.

But not everyone was in favour of leaving it alone in the interim.

County finance chief Susan Turnbull would rather it went away. She argues the discount did little, since it was established, to drive new home building in the County in areas serviced by water and sewer. Further, she notes that the revenue forgiven by the discount must be made up by taxpayers. After all, County costs continue to rise.

Some councillors share her view. Janice Maynard described the discount as a failed experiment.

“We expected an increase,” said the councillor from Ameliasburgh, as a result of the discounted charges. “That has not come to fruition.”

Councillor Jamie Forrester says development charges aren’t the problem. He suggests builders are choosing Quinte West, Brighton and Belleville over Prince Edward County for a variety of reasons including the lower cost of building lots.

Dianne O’Brien seemed to argue that higherthan- market development and connection charges in the County were understandable because Belleville property taxes tend to be higher on new homes than in the County.

Other council members couldn’t get past the seeming inequity of an incentive aimed at encouraging building in one part of the County and not to another. They said any incentive should be in effect for all new homes.

Turnbull seized upon the complaint as a means to scuttle the discount.

“If you believe it is unfair, you should abandon the reduction,” said Turnbull. “If you think it is faulty, abandon it.”

But a majority of council wasn’t prepared to do that.

Councillor Lenny Epstein struggled with Turnbull’s argument that the discount hadn’t worked. “How can we tell if it didn’t work?” asked Epstein. “How do you measure what didn’t happen?”

Last fall, many of the council members heard developers and builders describe the litany of challenges that discourage them from investing in the County. They know the County isn’t competitive with neighbouring jurisdictions.

From that meeting, an ad hoc committee has since been formed to look at the County’s planning and development processes—to determine what, if any changes should be made to make the County a more attractive place to invest for residential builders.

Councillor Gord Fox said that council had made a commitment to builders and developers to listen to their concerns and understand their issues.

“We are going to look at all these details,” said Fox. “I am looking forward to it.”

HARD DATA
If they needed reminding, Graham Shannon, president of Sandbank Homes, offered some stark data to underline the competitive problem the County faces in the region.

Even at the discounted rates, the County’s development and connection charges are 50 per cent higher than in Belleville—80 per cent higher in unserviced areas. Belleville, too, discounts its development charges in some neighbourhoods— extracting as little as a third of the County’s discounted charge from builders. Quinte West’s development and connection charges amount to a bit more than half of the discounted charges for the same services in the County.

Administration and permit fees are three times more expensive in the County than in Belleville and four times more expensive than in Quinte West. It gets worse.

The County requires developers to put up more than twice the amount of security than neighbouring regions. On a project needing about $1 million of infrastructure work—roads, sewers, etc.—the County needs $1.25 million from the developer in the form of a letter of credit. They hold this security until the project is completed. Belleville and Quinte West, however, require just $500,000 and release it as the project reaches specified milestones.

The County’s overhead costs for planning and development are considerably higher than its neighbours. Last year, Quinte West managed to process 181 new home building permits with planning and administration costs of $1.6 million. The County processed 105 new home permits for $1.85 million.

But why does this matter? Why should councillors and taxpayers in Prince Edward County care if it costs more to build new homes in Wellington than in Trenton?

The answer lies in the County’s stagnant population numbers. In 1998, the tax levy—the amount required from County taxpayers needed to fund its operations— was a little over $10 million. Today, the tax levy is more than three times greater at $31.8 million. Yet the population of the County has barely changed in the intervening years—just 200 more souls in the 2011 census than the 1996 count.

This means that the rising costs of taxes, water and garbage are spread across an unchanged number of residents— 25,000 then and 25,000 now. So everyone pays more. But not everyone can afford to pay more. Sadly, new folks coming to the County are largely only replacing those leaving. For many, the County is simply no longer an affordable place to live.

It has become clear, to many, that to staunch this trend, the County needs to both retain existing residents and attract new ones. That a mix of new homebuilding means more people—more taxpayers, more water consumers and more dump users.

Shannon illustrated how nine years of declining new homes starts has hurt the County.

In 2007, 155 new homes were built in Prince Edward County—more than Belleville and more than Quinte West. The next year, the County adopted sky-high development and connection charges. Collapsing credit markets around the world compounded the exodus of home builders from the local market.

New home starts in Belleville and Quinte West went sideways for the next nine years—one year up, the next down. But the market was essentially flat. Contrast that with the County, where new home starts fell off a cliff. They started falling in 2008 and kept falling until 2012, when just 69 homes went up—less than half the 2007 volume. Council waved the white flag and lowered development charges.

Between 2008 and 2015, Quinte West built 253 more homes than the County. Had those 253 homes been built in the County instead of Quinte West, the municipality would be earning about $680,000 more in property taxes each year from these homes, according to Shannon’s calculations.

“How many of these hundreds of new homes would be paying waterworks bills?” asked Shannon. “How many [would be] helping to relieve the pressure on existing ratepayers?”

Between 2007 and 2015, Belleville saw 462 more homes built in its market than did the County.

Councillor Kevin Gale urged his colleagues to maintain the discounted development charges until the committee looking at the issue delivers its recommendations.

“If we want to start solving problems with our water and wastewater, we have to build new homes,” said Gale. “Development charges are one part.”