Comment
Imminent
The vote will be done by the time this column is printed. The next chapter of the waterworks saga will have begun. So, let’s tidy up a couple of things.
First, let us all be clear about what was on the table: We—waterworks customers—are lending millions of dollars to developers from our own pockets. We are building their infrastructure with our money. We have no certainty when or if waterworks users will ever get paid back.
Moreover, Shire Hall is planning to build it according to developers’ requirements, not ours. Absent developers’ claims, no one believes Wellington is growing to 14,500 and Picton to 32,600 people.
Shire Hall made up these numbers. Entirely. It wasn’t their experts. It wasn’t demographers. It wasn’t economists. It wasn’t the Ministry of Finance. Shire Hall made up these population estimates—estimates that define the scale of the infrastructure and spending. They believe developers.
When developers announce their intentions, most reasonable people respond with: We’ll see. And then move on with their lives. But not Shire Hall. They have taken the developer’s claims to be fact. And that their plans are imminent. They are putting massive new debt on your shoulders—waterworks users in Picton and across the County—to get ready because they are convinced of their faith.
It makes them poor lenders—uncritical, wishful thinkers and easily seduced. They are unable to see the risk right in front of their noses. It’s how lenders go broke—how banks go bust.
Late in the waterworks debate, Shire Hall embarked on a marketing blitz emphasizing the mythical 8,000 housing units that it says are in the advanced stages of planning. The “detailed breakdown of planned development” lists 21 projects comprising 4,199 units Shire Hall describes as imminent. Another 4,564 on their heels.
How might a bank or lending institution look at such a list? Few of the developers on the list have built a house in Prince Edward County. Most have no track record in this market. They may be accomplished builders in other communities, but no one ever counts the markets in which builders have entered and then retreated.
A bank or institutional lender would accord each project on Shire Hall’s list a value of zero. Add up 21 zeros, and you still have zero. Imagine going to the bank and explaining that your chances of getting a job and an income were imminent. How do you suppose that conversation would go?
A bank might extend some working capital as a loan to an established customer/developer. It might do so in a limited and defined way to give the developer some room to prove they can make a go of it. To determine if there is a sustainable market. To discern if there is indeed the demand the developer anticipates. But the bank isn’t going to put its neck out. In an untested market. A market with hundreds of resale homes languishing unsold. They are not lending $300 million on such a flimsy basis.
But the Bank of Shire Hall is plunging into the deep end. It is bravely pushing forward with a quarter-billion dollars of infrastructure development, and it is faithful that developers will do what they say they are going to do. The Bank of Shire Hall is taking a more profound and reckless risk than any bank would dare.
There have been plenty of warning signs. A developer in Wellington agreed to provide a portion of its development charges upfront by May 2023 in exchange for exclusive allocation of the capacity of the waterworks plants.
But when that deadline came and went, Shire Hall responded by saying it had been advised by the developer that “execution of a subdivision agreement is imminent, subject to one final condition being worked out with Quinte Conservation.” Interesting choice of words.
But by last fall, the developer still hadn’t paid its development charges. Shire Hall’s story changed. It said it was giving the developer an extension until the trunk line was approved. In January, Council approved the trunk line. But then there was a new stumbling block. The developer wouldn’t pay until Council approved a sewage pumping station to go with the pipeline.
The developer was given until September 1, 2024, to come up with its payment or else. Earlier this month, the developer notified Council it was asking for another extension. The developer pointed to delays by the County and the need for the months-long runway to raise the money needed to pay its upfront development charges. It was asking for a four-month delay to pay these fees.
So it comes back to this: Twenty-one times zero is zero. It is a list without value. That Shire Hall presents this list as proof of anything more than it has a lot of paper on its desk is frightening in its naivete. It is unsettling that such folks have the power to borrow so much money—in your name.
There can be a better way to manage growth. A proper way to manage risk. A more deliberate way to build out our infrastructure.
No matter the outcome from Tuesday—we must continue to work toward doing these things better. Shire Hall must stop winging it based on wishful thinking.
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