Comment
So, build already
The Quinte Home Builder’s Association (QHBA) is sending a procession of emissaries to County council, urging quick approval of expensive waterworks infrastructure plans. Several QHBA members, each armed with a prepared script, have come to Council in recent weeks, essentially making the same pitch: Growth is coming, the County’s engineering department prefers a regional water plan, and they are the experts, therefore Council should abide and push the spending button. That’s the argument.
Council listens along. Nod their heads. Thank the builders for their comments. Yet none has yet posed the obvious questions: Why are you here? And why now?
New homebuilding in Prince Edward County is at multi-year lows, but it isn’t for lack of water infrastructure. There is plenty of water and sewer capacity in Picton— enough for more than a thousand homes. A few hundred more in Wellington. There is capacity, too, in Consecon, Carrying Place and Rossmore. But builders aren’t using it. Not at a pace that would suggest we urgently need major new infrastructure expansion.
So why is the QHBA urging Shire Hall to build massive infrastructure it can’t afford? And why now?
Follow the money.
Who benefits from expanded waterworks? Particularly when the municipality is paying? Folks with large landholdings have been promoting big infrastructure spending for years. It increases the value of their property.
With an election coming up, they may worry a new slate of representatives will be less inclined to bury the County in debt—to construct infrastructure it may never need. They may have concluded that time is not on their side.
None of the QHBA emissaries has addressed the extraordinary cost of a regional water plan, nor who should pay for it. None is raising their hands to do so. Instead, existing water bill payers are being called upon to underwrite these big ambitions.
If there is, as they predict, burgeoning demand for new homes, why aren’t they building them in Prince Edward County? Their answers ring hollow.
“It’s time to push forward with infrastructure projects and not pause,” said Keith Watson, a land surveyor, in his comment to Council last week.
Councillor Roy Pennell asked the QHBA member why new homebuilding is occurring in Trenton and Belleville, but not in Prince Edward County.
Keith Watson didn’t have an answer. He suggested that Trenton and Belleville are not comparable to the County because they have a larger industrial base.
His response doesn’t explain why the County must spend money it doesn’t have to build infrastructure it doesn’t need.
Councillor David Harrison wanted to know whether QHBA members were prepared to upfront the cost of the waterworks expansion they were seeking.
Keith Watson didn’t have an answer to that question either.
The QHBA push comes at a moment when the pace of new homebuilding in the County is excruciatingly slow. Further, those new homes that have emerged from the ground are mostly outside the municipality’s urban—municipally serviced—core. Whether they are building in the countryside to avoid high water bills and development charges is unclear.
What is obvious is that Shire Hall is collecting a fraction of the fees from building (permits, DCs and connection charges) it would normally generate in an active building season. Every measure is grinding lower, finding new depths.
If new home demand exists, why aren’t builders building? If the QHBA is convinced that rapid growth is nigh, where is it? Why can’t we see it? Where are the framers? Roofers, plumbers and electricians?
So, build already—what is holding you up?
Understanding the Developer Value Multipliers
Land Stage Value of $1M Initial Investment Primary Value Driver
========= ========================= =================
1. Virgin Land (Raw / Ag) $1,000,000 Initial agricultural or rural asset value.
2. Entitled Land (Rezoned) $2,000,000 – $3,000,000 Paper value added via municipal approvals.
3. Serviced Land (Finished) $4,000,000 – $6,000,000 Roads, water, sewer, and power hooks active.
@Angus, these are great questions, and the right ones for Council and Staff to be asking when they allocate massive amounts of taxpayer money to building infrastructure based on wild projections.
People often think developers make their money when they sell homes eventually. That’s not the case.
When a developer purchases raw, “virgin” land for $1M, say, they target an asset value increase (known as “land lift” or “planning uplift”) of $3M to $5M purely from municipal rezoning and infrastructure servicing.
This represents a 3x to 5x value multiplier, which often yields higher profit margins than the actual home sales.
The developments pitched to the County by the various outside interests over the years, have been pitched for exactly those reasons.
Always — follow the money. Developers have over the years looked for, and found “soft targets” in municipalities that are naive and uninformed. Being uninformed makes you vulnerable to wonderful-sounding spreadsheets and presentations forecasting great influxes of willing buyers to increase the tax base.
These great influxes are not going to happen in the County, which many say is a good thing, to preserve the historical County culture (Disclosure: I happen to be one of those) But the massive drain on County taxpayers has happened for years, and continues to happen, transferring wealth from County taxpayers to the asset values of the developers.
This has to stop. Perhaps with a new Council and Mayor, it might. But with only less than 2 weeks before the Registration deadline to run, it looks like at least some of the developer-friendly Council members will get in again by acclamation. Hopefully the new Mayor can steer the ship to right-size the Finances to a County of 25,000 souls.
There are questions that should probably be asked of these developers. Of the homes that you have built [see the various Picton subdivisions for a start], how many of those sold are being lived in by the people who purchased them? How many are now income properties due to long-term rentals by off-County owners, and who oversees/manages those rental contracts – again, here or off-County? Are some being used by the employees of the developers, again as rentals, only so long as they are working for them? We don’t know anything about this, and I could be well of the mark about this – but, I think it’s a pretty safe bet that Shire Hall doesn’t know either. Does any of this matter? If the idea is to make it affordable for residents in PEC to have a home, and not provide these homes as a second income to off-County interests then, perhaps.