Stayed

Development charges discount frozen for 18 months

Council decided, last week, to extend the 50 per cent discount on development charges for new homebuilding until September 2019. It will also convene a committee—likely comprised of council members, staff, residents and homebuilders—to consider the factors that go into forming the development charge rate.

HOW WE GOT HERE
In 1997, the province implemented development charges legislation that prescribed how municipalities could charge new homes and businesses for the cost of expanding municipal services and facilities to accommodate this growth.

It was considered fair and reasonable that newcomers should pay for expanded use of roads, emergency services and such through building, development and connection charges. But the County failed to implement development charges until a full decade later. Some former wards had a mix of small lot levies and waterworks charges, but the County lacked a uniform set of fees for development until 2008. The County had to make up for lost time, and a lot of neglect. It imposed new development charges of $7,382. A couple of years later, it added stiff new connection charges of $7,100, rising to $14,000 by 2015. In a matter of a few of years, the County went from zero to nearly $18,000 in eye-watering new building fees.

Almost immediately new homebuilding began to fall. The slide in new homebuilding triggered a dangerous decline in the County’s population.

It would take five years before County council relented. In 2013, council implemented a 50 per cent discount on development charges on new homes built in municipally serviced areas—that is urban areas with waterworks. This halted the decline in new homebuilding starts and has led to a slow recovery. New homes built in the rural countryside were excluded from the discount.

WHAT TO DO NOW
That 2013 bylaw expires at the end of March. Staff, along with its consulting economist, Andrew Grunda from Watson and Company, urged council to remove the discount. County manager James Hepburn noted that the municipality had forgone about $1.2 million in charges it otherwise would have gathered if the discount wasn’t in place.

But others, including this columnist, argued that the County needs more homes and more residents. Statistics Canada has tracked a decline in the County’s population for the past decade. This has bad implications for the viability of schools, health care and affordability of everything from roads to waterworks.

Further, demand for new homes is driving up prices on a dwindling inventory of resale homes.

Eric DenOuden heads Hilden Homes and is president of the Canadian Homebuilders Association. He told council there were bigger problems in building in Prince Edward County than just high development charges, urging council to find ways to free up developable land. He suggests too much waterworks capacity is tied up on projects that are sitting dormant. DenOuden encouraged council and Shire Hall staff to work with builders to find ways to accelerate new homebuilding in this community.

Another developer was more blunt. Alan Hirschfeld wrote to council to say that raising fees would likely put a stop to his residential subdivision project located north of Wellington—at least in the short term.

Graham Shannon, president of Sandbank Homes, urged council to freeze charges until a committee could be formed to consider development charges. Shannon sat on a similar committee that examined connection charges through much of last year.

Councillor Gord Fox tried to extract a commitment from Shannon that his company would build affordable housing in the County if council extended the discounted rate.

Shannon explained that Sandbank Homes had indeed invested in $3 million affordable housing project in Picton recently. He noted that the Federal and Provincial government had kicked in about $700,000 and that he, personally, had invested $400,000 into the project and that this money was tied up for the next 10 years. Meanwhile, the County earned $154,000 in fees and charges.

“So, my question would be, is the County committed to affordable housing in the future?” asked Shannon.

Most council members felt it was the wrong time to increase development charges. Most understood that growing the tax base was preferable to one-time charges.

Mayor Robert Quaiff noted that new homebuilding is beginning to increase, but the County wasn’t in a position to extract higher fees. He was encouraged by the outreach of builders such as DenOuden and Shannon, and their willingness to work with the municipality. He wants that to continue.

Councillor Janice Maynard disagreed. She argued that higher fees in the County relative to Brighton, Quinte West, Belleville and Loyalist Township weren’t a factor in the lower pace of new homebuilding in this County compared to these neighbours.

She complained that this lost revenue was being paid for by existing residents.

Most of her colleagues however were more interested in accelerating homebuilding in the County—to ease the pressure on the rising cost of housing and to stem the decline in the population.

Councillor Jim Dunlop suggested it would be better simply to reset development charges at the discounted rate. He said it was unclear the County could ever justify such high building charges if competing markets nearby kept theirs comparatively low.

Councillor David Harrison was in general agreement with the majority, but wanted the discount extended to rural areas.

In the end, council resolved to keep the discount in place for municipally serviced areas until September 2019—time enough to allow a new council to get its legs under itself before it tackled the issue all over again.