Straight up, please

Andrew Grunda is on spongy ground. The consulting economist advises County staff and council on how to set waterwork rates and development charges. He has done so for about a decade.

To be abundantly clear, Grunda provides an important service—pushing the municipality to consider its future needs—pumps, pipes, libraries, roads etc.—and then formulating these costs into a computer model that can then be manipulated in a variety of ways to present an array of potential funding pathways from which council can choose.

Essentially, Grunda enables municipal decision makers to ask “what if?”.

For example, what would waterworks rates look like if we did everything we wanted to do, right away? What if we extended debt repayment terms? What if we moved some of the cost burden from existing homeowners to new? What if we decide ratepayers simply can’t afford a massive increases on basic services? What if we can’t afford the plans drawn up by our public works team? On and on. It is an important function.

Grunda’s job is to take inputs provided by County staff and to tumble them around in his model to present a series of rates and fees that will pay for these plans.

Mostly he does this with objectivity and dispassion. This is important because these are complex problems, with lots of moving parts. The credibility of his work depends on delivering unbiased, uncoloured data to decisionmakers.

Yet Grunda has an unfortunate tendency, in recent presentations to council, of putting his thumb on the scale, shaping the message in a way that will serve his masters in public works—rather than lay out the bald facts and allow council and ratepayers to make up their own minds.

Speaking before a committee of council last week, Grunda pointed to striking population growth in the County—rising from about 25,000 currently to about 35,000 in 10 years, nearly 39,000 in 20 years. Maybe it will. Yet there is literally no evidence to suggest this is even remotely possible.

There are scarcely more folks in the County than there were 140 years ago. In fact, population in the County is declining—not growing— according to the last two census reports. Rural communities are being drained of people— a decades-long trend that shows no sign of letting up

On what evidentiary basis are we planning infrastructure build-out to accommodate 39,000?

But this example, though easy to understand, is less critical than his tendency to shape the message in a way seemingly designed to usher council down a particular policy chute.

The County was late to the business of applying development charges—a full decade went by before council got around to imposing these fees in new homebuilding. Looking to make up for lost time, the County, advised by Grunda, imposed the highest fees in the region. By a large margin. Staff was happy at the prospect of a rich new stream of revenue.

It was 2008. Bad timing. That fall credit market froze solid, triggering a deep recession. Yet the County kept its eyewatering development charges in place. So, when neighbouring communities began to see a rebound in new homebuilding in 2011 and later, the County continued to see fewer and fewer homes built.

It was much more cost effective to build in Quinte West or Belleville. Builders said it over and over again, but Shire Hall refused to believe it.

By 2013, County council realized it had to do something—our neighbours were eating our lunch—so they cut development fees in half for new homes built in serviced areas— those with water and sewers.

Municipal staff opposed these cuts arguing they weren’t factors in builders’ decisionmaking— pointing instead to the money left on the table.

In recent years, new homebuilding is beginning to return. Not yet on par with Quinte West and Belleville, but showing strong growth.

Is it because of more competitive development fees? It is hard to know. More likely a combination of factors. Ultimately, it’s a judgement call—best made by elected decision-makers.

That is why the data should be presented cleanly— without spin. But Grunda can’t resist referring to the discount as “lost” revenue. He paints scenarios in which development fees add only $11 to $16 to monthly mortgage payment. He suggests council consider this modest impact relative to the $1.5 million they lost in revenue.

This is spin. Not objective analysis.

Further, when he charted the County’s current and proposed fees in comparison to other markets, Prince Edward County is coincidentally positioned in the middle. The Goldilocks zone. Not to hot, not too cold.

“You are higher than Quinte West and Belleville, but comparable to Selwyn and North Grenville,” noted Grunda.

Sounds okay, but we don’t compete against Selwyn or North Grenville for new home building. In terms of market relevance, he might as well pick Tokyo and Santiago. In doing so, Grunda skims past the fact that our development and waterworks connection fees are already well above those in our competing market. Further he proposes that the County eliminate the discount despite the fact that the combined rate will be more than double that in Quinte West.

This is a difficult file—it requires the analysis and number crunching Andrew Grunda provides. He would be better serving this community, however, by presenting his findings without the spin. The implications are serious and will shape our community more importantly than most other policies developed at Shire Hall. To do this planning well, we all need Andrew Grunda to be a credible advisor. Marketing and spin is eroding that. Once lost, it’s hard to get back.

rick@wellingtontimes.ca