County News
Stuck
Despite incentives, new homebuilding remains stagnant in Prince Edward County
More than a year ago, Shire Hall reduced the development and connection charges it levies upon new home builders in a bid to stimulate a stagnant sector in PrinceEdwardCounty. A third of the way through, the experiment has, so far, failed deliver the desired result.
This year, despite partial relief from development charges, the County has issued only 40 new home permits in the first six months of the year—on pace for a mere 80 new homes in 2014.
The County is stuck in a narrow band averaging just 84 new homes annually over the past five years—down almost 40 per cent from the annual average of 138 new homes built between 2006 and 2008. It is a uniquely County problem, and our ability to fund roads, libraries and waterworks depends upon fixing it.
It’s important, first, to understand how we got here and how we diverged from our neighbours.
2008
At the end of 2008, credit markets froze around the world, triggering an economic downturn that continues to be felt in markets and regions around the world. But homeowners in Canada weren’t as leveraged (indebted) as those in the U.S., Spain and Ireland. The residential real estate market in this country didn’t fall as far, and recovered more quickly. But not in PrinceEdwardCounty.
Some said development and connection charges were to blame. Certainly, Shire Hall’s timing was terrible. While many other communities had been collecting development charges for a decade or more— the County didn’t get around to it until the spring of 2008.
The municipality pegged its development and connection charges on the higher end of the range of comparable communities—and well above those being charged by the County’s immediate neighbours. It believed, and was advised by its consultants, that Quinte West, Napanee and Belleville would likely soon increase their charges, falling in line with the County as they came up for review.
But when financial markets became seized in the fall of that year, new homebuilding slowed dramatically here and elsewhere. Against this global backdrop neighbouring communities balked at raising their building charges—unwilling to put another hurdle in front of a fragile building sector.
So instead of leading a movement toward higher rates—the County was suddenly the most expensive municipality in which to build a new home in the region.
Even after it relented last year—reducing development charge by 50 per cent for new homes in areas serviced by waterworks— PrinceEdwardCounty remains the most expensive place to build a new home.
Though a direct comparison is problematic— as each municipality processes these fees using local formulas—the graphic above illustrates a competitive disadvantage this municipality has in attracting new home building compared to our neighbours.
DIVERGING PATHS
It is a disadvantage that is apparent when comparing the number of new homebuilding permits issued in the County with the number issued by our neighbours since development charges were enacted.
From 2006 to 2008, the County (138) , Belleville (137) and Quinte West (138) each issued, on average, about the same number of single, detached new home building permits.
But since then, the County’s path has diverged greatly from our neighbours. Since 2008, Quinte West has averaged 107 new homes per year—a 22 per cent drop from the heyday of the last decade. Belleville is down just four per cent since 2008, averaging 131 new homes each year for the past five years.
Meanwhile, in the County, homebuilding fell off a cliff in 2009, dropping a sheer 43 per cent in the past five years, and no end to the downard trend in sight.
With just those 40 new home building permits issued in the County in the first half of 2014, the municipality appears stuck—unable to attract its share of residential development. That means a lower than expected increase in the tax base. It has also forgone a portion of its development charges.
The bigger problem is the County’s competitiveness for new homebuilding. The assumptions underlying the operations and maintenance of County infrastructure, including its waterworks, relies on a growing tax base and an increasing number of users. Revising these assumptions downward, means more of these costs must be borne by existing homeowners. This inevitably means even higher taxes and user fees.
The article is misleading, Council only reduced by 50% of Development Charges for the urban areas of Wellington and Picton and leaving the rest of the county paying for aerial fire trucks that could only be used in for residential buildings in Picton. Development is necessary to build a economically self sufficient municipality. Its not just houses, building causes employment in the construction industry and supporting suppliers which generates further economic growth in retail and commercial construction as plumbers etc need industrial space because of their business growth. Failure of PEC Council to understand this impact is singularly the cause of our economic struggles. It takes approximately 40k people to support a vibrant local economy with job opportunities for all. You need houses and you need to build them everywhere. This is not new, many municipalities have gone through this cycle before. And a strong vibrant housing and construction industry is the catalyst to economic strength and growth.
I think there are a number of factors contributing here. Firstly the development fees are a clear signal to potential builders that PEC is not interested in you living here, and if you do they will rip you off at any opportunity. Secondly the 2005 Planning Act makes it impossible to put a lot on prime ag. And considering large swaths of PEC is classified as such it’s impossible to build. Even areas of poor farm land is still oddly considered prime ag. Thirdly, there are minimum distances from barns that only two counties in Ontario seem to have, PEC being one of them. These are just additional headaches that only serve to complicate the process. Fourthly, property taxes are extremely high for a number of reasons, one being the oversized police force.
We moved back to the area in 2009 after growing up here. We have been looking for a spot to build since then. With a family farm here of over 3,000 acres, we still can’t build on any of it because its zoned agricultural. Yet a Toronto couple can buy a 40 acre farm here for the same cost as a postage stamp size building lot ($100k)and build a house right in the middle of it. It’s no longer farmed land, and 40 acres is gone.(if there is no home on a purchased farm, you can build one) The system is broken.