Unimaginable

Report tosses around large numbers for Wellington’s future

An area-specific Development Charges Study for Wellington was the subject of a public meeting held last Thursday. Andrew Grunda, an economist from Watson and Associates, presented a plan to council regarding setting an area-specific development charge to Wellington, that would encompass all future growth. Currently, the County recovers the growth-related capital costs for water and wastewater services through a connection charge imposed County-wide under the authority of the Municipal Act. The plan would see a premium charged to Wellington, to help offset the $96.5 million in gross capital costs associated with a new water and wastewater plant, as well as upgraded services throughout the village.

For several months now, engineering consultants have been busy imagining Wellington in the future. A future in which the village population is four times larger than it is today. And it is expensive. The price tag is currently set at $96.5 million—even before a shovel is in the ground. Wellington has bounced between 1,500 and 2,000 residents for over 100 years. The current pressure on the population is downward. Yet the County is making plans for a future that will welcome 8,600 residents.

To make matters worse, of the $96.5 million, only an estimated $75.6 million is recoverable through a development charge. Residential development charges will make up $46.4 million, or 48 per cent of the capital costs and non-residential is expected to make up $29.2 million, or 30 per cent. This leaves $20.9 million, or 22 per cent to be left to the taxpayer. Watson classifies this as a benefit to existing users, meaning existing residents will see better water pressure and more efficient waste takeaway. There is also $2.3 million included in that number that is classified as a post-period benefit, meaning the planning for even more future growth or services. “If you are replacing infrastructure with new infrastructure, then that replacement is a benefit to existing,” said Grunda. “If you didn’t expand it, you would ultimately have to replace those treatments plants in the future. This acknowledges that you are accelerating that replacement by constructing it through these works. The elevated tank would be replacing existing storage demands and addressing water pressure issues. The sanitary trunk sewer also improves current levels of service in addressing waste water conditions.”

Through the 2017 Water and Wastewater Ad Hoc Committee and 2018 Development Charges Background Study process, it has been the County’s intention that water and wastewater services would be incorporated into one development charge in the update. The County’s current connection and development charges for a single detached home— roughly $18,000—are already higher than all of its neighbours including Belleville, Quinte West and Brighton. The new charges would see the fee jump to nearly $30,000 per residential unit—a 60 per cent increase. Non-residential development charges would see an increase from $5.53 per square foot, to $34.14 per square foot. Grunda explained that though these charges might seem high, they are necessary to move forward. “It’s important to note that while the positioning is higher, this is the required charge to fund that share of capital that was identified. If these charges were to be exempt or reduced, then that would be funding that would have to come from some other source, principally water and wastewater rates,” he said.

At the current rates, Wellington doesn’t attract much non-residential development. It is hard to imagine that will change with a 517 per cent increase in fees. Councillor Mike Harper asked what would happen if Wellington can’t attract this type of development. “If those lands were to be maintained as non-residential, and the development was delayed, then cash flowing the costs that you are placing that would later be paid for by the development when it occurred would have to be a consideration,” said Grunda. Ultimately, the shortfall would fall onto the backs of current County taxpayers and water users.

One other item of note is the effect on being able to offer affordable housing in the village. The current fees already make it difficult for a developer to offer low cost housing. The Watson study does explain that a 30 per cent reduction is offered for any affordable housing project, but that is after the rates are already increased by 60 per cent, meaning developers will still be paying 30 per cent more to offer affordable housing in the village.

Councillor Kate MacNaughton asked how the impacts will be communicated to ratepayers. “It looks like we are taking on an enormous amount of risk and I really don’t know if there are enough ways to offset this risk that would give me confidence,” she said. “I’m not even clear if the full plan for servicing Wellington necessarily meets my vision of Wellington’s future longterm.”

CAO Marcia Wallace explained that her team is currently in talks with developers on up-front financing agreements to get the majority of the development financed through something alternative so the municipality isn’t carrying the full weight. “We are in the process of having conversations around an up-front financing agreement for the four largest developments. What we are hoping for is we have a draft agreement before we come to council on February 25 so we have a better idea of how this might impact, and then the ratepayer piece will also get more flushed out as we look to the next rate study which is something we are doing this year as our existing rates expire at the end of 2021. We see that there is risk now with an Official Plan and a Secondary Plan that permits growth that we cannot service under the current situation. We cannot approve any more development even though our Secondary Plan says it’s allowed. Eventually we will be having a legal risk, not just a financial one, for not meeting our obligations to match up with our own planning framework,” said Wallace.

Councillor Bill Roberts asked about the governance of water and wastewater in the village. Roberts believes the County should look at setting up a commission of water users who have a direct interest. It should be noted that only three current councillors live in an urban centre and pay water and wastewater rates. “This is a public meeting with no public present or interacting with us. And I don’t think it’s just about ZOOM. Pre-pandemic, these meetings were pretty perfunctory and more formal than productive. I’m still concerned that we haven’t had a very good discussion on the appropriate governance related to Wellington development charges as they relate to water and wastewater. Wellington water consumers are largely left out of the management of their own water utility, and they pay the entire bill. To pretend that this is some sort of meaningful public exercise is fraught with a lot of doubt,” said Roberts.

Councillor Harper circled back to the growth forecast, that many are having trouble grasping. “If you look at that, what you know about Wellington, and what is going on. And you look at the secondary plan and what the growth forecasts are, what’s your feeling about this sort of growth forecast. A lot of the public in Wellington are shocked that we would spend $100 million with the expectation there would be 8,600 people here one day,” said Harper. Grunda noted that this isn’t a unique situation. “From our experience this isn’t uncommon. A lot of municipalities find themselves in similar situations where they need to provide servicing. Obviously water and wastewater servicing is very expensive, especially on small systems. What we generally see is municipalities going through this process of understanding what is the anticipated development. Looking at land supply as well as market demands that could be achieved. And then try and look at the underlying servicing and whether or not that can be phased to address those financial concerns.”

Councillor Jamie Forrester didn’t mince words when it was his turn at the mic. “I know we probably have a legal obligation to do this, but what happens if we don’t do it? And what happens if we don’t get the growth we are expecting over the next 20 years?” CAO Wallace explained that developers are keen to get their building underway. “There is a lot of interest and belief on the part of the developers. They feel that the market is there over the next five to ten years. There always is risk when you build infrastructure as to whether the development is realized.”

Councillor Andreas Bolik added that he shares some concerns raised by residents surrounding the lack of industry employment, combined with Wellington’s smaller population, lack of younger workers and the difficulties of maintaining infrastructure. “We don’t have industry or commercial and I don’t see it happening in Wellington or even Picton for the matter. Our population has hovered around 25,000 for the last 20 years. We’re not growing, but we’re changing,” he said. “The definition of insanity is doing the same thing and expecting different results. We have a problem with maintaining the infrastructure we have now. Now we are looking at doing further development and spending 100 million on new infrastructure instead of spending it on fixing what we already have.”

The development charges bylaw is to come before council on February 25 for consideration. The development charges background study documentation and a video of the meeting can be found at the County’s website.