Wellington North council is planning to slash local development charges by over 40% to stimulate residential growth in the municipality.
Under the proposal, the development charges for single detached homes in urban areas would drop from $17,429 to $10,000.
Council held a public meeting on May 30 to review the proposed amendment to the township’s development charges bylaw.
While the main intent of the proposal is focussed on spurring residential growth, the drop in development charges goes across the board affecting commercial, industrial and warehouse proposals as well.
Perhaps the biggest winner would be those planning warehouse style developments in urban areas.
Previously, commercial, institutional, industrial and warehouse developments were all lumped into a single non-residential category at $5.13 per square foot. Now development charges for warehouses are set to drop to $0.75 per square foot.
The only development charge remaining unchanged is for wind turbines – which remains at $2,949 per unit.
Mayor Ray Tout said that a while ago residential developers from the area came to council to voice concerns about the economy and its impact on Wellington North. Tout said council wanted to listen to those concerns.
He noted councillor Dan Yake took the lead and set up four meetings to look into the issue. Those meetings happened as part of the township building and property committee.
“There were no closed-door sessions,” Tout said.
He added every one of the meetings went well between council and the developers.
“With the current economic situation, we wanted to stimulate our economy by increasing our labour force and creating business in Wellington North,” he said.
Tout stressed this is a one-year proposal. The planned implementation is retroactive from Jan. 1, 2011 and runs until March 31, 2012, with a review to come later in the year.
Yake said there was good discussion with the developers “and I think we made some progress.”
He hoped that over the course of the next year, good things would happen. If not, Yake said the drop will be reviewed.
Throughout the meeting, both Tout and Yake indicated this drop in charges was intended to be a one year experiment – with limitations.
Last year roughly 20 new homes were built in the township. The goal with the decreased charges is 35 new homes.
Tout added this target was suggested as realistic by the developers themselves. The argument made by builders was that development charges were hindering growth.
If new builds do not reach the target goal, it would prove to council the development charges were not the issue with the lack of builds.
Wellington North resident [and former councillor] Ross Chaulk advised caution. Chaulk did not favour the proposed amendments.
“To me it’s really very simple. Development charges are an attempt to bring fairness to property taxes. Current taxpayers should not have to shoulder the burden caused by new development.”
Chaulk explained that if the charges are reduced, then there is less money to pay for new infrastructure to accommodate the new development – “which means the taxpayer will be asked for more.”
He considered that unfair to existing taxpayers who are paying to maintain existing infrastructure.
In urban areas, he said these costs also drop development charges for water and sewage services to $6,500.
“I can safely say people in rural areas would love to be able install a well and septic system for $6,500,” he said.
He pointed to the Murphy property which will be developed at some point which includes townhouses and single detached homes.
Chaulk contended if 200 homes were constructed, based on the proposed charges, the township would lose $1,489,000 in development charges.
“Where’s that money going to come from? There’s only one taxpayer out there.” He asked council to think this through before implementing the change because of its potential ramifications.
Tout agreed Chaulk made some good points. However, “we’d be very impressed if someone were to build 200 units in a one-year period.”
Chaulk added once the fees drop, it would be hard to go back [to increase them].
Tout also stressed this proposal is in essence, a one-year contract.
Yake added as council went through the process, it looked at the importance of the development business in the community.
He agreed comparing Wellington North with other municipalities is not comparing apples to apples. He contended that perhaps part of the issue was problems within the original development charges study.
“I am a little uncertain as to whether it was entirely accurate,” Yake said.
Chaulk countered stating that was the reason those charges were not implemented at 100%.
Yake said “I think looking back, our study probably had a couple of mistakes – one of which was that it was not tendered.”
He added, “This amendment is on a one-year trial basis. One of the stipulations is that there needs to be 35 new homes. If there isn’t, we can say it is not the development charges causing the problem – it is the economy.”
However he advocated that it was better to have 35 units at $10,000 than 20 at $15,000.
Tout said the “realtors, developer and the municipality all need to work together to stimulate the economy in Wellington North. We hope that by this initiative it is going to work.”
Chaulk cautioned “a house only sells at market value.”
He said if in Centre Wellington the house cost includes the development charge, those market values will rub off on surrounding municipalities whether or not it charges the fees.
“They’re not going to be charged market value less the amount saved on development charges.”
Tout said the idea is that consumers will be aware of the $7,500 reduction to stimulate sales.
“If everyone else wants to remain with strong profits, this will not work.” But Tout said, council wants to be leaders in stimulating the economy.
Councillor Andy Lennox said the municipality was getting a lot of push back from the development community that the charges were standing in the way of development.
“One of the goals of this proposal is that in a year’s time, we would be able to say whether it was holding development back – or not.
“We’ve issued a challenge to the development community to deliver the goods.”
Yake also pointed out that at the start of 2013, council is required to undertake a new development charges study.
“That will tell us where we should be.”
He also believes a new approach is needed as to how the study is done.
When questioned about how the $10,000 figure was determined for single detached homes, Tout said there were a number of discussions with developers and with council.
He said the original idea was to drop it to $14,000, “but we had to look at how far we wanted to stimulate our local economy.”
Tout said some developers argued they had employees they would have to lay off if circumstances did not change.
After a lot of deliberation council decided to reduce the charge by $7,000 and use that formula across the board as a stimulus package, “to show by example.”
But Tout stressed this is a partnership and these savings need to be passed onto the consumers.
“If this works for us, by increasing the number of residents, there will be more people using services, students in the schools. We’re hoping to attract and bring in younger families.”
He believed Wellington North is in a good position with a diversified lifestyle.
“We felt councillors were the ones shovelling the coal, and we needed to get the train moving.”
Tout said council felt that by being aggressive with a 12-month contract, this would hopefully stimulate the economy.
He also foresaw a positive domino effect if 35 homes could be built within a year’s time.
The last date to purchase the permit would be March 31, 2012 – but there would still be a six month review to find out if the permit is followed through.
At that time, it would be reviewed by council to see if the goals were met.
While Tout agreed “Seniors are a strong part Wellington North’s economy,” but he noted “we need the youth for the survival and the growth of Wellington North. We need the youth or there will be tumbleweeds going down the main street in 15 years.”
He said the gamble is to increase the tax base for the municipality.
Council will consider passing the bylaw at its June 6 meeting.
