Developers get a six-month reprieve from 'substantial' development charge increases

ELORA – Developers will get a six-month break on development charges increases and the promise of more discussion, but development charges will still rise sharply in 2026.

Centre Wellington staff and consultant Watson and Associates have proposed an increase on single detached dwellings from $22,006 to $48,028.

Non-residential charges would increase from $11.71 per square foot to $14.73.

These include water and wastewater charges.

“It is a fairly substantial increase,” CAO Dan Wilson acknowledged at the March 23 council meeting. “But to be perfectly honest, this is the cost of growth.”

To a comment that the costs will only be passed on to the home buyer, thereby driving up the cost of buying a home, Wilson said, “If developers and home buyers don’t pay for it, taxpayers will."

The development charge (DC) background study considered:

• township growth projections to 2051 that have been established and approved by the Minister of Municipal Affairs and Housing;
• the township's urban boundary has been updated to account for growth to 2051;
• construction costs have increased significantly (the non-residential building construction price index increased 42.3% from 2021 to 2025);
• many township growth and planning documents have been updated, including the Water and Wastewater Servicing Master Plan, Active Transportation and Mobility Plan, and Parks and Recreation Plan; and
• there have been numerous changes to the Development Charges Act, which made some costs ineligible from DCs, meaning the township has to cover the costs itself.

Wilson said staff have had good conversations with developers and in consideration of their concerns have proposed a six-month freeze on current DC rates to the end of September.

The township will then phase in rate increases starting October 1.   

Officials also proposed a partial DC exemption to encourage medium and high-density development in intensification areas.

Council heard from two developers at the meeting, who explained how the proposed increases would have a negative impact on their bottom line and would likely stall new builds.

Joseph Puopolo of Polocorp said he appreciates the six-month freeze but is still concerned DCs, under the proposed plan, will be used to benefit existing residents when they should only be used to service growth.

He noted $36 million of infrastructure is needed to service the Fergus South Secondary Plan and that requires DCs to fund it. But DCs are only paid when applications are approved and none have come forward for Fergus South.

“If other development doesn’t happen, you can’t bring it online,” Puopolo said.

As well, the DC study does not include potential servicing for the lands outside the urban boundary with complete applications that are currently in front of the Ontario Land Tribunal.

Polocorp is one of four developers taking the township to the tribunal. Polocorp has two properties on Highway 6 just north of Fergus – one that falls inside the new boundary and one that remains outside the boundary.

“We appreciate the six-month extension for further discussion and to refine the numbers,” Puopolo said.

Joe Harris, first vice president of the Grand Highlands Home Builders’ Association, raised similar concerns.

“We want to deliver more housing in Centre Wellington … but (with) the magnitude of the proposed DCs, it will be hard to absorb that level of increase,” he said.

Council had a long discussion about the staff proposal and the concerns raised by developers.

In the end they approved:

• a six-month freeze on current DC rates to provide developers time to plan for increases;
• phased-in rate increases starting Oct. 1;
• a partial DC exemption to encourage medium- and high-density development in intensification areas; and
• an updated local service policy.