Developers scrutinize proposed development charges

It seemed like two conflicting messages were clear in presentations made by local contractors and developers – “Don’t increase development charges –  and don’t increase taxes.”
The Feb. 28 meeting was a chance for developers to present their case t0 council on new development charges for the municipality.
Mayor Mike Broomhead pointed out council has yet to consider the report, and no decision on its implementation had been made. He also pointed out what he considers to be a misunderstanding.
He stated that Gary Scand­lon, of Watson & Associates, is required to provide council a report of what development charges should be based on costs 100% related to the growth in the municipality. How­ever, council is not obligated to impose that rate.
“Keep in mind that Well­ington North has never adopted 100% of proposed development charges, nor have councillors expressed a willingness to do so.”
Broomhead however stated that Scandlon must provide those figures to council to show what fees should be collected to cover costs. He also explained that any money collected as development charges can only be spent on projects meeting the growth-related criteria.
He added that another factor to consider is what would happen to water and sewage fees if development charges are not collected to cover the costs of growth.
Broomhead said that Well­ington County in its recent decision, did accept 100% of the upper tier development charge.
“I spoke adamantly against it, as did the mayor of Minto, but we were only two votes among 16.”
Scandlon then offered a presentation on the development charges nd how they are generated. He, like members of council, stressed the night’s meeting was to get comments.
In the audience were over two dozen people representing developers, contractors, and realtors.
Scandlon cited growth forecasts that suggested Wellington North’s population will increase from its current population of 11,291 to only 13,344 within 20 years.
He added that while the report considers the direct costs of growth, legislation does not allow for full cost recovery, and a number of services are not provided for.
He said that even with the report, implementation of charges remains at council’s discretion – both in the amount of the charge and to what type of development fees would be charged.
Scandlon said the big ticket item within the proposed char­ges  deals with water and sewer charges.
He said, “Twenty-four thousand dollars is a sizable amount.” Currently, develop­ment char­ges in Wellington North are roughly $6,500.
Although development charges exist for non-urban de­velopment – they are lower.
While Scandlon said council has the option not to fully recover growth related costs through­ development charges, there is still a price to be paid.
He said council would have to decide if those costs will come from property taxes or water and sewer rates.
“The cost does not magically disappear – somebody else pays for it.” From the various presentations made, local de­vel­opers do not believe it should be them.
Their presentations primarily focussed on what could happen if the full fees are accepted by council. The main objections were not to the original calculations of the proposed charge, but the potential impact to the community.
Some believe there could be no justification to a 400% in­crease to the fees, then subsequently questioned how much of Mount Forest’s new arena and sewage treatment plant is being paid for through the charges.
Broomhead explained the arena is not being paid for through development charges – although portions – such as the part designated as a seniors centre and the running track can be included.
As for the sewage treatment plant, he said only that portion attributed to additional capacity for the community to grow is included in the charges.
Dwight Benson contended that local residents may not see it, but it is an issue that affects every taxpayer. “We have to be competitive, and if we are not competitive we will not exist.”
Benson said that in 2005, Well­ington North adopted a development charges bylaw. At that time it was to be in effect until Sept. 15, 2010.
Benson sought exact figures on projected costs related to growth. He contended that without the exact figures the projections would be inaccurate.
“Are these figures grabbed out of the air? Also, have we done our homework to see if there is funding, grants, etc. for any of these?
“If we are projecting a guess at these improvements, and have not thoroughly investigated any of the above, it is a shot in the dark. The taxpayers deserve better,” he said.
Scandlon said he worked close­ly with municipal staff and its engineers who are well qualified to provide the projected costs of various projects.
The largest cost – that of the Mount Forest sewage plant now under construction, is an actual cost, he said.
Benson, however, said “If we raise development charges from $6,000 to $24,000, that is an $18,000 income difference. As well, the value of a residential single family home will in­crease by $18,000. The assessments will rise accordingly, and will continue down the line to every homeowner’s MVA each year.
“Grant you, it may not raise each household by that same $18,000 value, but it will definitely raise their assessment. As you can see, drastic changes like this will affect each and every taxpayer in Wellington North.
Brian Padfield read a letter from Patti-Jo McLellan Shaw, president of Hapfield Devel­opments who urged council to reject the Watson & Associates proposal.
“Like any price-setting pro­cess, the council must consider the impact of the new price on at least three fronts.”
“First, what impact does the new price have on the builders, developers, current employers and businesses in the township. Secondly, where does this new price position the township within their competitive market [other municipalities]? And finally, how may the township’s competitors react to the new pricing policy in the very competitive environment for growth and development.”
“For the town­ship to ensure a healthy economy that reflects the rural character of the area and provide job opportunities for our next generations, we must be open for business. If we price ourselves out of the market with high development fees, the new businesses, industries and residential growth will go elsewhere to a more development friendly community.
“The next consideration is where the new development fees position the municipality within the marketplace. Ac­cording to the population growth statistics in the Watson & Associates 2007 report, we are a low growth rate area.
“We are not experiencing, nor is it anticipated that we will face the strains of rapid urbanization that our southern neighbours in Wellington County face today. Rather, we are in the opposite position of trying to attract business and residential development so we must be cognizant of where we set de­velopment fees relative to our neighbouring municipalities with whom we compete for business growth.
“For example, development charges for single detached and semi-detached dwellings are Southgate, $5,031; Mapleton $9,345; Minto, $4,337; and North Perth, $10,081. The proposed development charges of $24,003 put Wellington North at the top of these neighbours [and some of its larger neighbours.”
“Finally council must consider how others will react to new Wellington North development fees.”
Citing the Dec. 7, Well­ing­ton Advertiser, she wrote that it was reported that in the face of increased Wellington County de­velopment charges that Min­to might lower its municipal portion of those fees to be competitive and open for business development in that area.
“I would encourage the Township of Wellington North to consider an incremental phasing of any new development charges. I appreciate that the township has incurred significant capital costs in the past couple of years with the Arthur pool, the Mount Forest sewage plan and arena, and others eligible for funding under the Development Charges Act,” she wrote.
Later Padfield commented that the combination of in­creased county and municipal charges would stifle growth in the north and the case for moderation was well made.
At the same time while he said he understood there are significant costs “to make this a great place to be, there is also a great need for fiscal prudence.”
The letter provided by Brad Schwindt,of W. Schwindt & Sons Building Contractors, added other concerns.
“As a building contractor and taxpayer in Wellington North, I was greatly disappointed after reviewing the Wellington North Develop­ment Charges study,” he wrote. The proposed new township fee of $24,003 causes concerns for future home building in Wellington North.
“With building lots at a price of $45,000 to $50,000, an increased development charge fee to $24,003 will make the price of a new home not affordable for the average skilled worker who works in the community now. Also any new industries that may consider locating in Wellington North will have difficulty in attracting skilled workers and there is certainly a shortage of skilled workers presently.”
“I believe Wellington North has a challenge to find money for infrastructure as well as fire, parks, and recreation. I don’t believe that raising the development charges for this or any future capital expenditures is the way to go.”
Schwindt added, “Yes, we do need development charges, but I feel they should remain at today’s rates. This will allow builders to continue to construct affordable homes and cre­ate a tax base. I feel strongly that the residential and commercial contractors should not foot the bill for new capital projects, when in essence most of the people in Wellington North have access to these services and recreation as well as the police and fire protection.
“New home prices have only increased 8% to 10% in the past couple of years and builders have not had time to ‘catch up’ to the present fee; this new proposed fee will have a serious negative impact on the construction business. Neighbouring townships and other communities may indeed be my future direction.”
Broomhead pointed out that the Mount Forest sewage treatment plant may not be the only concern. He said the reason behind that plant’s construction was the plant had reached capacity. Without it, development was at a standstill.
“What I am hearing is a desire to have it both ways – not to have the costs on development charges, nor on the tax bills,” Broomhead said.
However, many of the phone calls he has received have been to ensure that the costs do not end up on the local residential tax bill.
“Joe Public does not want to subsidize builders,” he said.