After nearly 15 years of stagnant development charge rates, the cost of building new homes is set to rise in Wellesley Township.
Councillors meeting Tuesday evening rejected a staff proposal to phase in significant increases to residential development charges, instead passing a bylaw to apply all at once the maximum fees allowed by the province.
While council was unanimous in its support of raising rates more than 500 per cent – to $7,666 from $1,296 for single- and semi-detached units – Ward 1 Coun. Shelley Wagner and Ward 2 Coun. Herb Neher each agreed with the staff’s recommendation of a phase-in period that would see a 50 per cent increase over the next two years.
But Ward 4 Coun. Carl Smit, Ward 3 Coun. Peter van der Maas and Mayor Joe Nowak disagreed.
“I’d rather do it all at once,” Smit said. “They’re building $500,000 houses and we’re talking about a couple thousand dollars here. I think we’re better off just to get it done and over with.”
“My understanding is that some of the fault lies with the township for not having reviewed this issue a long time ago,” Wagner countered. “I understand where the developers are coming from, and although it has been enjoyable for (them) for so long because there hasn’t been an increase in so long, but I think there is a benefit to splitting it up and saying, ‘yes, we were at fault because we didn’t implement it before,’ rather than just dropping it all on them at once.”
Van der Maas, like Smit, is a newcomer to council who saw no need to atone for the sins of his predecessors.
“It was an oversight by council for whatever reason over so many years to have charges remain unreasonably low,” van der Maas said. “So what has happened is that developers have for 14 years, enjoyed quite a financial benefit, but I’m with Carl (Smit) in that I don’t think we have to provide more benefit. I’m in favour of the full charge.”
Homebuilder Ron Stroh of Stroh Homes acted as a delegate to council, raising concerns over the proposed rate hike.
“From my perspective, all I am saying is give some thought to how much you implement all in one blast. I think that is one of the biggest things that I look at, is how much we are going to affect people’s thinking in the short-term. Obviously, we’re going to see (rates rise), I have no question, and based on the numbers, it is probably needed. My only concern is, don’t take it any higher than you have to and let’s try to stretch it out over (a period of time).”
Nowak, on the other hand, pointed out that phasing the increases in over the next two years would cost the township some $139,000 based on development figures in 2013.
With a 3-2 vote (Smit, van der Maas and Nowak in favour, Neher and Wagner opposed), the revised motion passed, bringing Wellesley’s residential development charges much closer in line with its neighbouring municipalities.
Regulated by the province, development charges are established by a formula dividing forecasted capital costs by the projected population growth. Eligible costs include long-term expenses for indoor and outdoor recreation services, administration, road construction, public works, fire protection and water services.
The previous council commissioned Hemson Consultants to provide a development charges study earlier this year.
The results indicated maximum rates of $7,666 for single and semi detached homes, $5,686 for rows and multiple units and $4,125 for apartments; all will be applied going forward.
Consultant Stefan Krzeczunowicz outlined the reasons why most municipalities choose to enforce the maximum development charges allowed by provincial legislation.
“You have a choice. You have a capital program that you are committed to providing and you can fund a portion of that through development charges. If you choose to impose a lower charge, you will have to fund whatever revenue is not collected through your property taxes.”
Development charges are designed to pay exclusively for new infrastructure and services that are necessitated by growth, Krzeczunowicz added. The principle is that “growth pays for growth.”
The rate is still lower than the $17,358 in development charges imposed by the Region of Waterloo for singles and semis built in the township.
Wellesley will remain one of the few municipalities in southwestern Ontario to exempt all commercial development from development charges.