The price of new homes in Collingwood are sure to rise over the next three years. It’s all about growth.
Does growth pay for itself? If the answer were yes, then towns like Collingwood, Wasaga Beach or Blue Mountain would be rolling in cash rather than facing record debt levels. No, growth does not pay for itself and I doubt it ever will.
One of the tools a muncipiality has is to apply development charges (DC’s) against lots created. Under the Provincial Development Charges Act, it defines DC’s as being “charges against land to pay for increased capital costs required because of increased needs for services arising from development of the area.” In plainer English, that means developers pay for things like roads, water-mains and sewers to service newly developed land.
Currently, Collingwood is preparing a new DC by-law that would potentially see fees more than doubling in the next three years. They could climb from about $10,400 per lot to over $21,000 if approved. Even at that, Collingwood would not be covering the true cost of infrastructure related to that growth. That’s how expensive it is. At the new rates, the town would still be in the average rates of DC’s charged around the province.
Surprisingly, some members of the local development community have agreed it is an increase that is necessary and overdue. According to an article in the Enterprise-Bulletin newspaper, local developer Peter Osmond, representing the Georgian Triangle Development Institute, told council that an increase is necessary.
“The current rate is so out-of-date and so low that the opportunity to expand our infrastructure is virtually nil,” he said. “It is reasonable to build a solid infrastructure, and we support the phasing in; that’s prudent given the difficult economic climate.”
In my opinion, growth will never pay for itself however, development fees are a necessary charge in that direction and the failure to levy them is fiscally irresponsible. For every dollar that a town does NOT levy against a developer for infrastructure growth, a dollar is being charged to the existing tax payers of the community. I’m tired of high taxes and the costs that have come from such fast and furious growth in Ontario.
I disagree with Chamber of Commerce President Rick Lloyd who feels development charges should not be implemented at this time due to economic volatility. If a plan to increase the DC’s were deferred for a year of two, it would only mean that the financial burden would have to be borne by you and me instead of the developers. That just seems wrong. Wait a minute, it IS wrong.
What I do take issue with though is the idea of developers having to pay the DC’s at the time a site plan agreement is signed rather than when a building permit is issued. Now that would halt development in a hurry. It’s simply not reasonable.
At the end of the day, the people who buy new homes will see the cost passed on to them. New house prices will have to rise. It’s the price we pay for growth. Well part of it anyway.
July 22, 2009 Update: Thankfully, the draft by-law going before council on Monday night has been revised to remove the provision of having developers pay the DC’s when a subdivision agreement is signed. After reviewing policies in surrounding area, staff have nixed this from the draft. Whew.
Marg Scheben-Edey is a Broker with RE/MAX four seasons realty limited, Brokerage in beautiful Collingwood, ON. With three decades of experience, Marg is a leader in the local real estate marketplace and is ready to help guide both Buyers and Sellers in achieving their real estate goals. Email Marg