Proposed increases worry homebuilders

Luke Edwards

Grant Haven Media

Somebody’s got to pay for it.

While Norfolk’s homebuilders say proposed increases to the county’s development charges could further strain an already weakened market, county staff say long-term infrastructure needs are going to have to be paid for somehow. County councillors learned about the review of the charges at the July 28 council meeting.

“It’s a simple mathematical equation that’s in front of us. We have a growth forecast. That growth forecast means that there’s specific infrastructure required to support that growth. That infrastructure is costed. That then gets broken down in terms of development charges because in theory growth should be paying for growth,” said CAO Al Meneses.

“If there’s contemplation that we do not in Norfolk County want growth to pay for growth, that cost is still there. Someone has to pay for the cost of that infrastructure to support that growth. Whether it’s development charges, whether it’s current taxpayers, whether it’s grants from other levels of governments, those costs are the costs.”

A background study completed by Watson and Associates identified just over $1 billion in total capital needs, and attributed just under $400 million of it to costs that could be recoverable through development charges.

To collect that money, the consultants recommended significant increases to DCs on residential units. DCs on single and semidetached builds in rural areas would increase to $31,364 per unit from the current $8,215, while builds in urban areas would hit $49,387, up from the current $25,709.

DCs on apartment units and other multiples would range from $16,611 to $21,345 in rural areas, and $26,156 to $33,612 in urban areas.

Non-residential charges are also proposed to increase. For rural areas the charges would increase to $69.20 per square metre of gross floor area, from the current $40.93. Urban area charges are proposed to go up to $174.75 from the current $170.19.

Several members of the homebuilding sector in Norfolk spoke to oppose the possible increases.

“To add $25,000 to each house, it’s simply not going to work,” said Ike Keesmaat, president of the Haldimand Norfolk Home Builders Association.

“The building industry right now is suffering.”

Prominent Homes’ Sam Bunting said a building boom that occurred coming out of the COVID-19 pandemic has ended, pointing to numbers that show steady decline over the past few years. Last year there were 126 dwelling units built, he said, down from over 300 in 2021.

“We are seeing a significant slowing of our industry right now and for us to receive news that development charges are being proposed to double, you can imagine how we would feel and how scary that would seem,” he said.

Despite the fears surrounding the proposed increases, consultant Peter Simcisko said DCs would remain a small component of the overall cost to build a home. Currently, he said DCs in Norfolk represent about 3.6 per cent of the cost of the average home. Typically, he said DCs fall within a range of between four and eight per cent of the cost of a home, and with the proposed increases Norfolk would still fall within that range.

The presentation at the July 28 meeting was to introduce the background study and get feedback. A staff report and recommendation will come back at a future meeting. Councillors asked staff to include a breakdown of what the impact on the tax levy could be should they choose to lower the DC increases from the consultant’s proposal.