South Huron council backs tripling development charges

By John Miner

Faced with the possibility of having to raise property taxes to cover costs related to new development, South Huron council has voted instead to triple development charges.

The decision will see the fee charged to developers raised on Jan. 1, 2027, from the current $6,467 for a single detached house to $19,131.

A consultant’s report prepared by Watson and Associates for council calculated that based on anticipated growth, South Huron will eventually need to build a new water tower in Exeter and upgrade the sewage treatment system at a cost of millions of dollars.

Developers with projects already underway in South Huron have vigorously opposed the development charge increase, arguing it will halt growth in the municipality, stifle the economy and make housing unaffordable for buyers.

Before voting on the development charges, council asked for a report on what neighbouring municipalities are charging.

There is a wide variation, from Central Huron charging nothing to Lucan Biddulph with a $46,340 fee for single detached houses in Lucan.

Other area municipalities that will still charge more than South Huron after development charges are increased Jan. 1 include Middlesex Centre at $45,696, North Middlesex at $38,984, North Perth at $34,518, North Huron at $21,928 and West Perth at $21,341.

Charging lower amounts will include Goderich at $4,035, Lambton Shores at $13,021, and Stratford at $18,258. Bluewater has different rates for different communities in the municipality with charges for Hensall set at $5,144, Zurich at $15,681 and Bayfield at $18,669.

Responding to the suggestion that the increased development charge could trigger developers to build elsewhere, Tina Chitsinde, a senior project coordinator with Watson and Associates, noted that areas with high growth in Ontario also have high development charges.

In earlier submissions to council, some developers requested that the higher charges be phased in over a number of years.

Watson and Associates prepared three options for council to consider.

The first option would have council increase development charges on Jan. 1 to the full $19,131. The second option would be a two-year phase-in with a 50 per cent increase in rates Jan. 1, 2027, and full rates effective Jan. 1, 2028.

The third would be a three-year phase-in with a one-third increase Jan. 1, 2027, an additional one-third effective Jan. 1, 2028, and full rates starting Jan. 1, 2029.

If the growth forecasts are correct, South Huron would forgo $545,000 in revenue from development charges under the two-year phase-in and $1.1 million under the three-year phase-in.

That shortfall would have to be made up from other revenue sources such as property tax.

Arguing in favour of raising development charges the full amount and not phasing them in, Coun. Aaron Neeb said he could not support burdening taxpayers with the cost of growth.

“I think that leaves a foul taste in people’s mouth because why would they be in favour of any new developments, or any new buildings, when they would be the ones on the hook to pay for the growth?” Neeb said.

He cited a City of Ottawa experiment where development charges were lowered in specific areas. The cut did not result in any reduction in housing prices compared to other areas.

Coun. Wendy McLeod-Haggitt also supported the first option, saying she agreed that development should pay for development.

Questioning the development charge hike, Coun. Ted Oke said he was concerned about the message council is sending to businesses and developers.

“It’s like we are putting a sign up, closed for business.”

Oke said developers bought land, put pipes in the ground, and are at the point of digging foundations. They came to South Huron based on the original numbers.

“All of a sudden we are going to jack rates up from $6,000 to $18,000 to $19,000.”

In the end, that cost will be added to the price of homes, reducing affordability, Oke said.

Coun. Marissa Vaughan said she was concerned the increase in development charges could lead to lower growth.

“Are we in a way going to shoot ourselves in the foot and have developers choose not to continue to develop the land we’ve given the approval to do?”