Letter of Concern: Pelham Development Charge Proposed Increase

As presented to a variety of political representatives in March 2009

In May 2008, the Building Industry and Land Development Association (BILD) released a report entitled “Over the Top-The Impact of Development Charges on New Homebuyers”. The report outlined how the rapid increase of development fees between 2001 and 2008 was already threatening to push the cost of homeownership out of reach for many families in the GTA. As a real estate broker, specializing in the sale of new housing in the Niagara area, I am writing to you to express my concern about how the apparent need for municipalities to fund larger and larger shares of their infrastructure costs by continually increasing development charges is reducing the affordability of housing and further acerbating the current downward spiral in the Ontario housing market.

In 2001 the development charge for the Town of Pelham was $1,880 compared to the current rates that range from $6349 to $9,114. During the same time period the regional development charge increased from $2,750 to $5,436 for a combined increase ranging from 154% to 300%. Building permit fees in our town also increased by 90% between 2001 and 2008. Considering that the overall inflation rate for Ontario rose just 11.7 per cent between 2001 and 2008 the combined municipal/regional development charges have increased 13 – 26 times the rate of inflation. These increases have also far outpaced the average rate of increase of the selling price of new homes.

Last night I attended and presented my concerns at a public meeting of the Pelham planning committee that had convened to review a consultant’s report that is recommending further increases to our Town’s development charges to take effect as early as May 2009.
The increase is divided into 3 areas.
1- Fenwick, current fee $ 6,349.00 an increase of $ 9,450.00 the new DC will $ 15,799.00 (148% increase)
2-Fonthill Area Specific, current fee $ 9,114.00 an increase of $ 2,283.00 the DC will be $ 11,397.00 (25% increase)
3- The rest of Pelham, current fee $ 6,439.00 an increase of $ 2,320.00 the new DC will be $ 8,669.00 (36% increase)

I concur with the findings of the BILD report which concludes that “the dramatic increase of development charges is excessive, unsustainable and counterproductive.” In fact, considering the fact that there were zero new housing permits issued in Pelham during the months of January and February 2009 (compared to the 10 issued Jan/Feb 2008), I am reminded of the old saying “You can’t get blood from a stone.”

As a citizen of Pelham, I sympathize wholeheartedly with the fiscal constraints facing our Town and our Region as a result of changes in budgeting processes and the downloading of provincial costs and/or responsibilities. However, I also believe that it is no longer a realistic, viable solution to keep downloading further costs to homebuyers during the current economic circumstances.

The challenges associated with paying for growth is by no means a Pelham only problem. Home buyers, home builders, and municipalities across Ontario all appear to be caught in the shrapnel of an inappropriate system for funding infrastructure expenditures that presupposes on an inflationary market cycle. By the very nature of the volatility of the housing market a reliance on this formula is fundamentally unsustainable. Someday, some where, perhaps in a small municipality like Pelham, a Town Council will decide to stand up and send the message that “enough is enough” and together with homebuyers, home builders and other municipalities collaborate work with the Provincial government to figure out a way to solve the root of the problem.

Categories: Community Development, New Home Sales, Real Estate Industry

Tags: , , , , , , , ,

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