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Housing affordability is continually eroding across Canada and costs continue to increase. PKHBA is concerned with the large proposed increase to the DCs coming in 2025 during one of the worst economic times, rivaling the recession in the early 1990s.
The Development Charge By Law is expiring and the City of Peterborough is reviewing options for the new By-Law. The Background Study shows options but does not take into consideration the current economy or how increases to building will have ripple effects across our local economy.
The Economic Impact of New Home Construction in the Peterborough Area is over $100 Million in wages for Peterborough residents. The slow down in housing starts since 2021 has resulted in a loss of over $13 Million in wages for our community. The economic pressures of building have been felt across the province but are affecting communities differently. In the City of Kawartha Lakes the Economic Impacts have increased with 81% increase to wages for Kawartha Lakes.
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The Public and Council have not been provided the full picture as impacts of proposed DC increases have not been considered
Increasing DC without assessing impacts is irresponsible and contrary to Peterborough’s long term goals
Deferral for further assessment is the only reasonable next step
Increasing DCs by 50% adds $12.5 million to 500 new single family homes, or $5 million to a 100 unit apartment building. Adding millions to a project in a bad economy will result in no growth and no building in the City. The housing starts for 2024 are not on track to meet the provincial target, sitting at 32% as of August 2024. Housing starts for the entire province are only half of what they were the previous year.
Around Ontario municipalities are working with private businesses to create opportunities that cannot be achieved alone. For example, Burlington now accepts Surety Bonds in place of Letters of Credit, and they reduced their DCs by 15% to stimulate building in a tough economy. The City of Peterborough has a longstanding partnership with PKHBA for the DC deferral to help builders with cashflow over during the building cycle. This agreement was especially helpful during the pandemic when the supply chain interruptions delayed material deliveries to construction sites.
DCs represent a direct tax on home construction and will have the effect of driving up housing prices in Peterborough. The average price of a detached home in August 2024 was $605,882 but the cost to build that same house is $870,000. Adding more costs to building new homes will stifle new construction in Peterborough, especially when the DCs in the neighboring townships & municipalities is less than half the DCs in Peterborough.
PKHBA urges the City of Peterborough to work with the building industry to create sustainable conditions for building our community. This can be achieved by deferring the DC increase until an economic impact report on this increase has been prepared. The increasing costs to building in Peterborough over the past 2 years has resulted in low housing starts, which will only continue in 2025 as the economy begins to stabilize, pending interest rate changes from the Bank of Canada.
1) Defer the DC decision for 6 months because:
2) Reducing the DC increase by 35%
3) Phasing in the DC increase over 5 years
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