Council news: Waiving development charges; service allocation request

By Sharon Harrison
Council heard from from two developers at its last meeting with separate requests. The first was a request for the waiving of development and connection charges ($895,000) for the proposed Nicholas Street development. Council also heard the details of a request for early servicing capacity allocation for the proposed Folkard Lane development. More on both of these stories below.

Council also approved the $18.7 million tender for the reconstruction of County Road 49, with work to commence immediately, that story here: https://www.countylive.ca/county-road-49-tender-awarded-construction-to-begin/

And council shared news about the Ministry of Natural Resources decision that Picton Terminals are not quarrying, see that story here: https://www.countylive.ca/picton-terminals-not-quarrying-so-no-licence-needed-ministry/

Nicholas Street – development charges
Developer Alan Hirschfield with Homes First Nicholas Corporation requested some exemptions and discounts for development charges (amounting to $894,890.90) for his proposed affordable housing and market housing development at 5-31 Nicholas Street, Picton.

As outlined in a 21-page deputation, his request included an exemption of affordable housing development charges ($256,835) for 31 affordable housing units; a reduction in site-wide water and wastewater connection charges for the 89 market units ($166,954.60); and a discount for development charges for the 89 market units (totalling $471,101.30).

“It will help enable the delivery of the purpose-built residential rental housing project, containing a total of 120 units, of which 31 units (representing a total of 25.8 percent) are offered at affordable rental rates, for a period of 20 years,” stated Hirschfield in his deputation. “We acknowledge that Bill 23 requires an affordable residential unit to remain affordable for a period of 25 years and we would be prepared to meet this duration should council be agreeable to the three above requests.”

If approved, Hirschfield indicated construction would then be able to commence this year.

“These savings are fundamentally to the financial viability of the project, helping to offset significant up-front development costs and bridge the gap between achievable resents and the high cost of construction.”

However, while at the podium delivering his lengthy deputation, Hirschfield changed course, confusing council and staff (and members of the public) somewhat, saying he only required one of his three requests now to be considered, saying “we had quite a comprehensive submission submitted for relief on some of the municipal charges.”

“But I would like to simplify that as most of the information is already dealt with, so the province and the Bill 23 already deals with the bulk of the questions that have been put forward,” said Hirschfield. “And the same with the agreements we have with the municipality on property tax and so forth. So that was simply repeating those things we already have agreement on.”

Hirschfield’s amended ask was for development charges waivers only, totalling $296,391.

“What we are asking for is to be able to be excused the connection charges for the affordable units [31 units to be affordable for 25 years],” stated Hirschfield. “And I know there is a request here for waiver on the market units as well, but on reflection, I don’t think that’s reasonable. It was never offered by Prince Edward County, and we are not expecting that.”

This is the right time for us to build, he said. “We are collectively able to get our construction prices where they need to be. We are ready to go.”

Three members of the public spoke to the agenda item, each questioning the financial ask.

Lawrence Cornett called it a “financial structuring plan” designed to “optimize a private loan application to the Canada Mortgage and Housing Corporation (CMHC)”.

“If the County waives these fees, they are directly acting as an interest-free bank for a private build, starving the water works and urban roads reserve funds at the exact moment when these funds historically face deficits,” shared Cornett.”

“To grant millions in financial fee waivers to a developer, who is cutting his affordable housing commitment in half, using federal loan requirements as a local gift and putting our physical infrastructure at risk on the site that is not approved, is fiscally irresponsible.”

Another commenter suggested it is “not a sound financial project”, asking why the municipality was financing the project, while also noting how the affordable component has been slashed by 25 percent. “Why are the local ratepayers absorbing these deficits? If council accepts this argument that we must bankroll this, we are establishing a dangerous precedent,” he said.

A further commenter said, “it seems to be a moving target”, noting how today’s ask isn’t what Hirschfield originally asked for.

“The County taxpayers are financially stressed these days. We the taxpayers can’t afford to help Mr. Hirschfield deal with his project,” he said. “That fact that he is even doing this seems to indicate that he is having problems moving this project along. We can’t afford to do this, pure and simple.“

Councillor John Hirsch said given the ask has changed, the best thing would be to have a report from staff, specifying precisely how much is being asked for, and for what purpose.

“I think that make sense, but a point on timing, we need to start construction this year, we have already started with site clearing, and we are in front of the lenders right now,” Hirschfield added.

Council approved a Hirsch motion for staff to explore the feasibly of the request from the developer, and report back to council.

Folkard Lane – servicing capacity request
Cosmopolitan Homes requested allocation of servicing capacity for its proposed residential development at 49 and 57 Folkard Lane, Picton for 111 freehold townhouse units. The ask to reserve municipal servicing capacity (for water and wastewater) comes now rather than at plan of sub-division registration.

Carl Smith and Jamie Erlickto, owners of Cosmopolitan Homes, spoke to the request, where Erlickto stated that the site is already zoned and approved for residential development. “We are not asking council to approve a project tonight, we are asking council to reserve service capacity for a project that has already cleared its zoning approvals”.

While a draft plan of sub-division application has been filed (about a month ago), it has not yet been approved.

“The market has shifted, buyers are stretched, and lower price points are what move today,” said Erlickto. “That is why we reduced this project by roughly 33 percent in density and why we have committed to bringing 20 percent of our units (roughly 22 homes) to market starting at $399,000, with the HST rebate applied.”

He explained that the Ontario government has proposed a temporary one-year enhanced rebate available to all home buyers, not just first-time buyers, on new homes purchased between April 1 and March 31, 2027.

The full 13 percent HST is rebated with combined federal and provincial savings up to $130,000 per home, he said.

“We have designed this project to fit inside the window and intend to pass those savings directly to our purchasers. Reserving servicing capacity, we can be ready for sales this fall. The rebate window closes March 31, 2027.“

He reminded that no construction can begin until servicing is confirmed, but said with council’s support, they can have shovels in the ground this year.

Councillor Brad Nieman seemed confused about where Cosmopolitan Homes are in the process and asked what the hold-up was.

“We have gotten confirmation that the services are coming, and almost at the site, and there is about 1,000 units left of capacity right now, Erlickto explained. “Once we have our draft plan of sub-division approved, we are ready to start sales right away.”

Councillor Roy Pennell spoke to the HST rebate available until March 2027, while noting how far into 2026 it is already.

“That means to fall under that price line, you’ve gotta build one heck of a lot of houses in less than a year, and I am finding it a little hard to believe how many houses you can build in a year being a smaller company,” expressed Pennell. “How you are going to do it in less than a year to make them affordable?”

Smith clarified that a new home has to be purchased within a year, not finished and closed; you’ll still get the rebate if it takes a year and 11 months. Erlickto further clarified saying he believed the home has to be built by 2035.

”We could be holding water for years when somebody else may come along and want to build tomorrow,” added Pennell.
Erlickto confirmed again they are ready to build, and can build the entire site. “The HST really changes everything, it’s really going to make that difference, I truly believe,” said Smith.

“It’s way more feasible to build as many as you can at once rather than building them slow. It takes about seven or eight months to build a townhouse complete, so they are really quick to build,” Erlickto said. “The construction, we could do 111 houses in a year, no problem. We will go to sale, and that is a promise, as soon as we know we have services, we will go to sale, and we will go to construction immediately.”

Councillor David Harrison had concerns with a timeframe if the uptake isn’t there, thereby stopping someone else from getting water allocation.

“Is there some sort of formula that could be developed between the County and yourself that in a certain time frame if a certain amount of building hasn’t occurred, you relinquish that?” asked Harrison, to which Erlickto said yes, they were happy with that.

“That is a good agreement to make,” said Erlickto. “We are open to that, and if we are not proceeding at a rate and somebody else is ready to go… we are 100 percent ready to take that onus.”

Councillor Phil Prinzen asked the COA if staff could meet with the developers to bring back an agreement for a timeline to allocate water, to be used within a specified period of time.

”It really seems like they are almost there, and the new policy was designed to use it or lose it in terms of the capacity,” said COA Adam Goheen. “They will capture that capacity when the sub-division agreement is approved, so that would coincide with us crafting some sort of agreement anyway.”

Goheen said they also want to craft clauses in those agreements to put time limits on the use of that capacity, and that would be mandatory.

“If we know we have the allocation, we can start to sell right away, within weeks,” reaffirmed Smith.

“I would be concerned at setting precedent on this, quite strongly, especially as we get closer to the end of the plant’s capacity,” the COA added, noting that the uncommitted allocation is about 700 units remaining (not 1,000). “They appear close enough, and that would be motivation enough to move through the process and complete it and it get the allocation through the normal process.”

Full details of the items discussed at the May 26 council meeting, including staff reports, can be found on the corresponding agenda on the County’s website, along the meeting recording.