New home buyers face higher development charges
Council gave final approval on Monday to increase development charges by 26.4 per cent for the next five years, starting in January.
The hike will take development charges for an average house to $29,500 from the current rate of $23,337, a difference of more than $6,000.
Coun. Stephen Wright wasn’t happy with the idea of charging this increased fee to people who’ve already bought a property but haven’t yet taken out a building permit.
“The reality is, not everyone has $7,000 just lying around,” he said. “In all fairness, we should not penalize consumers.”
Development charges are fees on new development imposed by the city in order to pay for capital projects in areas such as library, policing and public works, that are needed to serve new neighbourhoods.
Peterborough and the Kawarthas Homebuilders Association had advised councillors that their members have a total of 67 cases where clients have purchased homes that haven’t been built yet.
Wright wanted to exempt those buyers from the increased fee — even though it would mean about $221,000 less collected in development charges.
Coun. Lesley Parnell said she thought that was a good idea, especially considering that 17 of those 67 agreement-holders are first-time homebuyers.
“Many young people are really struggling,” Parnell said. “This is one way we can do the right thing.”
But city treasurer Richard Freymond told councillors they can’t exempt development charges in 2020 without putting that money back into city coffers in 2021.
Council is obliged to cover any development charges it chooses not to collect from people, Freymond explained — and he said that money can only come from taxes.
That didn’t sit well with most councillors.
Coun. Dean Pappas, Coun. Henry Clarke, Coun. Gary Baldwin, Coun. Kemi Akapo, Coun. Keith Riel and Coun. Andrew Beamer all expressed reservations.
Beamer said that while he understands it’s unfair to suddenly ask a new homebuyer to pay nearly $7,000 more in fees, it’s also unfair to ask other citizens to subsidize them.
At the new rate, development charges are expected to raise $42.3 million for the city between 2020 and 2024 (after which time the fees will be reviewed again).