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New fees would put projects at risk: developer

City expecting rush of permit applications as school boards set to hike development charges

Some developers are rethinking their plans to build locally in the face of a steep increase in education development charges.

The Simcoe County District School Board and Simcoe Muskoka Catholic District School Board are considering raising development charges for new residential units from $1,759 to $5,064.

“It puts projects in jeopardy,” said Geoffrey Campbell, managing partner with Oakleigh, whose Matchedash Lofts development is underway in downtown Orillia.

Agreements of purchase and sale have been signed for about 55 of the 76 units at Matchedash Lofts, so that project will go ahead regardless of whether the school boards approve the increase. However, Oakleigh owns other properties in the county that are yet to be developed and, if the development charges are implemented as planned, Campbell said he would "re-evaluate the viability of projects in Simcoe County."

“We’re just getting to a point where we’re starting to see a stirring in development (in this area),” he said. “Policies like this that come in mean a market doesn’t have the same stability or traction that we were anticipating.”

While Matchedash Lofts will be built, Oakleigh could still take a hit.

“We haven’t forecast these increases into our pricing model,” Campbell said.

Oakleigh is within its rights to hike prices, even for those who have signed purchase agreements, but Campbell has no plans to do that.

“We could go back to them with an increase, but that’s not the right thing to do,” he said. “We don’t want to have to force people into more costs just because the school boards bring in this increase.”

He is hopeful he won’t have to adjust the prices for the remaining units, but added, “People would be better to be signing now before these things change.”

Oakleigh has secured a permit for its foundation at Matchedash Lofts, but the above-ground permit is still in the hands of the City of Orillia. That means, if the increase is approved, there’s a good chance “we would be subject to these new costs,” Campbell said.

The city’s chief building official is preparing for a rush of building permit applications in anticipation of the new development charges.

“I only have so many staff. If I get 100 building permits in one month, it’s more than we’re used to,” Kelly Smith said, noting the city issued 657 building permits in all of 2017.

She, too, would not be surprised to see some potential projects pulled from the city. She said one person who learned about the proposed increase told her, “This would kill me. I can’t do it now.”

The approximately $3,200-per-unit increase means a developer of a 100-unit residence, for example, would be looking at an additional $320,000.

“Those numbers do have an impact,” Smith said. “To suddenly have to find 320,000 more dollars … it’s tricky.”

Bradley Homes was going to get 20 permits per month for its development, Smith said, but now it will try to get ahead of the possible changes by applying for 50 at once.

Landen Homes, which bought the former David H. Church Public School site, has a phased site plan and has permits for the first phase.

“They would really like to get all those permits beforehand, but they will likely get caught up in this,” Smith said.

For affordable housing, “it could kill a project,” she said, because “the profit margin isn’t really big for the person who’s going to build it.”

This will be the first increase in education development charges since 2013. Prior to that year, the charges worked out to $1,088 per residential unit.

Asked if she had seen an increase as substantial as the one being proposed, Smith said, “Not that I can recall.”

“I don’t know if this is a suitable increase for five years.”

While a wave of permit applications would put a strain on the city’s building department, Smith feels it would still be better than the alternative: developers leaving town.

“We’re advising people, if they know their project is going forward and they have their drawings ready, get them in and pay the current fees,” she said, adding they have six months to a year to start their developments after receiving the permits.

The school boards have the option to defer implementation of the charges, even if they approve the plan at a meeting in June. Those who spoke to the boards at a public meeting earlier this week were concerned not only about the size of the increase, but also about the consultants’ suggestion to implement them at the same rate for each municipality in the county, regardless of differences in population growth. Politicians from north Simcoe County felt their areas would be unfairly penalized, since the majority of growth is happening in the south end.

“Jurisdiction-wide is not justified in this situation,” Orillia Mayor Steve Clarke said. “It needs to be geographic.”

Education development charges are used to purchase land to accommodate growth. While the public board built Orillia Secondary School, Clarke noted that was not due to growth; it was a consolidation of two other high schools the board had closed.

“I know the board is facing growth-related costs and I'm sure Orillia is willing to do our part,” he said. “However, it needs to be proportionate to our city's growth. I'm sure the board heard the message ... and I look forward to their response.”

Jodi Lloyd, the public board’s trustee for Orillia and Ramara, said the politicians and developers “made very sound arguments” at the May 1 meeting.

She said applying the charges on an area-specific basis is “worthy of consideration.”

“I need to look at the numbers and see where that leaves us as a board.”

A public meeting will take place June 5 at 6 p.m. at the Simcoe Muskoka Catholic District School Board office on Alliance Road in Barrie. It's possible the boards will approve the new bylaw that night. If they do, the changes could come into effect as soon as June 11.


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Nathan Taylor

About the Author: Nathan Taylor

Nathan Taylor is the desk editor for Village Media's central Ontario news desk in Simcoe County and Newmarket.
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