Development charges for new homes are going to approximately double over the next year and a half
(PETERBOROUGH) It's going to cost about $5,000 more to buy a new home come Jan. 1.
A year from that point, it will cost about another $5,000 more.
City council decided Monday (July 30) to increase development charges to better reflect the cost of development in Peterborough.
On average for each of the eight specific planning areas, development fees will rise from $14,157 per home to $25,065 by 2014.
The charges have been frozen since 2009 for the Transportation Master Plan to lay out what infrastructure costs the City is going to have to cover to continue growing.
"The fundamental principle is that development charges pay for the cost, or the costs, associated with growth-related infrastructure (which) should be borne by the beneficiaries of such infrastructure," explains City deputy-treasuter Richard Fraymond.
He notes roads and related infrastructure are responsible for driving up the fees. Part of the issue, he notes, is growth around Peterborough is happening in a number of places instead of one area.
"Part of the increase now is we're playing catch-up," he adds.
A number of developers showed up at council Monday to tell councillors what they'd like to see. Understanding the need to raise the fees, the general consensus was a request to take an extra year to phase in the full increase as well as to honour current purchase agreements.
Council stuck to the timeline but will honour any purchase agreement made by Dec. 31 at the current development charge rate.
Sean Mason, vice-president with Mason Homes, explained how home prices in Peterborough are getting nearer to those of larger urban neighbours. A certain 1,450 square foot home the company builds in Peterborough sells for about $245,000. In Oshawa, the same home is worth about $275,000. Adding another $10,000 to the purchase price of a home makes it less tempting to buy here, according to Mr. Mason.
"It's all about affordability," he told councillors.
"High-priced houses in Peterborough don't sell well."
Mr. Mason says the increase will make it more difficult to develop and sell new houses since it will make the price difference greater between resale and new homes.
"I believe it will have a dramatic effect," he says. But he understands the City needs to do what it needs to do, he says.
Upping the price puts it closer to the range of cities nearer Toronto, he adds, noting Lindsay is much cheaper.
Mike Davenport of Peterborough and the Kawarthas Home Builders' Association explained to council the housing market is soft right now and some developers have had to lay people off.
Rennie Lowes, president of the Peterborough and Kawarthas Association of Realtors, says home price isn't the only factor influencing people who move here.
"The people I've dealt with who want new homes want new homes," he adds.
By purchasing a new home, he says buyers can have it customized the way they want, right down to the colour of paint. Buying a home several years old doesn't have that draw.
The resale market locally, he says, is on track with last year.
The way development charges are set up, the City has a city-wide rate as well as a specific rate for certain areas. The city-wide rate will go from $9,548 to $19,789. A number of the area specific development charges will drop while others will increase. Currently, the cheapest area do develop is Coldsprings at $11,505 while the most expensive is the Liftlock area at $17,163.
In 2014, the cheapest will be the Jackson area at $22,501 while Chemong West will be the priciest at $28,752.
Smarter, Bolder, Faster!
Crystal Edwards, Sales Representative
Independently Owned and Operated
Peterborough, ON, K9J 6Y8Office: 705-743-4444
Toll Free: 1-877-272-4040