Five months after Peterborough city council took what city staff acknowledged was a financial risk by cutting residential development charges in half, the city is set to receive up to $39.9 million in federal and provincial infrastructure funding.
The federal and Ontario governments announced Monday (November 9) that the City of Peterborough will receive $39,893,202 in funding through the Development Charge Reduction Program (DCRP) in recognition of the city’s commitment to reduce development charges by 50 per cent for all residential development for three years.
The governments say the combination of lower development charges and new infrastructure could help support an estimated 9,276 new homes in Peterborough. The development charge reduction itself is estimated to lower the cost of building a new home by as much as $34,302.
Funding targets roads, water and wastewater infrastructure
Monday’s announcement — held at Rose Hill On Sherbrooke, a new residential development at 1737 Sherbrooke Street in Peterborough — was attended by Peterborough MP Emma Harrison, Ontario Premier Doug Ford, Ontario Minister of Municipal Affairs and Housing Rob Flack, Ontario Minister of Infrastructure David Piccini, outgoing mayor Jeff Leal and his wife, mayor-elect Micheal Eamon, and members of the outgoing city council.
“This partnership with the provincial and federal governments is an important step in preparing Peterborough for continued growth and creating more housing options for residents,” Leal said. “It’s a significant investment in Peterborough’s future with the potential to support the construction of more than 9,200 new homes in our community.”
The funding is intended to be used for road, water, and wastewater infrastructure needed to accommodate residential growth.
The specific projects identified in Monday’s announcement include a sanitary forcemain (a pressurized sewer pipeline) along the Otonabee River, a replacement trunk sanitary sewer on South Park Drive, two sanitary pumping stations, a trunk sewer connecting to the city’s wastewater treatment plant, and a looped trunk watermain system.
Funding will also support road reconstruction and widening, including increased stormwater, wastewater, and water-servicing capacity.
When the city applied to the DCRP in June, it submitted two applications.
One included five road projects: Chemong Road from Parkhill Road to north of Sunset Boulevard, Lansdowne Street West from Spillsbury Drive to Clonsilla Avenue, Water Street from University Heights Boulevard to Nassau Mills Road, Sherbrooke Street from Glenforest Boulevard to the west city limit, and Armour Road from Cunningham Boulevard to Nassau Mills Road.
The second application bundled water and wastewater infrastructure needed to service the approximately 280-hectare Coldsprings growth area at the city’s southern boundary, where the city anticipates about 2,900 residential units.
Monday’s federal-provincial announcement does not specify which of the five individual road projects will ultimately receive funding.
City council took a financial risk to qualify for funding
The $39.9-million commitment follows a decision city council made in June after the federal and provincial governments announced their $8.8-billion Canada-Ontario Partnership to Build.
Under the DCRP, municipalities that levy development charges could compete for infrastructure funding by reducing those charges by between 30 and 50 per cent or more for all residential development and maintaining the reduction for at least three years.
Development charges are fees municipalities impose on new construction to help pay for infrastructure required by growth, including roads, sewers, water systems, and other municipal services.
Leal brought a motion to council’s June 8 general committee meeting calling for Peterborough to cut its development charges by 50 per cent so the city could apply to the program before the province’s June 19 deadline.
The proposal initially divided council, with some councillors concerned about the speed of the decision and the financial consequences if Peterborough reduced its charges but failed to secure infrastructure funding.
City finance and corporate commissioner Richard Freymond warned at the time there was “no off-ramp” once the city made its commitment to the province.
Staff estimated a 50 per cent reduction could result in about $7.5 million less in development charge revenue over three years, based on historical collections, although additional development stimulated by the lower charges could offset some of that loss.
At the June 8 general committee meeting, the proposal passed 8-2, with councillors Alex Bierk and Joy Lachica opposed.
By the June 15 regular council meeting, however, councillors had added requirements for staff to report back on the projects selected for the funding application and on the status of the program. Council then unanimously approved the amended motion 10-0.
The city submitted its DCRP applications four days later.
Development charge and HST reduction expected to reduce cost of new homes
Peterborough’s development charge reduction applies to all new residential development types. Current city-wide charges range from $21,278 per apartment or multi-suite unit to $34,302 for a single or semi-detached dwelling, before any applicable area-specific and water-service charges.
The federal and provincial governments say the development charge savings can be combined with expanded HST relief on eligible new homes purchased during the qualifying period.
Together, the two measures could reduce the cost of an eligible new Peterborough home by as much as $164,302, although the maximum HST savings depend on the price and eligibility of the home.
“Today’s investment is great news for Peterborough residents, supporting the construction of thousands of homes and saving families more than $34,000 off the cost of a new home,” Ontario premier Doug Ford said, congratulating the outgoing mayor and council for their decision to reduce development charges.
“I look forward to working with incoming mayor Michael Eamon as we continue to deliver on that mission,” he added.
Peterborough MP Emma Harrison said the funding is intended both to lower development costs and provide the infrastructure required for future housing.
“This investment will help make more homes attainable for families in Peterborough, while supporting local growth and creating a stronger future for the community,” she said.
Funding still subject to agreements and conditions
The funding for the City of Peterborough is not yet unconditional.
Not only is federal funding is subject to Canada and Ontario signing an agreement under the federal Build Communities Strong Fund, as well as further federal and provincial review, but Peterborough must also enter into a transfer payment agreement with Ontario and comply with DCRP requirements.
In addition, the city will be required to contribute at least 10 per cent of project costs.
Peterborough-Kawartha MPP Dave Smith said the announcement provides the city with infrastructure funding while reducing a significant upfront cost of constructing new housing.
“By reducing development charges by 50 per cent and investing up to $39.9 million in critical infrastructure, we’re helping lower the cost of building homes, unlock the potential for 9,276 new homes and support local economic growth,” Smith said.
