New residential construction brings vitality and municipal revenue to a City
There is not enough supply of housing in Canada,1 in Ontario,2 or in Peterborough for our population.3 The most talked about reasons for the low supply of housing is material shortage,4 low inventory,5 and red tape.6 The red tape that municipalities need to address is zoning. The cost of changing zoning by laws is minimal for the municipality but provides developers more certainty that projects will happen in a reasonable timeline. The cost of not updating the zoning by laws is a lack of growth, which has resulted in a lack of funding for the city.
The City of Peterborough has not seen the expected growth in newly built residential dwellings for the past 30 years. The lack of growth has left the city without adequate funding for services and with an increasing homeless population. Growth is extremely important to our community. Regions that grow enjoy countless opportunities and benefits, such as a larger tax base, more opportunities for children to continue their adult lives in the community they grew up in and further economic development through new businesses opening in our community. However, Peterborough has seen business opportunities leave the region due to lack of residential dwellings, lack of land and too much municipal red tape. New development brings enormous benefits to a community- both economically and socially.
In assessing the role of growth and new development, it is important to recognize that:
Development provides significant BENEFITS to Peterborough. Growth and new residential development result in an enormous range of benefits for a community - benefits which contribute to a better quality of life for all residents. Too often, growth is viewed from a negative perspective. For Peterborough to grow and prosper, and for our citizens to enjoy prosperity and a better quality of life, it is essential that we recognize the enormous benefits that growth and new residential development bring.
In municipalities, just like in countries and provinces, economic growth is the foundation of prosperity. One needs only to look at the average incomes, unemployment rates, and out migration numbers for slow-growth regions and communities to recognize the critical relationship between growth and prosperity.
In a nutshell, economic growth:
Economic growth is the foundation for prosperity in a modern economy. But growth cannot occur without residential development. The two go hand in hand. Without new development, there will be little or no significant growth. Without growth, there is little need for new development - economic stagnation is the result.
Development is part of the process of growth - a process which benefits everyone in the community by encouraging private investment and a stronger local economy.
However, the City of Peterborough has not been growing as fast as neighboring areas such as Clarington, Northumberland or even the County of Peterborough.
Growth is vigorously pursued by all levels of government. Governments generally recognize that growth creates new and better jobs, higher incomes, a stronger local economy and tax base, and a more vibrant community. It provides residents with greater prosperity and improved chances for a better quality of life8.
All levels of government have explicit programs to promote economic growth - with the objective of creating strong communities with globally competitive economies:
Brining more businesses to our community brings in more funding for the municipality, but housing is required to expand to accommodate the economic growth. Negative perceptions of growth threaten to undermine these efforts at encouraging growth and development. They have the potential to discourage new development and thereby deny our community the benefits enjoyed by growing vibrant communities.
In addition to providing employment and increased revenues to a community with the expanded tax base, the availability and cost of housing is a key aspect of a community's capability to attract private investment. In today's highly competitive global economy, businesses take many factors into account in their location decisions. In most growth industries, factors such as the availability of transportation links to markets, access to important supplies of inputs, and other physical factors are less critical than in the past - most communities can satisfy these requirements for a company.
Increasingly, companies are making their location decisions based on the availability of qualified labour and the quality of life in a community. The availability and cost of housing is a critical factor for a community seeking to attract new investment. Qualified people are attracted to communities with a range of housing options which they can afford, and an appealing quality of life. The same attributes will be attractive to executives seeking not only a qualified supply of labour, but also a community in which their own families can prosper and enjoy a superior quality of life.
The City of Peterborough has everything a business needs to open here: a regional health care center, a university and a college, a vibrant arts community and plenty of sports including an OHL hockey team. But despite all these big city amenities, the City of Peterborough does not have enough housing to support growth. The downtown core is a 7 block stretch between one way roads with 3-5 storey mixed use buildings, which quickly changes to detached homes, many of which have been converted into office spaces. There is no plan to densify downtown to accommodate the population, many of which are students who need housing and need to live close to transit.
The lack of housing in the City of Peterborough has resulted in the slowest growth rate in this region at 3.2% in 2021. The lack of growth is linked to the lack of housing, which results in less revenue for the municipality to provide services.
The professional home building industry is a critical component ofPeterborough's social and economic future. Deterioration in the capacity of the industry would lead to significant problems in the future - problems which will not be easily remedied since it takes years to develop the skills and competence of professional builders. An economically viable and profitable home building industry is a key element in the local economy.
Profitability is an essential part of our economic well-being - in all industries, including home building. Without profits, an industry will wither as important parts of the industry seek opportunities elsewhere - in other activities, in other communities. The home building industry is no different. If Peterborough is to continue to enjoy the high quality of housing that we have come to expect, it is important to maintain a viable and profitable professional home building industry. That means not taking the industry for granted, but instead seeking ways to ensure that it can continue to perform its critical role in our economy and society.
New development results in revenue for Peterborough - revenues which are used to enhance the services for local residents. The revenues to Peterborough consist of two main streams: development charges and taxes.
Development-related revenues - the developer and builder provide substantial revenues to Peterborough through various fees and charges related to construction. For a typical new single-detached home, an average of $47,245 in development cost charges goes directly to municipal coffers to finance new infrastructure and other services. Other types of fees and charges on new development, such as building permit fees and planning application fees, generate additional revenues for Peterborough. In 2021 the City of Peterborough’s development charge revenue was approximately $12 million dollars.
Property taxes - residents of new developments add to the local tax base. On average property taxes account for $412 million dollars in the City of Peterborough’s budget. In 2021 that increased by over $4 million dollars due to new residential construction. 2021 saw a lot of construction for the City of Peterborough, but there is demand for more housing.
The revenues generated from new residential development help Peterborough to provide services to both new and existing residents. For example:
Increased municipal revenues provide the opportunity to improve the quality of life in the community and make it a more attractive place in which to live and work. They provide the resources and capacity necessary to achieve greater social equity through provision of much needed services to those less fortunate. They also provide the funding necessary for maintaining critical social and economic infrastructure (e.g. public art, The Canoe Museum, etc.) which are important to the quality of life of the residents of Peterborough and are a key factor in attracting businesses and workers to locate in Peterborough.
Homebuyers benefit when there are many builders offering differing products. Competition helps to ensure that homebuyers have a variety of options from which to choose - at competitive prices. Prospective homebuyers have a better opportunity to obtain a home at a cost they can afford. Competition also promotes housing quality. In the 1980s there were over 40 home builders in the City of Peterborough, now there are only a dozen. Creating a transparent planning and building process allows new development companies to enter the market, keeping prices competitive for everyone. Starting a new business as a home builder is not for everyone with the high risks and inconsistent planning approval timelines, plus rising prices, inflation and the shortage of building inspectors, creating a business plan is impossible for anyone who is not an experienced builder.
Homeownership remains an important goal for most Canadians10. There are many reasons for this
- including the financial security of equity in a home, the long-term lower costs in owning a home, and the desire to influence and modify their living environment to suit their needs and financial capacity11. Housing prices and the financial ability to own a home are important factors in the location decisions for families seeking a place to live. Children who grow up in stable homes have more opportunities to flourish since their basic needs are met if their parents own their home.
Any improvements in prospects for residential development will help to keep housing prices under control, raise the homeownership rate and improve the economic prospects for the community. Increasing supplies of housing, whether built for homeownership or renting, reduce the pressure on the existing rental market and on rent levels in the community, contributing to improved housing affordability.
Housing is a national and provincial priority, and was a top election issue for the 2021 federal election, and 2022 provincial and municipal elections. The provincial government is making housing a property with legislation such as Bill 109 and Bill 2312. There are opportunities for Peterborough to use the new legislation to build more houses, accommodate the current population and increase municipal revenues with new property taxes. The economic impact of residential construction was nearly $1 billion in 2021 between wages in the construction industry and individual improvements to existing homes in the City and County of Peterborough13.
Growth and new residential development result in an enormous range of benefits for Peterborough - benefits which contribute to a better quality of life for all residents. Growth means more and better jobs - which promotes the retention of current skilled workers and attracts other workers from elsewhere. It means greater resources available to Peterborough to fund the services which make this a great place to live and work. In turn, this makes Peterborough more competitive as a location for companies to expand or build new facilities and generate more jobs - and to foster more growth, and greater prosperity and a better quality of life for our citizens.
Too often, growth is viewed from a negative perspective. For Peterborough to grow and prosper, and for our citizens to enjoy prosperity and a better quality of life, it is essential that we recognize the enormous benefits that growth and new residential development bring.
Housing is a key part of the process of growth - and in generating the benefits of growth for a community. A competitive housing industry which provides a range of housing choices at an affordable price is an integral part of the process of fostering growth and promoting the future prosperity of a community. The housing industry provides more than just jobs and economic activity - though these are clearly important to a community. The housing industry contributes to the competitiveness of the community by providing high quality living environments at an affordable cost. Housing choice, and the opportunity to own a home, is an important component in a community's competitiveness in attracting growth.