Builders, Realtors, and Business Owners Issue Caution Over Escalating Municipal Housing Development and Building Fees Amidst Stagnant Housing Market and Economic Strain

27 November 2024

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The Peterborough & the Kawarthas Home Builders Association, Peterborough District Construction Association, Central Lakes Association of Realtors, and Peterborough + Kawartha Chamber of Commerce are raising concerns about the City of Peterborough’s proposed 50% increase to development charges. This significant fee increase will escalate costs and economic uncertainty in the local housing market. Business owners are warning that if current conditions persist, many in our communities could face an even tougher time securing housing, and development and economic growth could stall.

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Home builders are currently facing rising material costs, labour shortages, and stagnant market conditions, forcing many builders to make an impossible choice between pausing projects or pricing homes beyond the reach of average buyers. These market pressures create a worrying domino effect, impacting prospective homeowners, businesses, and overall regional growth. 

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“The construction industry is facing unprecedented pressures that threaten our ability to build the homes that people need at prices they can afford,” said Kris Keller, President, Peterborough & District Construction Association. “With construction costs rising and market demand flat, we risk creating a situation where builders can’t afford to build, and families can’t afford to buy. Without swift action to address these challenges, the entire housing ecosystem—and the communities it supports—will suffer.”

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Municipalities have control over Development Cost Charges (DCs) and Peterborough is choosing to increase them 50%. 

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In December 2019 council approved a $3,000 per unit fee increase for single family homes, bringing the development charge to $26,795 per new home built in the City. Due to annual indexed increases, the DC increase jumped another $4,000 per unit to $30,477 total the following month. The indexing of the Development Charges is a significant hidden cost that results in annual increases to DCs. Increasing the Development Charges by 55% on December 2nd will actually result in a 67% increase to the cost of housing on January 1st in our community at a time of crisis. 

“We are seeing serious challenges on all fronts,” said Rob Hatfield, Chair, Peterborough & the Kawarthas Home Builders Association. “Builders cannot keep up with rising costs and still produce homes people in our community can afford. Inflation-driven costs are placing severe financial strain on the housing industry. These rising costs are exacerbating affordability and hinder the likelihood of reaching the housing target of 4,700 homes in the City of Peterborough by 2031.”

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These are four factors impacting housing availability and economic stability in Peterborough:

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• Growth must pay for Growth: This phrase is often used by municipalities to justify significant increases in Development Charges, however, no consideration has been given to the direct and indirect benefits that local businesses gain from new growth and population increases?

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• Rising Building and Labour Costs: Costs for construction materials have risen sharply, with many essentials seeing price jumps of 50% in the past year. Meanwhile, labour shortages have increased wages by 50%, driving overall expenses higher. 

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• Heightened Regulatory and Development Charges : Additional costs from development charges, new planning fees, and provincial and federal taxes on new housing continue to hinder builders' ability to offer new housing that is affordable, stifling new development and deterring future projects. Furthermore, the risk assessment for new construction projects is high due to the affordability crisis for potential homeowners. Development charges in the City of Peterborough are unsustainable, increasing 373% since 2013.

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• Reduced Buyer Demand Amid Interest Rates: The current economic climate and high interest rates have limited the number of buyers who qualify for financing, leaving a glut of inventory and deterring potential new projects. 

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“This affordability issue isn’t isolated to just buyers or builders,” added Vicki Sweeney, President, Central Lakes Association of Realtors. “It affects the broader real estate market, reduces transaction volumes, and ultimately hampers the ability of families to achieve homeownership.”

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As businesses across sectors feel the impacts, the Chamber of Commerce underscored the importance of collective action. “Without a balanced approach to housing affordability, the ability of our communities to grow and thrive is at risk,” said Noah Crowley, Chair, Peterborough and the Kawarthas Chamber of Commerce. “Stable housing options are crucial to maintaining a competitive and economically vibrant region.”

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To address these concerns, the associations are calling for:

• Targeted Incentives and Cost Reductions: some text
  • Temporary moratorium on new DCs for one year from January 1, 2025 to 2026
  • Balanced & appropriate increases capped at 5% in the City of Peterborough to spur new development 
  • Offer density bonuses for multi-residential units through decreased Development Charges. 
  • Create a Community Improvement Plan with targets to meet growth expectations that includes relief from Development Charges
  • Continue the Development Charge deferral program for single family homes to assist with cash flow for subdivision development.
  • Allow designs to be approved as per the Building Code, CSA or Wood Guide without requiring engineer stamps to mitigated imagined risks in structural integrity 

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• No Cost Changes, Streamlined Regulations: some text
  • Implement all elements of the Development Approval Process report from October 2023 
  • Create timelines for the planning and permitting process to increase transparency and introduction predictability into the development process.  
  • Recognize the time value of money: in that time is costly and delays and changes are the difference between a project being completed or canceled
  • Introduce Pre-Authorized Model approvals for subdivisions with repeat layouts, that includes a lower fee in alignment with the efficiency of Pre-Authorized Model building permits. 
  • Review all guidelines and standards from an economic growth and long term sustainability perspective.

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The Peterborough & the Kawarthas Home Builders Association, Peterborough District Construction Association, Central Lakes Association of Realtors, and Peterborough Kawartha Chamber of Commerce are committed to advocating for solutions that will help stabilize the housing market, sustain development, and ultimately ensure that affordable housing remains within reach for families across the region.

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Rob Hatfield, Chair & Rebecca Schillemat, Executive Officer

The Peterborough & the Kawarthas Home Builders Association (PKHBA)

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Kris Keller, President & Nigel Lister, Vice President

Peterborough District Construction Association (PDCA)

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Vicki Sweeney, President & Wendy Giroux, Chief Executive Officer 

Central Lakes Association of REALTORS® (CLAR)

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Noah Crowley, Chair & Joel Wiebe, Vice President

Peterborough and the Kawarthas Chamber of Commerce (PKCC)

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For More Information Contact:

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About PKHBA 

Peterborough and the Kawarthas Home Builders Association represents the residential construction industry in the City and County of Peterborough and City of Kawartha Lakes. PKHBA members include builders, renovators, trade contractors, suppliers and professional services that support residential construction. PKHBA represents over 8,000 jobs in the City and County of Peterborough and City of Kawartha Lakes and over $1 Billion in investment in our community. 

For further comments please contact Rebecca Schillemat rebecca@pkhba.com or 705-930-1620

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About PKCC

The Peterborough and the Kawarthas Chamber of Commerce is a member-based organization. Our main focus is to channel the collective strength of the business community to improve the economy. This includes providing representation on numerous committees, conducting surveys, issuing discussion papers and developing policy positions on issues of significance to our members.

For further comments please contact Joel Wiebe joel@pkchamber.ca 705-748-9771 x215

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About PDCA

The Peterborough & District Construction Association (PDCA) represents companies across the City and Counties of Peterborough, City of Kawartha Lakes, Northumberland, Hastings, Haliburton, and Durham Region. PDCA members include General Contractors, Trade Contractors, and Manufacturers, Supply, and Service Companies involved in commercial, industrial, and institutional construction. PDCA members contribute over $1 billion in construction contracts annually, create a $250 million direct economic impact, and sustain 3,000 full-time job equivalents locally.

For further comments, please contact Kris Keller or Nigel Lister at office@peterboroughconstructionassociation.ca or 705-745-3581

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About CLAR

The Central Lakes Association of REALTORS® (CLAR) proudly serves over 2,600 members, creating a powerful network of professionals dedicated to excellence in real estate across diverse communities. We foster collaboration, continuous learning, and innovation to adapt to the evolving landscape of real estate. Through ongoing education, advocacy, and community engagement, CLAR remains at the forefront of shaping the future of real estate in Central Ontario.

For further comments, please contact Wendy Giroux wendy@clar-mls.ca  or 905-723-8184 x204

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