What are development charges?

    Development charges are fees imposed under the authority of the Development Charges Act on land development and redevelopment projects. Those funds are used by the municipality to cover capital costs associated with residential and non-residential growth within the municipality. In essence, development charges help ensure that "growth pays for growth" and the additional growth-related costs are not passed on to existing taxpayers.

    How does the municipality set the development charges?

    The background study informs the calculation of the development charges for the County. The study will look at the anticipated residential and non-residential growth over the next five years. Based on those projections, the municipality will determine the increase that is required to ensure the service is delivered at the same level as it has been on average over the past 10 years. This ensures that development charges pay for growth and are not used to increase the level of service delivery.

    From there, the municipality deducts from that increase any uncommitted excess capacity, grants, subsidies and contributions, and benefits to existing development. The difference is the cost of infrastructure to accommodate growth that can be recovered from development charges. The municipality then sets development charges per residential unit and per square foot for non-residential development.

    How are development charges currently used?

    County-wide growth-related costs of new development are recovered through by-law 4172-2018 for the following services (examples of projects partially funded through development charges in previous years included in parentheses):

    • Transportation -- roads and highways (crosswalks in Wellington and Bloomfield; collector road in Picton)
    • Fire protection (Rossmore Station #5 expansion)
    • Parks and recreation (Wellington and District Community Centre)
    • Municipal parking
    • Library (Picton library expansion; expansion of e-books and e-digital audiobooks)
    • Administration (Official Plan review; Wellington master servicing study)
    • Marinas and boat launches
    • Homes for the aged
    • Waste diversion

    The County provides a breakdown of the current County-wide development charges by development type and service area. Click here to view.

    How are the growth-related costs of water and wastewater infrastructure recovered?

    The growth-related portion of expanded water and wastewater infrastructure is recovered in two ways:

    • In the Wellington urban serviced area, costs are recovered through the area-specific development charges by-law 90-2021.
    • All other growth-related costs of water and wastewater services are currently recovered through connection charges imposed under the authority of the Municipal Act.

    What types of development are currently exempt from development charges?

    Under provincial legislation, the following types of development are exempt from development charges:

    • Industrial building expansion -- Up to 50% expansion with no development charges
    • Upper/lower tier governments and school boards
    • Residential intensification related to: Enlargement of an existing dwelling; One or two additional dwelling units within or ancillary to an existing single-detached dwelling; One additional dwelling unit within or ancillary to any other existing residential building
    • The creation of a second dwelling unit in prescribed classes of new residential buildings, including structure ancillary to new residential dwellings
    • Development of lands intended for use by a university that received operating funds from the government.

    Municipalities also have the ability to provide their own exemptions through the development charges by-law. Under the current by-law, the County exempts:

    • Non-residential farm buildings (e.g. barns)
    • Places of worship
    • Industrial development (excluding industrial wind turbines and solar farms)
    • A 30% reduction for affordable housing
    • Temporary buildings and structures

    The municipality must cover the exempted development charges through other funding sources. In the County of Prince Edward, the exemptions are covered through the tax base.

    What are the eligible service areas that can be considered for inclusion in the development charges by-law?

    Through the preparation of the background study, all eligible services areas will be considered for inclusion in the development charges by-law. The eligible services under the Development Charges Act include:

    • Water supply services, including distribution and treatment services
    • Wastewater services, including sewers and treatment services
    • Storm water drainage and control services
    • Services related to a highway
    • Electrical power services
    • Transit services other than the Toronto-York subway extension
    • Waste diversion services
    • Policing services
    • Fire protection services
    • Ambulance services
    • Library Services
    • Long-term care services
    • Parks and recreation services (but not the acquisition of land for parks)
    • Public health services
    • Childcare and early years services
    • Housing services
    • Provincial Offences Act services
    • Services related to emergency preparedness
    • Additional services as prescribed

    What services are development charge eligible but the County of Prince Edward does not currently collect?

    The County currently doesn't collect on the following development charge eligible services:

    • Policing services
    • Ambulance services
    • Public health services
    • Childcare and early years services
    • Housing services
    • Provincial Offences Acts services
    • Services related to emergency preparedness
    • Storm water drainage and control services
    • Transits services

    What types of capital costs can be development charges be used to fund?

    Development charges can include the following capital costs for the increase in need for service associated with new development within each of the eligible service areas:

    • Acquire land or an interest therein (including a leasehold interest)
    • Improve land
    • Acquire, lease, construct, or improve buildings and structures
    • Acquire, lease, or improve facilities including rolling stock (with a useful life of seven or more years)
    • Furniture and equipment (other than computer equipment)
    • Materials acquired for library circulation, reference, or information purposes
    • Undertake studies in connection with the above-referenced matters
    • Prepare the Development Charges background study
    • Finance money borrowed (i.e. interest) to pay for the above-referenced costs

    What are the limits that the County faces when setting development charge rates?

    Under provincial legislation -- Development Charges Act -- the development charge rates the municipality apply to new development must be substantiated through a development charges background study.  

    The preparation of the study includes mandatory requirements such as the calculation of the average historical level of service over the previous 10 years for each eligible service area (i.e. parks, recreation, roads, libraries, waste diversion, etc.). This historical level of service forms a cap that new cannot be exceeded through development charges.

    Legislation also does not allow all municipal services to be funded from development charges (i.e. cultural, tourism, cemeteries, general administration, etc.). Costs for those services must be paid from the tax base or other funding mechanisms.

    The cost of growth includes not only the cost to construct the capital infrastructure required, but the operating budget pressure to operate and maintain those assets every year. As per the provincial legislation, development charges can only be used for the initial cost to construct the capital assets.

    What are the implications to the County as a result of the changes to the Development Charges Act proposed through Bill 23, More Homes Built Faster Act

    On October 25, 2022, the Province of Ontario introduced Bill 23, More Homes Built Faster Act, 2022 in support of the More Homes Built Faster:  Ontario’s Housing Supply Action Plan:  2022-2023.  The bill proposes to amend a number of acts, including the Development Charges Act. If passed, the legislative amendments will have significant impacts on the way municipalities plan, process and fund development.  

    The changes proposed to the Development Charges Act include:

    • Additional statutory exemptions:
      1. Up to two additional residential units within or ancillary to all new or existing dwellings
      2. Affordable rental units
      3. Affordable owned units
      4. Attainable unit
      5. Non-profit housing
    • Removal of "Housing" as an eligible service area
    • Removal of studies (including the development charge background study) as eligible capital costs
    • Extending the period over which the average historical level of service must be assessed from 10 to 15 years
    • Requiring that all by-laws passed after June 1, 2022 must be phased in relative to the maximum charge over the first five years the by-law is in force, as follows:
      1. Year 1 – 80% of the maximum charge
      2. Year 2 – 85% of the maximum charge 
      3. Year 3 – 90% of the maximum charge 
      4. Year 4 – 95% of the maximum charge; and 
      5. Year 5 to expiry – 100% of the maximum charge 
    • Development charge by-laws currently expire a maximum of five years after they come into force.  This period would be extended to 10 years.
    • Discounts for rental housing dependent on the number of bedrooms in the units being created
    • A maximum interest rate would be prescribed at prime plus 1% for the purposes of mandatory installment payments and charges calculated at planning application submission
    • Requirement to allocate or at least 60% of monies in a reserve fund at the beginning of each year for water, wastewater, and services related to a highway. 

    The status of Bill 23 is being monitored by the County and any legislative changes will be incorporated into the background study and by-law for Council’s consideration. 

    More information on the Bill 23 and the status of the legislative process can be found by following this link