County secures intake of development fees in advance of Wellington-area Kaitlin builds

(Gazette file photo)



In an effort to safeguard the integrity of municipal infrastructure, such as water and wastewater systems, the county has entered into an agreed with the developer of two soon-to-be subdivisions in Wellington, wherein the developer will pre-pay a portion of development charges.

Development charges are typically collected at the time a building permit is issued and are necessary to help pay for the cost of growth-related strain on municipal infrastructure.

As per a recent press release from the municipality, the developer, Kaitlin Corporation, is providing letters of credit amounting to $4 million. This not only signals their seriousness about proceeding with development, but will ensure the municipality reserves water/wastewater capacity for these future developments.

Kaitlin Corporation will also pay all of its development charges upfront at the time they receive final approval of their plan of subdivision, rather than paying at the time when building permits are issued.

“Increasing a mix of housing supply in Prince Edward County is critical to the long-term livability of our community,” Mayor Steve Ferguson said. “With these agreements in place, the developers can move forward with greater certainty, and the municipality can ensure that growth pays for growth.”

As per their press release, the municipality is focused on immediate and short-term infrastructure needs.

With an uptick in regional development, there are a number of infrastructure improvements slated for the next two decades. This is also in order to accommodate anticipated growth in that time period.

The estimated cost of infrastructure improvements is $68 million, with $52 million to be funded by developers via development charges. The remaining $16 million is identified as benefiting existing customers and would be debt serviced over a 30-year term.

The debt servicing costs would be recovered through these upfront financing agreements, and therefore will not be an addition to the water and wastewater rates, according to the municipality.

In return for pre-paying a portion of the fees associated with infrastructure improvement, developers will gain the certainty that they can connect their developments to municipal water and wastewater services when the services are available.

“We are excited to be building in Prince Edward County,” said Devon Daniell, Director, Business Development at Kaitlin Corporation.¬† “We respect the importance of connecting into the existing village of Wellington and will be offering a mix of housing options.”

Construction of the housing units is anticipated to begin as early as fall 2022, with construction continuing into 2025.

Notably, the municipality has not pursued upfront financing agreements in the past. However, these arrangements are common in other jurisdictions as a way of managing infrastructure requirements.

While the agreement allows staff to understand projected development and plan ahead for infrastructure upgrades in order to maintain a positive cash flow, it also prevents the municipality from shouldering the financial cost of infrastructure investments that may take years to pay for themselves.

As per the recent press release, in order to mitigate the risks associated with signing these agreements and their commitments, the municipality is requiring the developer to submit an irrevocable letter of credit as security for the draft approved lands for both developments.