Downtown Kitchener could see a construction boom in about two years as developers rush to meet a deadline that could save them millions of dollars in fees.
Developments in downtown Kitchener are currently exempt from paying both regional and city development charges, but that exemption disappears at the end of February 2019, and city officials are expecting a rush of applications from builders hoping to start their projects in time to avoid the extra charges. That could mean a host of construction cranes on the skyline in about two years.
“We’re going to be swamped (with applications), from what we’re hearing,” said Jennifer Young in Kitchener’s building department.
The number of site plan applications for new developments in the downtown is already up, she said. “We’re seeing volumes more than usual … We’ll have a lot of construction, if they’re all approved. We’re looking at a significant amount.”
A lot of the proposals coming to the city’s planning department are for major developments that increase density in the downtown, said Alain Pinard, Kitchener’s director of planning.
“A lot of the development we’re talking about here is for new, transformative things,” he said, noting that bigger developments will face bigger charges if they’re approved after the 2019 deadline, so the incentive to move quickly is even greater for large projects.
Drewlo Holdings Inc. is one of several developers keen to get building. It is planning a major development in the east end of downtown, on the block of land bounded by King Street East, Madison Avenue, and Charles and Cameron streets that would include towers of 14 and 18 storeys on a four-storey podium.
There’s a good market for downtown sites, said George Bikas, Drewlo’s manager of land development. “This is a good site. It’s close to downtown amenities, and close to light rail transit.”
The city and Waterloo Region charge development charges for any new construction. The charges are one-time fees developers pay
Developers are keen to get their building permits before Kitchener and Waterloo Region begin levying development charges on downtown developments, since the extra charges could boost the cost of a project by millions of dollars.
For example, a new condo downtown would face fees of about $14,600 for each unit.
The extra fees are so significant, they could mean the difference between a project going ahead or not, said Allan Drewlo, vice-president of Drewlo Holdings. His downtown project will build about 450 rental apartments, so it would face almost $6.6 million in regional and city development charges if it misses the deadline.
The city held an information session Friday for developers and consultants who want to take advantage of the fee exemptions before the deadline. Development charges are one-time fees on new construction that pay for infrastructure like new roads and sewers needed to service the new growth.
The key message at the meeting was that developers need to move quickly if they want to avoid the extra fees.
“If you need a zone change or an Official Plan amendment change, that process can take upwards of 18 months, so it’s imperative that you start immediately,” said Brian Bennett, Kitchener’s manager of business development.
Meeting the deadline to avoid the millions in extra fees is crucial, said Drewlo, but it’s not going to be easy. “It seems like a really long time (until the deadline), but our experience is it can drag on. We’d like to be going right now.”
Approvals can take time because often many different government bodies such as the Region of Waterloo, the Ministry of the Environment and the Grand River Conservation Authority also need to approve the plans, Pinard said.
The number of regulations developers need to meet seems to increase all the time, said Drewlo, but every new policy increases the cost of a development and makes it less affordable for tenants or homebuyers, he warned.
“Every year there’s more and more policies being piled on,” he said, noting that it’s a situation he sees everywhere, not just in Kitchener. “The cities are requiring that we build a Porsche building every time, so there’s no Ford buildings being built anymore. Affordability and choice suffers.”