Developers finding savings outside the city
After years of dealing with planners at the City of Ottawa, David Kardish has one word to refer to his company’s experience so far in neighbouring Mississippi Mills: refreshing.
© Joël Côté-Cright
Rahul Kochar is vice-president of Phoenix Homes.
Mr. Kardish’s firm The Regional Group bought 180 acres of land in Almonte, just west of Ottawa’s limits, in 2010. Since then, the company has set about getting zoning approvals with the municipality so builders could begin to construct homes in that area.
“The City (of Ottawa) has put together such a regimented approval process that things just take forever, and more and more builders are being attracted to the outskirts,” said Mr. Kardish, The Regional Groups’s vice-president of development.
Developers moving beyond the city limits is nothing new. Homebuilders have been buying up large tracts outside the municipality’s boundaries for years, citing the scarce land supply in Ottawa as the main reason.
Increasingly, though, builders say the speed with which land is approved for construction outside of Ottawa is a big reason for hitting the road.
Mr. Kardish pointed to the example of registering a plan for the land. He estimated that process would take about six months with the City of Ottawa – more than twice as long as the two and a half months it took with Mississippi Mills.
That can have a big impact on the price of the finished product. Mr. Kardish cited “carrying costs” – what developers have to pay as they wait for land to be developed – as a major price increase that is ultimately passed on to those who buy the home.
A speedy approval in a rural municipality adds up to savings of $50,000 to $100,000 for each project, he estimated.
Many of the people who are moving into the new developments continue to work in Ottawa, according to the developers OBJ contacted. That raises the prospect that more and more people will be using Ottawa’s municipal infrastructure and services during the day, but not covering any of the costs through residential property taxes.
Ottawa city councillor Peter Hume, who chairs the city’s planning committee, said it’s an argument he’s heard before.
“The industry (is) throwing the straw man up to say, ‘Oh, they’re rushing off to Arnprior so the city better include more land in the urban boundary (and) speed everything up,’” said Mr. Hume. “It’s sort of the dance they do every so often.”
But developers insist the length of time required to get land approved for development has more than doubled since various municipalities came together to form the City of Ottawa in 2000.
“The level of bureaucracy is much less when you’re dealing with townships, much as it was in the City of Ottawa before amalgamation,” said Rahul Kochar, vice-president of Phoenix Homes. His firm has new developments in Almonte and Arnprior.
Rural municipalities such as Mississippi Mills, which is responsible for Almonte and five other communities, have made attracting new developments a priority. Mayor John Levi wants to add about 150 homes a year so the town has a larger tax base on which to draw.
“We don’t hold them up,” he said. “It does take time – you’ve got to go through the city process – but we just have a lot more efficiency in how we get it done.”
Mississippi Mills is just in the process of doubling its planning department – “We added a second planner this year,” said Mr. Levi – to try to speed along the approvals process.
A mass exodus to rural municipalities seems unlikely, though. Developers stress the quicker approvals process and cheap land is an opportunity, but it will never entirely replace construction in Ottawa because homes in the countryside sell for less.
“There’s only so much business in a small town,” said Vince Campanale, vice-president of Campanale Homes, adding his firm is already competing against other builders buying neighbouring land.
Even though his firm’s development in Arnprior is a nice addition to its portfolio, he said demand isn’t high enough in those areas to allow the company to survive on that alone.
How much faster?
OBJ spoke with several developers to get some hard numbers on the difference between working with the City of Ottawa and a rural municipality. While anecdotal measurements vary, here’s what they said:
David Kardish, The Regional Group:
Registering a land plan: Two and a half months with Mississippi Mills, six months with the City of Ottawa.
Development charges: Savings of $10,000-$15,000 in Mississippi Mills compared to Ottawa.
Final cost: He estimated the final cost of the average residential project was $50,000-$100,000 cheaper.
Vince Campanale, Campanale Homes:
Cost of land: He estimated land is around 40 per cent cheaper in outlying municipalities than in Ottawa.
Rahul Kochar, Phoenix Homes:
Development charges: Approximately $40,000 to $50,000 less in rural municipalities.
Time for approval: He estimated it takes half as long to get approvals in rural municipalities. In Ottawa, he says it’s increased from one year about a decade ago, to about two and a half years now.