Quarters were close at Shire hall last week, where it was standing room only — out in the hall.

On the agenda was the future of development in Prince Edward County.

The nominal item for approval was $16 million for Wellington’s watermain trunk and sanitary sewer trunk linear infrastructure.

The real item was Kaitlin Corporation’s Cork and Vine.

The watermain project was first identified in the Wellington Master Servicing Plan of 2021, and it was budgeted the same year. A call for tenders went out this August. A contractor has been selected. All that remains is council approval.

The new water and sewer mains will serve both existing water users —and provide for future development.

As a result of infrastructure agreements negotiated with Kaitlin, 90 per cent of the cost of the project, which was originally to be debt financed, will be paid for by area-specific DCs.

The trunk lines are the final part of the County’s interim servicing obligations to Kaitlin Corp. The first two parts included building a new water tower and equalization tank.

And now, Kaitlin says it is ready to start building the first two phases of its long-planned new housing development, and to pay its full share of the costs of all new and interim servicing infrastructure.

Question of Commitment

The question is of commitment: council is considering whether to proceed with key infrastructure and prepayment agreements it has already signed with Kaitlin.

The municipality has entered into two prepayment agreements with Kaitlin. The agreements mean the municipality will receive funds to build infrastructure when they are needed, rather than post-construction.

Such agreements are a two-way street: the municipality must proceed expeditiously with required infrastructure, provided the developer continues to meet payment deadlines.

According to County staff, Kaitlin is operating within the terms of this agreement and is awaiting confirmation of the contract for the provision of the required infrastructure: the water tower and the equalization tank at the Wastewater Plant are almost complete. The trunk lines and the pumping station are next.

According to staff, once the final tender has been awarded, subdivision agreements can be executed and up-front development charges will be payable. The county expects to see those payments as early as Spring 2024.

Kaitlin: We are Ready, Willing and Able

A letter from Kaitlin underscoring its commitment to build in Wellington was sent to Councillors the day of the meeting.

“We are ready, willing and able to start this development as soon as possible,” wrote Devon Daniell. The company says their pre-sales are “significant” enough to warrant proceeding immediately. The detailed engineering design for the first two phases is complete.

“We have a made significant financial commitment to this project; millions of dollars in securities have already been posted. Many millions more have been arranged to pay area specific development charges.”

Mr. Daniell underscored that DCs “cannot be paid until council starts the work on this infrastructure and we can enter the subdivision agreements.”

The company says it anticipates it will pay $53 million in development charges. It also promises to create about 334 full-time construction jobs over the next 20 years.

Base31: 100 per cent committed

Base31’s partners sent a representative, their legal counsel, to highlight their commitment to building in the County. Paul DeMelo stressed the consortium of developers at the Base “are 100 per cent committed to Prince Edward County.”

The infrastructure underway in Wellington will eventually help to extend trunk lines along the Millennium Trail and through Bloomfield and Picton. That plan is part of a regional water servicing proposal that will probably do away with Picton’s 1928 water treatment plant, and support new development at Base31 — which is committed to paying the development charges required in Ontario law.

“You have partners in this community, sophisticated developers, they are standing here with their hands up, saying ‘allow us to be partners with you in bringing that infrastructure into place’,” said Mr. DeMelo. “They are prepared to work with the County to address not only growth but deficiencies in the existing infrastructure.”

Yet despite clear assurances from the Base31 consortium, and the written prepayment agreements with Kaitlin, Council still worried that the current dire economic situation — while inflation has slowed dramatically, interest rates are still forbidding — will slow development, if not cancel it outright.

A number of residents worried that the municipality is building expensive infrastructure for a developer who may not build, leaving ratepayers across the County on the hook.

In that eventuality, the County would be left with the securities Kaitlin has provided, about four million — barely enough to pay the interest charges on the loans incurred to finance these projects.

Clarifying Agreements

As the meeting hung in the balance, former County councillor Ernie Margetson suggested simply seeking a clear agreement from Kaitlin before approving the tender for the final phase of the expansion of the Wellington service area.

“If the municipality is to proceed with the front-end financing on this third phase, as they have done with the first two, then I feel they must be assured with confidence that the developer is willing to make their contribution. The pre-servicing agreement does not prevent the developer from signing a subdivision agreement at any time,” he said.

The staff report accompanying the motion to approve the tender explains that “upon full execution of a Subdivision Agreement, [the developer] pays the full amount of the development charge for those lands.”

“Once the Tender for the Trunk Mains and Pumping Station has been awarded, the Subdivision Agreements can be executed and the DC’s associated with those Agreements will be payable.”

Mr. Margetson noted, “We are looking for a commitment from the developer at the same time as we make a final commitment on the servicing. That creates a win-win situation.”

Councillor John Hirsch said that this guarantee does seem implicit in the pre-payment agreements the County has negotiated with Kaitlin, but nonetheless, “there needs to be a guarantee that our understanding of the payments really does work, that the day we sign the tender, we have a commitment from Kaitlin.”

Council voted unanimously to defer awarding the tender while it seeks the required assurances. It has until the end of January to award the contract. The winning bid is irrevocable until January 27.

“I am ready to proceed with every caution, and with all the information we can gather,” said Mayor Steve Ferguson. “This is a very big project. But we must not lose sight of the goal. Housing is our top priority.”