Kitchener-Waterloo’s billion-dollar building industry is in limbo weeks after the Region of Waterloo said it would no longer approve new development applications until it can fix a water supply system that has insufficient capacity to meet population growth.
The crisis could derail the development industry for months, impacting housing needed for the region’s projected growth to a million residents by 2050, up from an estimated 700,000 last year.
“This is not just about development,” said Melissa Durrell, CEO and Communications Strategist for Build Urban, a group of 17 regional multi-residential and commercial developers. “It’s about economic development. It’s about us being the 10th largest community in Canada.”
Durrell added that she believes the water capacity issue is a “solvable engineering problem,” but the pause on development, without a concrete plan from the region on how to move forward, is affecting capital investment decisions.
“The lack of clear communication is now threatening to stall housing and employment projects that were properly planned and approved.”
The region first announced in December that it had identified a significant water capacity issue in what is known as the Mannheim Service Area, which supplies drinking water to Kitchener, Waterloo, and parts of Cambridge, Wilmot, and Woolwich.
The problem was discovered after a review by regional staff found that a number of factors were impacting water capacity, including “aging infrastructure, lower levels of water in the system, and the pressures of rapid growth,” according to a statement from the region.
Waterloo region relies on a complex system of 100 wells, and the Grand River, for drinking water to supply all seven of its municipalities.
The news of a potential water shortage came as a shock to the local building industry, as well to area municipalities, which have authority in the two-tiered government system to approve building developments, but rely on the region to manage and approve connections to the supply of drinking water.
At the time, the region said there would be a two-week pause on processing new development applications in a letter to the Waterloo Region Home Builders Association (WRHBA).
In a January meeting, the region said that a third-party review had confirmed its findings and that because of the water capacity constraint, it would not support approval for development applications from municipalities or enter into new water servicing agreements.
The region has been criticized for making the abrupt decision without releasing, until recently, the data used to substantiate it and without input from the development industry, which has asked to be included on any task force going forward.
“Ultimately, this is an engineering and asset management failure. It didn’t happen overnight,” Tom McLaughlin, vice-president of Thomasfield Homes and a member of the WRHBA.
“I think the region really does need outside expertise, transparency, and a risk-based management path to keep us moving forward while these infrastructure upgrades are being fixed and delivered.”
Last week, the Region of Waterloo extended invitations to Durrell’s group, Build Urban, as well as the WRHBA, to participate in stakeholder groups that will consider solutions as well as issues such as water conservation, going forward.
Kitchener Mayor Berry Vrbanovic said his city will continue to look for ways to expedite housing within its control, while examining the data contained in the third-party report, as well as data from the region, which the city received Jan. 30.
“The region had been saying…we have enough water to build 120,000 new homes,” said Vrbanovic. “They’re saying now ‘hey, well time out, that may not be the case.”
The city’s priority, said Vrbanovic, was too fast-track the infrastructure repairs in order to save thousands of jobs associated with the construction industry and build housing to address the affordability crisis.
The region says that “construction of buildings with existing permits and servicing agreements will continue as we work with our area municipal partners to find ways to advance development.”
Previous water monitoring reports consistently showed enough capacity, according to the region, but a new methodology used by staff, which looked solely at the Mannheim Service Area — and not other water supply systems in the region which can’t pump water to Mannheim area for a number of reasons — found the shortage.
The region has also said it had not included infill housing, which has been used extensively to prevent urban sprawl, in its previous water capacity estimates.
In a statement released at the end of January, the region said it had identified some initial solutions, and that it would fast-track the work.
But most of the solutions cited by the region were long-term, including building a new pumping station, reallocating water supply from another area of the region, expanding existing well supply and repairing existing infrastructure.
“This is the top priority for Regional Council,” said Karen Redman, Regional Chair, in the statement. “We are acting now and working closely with our municipal and provincial partners to move solutions forward.”
The region did not give the Star an interview or answer numerous questions sent by email asking about the scope of the work and the timeline. The region has said the potential water capacity shortage does not affect current residents and there is nothing wrong with the quality of the drinking water.
However, the scope of the problem was answered in an engineer’s report from the region’s department of Waste and Wastewater Infrastructure Management, presented at a mid-January meeting of the Sustainability, Infrastructure, and Development Committee.
The report said the demand for water when the current development applications are fully constructed in the next 12 years will outpace the peak supply available in the Mannheim Service Area.
“While the planned development is going to take some time to draw on the water supply, significant infrastructure projects and investment are required to be able to support these future growth needs,” the report says.
McLaughlin, though, said the “full stop” being placed on the development industry is “unacceptable,” and will mean that up to 180 homes slated for development by his company in Wilmot won’t move ahead this summer.
“Ultimately, this problem was caused by regional decision-making, regional management,” said McLaughlin. “And unfortunately, the new homebuyers, the economy, and the people who work for us are paying the price for it.”
McLaughlin added that developers and homebuilders have paid about $150 million in development charges in the last decade to the region’s water system.
“It’s concerning because we’ve invested in the community and we’d like to see that investment prosper,” he said. “But that’s not what’s happening here.”
