Before Prince Edward County Chases Growth, Answer One Question: Who Pays for It?

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The argument for faster growth in Prince Edward County is appealing: more homes bring more residents, workers and customers, while a larger tax base helps support municipal services. But that argument leaves out the calculation that matters most. Will each additional increment of growth generate enough revenue to pay for the infrastructure and services it requires, or will today’s residents inherit part of the bill? With the County recently considering a water and wastewater strategy involving as much as $225 million in new borrowing through 2036, that question is no longer theoretical.[1]

The case for growth in Prince Edward County sounds wonderfully straightforward. Build more homes and more families will come. Those families will provide workers for local businesses, customers for shops and restaurants and additional taxpayers to help carry the cost of municipal services. Build the infrastructure required for those homes today, the argument continues, and the resulting growth will eventually spread municipal costs across a larger population and make the community more economically sustainable.

There is considerable logic in that argument, but there is also a very large assumption buried inside it. It assumes that the municipal revenue created by each additional increment of growth will exceed the full incremental cost of accommodating it. Before Prince Edward County commits hundreds of millions of dollars to infrastructure on that assumption, residents deserve to see the calculation.

The important question is therefore not whether growth can be beneficial. It plainly can. The more useful question is whether the particular form and pace of growth being contemplated in Prince Edward County will pay its full incremental cost after capital expenditures, financing, additional operating expenses and the eventual replacement of the infrastructure built to accommodate it are included.

That calculation is conspicuously absent from much of the public debate.

Start with the claim that a larger population creates a larger tax base

Prince Edward County faces a genuine demographic challenge. An aging population can shrink the available workforce, make recruitment difficult for local employers and leave a smaller proportion of working-age residents supporting community services. New permanent residents can strengthen businesses, schools, community organizations and the municipal tax base.

But none of that establishes that rapid residential development automatically improves municipal finances. Every new house generates property-tax revenue, but every new household also creates demands on roads, intersections, water and wastewater systems, fire protection, paramedic services, parks, waste services and other municipal infrastructure.

The relevant fiscal calculation is therefore considerably more complicated than simply estimating the value of new assessment. Council needs to know the municipal revenue generated by growth and then subtract the capital infrastructure required to accommodate it, the interest and financing costs associated with that infrastructure, the additional annual cost of providing services and the eventual cost of replacing the assets created to support the new development.

If the resulting number is positive over a reasonable lifecycle, the County should be able to demonstrate that clearly. If it is negative, adding population has not solved the fiscal problem; it has expanded the municipality while transferring part of the resulting cost somewhere else.

Prince Edward County’s own description of growth financing implicitly recognizes this problem. The County says development charges are its primary revenue tool for funding growth-related capital costs, while acknowledging that additional municipal revenue from growth may not be sufficient to maintain existing resources and service levels.[2] That is an important qualification because it comes from the municipality itself: a larger tax base does not automatically mean growth pays for itself.

PEC already has an infrastructure problem before another subdivision is built

This distinction becomes even more important when the condition of the County’s existing infrastructure is considered. In 2025, the municipality reported that the average Pavement Condition Index for its paved-road network was only 65 and that 24 per cent of the network was below a PCI of 40.[3] Council was already confronting the enormous cost of maintaining and renewing assets serving today’s population before accounting for the additional infrastructure associated with future growth.

Growth does not make those existing roads younger, nor does it eliminate the need to replace aging bridges, buildings, equipment, water systems and other municipal assets. New development can broaden the revenue base available to support some fixed municipal costs, but it can simultaneously add roads, pipes, parks and other assets that the County will be responsible for maintaining long after the original developer has finished construction.

That is why the debate needs a much clearer accounting boundary between the cost of maintaining the community that already exists and the incremental cost of expanding it.

Existing residents should reasonably bear the cost of renewing infrastructure that exists primarily to serve existing residents. Growth-related infrastructure should, to the greatest extent permitted by law and supported by benefit analysis, be funded by the development creating the requirement. Where a project benefits both existing and future users, the costs should be allocated transparently according to the demonstrated share of benefit rather than being obscured inside a much larger capital program.

That is not a novel principle. It is broadly the logic behind development charges themselves, and Prince Edward County explicitly describes its approach as following the principle that “growth should pay for growth.”[2]

The County’s own water plan shows how the calculation can be done

The regional water plan provides an unusually useful example because the County has already attempted to separate the cost benefiting existing users from the cost associated with growth.

The County currently describes the overall regional water supply plan at approximately $192.4 million. Of that amount, $41.7 million – 21.7 per cent – is identified as benefiting existing users, while approximately $150.5 million is described as eligible to be recovered through regional development charges.[4]

That is precisely the kind of accounting residents should expect to see for every major growth-enabling project.

The important debate is not whether infrastructure should ever benefit both existing residents and future development. Of course it will. A new plant may replace aging capacity while simultaneously creating room for thousands of additional homes. A road improvement may correct an existing deficiency while also being enlarged to accommodate a new subdivision. The important issue is whether the division between those purposes has been independently and transparently demonstrated.

If 78.3 per cent of a project’s cost is attributable to growth, residents should be able to see how that percentage was calculated and how the growth-related portion will actually be recovered. If another project is almost entirely necessitated by new development, residents should similarly be able to see why existing households are being asked to contribute anything beyond whatever demonstrable benefit they receive.

The principle is straightforward. The accounting is where the real argument should occur.

A larger tax base is only useful if the additional revenue exceeds the additional cost

One of the most attractive arguments for population growth is that municipal costs can be spread over more taxpayers. That is certainly true for some costs. If a municipality already operates a town hall, fire department or administrative system with unused capacity, adding households may distribute portions of those fixed costs across a larger assessment base.

Infrastructure, however, complicates that calculation because growth can expand the physical system the municipality must maintain indefinitely. A new subdivision road becomes a municipal asset, but it also becomes a future municipal liability. It will need winter maintenance, resurfacing and eventually reconstruction. New watermains eventually require repair and replacement. Parks need maintenance, facilities consume energy and staff time, and additional service demands can eventually require more vehicles, equipment and employees.

The initial construction bill therefore captures only part of the fiscal consequence of growth. Every kilometre of infrastructure added today can create decades of operating and replacement obligations tomorrow.

That is why County First believes the County should publish a lifecycle calculation alongside major growth proposals: what is the expected 50-year municipal cost of servicing an additional household, and what is the expected 50-year municipal revenue generated by that household?

The calculation does not need to pretend that the future can be predicted perfectly. It should include reasonable ranges for inflation, borrowing costs, asset replacement, service levels and assessment growth. What matters is that residents can see both sides of the ledger rather than being shown the additional tax assessment while the future liabilities remain largely invisible.

More houses do not necessarily mean more young local families

The growth argument also frequently moves from municipal finance into demographics. Prince Edward County needs workers and younger families, so the reasoning goes, and therefore it needs more housing.

The first proposition is understandable. The second does not automatically follow from it.

A newly constructed home in Prince Edward County could be purchased by a young family with children. It could also be purchased by a retiree, an investor, a second-home owner, someone relocating from another community while continuing to work remotely, or an existing County resident moving from one house to another. Every transaction adds to housing activity, but those outcomes have very different implications for schools, the workforce, local businesses and population renewal.

Prince Edward County therefore needs to distinguish between housing production and demographic outcomes. If the objective is attracting working-age permanent residents and families, the County should measure whether that is actually happening through indicators such as the age of incoming residents, permanent occupancy, household size, children entering local schools, labour-force participation and local employment.

Otherwise the municipality risks measuring what developers construct rather than whether the underlying demographic policy succeeds.

Research about Canada’s housing shortage is valuable, but PEC still needs PEC evidence

The same caution applies when national housing research is used to justify local infrastructure investment. The University of Ottawa’s Missing Middle Initiative conducts legitimate research into housing affordability and the challenges facing Canada’s middle class, with particular attention to younger Canadians and market housing.

That research can help explain broader housing-market pressures, but it cannot by itself establish that constructing thousands of additional homes in a rural, tourism-oriented municipality will produce a particular demographic or fiscal outcome. Prince Edward County has a distinctive geography, economy, housing market, infrastructure system and seasonal population. Decisions involving hundreds of millions of dollars therefore need to be supported by local evidence as well as national research.

The same problem arises when nearby Belleville is presented as evidence that faster growth would benefit PEC. Belleville may offer useful comparisons, but it has Highway 401 access, a larger employment and industrial base, different urban infrastructure and a substantially different role as a regional service centre. Prince Edward County is a peninsula with extensive rural roads, dispersed settlement, substantial seasonal activity and limited municipal water and wastewater servicing.

The meaningful comparison is therefore not which municipality added more people. It is whether growth improved the economic and fiscal position of each community after the associated costs are included.

Population growth is an input. Prosperity and sustainable municipal finances are outcomes.

Even the argument that “now is the time to build” needs numbers

Another argument for moving quickly is that construction conditions may currently be favourable because trades are more available or construction prices have softened. That could be an excellent reason to advance infrastructure, but only if the savings are quantified.

Council should be shown actual tender prices, construction-cost indices, labour availability, contractor bids and historical comparisons. If a project that would ordinarily cost $100 million can credibly be delivered for $80 million because the construction market has weakened, that $20-million difference is highly relevant.

But the saving must then be compared with the cost of financing the project early, the risk that expected development is delayed and the possibility that the infrastructure sits underutilized while ratepayers or taxpayers carry the debt.

A favourable construction market can improve an investment case. It cannot substitute for one.

Government grants help, but they do not make infrastructure free

The same discipline should apply when provincial or federal grants are announced. Higher-level government funding can dramatically improve the economics of a municipal project, and PEC should pursue appropriate grants aggressively. But grant money still comes from taxpayers, and most grants fund only part of the underlying project.

The useful number for local residents is therefore not simply the size of the government announcement. It is the amount remaining after development charges, connection charges, grants, developer contributions and other recoveries have been deducted from the full project cost.

That residual exposure should be presented alongside every major growth project, together with the associated debt, interest, operating and lifecycle obligations. Residents can then judge the actual local risk rather than the headline size of a grant.

Tax incentives can make particular housing projects work without proving the case for growth generally

Purpose-built rental incentives provide another example of why precision matters. Federal and Ontario tax measures can materially improve the economics of qualifying rental construction. That may make projects viable that otherwise would not proceed and can contribute to the supply of long-term rental housing.

But those programs apply to defined categories of qualifying development. They should not be treated as evidence that every type of residential growth produces the same financial or demographic benefits for Prince Edward County.

The relevant question is always the same: what kind of housing is being created, who is expected to occupy it, what infrastructure does it require, what revenues will it generate and who bears the residual financial risk?

If growth goes somewhere else, PEC has not necessarily lost

Perhaps the most revealing assumption in the growth argument is that Prince Edward County must compete aggressively to capture development because, if the County does not build infrastructure quickly enough, growth will move elsewhere.

That outcome is usually presented as self-evidently undesirable. It is not.

Municipalities are not corporations competing to maximize market share, and population growth is not equivalent to profit. The purpose of municipal government is to provide sustainable services and help create a community in which people can live, work and invest productively.

If additional development is financially self-supporting, expands housing choices, strengthens local businesses and improves municipal services, PEC has compelling reasons to welcome it. If the same growth requires existing residents to assume substantial debt and long-term infrastructure liabilities that are not adequately recovered from development, allowing some of that growth to occur elsewhere may be financially rational.

The County should not be afraid of losing growth for its own sake. It should be much more concerned about paying more for growth than the growth is ultimately worth.

The largest risk appears after the infrastructure is built but before the forecast growth arrives

This is where the debate becomes particularly important.

Municipal infrastructure often has to be constructed before all the homes expected to pay for it exist. A treatment plant, trunk main or water tower cannot necessarily be added one household at a time. Municipalities therefore make large investments today based partly on forecasts about what will be built years from now.

That creates forecast risk.

Prince Edward County has already recognized the problem. Its own growth-planning material has changed as development applications, population projections and economic conditions have evolved. The County’s public information shows thousands of units moving through various stages of the planning system, but an approved subdivision is not the same thing as a completed house, and a projected household does not become a taxpayer or ratepayer until development actually occurs.[2]

This is why sensitivity analysis matters. Infrastructure should not be tested only against the growth forecast that makes the financial model work. Council and residents need to see what happens if growth is slower, construction is delayed or development-charge collections arrive years later than anticipated.

Then came the $225-million borrowing scenario

The theoretical debate about growth became considerably more concrete in August 2026, when councillors considered a water and wastewater financial strategy based on approximately 1 per cent population growth.

According to reporting on the August 27 Committee of the Whole meeting, the strategy contemplated as much as $225 million in new borrowing between 2026 and 2036. Water rates were projected to rise approximately 5.5 per cent annually over the period and wastewater rates approximately 2.1 per cent annually. After a lengthy debate, the motion failed on a recorded 6-5 vote.[1]

That proposal illustrates why the underlying growth assumptions matter so much. When infrastructure plans involve borrowing measured in hundreds of millions of dollars, an error in the timing or scale of projected development is not an academic forecasting problem. Somebody has to carry the debt while the municipality waits for the expected development charges, connection revenues and additional ratepayers to arrive.

A credible financial strategy should therefore show residents what happens under several different futures. What happens if annual population growth is 1 per cent, 0.5 per cent or effectively flat for several years? What happens if major developments are delayed five years? What happens if a meaningful portion of approved units are not constructed on schedule? How does each scenario affect development-charge collections, debt servicing and water rates?

The most important number in every scenario is the same: if projected growth does not arrive when expected, who pays the difference?

Prince Edward County already has a mechanism for transferring some of that risk back to growth

There is encouraging evidence that the County understands this problem because it has already negotiated arrangements designed to prevent existing residents from financing growth upfront.

The County says it has negotiated two upfront-financing agreements under which developers prepay development charges at the draft subdivision approval stage rather than waiting until building permits are issued. According to the municipality, those prepayments are expected to cover debt costs for major Wellington infrastructure – including a new water tower, water plant, wastewater plant and associated trunk mains – for at least ten years.[2]

The County explicitly says the arrangement protects ratepayers by providing cash flow for new infrastructure upfront rather than relying on existing tax dollars while waiting to recover costs after homes are built. Developers, in return, receive greater certainty that their projects will eventually have access to servicing.[2]

That is exactly the kind of risk allocation PEC should be trying to expand wherever legally and commercially feasible.

If a new subdivision requires additional treatment capacity, a larger trunk main, a road widening or other infrastructure that would not otherwise be required, the cost associated with that growth should be recovered from the development creating the need. Where infrastructure genuinely benefits both new and existing users, the division should be demonstrated transparently and the existing-user share should be clearly identified.

This approach is not anti-development. Properly structured, it may actually make development more sustainable because residents can see that approving growth does not automatically mean transferring its financial risk onto them.

The missing document is a municipal growth profit-and-loss statement

Prince Edward County does not need to choose between the slogans “growth” and “no growth.” Neither is a serious financial strategy.

What Council needs is a transparent growth accounting model.

Before approving a major growth-enabling infrastructure project, the County should publish the project’s total capital cost, the share attributable to existing users, the share attributable to future growth, expected developer contributions, development and connection charges, provincial and federal grants, municipal borrowing, interest costs, annual operating expenses and long-term asset replacement obligations.

It should then run those numbers under low, medium and high growth scenarios.

Most importantly, the model should extend beyond the initial construction period. A road or watermain does not cease to have a cost once it is built. The municipality inherits that asset and its future maintenance and replacement obligations. A meaningful growth model therefore needs to compare the lifecycle municipal revenue associated with new development against the lifecycle municipal cost of serving it.

That would allow residents to see whether a new household contributes more to the municipality over time than it costs, whether the result is approximately neutral or whether some portion of the cost is effectively being transferred to existing residents.

The County already has many of the pieces required to construct such a model. It has a development-charge framework, asset-management data, servicing plans, growth forecasts, rate studies and experience negotiating upfront developer financing. What is missing from the public debate is a single integrated calculation showing how those pieces fit together.

Growth can be an investment. Treat it like one.

Developers understandably want servicing capacity available when they are ready to build. Local employers understandably want workers and customers. Residents looking for housing understandably want more choices, and governments understandably want communities to accommodate additional homes.

Those are legitimate interests, but existing residents have an equally legitimate interest in knowing that the growth being pursued on their behalf will not leave them carrying costs that were never clearly disclosed.

The County’s own documents already embrace the principle that growth should pay for growth.[2][5] The next step is to demonstrate that principle project by project and over the full life of the infrastructure being constructed.

If the economics are strong, the analysis should strengthen the case for investment. Residents would be able to see that development charges, connection fees, grants, developer financing and additional municipal revenues cover the incremental costs and leave the community better off.

If the economics do not work under reasonable assumptions, that is equally important information. It would allow Council to renegotiate developer contributions, resize or phase infrastructure, seek additional grants, postpone investment or reconsider the pace of growth before the debt is incurred rather than after it becomes unavoidable.

That is why the most useful question facing Prince Edward County is not how quickly it should grow or whether growth is inherently good or bad. It is whether the particular growth being proposed represents a sound investment for the people who already live here as well as those who may arrive in the future.

Before another major growth-enabling commitment is made, residents deserve to see the return, the risks and the allocation of the bill.

If growth pays for itself, show the numbers. And if it doesn’t, show who does.

Sources

[1] Quinte News – “County rejects water and wastewater strategy,” August 27, 2026. Reports that the strategy was based on a 1 per cent population-growth assumption, contemplated $225 million in new borrowing between 2026 and 2036, projected annual water-rate increases of approximately 5.5 per cent and wastewater-rate increases of approximately 2.1 per cent, and was defeated 6-5 at Committee of the Whole. https://www.quintenews.com/2026/08/27/county-rejects-water-and-wastewater-strategy/

[2] County of Prince Edward – “Managing Growth and Development.” The County states that it follows the principle that growth should pay for growth, describes development charges as its primary revenue tool for growth-related capital costs and explains its upfront-financing agreements with developers. https://www.thecounty.ca/managing-growth-and-development/

[3] County of Prince Edward – Asset Management Plan update, September 5, 2025. The County reported an average Pavement Condition Index of 65 for paved roads, with 24 per cent of the network below a PCI of 40. https://www.thecounty.ca/county_news_notices/county-council-to-consider-final-draft-of-asset-management-plan-on-september-25/

[4] County of Prince Edward – “Water and Wastewater Infrastructure.” The County identifies the regional water plan at $192.4 million, with $41.7 million attributed to benefit for existing users and $150.5 million eligible to be recovered through regional development charges. https://www.thecounty.ca/water-and-wastewater-infrastructure/

[5] County of Prince Edward – “County approves growth funding by-laws,” March 8, 2023. The County explains that development charges fund capital costs associated with growth and states that development charges do not cover portions of new infrastructure benefiting existing development. https://www.thecounty.ca/county_news_notices/county-approves-growth-funding-by-laws/

Disclaimer

This article examines the financial assumptions surrounding population growth and growth-related infrastructure in Prince Edward County. It does not argue that growth, development or infrastructure investment is inherently beneficial or harmful. The financial outcome depends on the nature, timing and location of development, the infrastructure required, available government funding, development-charge and connection-charge recoveries, financing arrangements and the additional municipal revenues and expenses created over time.

References to developers and development financing describe their ordinary role in the municipal planning and infrastructure process and do not allege improper conduct. The article’s proposal for lifecycle and scenario analysis is an analytical recommendation intended to improve public understanding of the financial consequences of growth rather than a conclusion that any particular development or infrastructure project should be approved or rejected.