Part 2: Financial Risks, Development Charges, and Oversight 03/24/2025

Councillor Kate MacNaughton opened the meeting in her role guiding the initial proceedings. She oversaw the early procedural steps, including the election of the committee’s leadership, and played an active role throughout the discussion by asking detailed and targeted financial questions.

Her line of questioning consistently focused on key areas such as financial risk, reserve levels, debt management, and transparency. These topics are not just technical concerns they have direct implications for residents, influencing property taxes, service levels, and the county’s overall financial stability in the years ahead.

Photo: PEC Council/ YouTube

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Following the nomination process, Councillor Engelsdorfer was elected as Chair, while Jane Leslie was elected as Vice Chair. Although the election itself was straightforward, these roles carry significant responsibility. The Chair, in particular, shapes how discussions are managed, how priorities are set, and how effectively the committee carries out its oversight function. Their leadership will influence how financial accountability and audit scrutiny are handled throughout the year.

Audit Oversight and Financial Risk

A major portion of the discussion centered on audit oversight and the county’s financial position. Aaron McNichol, acting director of finance, presented the audit plan and provided important context around current financial risks.

One of the most notable points raised was that county reserves are currently low compared to commonly accepted municipal guidelines. This is a critical issue because reserves act as a financial buffer. When reserves are limited, the municipality has less flexibility to respond to unexpected expenses, infrastructure failures, or economic downturns without turning to borrowing or increasing taxes.

Councillor Kate MacNaughton pressed further on this issue, asking for peer comparisons to better understand how Prince Edward County stacks up against similar municipalities. Her goal was to move beyond a simple “low” designation and provide residents with clearer context. Are these challenges unique to the county, or are they part of a broader trend affecting municipalities across Ontario?

This distinction matters. If the issue is widespread, it may point to systemic funding challenges. If it is more localized, it may suggest the need for specific policy changes or financial adjustments at the county level.

Development Charges and Infrastructure

The conversation then shifted toward development charges and how they are used to fund long-term infrastructure projects.

Councillor John Hirsch took a leading role in explaining how development charges interact with municipal debt. He highlighted that major infrastructure such as water and wastewater system is typically financed over long periods, often spanning decades. Development charges collected from new growth help offset these costs, particularly in the early stages when debt servicing is highest.

This issue is especially important for residents who are concerned about whether growth is placing additional financial pressure on existing taxpayers. Hirsch’s explanation aimed to clarify that development charges are intended to ensure that growth contributes to the infrastructure it requires, rather than shifting the full burden onto current residents.

Jason Raynor, serving as legal advisor, added further context by confirming that development charge prepayment agreements are standard practice across Ontario. However, he emphasized that these agreements must be carefully structured to manage risk. In particular, he noted the importance of safeguards in cases where a developer may fail to complete a project or meet payment obligations.

Councillor Kate MacNaughton raised additional concerns related to these agreements, including the risks of developer insolvency, rising interest rates, and delayed payments. Each of these factors can have real financial consequences. For example, if payments are delayed, the county may need to carry debt longer than expected, increasing borrowing costs. In more severe cases, unfinished projects or unpaid charges could place additional strain on municipal finances.

Communication with the Public

Beyond the technical details, there was a clear and repeated message from multiple committee members: the need for better communication with the public.

Development charges and municipal financing tools are complex topics, and confusion around them has led to concern and uncertainty within the community. Members acknowledged that residents are often left trying to understand how large infrastructure projects are funded and whether those costs will ultimately affect their taxes.

To address this, the committee discussed the importance of clearer explanations and more accessible information. Suggestions included providing real-world examples from other municipalities and offering more transparent breakdowns of how development charges work in practice.

Improving communication is not just about clarity, it also plays a role in building public trust. When residents understand how decisions are made and how funds are managed, they are more likely to feel confident in the process.

Annual Report and Accountability

Accountability was another key theme during the meeting. Councillor John Hirsch agreed to present the Audit Committee Annual Report to Council, a document that outlines the committee’s activities and oversight work over the past year.

This report serves as an important link between the committee and the public. It provides residents with a clearer picture of how financial oversight is being carried out on their behalf, what issues have been addressed, and what areas may require continued attention.

By formally presenting the report to Council, the committee ensures that its work is part of the broader public record and subject to further review and discussion.

Cybersecurity and Closed Session

Toward the end of the meeting, the committee voted to move into a closed session to receive a cybersecurity update. While the details of this discussion were not made public, the decision itself highlights the growing importance of digital security in municipal operations.

Cybersecurity risks can affect everything from internal systems to sensitive personal information. By addressing these issues in a closed session as permitted under the Municipal Act, the committee is able to review potential vulnerabilities and protective measures without exposing sensitive details.

For residents, this type of oversight plays a critical role in safeguarding both municipal services and personal data.

Key Takeaways

1. County reserves are lower than recommended levels. Finance staff confirmed that Prince Edward County’s reserves fall below common municipal benchmarks, leaving less financial flexibility to respond to emergencies or unexpected costs.

2. Development charge agreements carry financial risk. Council members and advisors discussed how infrastructure is funded through development charges, while also acknowledging risks such as developer insolvency, delayed payments, and rising borrowing costs that could ultimately impact taxpayers.

3. More financial transparency is being pushed. Committee members emphasized the need for clearer communication around development charges, debt, and financial strategies so residents can better understand how growth and infrastructure are funded.

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Disclaimer: This article is based on a meeting with an approximate duration of 4:12:027. Due to the length of the meeting, our team was not able to independently review the full recording in its entirety. As a result, we relied on software-generated transcription, automated summarization, and automated recognition of speakers and participants, which may not be entirely accurate. All transcriptions, summaries, and related content are prepared by our team in good faith and on a reasonable best-efforts basis. The content is provided for general informational purposes only and is intended to support public understanding of the topics discussed. While reasonable efforts have been made to present the information accurately, automated processes may result in errors, omissions, or unintended misinterpretations. This article does not constitute an official, certified, or verbatim record of the meeting, and it should not be relied upon as such. Readers are encouraged to consult original source materials, official minutes, or recordings where available for confirmation or clarification. Questions, requests for clarification, or suggested corrections may be submitted to hello@pecconnect.ca for review and consideration.