Social Costs

CAMP recognizes that aggregate extraction makes an important contribution to Ontario’s economy. However, aggregate extraction activities should not be allowed when such operations represent significant negative social costs to residents in host communities. Olympia Sand and Gravel, as a private, for-profit businesses should have to undertake a Social Impact Study as part of the approval process to ensure that the true costs are understood and addressed.

One element of the true costs not being covered relates to the truck traffic. This was highlighted in a presentation Mayor Morrison, Chair of the Top Aggregate Producing Municipalities of Ontario (TAPMO) to the Standing Committee on May 14 2012. The Town of Caledon is a member of TAPMO.

“Municipalities recognize the benefits of a successful aggregate industry to their local economies. However, for many communities, this success has significant quality of life, environmental and economic costs.

Perhaps the most immediate concern for major aggregate-producing municipalities is the impact of heavy vehicles on local infrastructure. The real cost of continuous heavy traffic on local roads, bridges and culverts is many times more than the royalties returned to the communities. The aggregate industry pays 12.5 cents per tonne as a royalty; 7.5 cents of that is paid to the local municipality. This royalty is grossly insufficient to recover the costs of the infrastructure damage caused by the industry, costs that are ultimately borne by the local taxpayer.

Let me give you an example. The city of Kawartha Lakes receives about $400,000 in royalties from the Ontario Aggregate Resources Corporation, TOARC, for approximately 5.4 million tonnes of virgin aggregate extracted in the community annually. However, according to their municipal finance and public works officials, the direct cost of continuous heavy traffic on the local infrastructure is $2.4 million annually. When combined with (1) aggregate traffic generated in neighbouring municipalities, (2) the introduction of larger trucks, (3) overloading, and (4) the excessive speed, the costs to local taxpayers balloons to more than $5 million per year. In Kawartha Lakes, the full cost-recovery payment for the $5 million in local expenditures would amount to 93 cents per tonne, more than 12 times the current rate.

Aggregate-producing municipalities are focused on narrowing the gap between the real costs to the local taxpayer and the royalties currently paid by the industry. Any meaningful review of the Aggregate Resources Act must address this enormous discrepancy.”

 

Another major cost impact relates to the reduction of property values. Studies have shown that Property Tax Assessment and Land Values can drop by as much as 40% in the vicinity of a gravel pit, and in extremes by 60% adjacent to the site. This impact starts to be seen once the application for a permit is announced and we see this ourselves in these two 2014 examples:

 

  •  A property in Flaherty Lane was valued at $425,000 but it was listed at $360,000 “because of the Melville Pit application”. While the property sold for $370,000 the realtor said “we were lucky as the listing price would have had to have been less if the pit was actually dug and in operation”
  • A property on the corner of Willoughby Road and Highpoint Side Road was “priced to sell” at $495,000 and when a low ball offer came in at $450,000 the realtor advised the seller to “grab what they could” in light of the Melville Pit application and the offer was accepted  

In fact it is possible to estimate the reduction in property value with distance from the Melville Pit and, for example, we know that the 150 properties within 1 KM of the site will all likely see their value reduced by at least 20%. The whole picture looks like this:

Area Map with Concentric Radii Model

Map showing the estimated reduction in property price with distance from the Melville Pit

Download: Map showing the estimated reduction in property price with distance from the Melville Pit

Download: Table of examples of the reduction in property price with distance from the Melville Pit

Despite these facts being well known and commonly accepted the planner representing Olympia Sand and Gravel said (at the public information meeting held in June 2013) that “the Melville Pit would have no impact on local property values”. Indeed Olympia Sand and Gravel has made no provision to compensate local property owners for any drop in the value of their property.