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HomeMy WebLinkAbout1977-11-03 Courtice Heights Municipal financial Impact AnalysisCourtice Heights Municipal Financial Impact Analysis PREPARED BY PETER ARNARD ASSOCIATES REVISED NOVEMBER, 1977 CONTENTS PAGE SUMMARY 1 1. EXPENDITURE Annual Operating Expenditures 5 Education 7 Capital Expenditures 7 2. REVENUE Annual Operating Revenues 9 One Time Revenue 10 3. IMPACT OF COURTICE HEIGHTS Regional Levy Education Levy Capital Improvements Financial Impact on Newcastle 12 13 14 15 APPENDICES A. Municipal Operating Expenditure A-1 B. Capital Expenditures B-2 C. Revenue C-1 D. Education Cost Impact D-1 SUMMARY Any new development imposes new expenditures and generates new revenues for the municipality in which it is located. Thus, with the proposed new development of Courtice Heights in the Town of Newcastle, there is concern as to what the ultimate financial impact if a new develop- ment of 1,051 households will be on the municipality. The purpose of this report is to assess the new expenditure and revenues generated by the proposed development to determine the financial benefit or defecit. HOW THE ANALYSIS WAS DONE The analysis was carried out using 1977 budget informa- tion from the Town of Newcastle and the Regional Municipality of Durham and actual costs for the various capital improve- ments and revenues attributable in whole or in part to Courtice Heights. Uncertainties regarding projections of future trends in costs and revenues were avoided by conducting the analysis in current dollars; that is by cal- culating the financial impact as if Courtice Heights were now in place and employing actual municipal budget figures. • Expenditures The analysis first determines the appropriate per capita or household costs for the Town or Region to provide their full range of services. The cost of providing these services was then computed for Courtice Heights based on these cost estimates and modified to take any peculiar aspects of the development into account. A review was then made of the capital improvements required to serve the proposed developments. Appropriate expenditures were developed for these based upon estimated construction costs and apportionments made to Courtice Heights. ® Revenues. The income producing potential of the project was estimated from a number of sources. First the income from taxation was determined using the current Newcastle mill rate and the expected assessment of the project. Grant incomes to both the Town and Region due to the Courtice Heights development were determined from the for- mula used in calculating 1977 grants. Then one time income to be applied to capital works were determined from lot levy and building permit schedules in place in August 1977. Finally, since both the Town and the Region benefit from the interest free character of DHAP loans and the Town from the OHAP Capital Housing Incentive Grant, the annual and one-time amounts of these benefits completed the determination of revenues attribu- table to Courtice Heights. CONCLUSIONS From our analysis it is clear that the proposed Courtice Heights development would benefit the Newcastle taxpayer. On the next page we summarize the financial benefit to the residents of Newcastle and the implications of the Courtice Heights development on the Regional Municipality of Durham. ANNUAL FINANCIAL BENEFIT IS OVER $185,000 The financial benefit of Courtice Heights was deter- mined by deducting the expenses to the Town generated by the proposed development from the income it would receive. To this, debt charge savings derived from an excess of one time revenue over capital expenditure were added to determine a total annual financial benefit of $187,000 to the Town of Newcastle. FINANCIAL IMPACT OF COURTICE HEIGHTS ON NEWCASTLE Annual Revenues Taxation $585,563 Provincial Grants 176,252 OHAP Interest Saving 15,796 Reduced Debt Repayment 204,803 Annual Expenditures Local Purposes Regional Levy Education Levy $260,485 185,008 350,153 $982,414 $795,646 Excess of Annual Revenues over Expenditures $186,768 REGIONAL TAXPAYERS ALSO BENEFIT We would conclude that as a result of the develop- ment of Courtice Heights, Newcastle's increased contri- bution to equalized Regional assessment would more than cover the annual cost of providing Regional services to the proposed development. A further benefit to the Region is the increased borrowing power which would result from the addition of the Courtice Heights project. The increased assessment and calculated one time revenues associated with the development of Courtice Heights ($1,833,995 to Durham) could be applied to significantly reduce the Regional debt to assessment ratio. 1. EXPENDITURE Both the Town of Newcastle and the Regional Municipality of Durham will have to provide Courtice Heights residents with the full range of services. As well, the school boards will be required to build and operate the necessary schools and transportation services. Finally, both the Town and the Region will have to make certain capital expenditures for hard services and recreation facilities in the Courtice area and the Courtice Heights development must pay for its share of these costs. ANNUAL OPERATING EXPENDITURES (a) Town of Newcastle The expected municipal expenditures which would be generated through the development of the proposed Courtice Heights development were determined through a review of the 1977 budget. From this review, the appropriate per capita or per household costs were determined and the municipal expenditure calculated based on a development of 1,051 housing units and 3,9171 people. It is estimated that the new operating expenditure which can be attributed to the proposed Courtice Heights development, expressed in constant 1977 dollars are: 1. Population calculated based on 3.8 persons per household for detached and semi-detached units and 3.5 persons per household for townhouse units. Added Operating Expenditures due to Courtice Heights General Government $ 10,341 Fire Protection 23,753 Other Protection 23,267 Transportation 69,944 Sanitation 43,638 Community Services 8,735 Library 15,864 Parks & Recreation 52,605 Planning 12,338 Total annual expenditure $260,485 The detailed calculation of these expenditures is presented in Appendix A. (b) Regional Municipality of Durham As in the case of the Town of Newcastle, Regional expenses were determined from a review of the 1977 budget. It is expected that the expenditures attributed to the proposed development are: Added Operating Expenditures due to Courtice Heights Management Committee $ 17,313 Finance 22,405 Planning & Development 21,739 Social Services 43,910 Works 27,654 Health 7,599 Police 99,570 Non -Departmental 22,670 Total annual expenditure $262,860 The analysis of these expenditures is presented in Appendix A. -6- EDUCATION The costs of providing education were derived from a review of the budget of The Northumberland and Newcastle Board of Education. This review is presented in more complete form in Appendix D. It was determined that the annual cost of providing edu- cation was $1,203 per elementary student and $1,893 per secondary school student. From the loading factors used by the school board it is expected that the proposed development will generate 526 elementary school and 210 secondary school students imposing a cost of $1,030,308. This is offset by grant revenues of $766,484 leaving an annual operating cost of $263,824. In addition, it is expected that the cost of providing new schools will be about $2,450,000, a cost which when offset by grants of $1,960,000 and debentured over 20 years at 9% results in an annual cost of $53,256. The Total cost of providing education to the new development is there- fore $317,080. CAPITAL EXPENDITURES The development of a new subdivision of a thousand households will create the need for new municipal facilities ranging from sewers to park facilities. A general review of new facilities resulting from the increased population generated by the proposed development was conducted by the I.B.I. Group, the planning consultants for the Town in consultation with Town department heads. The major areas where new facilities are required as a result of the proposed new development are for fire protection, libraries, roads and parks and recreation facilities. -7- It is estimated that the capital expenditure which will be required to serve the new development are: Courtice Heights' Share of Capital Expenditures Town of Newcastle Parks & Recreation Facilities $344,775 Fire Department 64,363 Roads 263,500 Storm Sewer 92,385 Libraries 68,683 Total $833,706 Regional Municipality of Durham Farewell Creek Trunk Sewer $271,459 Water main 113,090 Total $384,549 Detailed calculation of Capital requirements may be found in Appendix B. 2. REVENUE Municipalities raise revenues from taxes, grants, levies and fees. For the purpose of this study these revenues will be divided into two classes; annual revenues and one time revenues. Annual revenues are those revenues raised on yearly basis for the purpose of meeting operating expenditures and retiring debt. Annual income includes taxation and a variety of Provincial Grants. One time income generally consist of development levies and for the purpose of the analysis, building permit fees and one time grants. These incomes (especially lot levies) are generally applied against one time expenses such as Capital improvements. This chapter summarizes the annual and one time revenues which would be generated for both Newcastle and the Region by the proposed development. Details will be found in Appendix C. ANNUAL OPERATING REVENUE Annual operating incomes consist of property taxes and provincial grants. Only the lower level of municipal government, the Town, collects taxes directly. Both levels receive grants from the Province and benefit from the interest savings on OHAP loans. Property taxes are based upon a mill rate applied against the assessed value of the property. The 1977 mill rate for the Darlington area of Newcastle is 213.68 mills. It is expected that the proposed project will be assessed at about $2,740,375. The project will thus generate a tax revenue, at current mill rates of $585,563. In addition, both municipalities receive Provincial grants. These grants are explained in detail in Appendix C. Based upon the 1977 formuli, it is expected that Provincial grants in,the value of $176,252 local and $123,934 Regional will be received. -9- Because the proposed development is being processed under OHAP, both the Town and the Region receive interest- free loans for constructing below ground services, not for the Courtice Heights development alone but for the entire Courtice area. Since under normal circumstances these costs would have to be debentured, Courtice Heights produces an effective revenue equal to the debenture interest saved. Therefore the annual income to the municipalities due to Courtice Heights is as follows: Annual Revenues due to Courtice Heights Town of Newcastle Taxation $585,563 Grants 176,252 OHAP interest saving 15,796 Regional Municipality of Durham Grants 123,934 OHAP interest savings 63,393 $777,611 $187,327 ONE TIME REVENUES Both the Town and Region collect revenues from the development of new housing. This is collected in the form of lot levies and building permits. In addition, the Town will receive a Capital Housing Incentive Grant under the OHAP program that is directly attributable to the Courtice Heights development. The one time revenues generated are: One Time Revenues due to Courtice Heights Town of Newcastle Plumbing Permits $ 31,530 Lot Levies 1,576,500 Building Permits 167,676 Capital Housing Incentive Grant 496,575 Regional Municipality of Durham Lot Levies $2,272,281 $1,833,995 For more details of these analyses see Appendix C. 3. IMPACT OF COURTICE HEIGHTS The ultimate responsibility for municipal programmes which are to be financed out of municipal revenues resides with the local municipality, in this case Newcastle. The schoolboards and the Regional Municipality do not raise money directly from tax payers, they merely levy an amount to the local municipality. The local municipality is responsible for raising the required revenue for its own purposes plus that for the regional and school board ex- penditures via taxation. Thus the financial impact of Courtice Heights is determined by the difference in Newcastle revenues and expenditures attributable to the development, including the changes in both the Regional and Educational levies. It is also necessary to take into account the capital expenditures and one time revenues associated with Courtice Heights and the effect these might have on municipal debt. REGIONAL LEVY The Regional Municipality of Durham derives its revenue from Provincial Grants and from a levy to area municipalities. This levy to area municipalities is based on the munici- pality's proportion of equalized assessment. The 1977 Regional Levy before Regional Municipal Grants was $22,334,945. This was reduced by the General Per Capita, Police and Density Grants from the Province totalling $6,688,693 leaving the 1977 levy to area municipalities of $15,646,252. It was determined in Appendix A of this report that the proposed Courtice Heights development of 1,051 housing units would add $262,860 in operating expenses. This would be offset by revenues of $187,327 grants (see Appendix C) and interest saving. The net cost to the Region would therefore be $75,533 and would result in an increased revised levy to area municipalities of $15,721,785. The additional housing units generate an assessment of $2,740,375 which is equalized to $24,038,372. This increases the Region's equalized assessment from $2,397,553,3201 to $2,421,591,692 and Newcastle's from $279,113,1441to $303,151,516 causing Newcastle's proportion of equalized assessment to rise from its present 11.642% of the Region's equalized assessment to 12.519%. Newcastle's revised Regional levy, based on the revised 12.519% proportion of equalized assessment would be 12,519% of $15,721,785 or $1,968,210, an increase from the existing $1,783,202 of $185,008. Thus, Newcastle's increased contribution to equalized Regional assessment would more than meet the annual cost of providing Regional services to the proposed Courtice Heights development. EDUCATION LEVY The Town of Newcastle's share of education is derived from a levy from both the Northumberland and Newcastle Board of Education and the Peterborough, Victoria, North- umberland and Newcastle Roman Catholic School Board. For the purpose of this analysis, all costs and revenue are calculated using public school board data. The School board levy is based upon proportion of equalized assessment in the same manner as that of the regional levy. The school board however, covers a different geographic area and thus has a different assessment base. 1.'Region of Durham, final results after Assessment review appeals, July, 1977. -13- t The total equalized assessment for all member municipalities of The Northumberland and Newcastle Board of Education for purposes of the 1977 budget was $794,425,710. Of this, the Newcastle equalized assessment was $280,319,243 or 35.29%. The proposed new development will yield an equalized assessment of $23,223,517, increasing Newcastle's assessment to $303,542,760 and the total assessment for the School Board area to $817,649,227, increasing Newcastle's proportion from 35.29% to 37.12% to total equalized assessment. It was shown earlier in the calculation of expenditures that the cost of providing education to the Courtice Heights development would be about $317,080. The 1977 Public School Board requisition to munici- palities was $11,656,085. The additional net expenditure of $317,080 generated by the proposed development would increase this to $11,973,165. Newcastle's share of this expenditure is (37.124% of $11,973,165) = $4,444,918. The Total requisition, including the separate school requisition would be $4,444,918 and $117,879 (the separate school levy) _ $4,562,797 The levy which may be attributed to the new development is the difference between the anticipated new levy and the existing 1977 levy ($4,562,797 - $4,212,644) $350,153. CAPITAL IMPROVEMENTS Examining the balance of one time revenue generated and the cost of capital improvements required to service the development, it was found that the proposed development generates surplus revenues for capital spending: Newcastle Region Revenue $2,272,281 $1,833,995 Expenditures 833,706 384,549 Excess revenue $1,438,575 $1,449,446 -14- This excess revenue may be taken as income and applied to the budget creating a one year budgetary surplus which would be reflected in abnormally reduced property taxes. To be handled properly, however, since the revenue derived are for capital purposes, any excess revenue should be applied to retire debt. The analysis will treat these excess revenues in this manner. At the beginning of 1977 the Town of Newcastle had a debt of $2,073,752 and the Regional Municipality debt of $36,413,000. Applying the surplus revenues to capital pur- poses these, debts could be reduced to $635,177 and $34,963,554 respectively. Assuming on average the debt is debentured over 15 years @ 9.5% the annual debt payments would be reduced by $181,863 and $183,238 per year respectively. Newcastle's share of the latter saving, allocated by proportion of equalized assessment would be 12.519% of $183,238 or $22,940. * FINANCIAL IMPACT ON NEWCASTLE In Chapter 1 it was concluded that the added operating expenditures for the Town due to Courtice Heights would be $260,485 and in Chapter 2 the associated revenues were shown to be $585,563 from taxes, $176,252 from Provincial Grants and $15,796 in interest savings on OHAP loans. Comparing the revenues and expenditures related to Courtice Heights shows that the financial benefit of the project to Newcastle is considerable: Annual Revenues Taxation $585,563 Provincial Grants 176,252 OHAP Interest Saving 15,796 Reduced Debt Repayment 204,803 Total $982,414 -15- Annual Expenditures Local Purposes $260,485 Regional Levy 185,008 Education Levy 350,153 Annual 795,646 Excess of Annual Revenues over Expenditures $ 186,768. A further, and not inconsiderable benefit to both the Town and the Region is the increased borrowing power which would result from the addition of the Courtice Heights project. Municipalities raise capital by issuing debentures and their ability to repay this debt is normally measured by the relationship of total debt to assessment. Since Courtice Heights will increase assessment and, as shown earlier, the excess one time revenues could be applied to reduce debt then the debt to assessment ratio would be considerably improved. Hence both the Town and the Region's borrowing capacity would be increased. No attempt has been made to determine what the increase might be because other factors do affect the amount a municipality will be allowed to borrow. Nevertheless the Courtice Heights development would present this added benefit. To conclude, therefore, Courtice Heights shows a net annual financial benefit to Newcastle of some $187,000 as well as a beneficial increase in the municipality's borrowing capacity. APPENDIX A MUNICIPAL OPERATING EXPENDITURE INTRODUCTION The purpose of this Appendix is to determine the cost of delivering municipal services to the proposed new development of Courtice Heights. . The 1977 operating budgets of both the Town of Newcastle and Regional Municipality of Durham were examined. The budgeted 1977 expenditure for each functional department were first determined. Any capital expenditure or revenues (recoveries) were deducted from the budgeted amount to yield the net operating expenditure in 1977 dollars. The net expenditure was then expressed in per capita or per household terms depending upon the function. A comparison of expenditures of other like municipalities was then conducted to determine whether this expenditure was in line with the general trend in expenditures. in certain cases, specifically the Newcastle Library, where entire new facilities were required the costs of providing these facilities were substituted in place of the general cost derived from the budget. Following the determination of the cost of providing services for each functional group the costs of providing these services to the proposed development were determined assuming the development would contain 1,051 housing units and accomodate 3,917 persons. Information regarding the Courtice Heights housing mix and unit total was obtained from the project developer. The assumed population of 3,917 was derived using Region of Durham occupancy standards. Expenditures for the Town of Newcastle are presented in tabular form in Table A-1. A-1 TOWN OF NEWCASTLE 1977 OPERATING COSTS EXPENDITURE CAPITAL RECOVERIES NET ($) ($) ($) General Government 436,750 2,400 352,640 Protection Fire 251,020 31,500 Other 238,575 15,050 39,500 Transportation 2,185,275 592,600 946,200 Sanitation 202,440 18,000 8,000 Community Services 104,526 5,050 30,410 Library 97,312 Parks & Recreation 734,810 318,455 Planning 146,540 600 48,240 Other Local Expenses 221,100 2 * Sanitation services are provided by the Town only in the Bowmanville commu. 4,250 households. REGIONAL MUNICIPALITY OF DURH 1977 OPERATING COSTS EXPENDITURE RECOVERIES CAPITAL NET 0 ($) ($) ($) Management Committee 1,451,286 ► 358,438 25,925 Finance 1,0 1,547,695 130,120 23,841 1,3! Planning & Development 1,427,127 69,900 2,957 1,3' Social Services 15,649,863 12,759,914 155,300 2,7: Works 11,286 719 Health 5,440,152 4,124,326 1,7; Police 2,032,593 1,552,378 6,510 4-) 10,269,217 3,797,501 273,632 Non -Departmental 6,19 1,767,128 5,000 (Children's Aid & 1,76 Conservation Authority) TOWN OF NEWCASTLE 1. General Government This function includes the general administrative procedure of the Town including the council and clerk's office. It is assumed that these general administrative costs will increase in proportion to new population and thus costs are allocated on a per capita basis. The budgeted 1977 expenditures on the General Government function were: Total Expenditure Less Recoveries Less Capital Net Expenditure $436,750 352,640 2,400 $ 81,710 $ 2.64 per capita The expected new expenditure 'caused by the pro- posed development is $2.64/capita x 3,917 persons = $ 10,341 2. Fire Protection Fire protection in the Town is currently provided by a part-time volunteer fire department operating out of three stations. Operations are co-ordinated by the Chief in the Bowmanville firehall. In addition to the Fire Chief, the department personnel include one full-time fireman, one full-time maintenance man, and fifty-four part-time volunteers. The part-time volunteers are paid on the basis of a point system relative to the number of fires fought and the time spent at the fire. A-2 At the present time the Courtice area is serviced out of the Bowmanville station. The new Courtice Heights development will require the con- struction of a new fire station in Courtice, the cost of which has already been approved by Town Council. The new station will be staffed by 15 to 21 local part-time volunteers and should not result in any abnormal expenditure increases. It is assumed that the cost of providing fire protection will increase at a rate relative to the number of households. The budgeted 1977 expenditure for providing fire protection was: Total Expenditure (net of recoveries) Less Capital Net Expenditure $251,020 31,500 $219,520 $22.60 per household The estimated new expenditure of providing fire protection to the proposed development is: $22.60/household x 1,051 households $23,753 3. Protection (Other) The Town of Newcastle is responsible for providing protective services such as building inspection and weed and pest control. It is assumed that the cost of providing this service will increase in proportion to the change in population. A-3 .The budgeted 1977 expenditure on general pro- tection services was: Total Expenditure Less Recoveries Less Capital $238,575 39,500 15,050 $184,025 $ 5.94 per capita The expected new expenditure for general protection is expected to be: $5.94 /capita x 3,917 persons = $23,267 4. Trans,portation The public works function in the municipal budget is split into two major functions, works (i.e. roadway and transportation services) and sanitation. It is assumed that transportation expenditure is a function of the number of households. The budgeted 1977 expenditure for transportation was: Total Expenditure $2,185,275 Less Recoverables 946,200 Less Capital 592,600 $ 646,475 $ 66.55 per household The expected new expenditure on transportation caused by the proposed development will be: $66.55/households x 1,051 households = $69,944 5. Sanitation Sanitation services, the removal of refuse, is provided by the Town only in the Bowmanville community. It is assumed that expenditure on sanitation is proportional to the number of households served. The budgeted 1977 expenditure on sanitation was: Total Expenditures Less Recoveries Less Capital $202,400 8,000 18,000 $176,440 $41.52 per household The Town has not made any commitment to service the Courtice Heights development. It would appear likely that the Courtice area shall in future continue to be serviced by private sanitation contractors who will charge all households directly. However, in the possible event that Town sanitation services are pro- vided for Courtice Heights, the new expenditure due to the proposed development would be: $41.52 per household x 1,051 households = $43,638 To be conservative, we will include this expenditure in our analysis. 6. Community Services The Community Services function in the budget encompasses Parks and Recreation and the Library Board as well as other Community Services. The Parks and A-5 Recreation and Library services have been separated for detailed examination. The classification for Community Services used here consists of grants to area organizations such as the Horticultural Society, Museums and Cemeteries. It is assumed that the Community Services function will increase with population. The budgeted 1977 Community Services expenditure was: Total Expenditure Less Recoveries Less Capital $104,526 30,410 5,050 $ 69,066 $ 2.23 per capita The expected new expenditure caused by the proposed development is: $ 2.23/capita x 3,917 persons = $ 8,735 7. Library Library services are provided through the Library Board which operates three libraries in Bowmanville, Newcastle and Orono. At present Courtice residents make use of the Bowmanville Libary and the City of Oshawa Library (for which they are charged a $13.00 per year fee). The Library Board has no plans at present to expand services in the Courtice area. It is expected, however, that with new development occurring in the area, there will be an increased need for local library facilities. The budgeted 1977 expenditure of the Town of Newcastle for library facilities was: Total Net Expenditure $ 97,312 $ 3.14 per capita It is expected that expanded library facilities will be required with the development of the proposed project. This would not be a full library but a store front facility similar to the one presently serving Orono. Based on the Orono experience the annual operating cost of such a library is: Rent of Building $ 12,000 Salaries 19,000 Total $ 31,000 A Provincial grant payable directly to the library would help to defray annual operating costs. At $1.80 per capita, the total yearly grant attri- butable to Courtice Heights would equal (3,917 x $1.80) = $7,051. This would reduce estimated annual operating costs to $23,949. The combined population of Courtice would be: Existing Population 2,000 persons New Residents 3,917 persons Total 5,917 persons The per capita operating costs of the new library facilities would therefore be: $23,949 = $4.05 per capita 5,917 persons A-7 Based on the above operating cost attributable to the proposed project would be: $ 4.05 per capita x 3,917 persons = $15,864. 8. Parks and Recreation The Parks and Recreation Department provides and maintains parks and recreation facilities and programmes throughout the municipality. It is'assumed that the cost of providing this service is a function of population. In the 1977 budget the expenditure on parks and recreation services was: Total Expenditure Less Recoveries $734,810 318,455 $416,355 $13.43 per capita It is estimated that the new expenditure on pro- viding parks and recreation service to the proposed development will be: $ 13.4./capita x 3,917 persons = $ 52,605 9. Planning The Planning Department is responsible for overall planning and development control and for budget purposes is similar to the General Government function. It is A-8 assumed that planning costs will increase in pro- portion to the population. The 1977 expenditure on planning was: Total Expenditure $146,540 Less Recoveries 48,240 Less Capital 600 $ 97,700 $ 3.15 per capita It is expected that the new expenditure caused by the proposed development will be: $ 3.15/capita x 3,917 persons = $ 12,338 10. Other Expenses The category Other Expenses in the municipal budget is dominated by items such as existing short term borrowing, debt charges on land acquisitions etc. None of the expenditures in this category are linked to the provision of services and cannot be said to increase in proportion to population or household growth. This expenditure item will therefore not be dealt with as the other service categories have been. Rather, the capital requirements section of this report will examine required capital expenditures. These will be debentured and the annual debt charge related to the project determined. REGIONAL MUNICIPALITY OF DURHAM 1. Management Committee The Management Committee is similar to the General Government function for the Town of New- castle. It is assumed that costs are linked to the size of the population. In 1977 the expenditure on the Management Committee was: Total Expenditure Less Recoveries Less Capital Net Expenditures $1,451,286 358,438 15,925 $1,076,923 $ 4.42 per capita The expected'new expenditure created by the pro- posed development is: $ 4.42/capita x 3,917 persons = $ 17,313 2. Finance The Finance Department is responsible for managing the collection of revenues, the Region's borrowing and the overall co-ordination of the budget. It is assumed that the expenditure of the Department is proportional to population. The budgeted 1977 expenditure of the Finance Department was: Total Expenditure Less Recoveries Less Capital Net Expenditure $1,547,695 130,120 23,841 $1,393,734 $ 5.72 per capita It is expected that the new expenditure that will be a result of the proposed development will be: $ 5.72/capita x 3,917 persons = $ 22,405 3. Planning and Development The purpose of the Planning and Development Depart- ment is to co-ordinate the growth of the municipality. It is assumed that expenditure is proportional to population. In 1977 the budgeted expenditure on planning and development was: Total Expenditure Less Recoveries Less Capital Net Expenditure $1,427,127 69,900 2,957 $1,354,270 $ 5.55 per capita It is expected that the new expenditure resulting from the proposed development will be: $ 5.55/capita x 3,917 persons = $ 21,739 4. Social Services The Social Services Department is responsible for providing general welfare assistance, nurseries, counselling, and homes for the is assumed that expenditure is a function population. day aged. It of The budgeted 1977 Social Services expenditure was: Total Expenditure Less Recoveries Less Capital Net Expenditure $15,649,863 12,759,914 15'5,300 $ 2,734,649 $11.21 per capita It is expected that the new expenditure resulting from the new development will be: $11.21/capita x 3,917 persons 5. Works $ 43,910 The Works Department is responsible for providing water, sewerage, and roadway services to the Region. It is assumed that these services are a function of population. The budgeted 1977 expenditure on works was: Total Expenditure Less Recoveries Less Capital Net Expenditure $11,286,719 5,440,152 4,124,326 $ 1,722,241 $ 7.06 per capita It is expected that the new expenditure on works resulting from the proposed project will be: $ 7.06/capita x 3,917 persons = $ 27,654 6. Health Unit The Health Unit provides Health inspection, medical and Family Planning services. It is assumed that Health Unit expenditure is a function of population. The budgeted 1977 Health Unit expenditure was: Total Expenditure Less Recoveries Less Capital Net Expenditure $2,032,593 1,552,378 6,510 $ 473,705 $ 1.94 per capita It is expected that the new expenditure resulting from the proposed development will be: $ 1.94/capita x 3,917 persons = $ 7,599 A-13 7. Police Police protection in the area is supplied by the Regional Police force. It is assumed that police protection is a function of population. was: The 1977 budgeted expenditure on police protection Total Expenditure Less Recoveries Less Capital Net Expenditure $10,269,217 3,797,501' 273,632 $ 6,198,084 $25.42 per capita It is expected that new expenditure resulting from the proposed project will be: $25.42/capita x 3,917 persons = $ 99,570 8. Non -Departmental The Regional Municipality contributes to certain non -departmental agencies providing services to the Region. Most significant of those are the Childrens Aid Society and the Conservation Authority. It is assumed that these costs are Proportional to the number of households. The budgeted 1977 expenditure on non -departmental expenditure was: Total Expenditure Less Recoveries $1,767,128 5,000 $1,762,128 $21.57 per. household It is expected that the new expenditure resulting from the proposed new development will be: $21.57/household x 1,051 households = $ 22,670 SUMMARY The new operating expenditure which can be attributed to the proposed Courtice Heights development, expressed in constant 1977 dollars are: Town of Newcastle General Government $ 10,341 Fire Protection 23,753 Other Protection 23,267 Transportation 69,944 Sanitation 43,638 Community Services 8,735 Library 15,864 Parks & Recreation 52,605 Planning 12,338 Total $260,485 Regional Municipality of Durham Management Committee $ 17,313 Finance 22,405 Planning & Development 21,739 Social Services 43,910 Works 27,654 Health 7,599 Police 99,570 Non -Departmental 22,670 Total $262,860 A-16 APPENDIX B CAPITAL EXPENDITURES INTRODUCTION The development of a new subdivision of a thousand households will create the need for new municipal facilities ranging from sewers to park facilities. The purpose of this appendix is to outline the facilities required by both the Town of Newcastle and the Regional Municipality of Durham. TOWN OF NEWCASTLE A general review of new facilities resulting from the increased population generated by the proposed development was conducted in consultation with the I.B.I. Group, the planning consultants for the Town and with Town department heads (see accompanying letter page B42). The major areas where new facilities are required as a result of the proposed new development are for fire protection, roads and parks and recrea- tion facilities. The general protection, community services and planning functions do not have significant capital programmes associated with them. In the case of general government, the capital programmes cannot be attributed directly to this development. Fire Protection At present the Courtice area and, in fact, all of the former Township for Darlington receive fire pro- tection through the Town's Bowmanville detachment. According to the Underwriters Association and the Ontario Fire Marshall's Office, the area is rated as having no fire protection since it is more than five miles from the nearest fire station. The proposed new development will intensify the need for fire protection in the area. In anticipation of the new development, the Newcastle Fire Department has budgeted $250,000 for a new station and truck to service the Darlington area from Courtice. Since the new fire protection facilities are to serve the entire area it is appropriate to allocate the cost over the entire area served to determine a per household cost. According to the enumerators for 1977 budget purposes the former Township of Darlington contains 3,031 households. Combined with the 1,051 households in the proposed new development the capital cost associated with providing fire protection is: $250,000 _ $61.24 4,082 households per household The capital expenditure to provide fire protection facilities to the proposed development is therefore ($61.24/household x 1,051 households) = $64,363. Parks and Recreation The Parks and Recreation Department of the Town of Newcastle has exercised considerable restraint in expenditure on capital facilities. For the most part, new facilities are financed out of community generated funds (such as contributions from service clubs and Wintario grants) or out of the annual operating budget. In addition, parks facilities have generally been placed adjacent to school properties in order to take better advantage of the land areas avail- able and insure better utilization of fixed facilities such as baseball diamonds and tennis courts. It is expected that the Parks and Recreation Department will continue to exercise close management of expenditure in the future. It is, however, also anticipated that the municipality will have to increase its assistance in the provision of recreation facilities. The plan for the proposed development contains 19.65 acres of parks and open space. In addition, 6.25 acres are provided adjacent to the major park for a school site. It is estimated that the following recreation facilities will have to be provided in the new develop ment: Number Facility Cost 3 Tennis Courts 1 Wading Pool 1 Baseball Diamond 1 Paved Play area Basketball court swings, etc. General landscaping $26, 500 6,500 9,000 9,000 TOTAL COST $51,000 B-3 In addition it is foreseen that with the eventual development of the entire Courtice Area to a community of 20,000 persons, facilities such as a community centre, arena and swimming pool will be required. Although these facilities would not be built for some time, financial provision should be made for them in the planning of current development. It is estimated that the current cost of a combined community centre, arena, swimming pool complex is about $1.5 million. Pro -rated by population, the cost of this facility which would be attributed for the proposed project would be: 3,917 persons 20,000 persons The entire cost for parks therefore $344,775. Roads x $1.5 million = $293,775 and recreation facilities is Estimates of capital improvements to roadways in the area and to the facilities of the Works Department were gatheredby the T.B.I. Group in consultation with the director of the Works Department. The addition of 1,051 households to the Courtice area will place a greater load on the Town's road network. The municipal Roads Needs Study conducted in 1975 by Totten, Sims, Hubicki & Associates indicated that the roads and bridges in the Town of Newcastle required upgrading at an estimated cost of $12,980,000 (1975). Road work ,required in the immediate vicinity of the Courtice Heights project was estimated at $768,000. In conducting an analysis of the impact of the proposed Courtice Heights project the I.B.I. Group has estimated that the standard of construction recommended in the 1975 Totten, Sims, Hubicki & Associates Report would be adequate to serve the new community. The current level of construction is not however adequate. The proposed Courtice Heights development will necessitate the up- grading of roads in the Courtice area to the standards recommended in the Road Needs Study. This raises the problem of how to equitably aportion the cost of improve- ment. If the necessary 'construction had been conducted as recommended in the report prior to the development of Courtice, the cost of upgrading would have been born by Newcastle property taxpayers in proportion to the assessed value of this real property. The Courtice Heights develop- ment precipitates the need for the roadway upgrading but does not in itself generate the need. The developer should therefore share in the cost of upgrading but should not be burdened with the entire cost. B-5 The issue of whether or not the Courtice Heights development should assume a share of the cost for upgrading roads and bridges which were in poor repair prior to the development's existence is a contentious one. We have examined several cost analyses using data supplied to us by the Town's consultants, the I.B.I. Group, and present the following recommended alternative which we would advance as being a fair and realistic solution. This alternative would require the Courtice Heights development to share in the responsibility for the up- grading of those roadways immediately bordering the site and which would therefore be of greatest utility to that development. The present cost of conducting the upgrading is computed by inflating the 1975 upgrading cost estimate by the change in the C.M.H.C. Construction Index. It is estimated that the 1977 cost of upgrading the roads in the area would be $768,000 x 175.0 (1977 index) $894,000 150.4 (1975 index) This $894,000 capital cost would include improvements to: Prestonvale (south of Hwy. No2) Trull's Road (south of Hwy. No.2) (Hwy. 2 -Nash Road) (north of Nash Road) Total $894,000 50% of which is covered by a Provincial grant. $894,000 @ 50% = $447,000 Since the road improvements described above are to occur on the perimeter of the Courtice Heights development and would be bordering the properties of other landowners, it would appear appropriate that Courtice Heights assume a 50% share of these costs, or $223,500. The remaining 50% or $223,500 would be collected by the Town from adjoining landowners as their properties reach the develop- ment stage. B-6 In addition, Courtice Heights development would create the need for the addition of a new service bay to the district Works garage. It is estimated that this would cost $40,000. The total Works capital costs attributed to the proposed development is therefore: Roadways Works Garage $223,500 40,000 $263,500 Storm Sewers The development of the Courtice area will necessitate the construction of a storm sewer system to handle rain water run-off. To make provision for this the Town passed by-law 77-10 authorizing the construction of trunk storm sewers in the area. These storm sewers are subject to a C.M.H.C.. grant and to a five year interest-free O.H.A.P. loan. The O.H.A.P. agreement providing for storm sewers estimates the costs to be: North of Hwy. 2 $76,830 -12,800 $64,030 Total Cost of Scheme Less C.M.H.C. Grant Financed South of Hwy. 2 $262,370 -43,700 by O.H.A.P. $218,670 loan As is also necessary in the case of sanitary sewers which are discussed later under regional capital works, a portion of the cost of the scheme must be attributed to the proposed Courtice Heights project. This apportion- ment is based upon the proportion of the capacity of the entire scheme which is used by the Courtice Heights project. B-7 The storm sewer system will incorporate two separate drainage areas to service each of the Courtice Heights subdivisions. To the north of Highway 2, Courtice Heights will occupy 45 acres, or 35%, of the total drainage area. To the south of Highway 2, Courtice Heights occupies 120 acres, or 32% of the total drainage area. Based on the development's coverage area and accounting for the avail- able C.M.H.C. grants, the proposed Courtice Heights proportion of the cost is: North of Hwy. 2 South of Hwy. 2 $64,030 Financed by O.H.A.P. loan $218,670 22,410 Courtice Heights Share 69,975 TOTAL $92,385 Libraries At present the Courtice area is dependent upon Bowmanville for Library services. With the addition of 3,917 persons in the Courtice Heights development, pro- vision of locally available library services should be considered. In ari.cdition to the operating costs treated in Appendix A, expenditure for the purchase of new books, shelving, furniture and equipment must be added. Based on an estimate of future needs made by the Town's librarian, the new Courtice library would require 10,000 additional texts. This would provide a local service standard of 1.7 books per person (10,000 4 5,917) and would raise the Town's total service level from the current 1.5 books per person to 1.6 books per person (55,000 _ 34,922). B-8 Taken at an average cost per book of $10.00, the expenditure attributable to Courtice Heights residents for new books would be: 10,000 x $10.00 = $100,000 3,917 Courtice Heights population = 66.2% 5,917 Total Courtice population 66.2% of $100,000 = $66,200 Courtice Heights share The cost of shelving ($4,000), furniture ($2,000) and equipment ($1,500) is estimated at $7,500. A 50% Provincial grant applicable to these capital costs would reduce the Local cost to $3,750. The expenditure attributable to Courtice Heights residents would be: 66.2% of $3,750 = $2,483. Therefore the capital costs attributable to the proposed project would total: Purchase of Books $66,200 Shelving Furniture and Equipment 2,483 Total $68,683 B-9 Summary It is estimated that the proposed new development will generate the need for Newcastle to initiate capital improvements in the amount of: Fire Protection $ 64,363 Parks and Recreation 344,775 Roads 263,500 Storm Sewers 92,385 Libraries 68,683 TOTAL $833,706 REGIONAL MUNICIPALITY OF DURHAM We were aided in the analysis of the capital improve- ments required to service the proposed development by the Town's consultants, the I.B.I. Group. It was con- cluded that the only Regional Capital improvements required by the proposed development was the provision of the trunk sewer to the area and the water main. Provision for the Farewell Creek Trunk Sanitary Sewer was made in the passing of By-law 242-76 approving an expenditure of $2,805,000 for the scheme. The financial provision of the plan provides for $725,916.67 in M.O.E. and C.M.H.C. grants. The remainder, $2,079,083.33 is to be debentured, interest free over fifteen years. The Trunk sewer will be designed with a capacity to serve a population of 30,000 persons. In order to determine the rightful share of costs which can be attributed to the proposed development, the cost of the trunk has been pro -rated by population. It is estimated that the costs of providing for sewerage attributed to the proposed development is: 3,917 30,000 x $2,079,083 = $271,459 B-10- The water main to the area was approved by by-law 251-76. The cost of the main is estimated to be $1,019,000 of which $152,850 will be covered by a M.O.E. grant leaving a net cost of $866,150. Allocating the costs of the water main by proportion of the capacity used as in the case of the trunk sewer, the Courtice Heights proportion is: 3,917 30,000 x $866,150 = $113,090 The total cost of Regional Capital Improvements attributable to Courtice Heights is therefore: sewers $271,459 water main 113,090 $384,549 B-11 September 1, 1977 Mr. Peter Barnard Peter Barnard Associates 236 King Street East 3rd Floor Toronto, Ontario M5A 1K1 Dear Peter: Group 40 University Ave. 6th Floor Toronto, Ontario M5J 1 T1 (416) 862-0450 Courtice Heights Financial Impact Analysis The purpose of this letter is to summarize and confirm the input data which you have requested in order to carry out the Municipal Financial Impact Analysis of the Courtice Heights Developments. CURRENT OPERATING COSTS AND REVENUES Information concerning current operating costs and revenues should be obtained from the 1977 annual budgets of the Corporation of the Town of Newcastle and the Regional Municipality of Durham. ADDITIONAL REQUIRE- MENTS AND COSTS Library Services An additional library facility will be required in the Courtice area as this population reaches 5500-6,000 people. This facility will require approximately 4,000 square feet of space which for purposes of your analysis could be assumed to be rented at $3 per square foot. Annual staff operating costs are estimated at $19,000. In addition, the facility will require 10,000 books as well as furniture and fixtures. Capital costs for these items are estimated as follows: - books $100,000 - shelving $4,000 - furniture $2,000 - equipment $1,500 A 50% grant from the province can be assumed for shelving, furniture and equipment. The Province of Ontario also provides annual operating grants directly to the Library Board amounting to $1.80 per capita. IBI is a group of companies practicing professional consulting and is affiliated with Beinhaker/Irwin Associates Architects, Engineers and Planners B-12 Mr. Peter Barnard September 1, 1977 2. Fire Protection Council has by Resolution C-77-72 (January 17, 1977) approved in principle the establishment of a new fireball in the Courtice area. Moreover, $250,000 has been budgeted in the 1977 budget for a new station and truck. Discussions with the Fire Chief have confirmed that this capital expenditure would be adequate to serve the estimated future population in the Courtice area and its immediate environs. Roads Needs The development of the Courtice Heights Subdivisions will necessitate improve- ments to four road segments adjacent to and/or abutting the specific sub- divisions as development occurs. The Town of Newcastle Roads Needs Study Report (November 1975) contains cost estimates for these required upgradings which amount to $768,000 (1975 dollars). For your information, other road and bridge upgradings in the Courtice area which are in the "now needs" category are estimated to cost an additional $655,000 (1975 dollars). Both of the above figures represent total costs for which a 50% provincial MTC subsidy is available. The total estimated cost of all "now needs" works for the Town of Newcastle is $12,980,000 (1975 dollars). The Town of Newcastle share of these costs is estimated to be $5,998,000 (1975 dollars). Other transportation requirements include a new service bay for the Works Garage whose estimated 1977 cost is $40,000 and as well an intersection improvement at Highway 2 and Trulls Road whose. estimated 1977 cost is $15,000. It should be pointed out that the cost of the intersection improvement would be borne in total by the Ministry of Transportation and Communications as it involves a provincial highway. PARKS & RECREATION Additional recreational requirements and associated capital costs for a population of 5500-6,000 persons are as follows: - wading pool $ 6,500 - playground equipment $ 1,000 - landscaping $ 9,000 - basketball court $ 8,000 - 3 tennis courts $26,500 $51 ,000 All facilities would be located in the park to be established in the southern subdivision with the exception of the tennis courts which are to be const- ructed adjacent to the Courtice Secondary School. As well, as the population approaches 20,000 persons a community centre complex containing a swimming pool and arena should be considered. Estimated 1977 cost for such a facility is $1.5 million. Mr. Peter Barnard September 1, 1977 3. SEWER, WATER AND STORM DRAINAGE CAPITAL COSTS Details of the capital costs of trunk water and sewer facilities are outlined in already forwarded copies of the Regional Municipality of Durham By -Laws authorizing the construction of the respective works. The estimate of the capital cost of the construction of the storm drainage works required to serve the two Courtice Heights Subdivisions is $282,700 net of a CMHC grant. As the expenditure of these funds will be for the construction of work which will serve drainage areas which are larger than the two subdivisions in question, we would estimate the Courtice Heights Developments share of this cost should be $92,385. based on the principle of portion of land area served as follows: Drainage Area Drainage Area #1 South # 2North Total Gross Cost $ 262,370 $76,830 $ 339,200 CMHC Grant $ (43,700) $(12,800) $ (56,500) Net Cost $ 218,670 $64,030 $ 282,700 Total Acreage to be drained Total Acreage of subdivisions Percent Subdivision Subdivision Share of Cost DHAP AGREEMENTS 380 acres 130 acres 120 acres 45 acres 32% 35% $ 69,975 $ 22,410 $92,385 For your information the terms of the OHAP interest-free loans are as follows: - storm sewer loan - interest-free for 5 years Full repayment on 5th anniversary - sanitary sewers - interest-free for life of loan 3 years no repayment 15 equal annual payments to commence in 4th year - water - interest free for life of loan 5 years no repayment 15 equal annual payments commencing in 6th year B-14 Mr. Peter Barnard September 1, 1977 4. We have very much enjoyed working with you during this assignment and hope this information is satisfactory. Yours very truly IBI GROUP Philip. J. Levine Associate PJL/cs L APPENDIX C REVENUE INTRODUCTION Municipalities raise revenues from taxes, grants, levies and fees. For the purpose of this study these revenues will be divided into two classes; annual revenues and one time revenues. Annual revenues are, those revenues raised on yearly basis for the purpose of meeting operating expenditures and retiring debt. Annual income includes taxation and a variety of Pro- vincial Grants. One time income generally consist of development levies and for the purpose of the analysis, building permit fees. These incomes (especially lot levies) are generally applied against one time expenses such as Capital improvements. The purpose of this appendix is to determine all anuual and one time revenues which would be generated for both Newcastle and the Region by the proposed development. ANNUAL OPERATING REVENUE Taxation (Newcastle) The Town of Newcastle derives revenue from property taxation is based on a levy (via the established mill rate) against the assessment of the value of real pro- perty in the municipality. The assessment for the Darlington area of the Town of Newcastle is based upon a 1940 valuation method and is C-1 COURTI CE HEIGHTS LO o o Lo CO CO LO o N CO V' N � N co co m LS1 m N co et• M r -I O b th O 0 N to eV 0 N i� {N i !} in - o o o 0 0 0 1-11 LI) N Ol CO •=1' d' in- t!} VD- t/} presently being revised to a market value method. Analysis by the Ministry of Revenue Assessment office of new construction in the Darlington area has shown that the assessment based on the 1940 method is equivalent to 5% of the current market value of a building. The expected market value (in 1977 dollars) and assessment (based on 5% of market value) for the proposed Courtice Heights project is shown in Table C-1. It is expected that the total project of 1,051 housing units will yield an assessment of $2,740,375. Based on the current mill rate of 213.68 for the Darlington area it is expected that the project will yield an income from property taxation of $585,563. Resource Equalization Grants (Newcastle) The Resource equalization grant applies a grant rate for the Net General Levy for Equalization Purposes, a levy which is made up of the levy for support grants, plus taxation for Regional Purposes, and a share of Region's support grant. It is estimated that the revised levy would be: Existing Levy $4,505,212 Taxation on proposed development for regional purposes ($2,740,375 x 39.07 mills) 107,066 Share of Region's support grant from development (12.519% of $6,420 Regional Grant) 804 Revised levy $4,613,082 The resource equalization grant rate is calculated from equalized assessment and is expected to be .1109, an increase from the existing rate of .0762. C-2 The resource equalization grant attributable to the proposed development would therefore be: $4,613,082 (levy) x grant rate of .1109 Less existing grant New grant attributable to Courtice Heights Develop- ment General Support Grant (Newcastle) $ 511,591 343,295 $ 168,296 The General Support Grant is based upon 6% of the Net General Levy for purposes of support grants, an amount calculated from the previous year's taxa- tion for municipal purposes plus new taxation in the new year less any surplus in the previous year. The General Support Grant revenue for the proposed project is calculated as 6% of the new taxation revenue for local purposes, which is: Taxation for local purposes $2,740,375 assessment x 48.39 mills = $132,607 General Support Grant for proposed project, 6% of above = $7,956. General Support Grant (Region) The General Support Grant for the Region, as with the Town is based on the general purpose levy plus supplementary income during the'year. The proposed development will yield, at current rates, $107,066 additional supplementary taxation which, when applying the 6% general support grant rate yields an income of $6,424. C-3 General Per Capita Grant (Region) The 1977 per capita grant was $10. Based on a new population of 3,917 persons the project will generate revenue of $39,170. Police Grant (Region) The Region receives a Police grant of $15 per capita. Based on the projected population of 3,917 persons this will generate a revenue of $58,755. Density Grant (Region) The Region receives a density grant of $5 per capita. Based on the population of 3,917 persons the grant would yield a revenue of $19,585. O.H.A.P. Interest Savings (Newcastle & Region) In addition to the above standard annual income items, the Town and Region benefit because of the interest free nature of the OHAP loans for public works (trunk sewers and water mains). Under normal circum- stances the development of this area would necessitate the debenturing of sewers and water mains at standard interest rates, (about 9.5% per year). Because the proposed development is being processed under O.H.A.P., the municipalities will receive the loan interest free. The annual interest saving can therefore be classified as an income. The terms of the loan vary with the scheme. All loans are interest-free. Storm sewers are to be repaid on the 5th anniversary following the date of advancement of the loan. After the first three years the loan for the sanitary sewers are to be repaid in 15 equal installments over 15 years. Similarly, after 5 years the loan for the water mains is to be repaid in 15 equal installments over 15 years. It is estimated that the interest saving to the municipalities will be: - Storm sewer (Newcastle): if debentured @ 9.5% on $282,700 over 5 years total repayment would be less principal amount interest portion (5 years) interest saving per year - Sanitary sewer (Region): if debentured @ 9.5% on $2,079,083 over 3 years total repayment would be less principal amount interest portion (3 years) followed by a 15 year period of equal payments on a decreasing principal @ 9.5% total repayment would be less principal amount interest portion (15 years) total interest portion (18 years) (a & b) interest saving per year $ 361,678 282,700 $ 78,978 $ 15,796 $2,438,079 2,079,083 $ 358,996 (a) $2,460,344 2,079,083 $ 381,261 (b) $ 740,257 $ 41,125 -- Water main (Region) : if debentured @ 9.5% on $866,150 over 5 years total repayment would be less principal amount interest portion (5 years) followed by a 15 year period of equal payments on a decreasing principal @ 9.5% total repayment would be less principal amount interest portion (15 years) total interest portion (18 years) (c & d) interest saving per year $1,108,125 866,150 $ 241,975 (c) $1,025,000 866,150 $ 158,850 (d) $ 400,825 $ 22,268 Thus the total annual interest savings due to the interest - free nature of the O.H.A.P. loan would be $15,796 for Newcastle and $63,393 for the Region. Transitional Subsidies and Grants The Town of Newcastle receives annual subsidies and grants for roads and regional matters. In the 1977 Newcastle budget these amounted to $267;090. In addition, miscellaneous subsidies and grants of $4,700 brought the total to $271,790. Due to the transitional nature of these subsidies and grants and due to the fact that $271,790 actually exceeds the total of Other Expenses discussed in Appendix A, we have not included these revenues in this analysis. BUILDING PERMIT REVENUE CO CO Co N N ri In r -- O ..K:r N C1 . N LO N H N N N . rii N 01 01 C+1 Cn N N {f}. CO OD M N 111 Cr) N CO ..zI' Cr7 rl 1/40 N r --f ONE TIME REVENUES Lot Levies (Newcastle) The Town of Newcastle currently collects lot levies. at the rate of $1,500 per dwelling unit. The proposed development of 1,051 units would therefore generate a revenue of $1,576,500. Permits (Newcastle) The Town of Newcastle issues building permits for new construction at the rate of: $6 fee for the first $1,000 value (labour & material) $5 fee for each additional $1,000 value (labour & material) Estimated building values and permit fees are presented in Table C-2. It is estimated that the total building permit revenue will be $167,676. Plumbing Permits (Newcastle) The Town of Newcastle requires a plumbing permit which amounts to about $30 per unit. Based on a total number of 1,051 units planned for Courtice Heights, it is estimated that the total plumbing permit revenue will be $31,530. O.H.A.P. Grant (Newcastle) A municipality is eligible for an unconditional Capital Housing Incentive Grant for participating in O.H.A.P. To be eligible the Minister of Housing must have signed O.H.A.P. agreements with both the developer and the municipality. Such agreements exist between the Minister and the Courtice Heights developer and the Town of Newcastle. In this case the municipality will receive a grant of $496,575. Since the grant programme has now terminated and the Courtice Heights developer was the only one to have both agreeements, all of this grant may be attributed to this development. Lot Levies (Region) The Regional municipality of Durham levies a $1,745/unit lot levy for new development within the municipality. Based on the proposed development of 1,051 units, the Region will receive a revenue of $1,833,995. Summary It is estimated that the revenues generated by the proposed project will be: Town of Newcastle Annual Revenues Taxation Resource Equalization Grant General Support Grant OHAP Interest Saving Total $585,563 168,296 7,956 15,796 $777,611 Regional Municipality of Durham Annual Revenues General Support Grant General Per Capita Grant Police Grant Density Grant OHAP Interest Saving Total $ 6,424 39,170 58,755 19,585 63,393 $187,327 One -Time Revenues Lot Levies Building Permits Plumbing Permits OHAP Grant $1,576,500 167,676 31,530 496,575 $2,272,281 One -Time Revenues Lot Levies $1,833,995 APPENDIX D EDUCATION COST IMPACT Education in the Town of Newcastle is provided by The Northumberland and Newcastle Board of Education which is responsible for providing public, elementary and secon- dary education and The Peterborough, Victoria, Northumberland and Newcastle Roman Catholic Separate School Board which provides elementary education for separate school supporters. OPERATING COSTS The costs of providing education was determined from a review of the 1977 budget of The Northumberland and Newcastle School Board. It is assumed that the costs of separate school education is equivalent to the public school system. In determining the costs of education the total costs of education for both elementary and secondary education were established. Revenues such as auditorium rentals and the debt cost of debenturing capital projects were deducted to determine the operating cost net of capital and revenue. In addition, the cost of home to school transportation was deducted in the case of elementary schools. This is done to reflect the urban situation of the proposed development where students do not require transportation. This transportation cost has been retained for secondary education since it is expected that some of the secondary students may attend schools outside Courtice. The costs of providing education are presented in TABLE D-1. r Q W _1 EDUCATION EXPENDITURE THE NORTHUMBERLAND & NEWCASTLE BOARD OF EDUCATION Secondary Elementary $16,552,956 $18,445,914 Total Expenditure CO lD N 1/40 01 CO (Y) Incidental 1,414,000 Transportation 1,059,602 1,163,122 Debt Charges $15,143,669 $15,479,118 Net Expenditure r-1 M O 01 co 00 cV c� N O 00 (N1 LV ,—I r-� As can be seen from TABLE D-1 the cost of providing education is $1,203 per student for elementary and $1,893 per student for secondary school students. Both the Public and Separate School Boards estimate that -elementary student load for new development is .5 students per household. The Public Board estimates the secondary load to be .2 students per household. Based on the 1,051 households of the pro- posed project, it is estimated that the student load will be: 526 elementary school students, 210 secondary school students. this should yield a cost of: $632,778 $397,530 CAPITAL COSTS for elementary education, and for secondary education. The above costs are operating costs and do not include building costs. The addition of 526 new elementary school students to Courtice will necessitate the construction of one new school. The Public School Board estimates from its current capital planning that the 1977 cost of constructing an elementary school for 520 students (the optimum size school) is about $1.4 million. The additional secondary school load created by Courtice Heights does not warrant the building of a new high school. Initially, these students would be using existing facilities both in Courtice and Bowmanville until the time that sufficient development necessitated the building of a new school. Provi- sion must therefore be made for either expanded facilities at existing schools or for a reserve to be applied towards a future new school. According to the Northumberland and Newcastle Board of Education, the present cost of providing a new high school would be about $5 million for a school to house about 1,000 students. This represents a cost of $5,000 per student. The proposed new development would therefore generate a capital expenditure of $1,050,000. D-2 REVENUES The principal sources of revenues for the school boards are the local tax levy and Provincial Grants. For the purposes of the analysis, the grant revenue will be applied against expenditures to determine the impact of pro- viding education facilities to the proposed development. School boards receive grants for both operating cost and capital projects. The 1977 operating grants to The Northumberland and Newcastle Board of Education was $11,956,750 for elementary education and $10,585,533 for secondary educa- tion. On a per student basis this amounts to: $ 929 per elementary student, and $1,323 per secondary student The proposed development with 526 elementary and 210 secondary school students would therefore generate annual grant revenues of: $488,654 for elementary purposes, and $277,830 for secondary purposes. Similarly, school boards receive one-time grants to be applied against the construction of new schools. These grants typically amount to 80% of the cost of construction of the school. It was estimated that the cost of constructing schools to serve the proposed development would be $1.4 million for elementary and $1,050,000 for secondary. The grant portion would therefore be about $1,120,000 for elementary shcools, and $ 840,000 for secondary schools. IMPACT OF PROPOSED DEVELOPMENT The costs of education are born by Municipalities through a levy which is based upon the area municipality's proportion of equalized assessment. All capital expenditures incurred by the Regional municipality are debentured by it for inclusion in the annual requisition from area municipalities. D-3 The total net cost of providing education is determined by reducing the operating costs by the grant revenues derived for operating purposes. To this the debentured cost of net capital expenditures (cost - grant) is added to determine the total net cost for requisition purposes. The net operating costs of providing education to the proposed development are: Expenditure (Net) Less: Revenue (grants) Elementary Secondary $632,778 488,654 $397,530 277,830 Net Operating Cost $144,124 + $119,700 $263,824 The total capital expenditure of providing education to the proposed development are: Expenditure Less: Revenue (grants) Elementary Secondary $1,400,000 1,120,000 Net Capital Expenditure $ 280,000 $ 490,000 $1,050,000 840,000 + $ 210,000 This capital expenditure is debentured so that the annual debt charge may be included in the municipal requisi- tion. At present, the policy of The Northumberland and Newcastle School Board is to debenture costs over a 20 year period. Recent experience has shown that debentures bear an interest rate of 9%. Based on the 20 year term and 9% interest, the annual debenture cost for the $490,000 of capital expenditure would be $53,256. The total net cost of education for the proposed development is: Net Operating expenditure Net debentured capital expenditure $263,824 53,256 Total net expenditure $317,080 The costs of education are not born by the individual municipality on a simple per capita or per student basis. Rather, education costs are apportioned by ability to pay i.e. by proportion of equalized assessment. Using the 1977 Northumberland and Newcastle School Board Budget as the basis the impact of the proposed development on the Newcastle levy is determined by adding the additional net expenditure to the existing municipal requisition. This requisition is then re-aportioned by equalized assessment. In order to accurately reflect the changed assessment, the projected equalized assessment for the proposed project is added to the town's existing assessment and the re -aligned equalized assessment determined. The total equalized assessment for all member munici- palities of The Northumberland and Newcastle Board of Education for purposes of the 1977 budget was $794,425,710. Of this, the Newcastle equalized assessment was $280,319,243 or 35.29%. The proposed new development will yield an equalized assessment of $23,223,517, increasing Newcastle's assessment to $303,542,760 and the total assessment for the School Board area to $817,649,227, increasing Newcastle's proportion from 35.29% to 37,124% of total equalized assessment. The 1977 Public School Board requisition to municipalities was $11,656,085. The additional net expenditure of $317,080 generated by the proposed development would increase this to $11,973,165. Newcastle's share of this expenditure would be (37.124% of $11,973,165) _ $4,444,918. The total requisition, including the separate school levy of $117,879 would be $4,562,797. The levy which may be attributed to the new development is the difference between the new requisition and existing requisition which is: new levy existing levy attributed to development $4,562,797 4,212,644 $ 350,153