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HomeMy WebLinkAboutPSD-021-18Clarington Planning Services Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: Council Date of Meeting: February 26, 2018 Report Number: PSD -021-18 Resolution: #C-073-18 File Number: PLN 11.22 By-law Number: Report Subject: Participation in the Ontario Ministry of Housing's Development Charge Rebate Program Recommendations: That Report PSD -021-18 be received; 2. That Council authorize staff to submit an Expression of Interest and enter into a Transfer Payment Agreement with the Province to facilitate participation in the Ontario Ministry of Housing's Development Charge Rebate Program; 3. That subject to an partnership arrangement between the Municipality of Clarington and the Region of Durham, that Council authorize the Regional Municipality of Durham to: a) Serve as the Municipality of Clarington's program administrator for the Ontario Ministry of Housing's Development Charge Rebate Program; and b) Enter into a Transfer Payment Agreement on behalf of the Municipality of Clarington with the Province to facilitate participation in the Ontario Ministry of Housing's Development Charge Rebate Program; and 4. That all interested parties listed in Report PSD -021-18 and any delegations be advised of Council's decision. Municipality of Clarington Report PSD -021-18 Report Overview Page 2 Because of a shortage of rental housing, the Municipality of Clarington has been identified as one of the 68 municipalities in Ontario that can participate in the $125 million Provincial Development Charges Rebate Program designed to stimulate the construction of purpose- built rental housing. This program will provide rebates for municipal and regional development charges levies for qualified projects. There is no municipal financial contribution required but there are administrative costs associated with the program administration. Staff support the Municipality's participation in this program. It is recommended that Council authorize staff to take the appropriate steps, including seeking a partnership agreement with the Region of Durham as the housing authority, to participate in this program. 1. Background 1.1 On April 20, 2017, the government announced its Fair Housing Plan, a comprehensive package of 16 measures designed to improve housing affordability, address demand, protect renters and buyers, increase the supply of housing, and improve information sharing. 1.2 The Development Charges Rebate Program (DCRP) is an initiative designed to increase the supply of purpose-built market rental housing. The Program provides rebates for development charges and aims to reduce the construction costs of building market rental housing, particularly in those communities that are most in need of new purpose-built rental housing. 1.3 The DCRP was officially announced on November 29, 2017. Program Guidelines were issued on December 20, 2017 and the Ministry of Housing held information sessions in January. Clarington staff participated in a conference call briefing with Regional staff on February 15, 2018. 1.4 Municipalities that wish to participate in the program must open a draft Expression of Interest (EOI) application on the Province's Grants Ontario website by February 16, 2018. This step was completed. The final EOI must be completed and submitted to the Ministry by March 2, 2018. The program is designed to operate for five years, however this deadline applies for all five years of the program. 2. Discussion 2.1 The introduction of the DCRP provides a means for encouraging an increase in the stock of rental housing in Clarington. The need for such projects has grown in recent years. The DCRP is designed to encourage the development of rental housing by reducing its overall construction costs. Municipality of Clarington Reoort PSD -021-18 Program Overview Page 3 2.2 The DCRP provides up to a total of $125 million available over five years to participating municipalities, starting with $25 million in 2018-19. To qualify, municipalities must have multi -unit development charges and must be in need of new purpose-built market rental housing. The Province identified municipalities in need of market rental housing as those that have a low vacancy rate (3% or less), have a high rental tenant population (20% or more of all households), or have development opportunities within a 500-800 metre radius of a major transit station area i.e. GO Transit. The Municipality of Clarington has been identified by MHO as eligible to participate in the program. 2.3 Municipalities participating in the DCRP are able to provide up to a 100% rebate of the development charges paid by qualifying rental developments. To facilitate this, the MHO would advance funding directly to the municipality, and the municipality would then issue the rebate to the developer in compliance with the program requirements, usually at the time that building permits are issued. Since the rebate is funded in whole by the Province, no municipal contribution is required. Project Eligibility 2.4 To be eligible for a rebate, purpose-built rental projects would have to remain as rental tenure for a minimum of 20 years and would have to be non -luxury units. For the purpose of this program, non -luxury units are those where starting rents do not exceed 175% of the Average Market Rent (AMR), as published by CMHC. 2.5 Single and semi-detached homes, duplexes/triplexes, and retirement homes are not eligible under the program. The DCRP is intended to attract new purpose-built rental projects, so rebates cannot be used to supplant existing incentive programs (e.g_ Community Improvement Programs) that already offer a deferral or exemption from the payment of development charges. Where an existing incentive program results in only a partial exemption from development charges, the DCRP can be used to rebate the remaining development charges that are charged to the applicant. While Clarington has some development charge incentive programs, they are not specifically geared toward below-market rental housing. Clarification on this matter is being sought. The interrelationship of the programs will be clarified as the details are finalized. Municipal Flexibility 2.6 Staff view the DCRP as a means for ensuring coordination with the Municipality's general planning objectives. The Municipality has flexibility to determine additional parameters based on local need including: • The eligible built form of rental housing that can receive the rebate (high-rise, mid - rise, townhouses); 0 Unit size and configurations (units less than 100 square metres, 3+ bedrooms, etc.); Municipality of Clarington Page 4 Report PSD -021-18 ■ Full or partial rebates; • The timing of the rebate after the development charges are collected within the program's parameters; and • a more stringent threshold for rents based on AMR percentage (e.g. at or below AMR)_ More research into current housing needs is required prior to determining such measures. Administration 2.7 Participation in the DCRP requires a considerable administrative effort. Although the EOI process is managed entirely online, the volume and detail of required content is substantial. The EOI process requires that a municipality document its need and vision for market rental housing, program expectations and capacity, existing and potential incentives, and planned program mechanisms (rent threshold, level of rebate, means of rental tenure maintenance, etc.)_ 2.8 If a municipality is selected to participate in the program, it must enter into a Transfer Payment Agreement (TPA) with the Province, administer the DCRP in compliance with the TPA and the program guidelines, undertake all activities relating to program delivery, develop and enter into required agreements with the developers of eligible rental projects, and complete all reporting requirements. Reporting responsibilities include the submission of "take-up plans" to MHO in the first quarter of each fiscal year that outline the eligible rental housing developments that have come forward for planning approvals. Municipalities are also required to submit "adjusted spending plans" on a bi-annual basis that provide detailed statistics on the rebates that have been completed. 2.9 Municipalities may use up to 5% of allocations through the DCRP help offset their own administrative costs. Designation of a Program Administrator 2.10 Municipalities have an option to designate their housing Service Manager to serve as their program administrator. In the case of the Municipality of Clarington, this would involve designating the Region of Durham as administrator. To facilitate this arrangement, the Municipality of Clarington is required to produce a motion of Council designating the Region of Durham as program administrator. The Region must also provide written confirmation from a "person of appropriate authority" of its willingness to act as program administrator. Municipality of Clarington Page 5 Report PSD -021-18 2.11 Clarington staff have had discussions with staff from the Housing, Planning and Economic Development and Finance Departments at the Region of Durham regarding the DCRB. The Region of Durham expressed a willingness to serve as the program administrator for the Municipality of Clarington. However, due to impending program deadlines, it was agreed that the Municipality would proceed with the submission of its own EOI while partnership discussions between the Municipality and Region were ongoing. If the Municipality and Region are able to arrange an agreeable partnership, the Municipality may designate the Region as its program administrator. Application Process and Selection Criteria 2.12 There are a few applications that have identified to staff that they are considering purpose-built rental housing: x One of the apartment buildings (151 units) in Courtice Uplands development; x A 66 unit mixed use development proposal in the Courtice Town Centre; x One of the apartment buildings (136 units) proposed at 51 Clarington Boulevard in Bowmanville; x The 20 unit townhouse development proposal on the south-east corner of Liberty and Longworth; and x The 16 apartment units proposed above the commercial stores in the Tornat development in Newcastle. Once the development community is aware of the Municipality's participation in the program, we would anticipate the above projects and other potentially eligible projects will emerge over the next five years. 2.13 At the present time, MHO has been unable to provide any information regarding EOI evaluation criteria or prospective funding allotments. Accordingly, the range of magnitude for potential funding for the Municipality of Clarington is currently unknown. There is a total of $125 million available from the Province over the five-year duration of the program, however, this allocation could be divided between as many as 83 municipalities. The MHO announcement of notional funding allocations is planned for Spring 2018. 3. Financial Implications As a rebate program, there will not be any financial impacts for the Municipality. The DCRB requires the initial payment of development charges to the Municipality and then subsequently provides for a rebate to be issued to the developer using entirely provincial funds. Despite the absence of direct financial impacts, there will be administrative implications for the Municipality's Planning Services and Finance Departments, who will be responsible for administering parts of the program. Municipality of Clarington Page 6 Resort PSD -021-18 4. Concurrence This is a joint report with the Director of Finance. 5. Conclusion The Development Charges Rebate Program has the potential to be a valuable tool for the Municipality to implement more affordable rental housing. Designating the Regional Municipality of Durham to serve as program administrator will reduce the Municipality's administrative responsibilities in delivering the DCRP. Further, by co-ordinating local and regional incentives, the program will be more user friendly for the development community. 6. Strategic Plan The report conforms to the Strategic Plan Action item to support a variety of affordable mixed housing types and support our residents at every stage of life and across all abilities. Submitted by: Submitted by: David Crome, MCIP, RPP, Director of Planning Services ; 14; / Nancy Taylor, BBA, CPA, CA Director of Finance/Treasurer Reviewed by: (for) Andrew C. Allison, B.Comm, LL.B ,CAO Staff Contact: Carlo Pellarin, Manager, Development Review, 905-623-3379 x2408 or cpellarin@clarington.net The following is a list of the interested parties to be notified of Council's decision: Alan Robin, Acting Director of Housing Services Region of Durham CP/DC/tg