HomeMy WebLinkAboutFND-024-07
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REPORT
FINANCE DEPARTMENT
Date:
GENERAL PURPOSE AND ADMiNISTRATION COMMITTEE
DECEMBER 3,2007 Resolution #:(!,PfJ-{k:J-07
Meeting:
Report #: FND-024-07
File#:
By-law #:
Subject:
DEVELOPMENT CHARGES BY-LAW: INTERIM REVIEW AND AMENDMENT
Recommendations:
it is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-024-07 be received;
2. THAT Council endorse an interim update to the 2005 Development Charges
Background Study and By-Law;
3. THAT Purchasing By-Law #2006-127, paragraph 15.14 be waived for this project; and
4. THAT the proposal from Hemson Consulting Ltd. be approved in the amount of
$49,600, to be funded 90% from the General Government Development Charges
Reserve Fund and 10% from the Municipal Capital Works Reserve Fund.
SUbmittedfoyd~ M~
Nancy Taylor, B.BA, CA,
at Director of Finance/Treasurer
/-..
~~UD .
arie Marano, H.B.Sc., CMO,
Director of Corporate Services.
Reviewed by: O~~
Franklin Wu,
Chief Administrative Officer.
NT/hjl
REPORT NO.: FND-024-07
PAGE 2
BACKGROUND AND COMMENT:
1.0 Clarington's current Development Charges Background Study and By-Law were
approved and passed in 2005. This By-Law does not expire until June 2010.
The costs included at that time were based on sound projections and market
comparisons. However, since that time, there has been a rapid increase in the
cost of providing services and infrastructure. Examples include the Newcastle
Aquatic Facility, the Newcastle Branch of the Clarington Library, as well as many
roads projects.
1.1 In June 2007, Council authorized a Fiscal Impact Study of New Development in
Clarington through report PSD-078-07.
1.2 The Fiscal Impact Study, still underway, has highlighted this issue even more and
has provided clear preliminary indicators that the existing By-Law needs to be
updated to prevent further loss of necessary development charges collections.
1.3 Hemson Consulting assisted with the 2005 Background Study and By-Law, as
well as the ongoing Fiscal Impact Study. As we are proposing an interim update
to the existing background study, they are uniquely positioned to assist us with
this update.
1.4 The full complete study will still have to be undertaken, including growth
projections prior to the expiry in 2010. This interim update will not extend the
timeframe for the existing By-Law, but rather allow us to correct problems due to
the existing unanticipated inflationary impacts in the interim.
REPORT NO.: FND-024-07
PAGE 3
RECOMMENDATIONS:
2.0 Since timing is of the essence in updating the existing study in order to collect
appropriate funds that more accurately reflect the cost of providing services, it is
recommended that the interim study update proceed. It is also recommended that
the Purchasing By-Law #2006-127 section 15.14 be waived and that Hemson
Consulting Ltd. undertake this work in conjunction with municipal staff, at an
estimated value of $49,600 (net of GST), due to their detailed knowledge and
involvement in the 2005 Development Charges Background Study and By-Law. A
copy of their full proposal is attached (Schedule "A"). The study cost will be
funded 90% from Development Charges and 10% from the Municipal Capital
Works Reserve Fund, where the non-growth share of growth-related projects are
typically funded.
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-4169
Attachments:
Schedule "A" - Hemson Consulting Ltd. proposal
Schedule "A"
REMSON
Con sui tin g Ltd.
30 St. Patrick Street, Suite 1000, Toronto, Ontario, Canada M5T 3A3
Facsimile (416) 595-7144 Telephone (416) 593-5090
e-mail: hemson@hemson.com
Via e-mail
November 15, 2007
Ms. Nancy Taylor
Director of Finance
Municipality of Clarington
40 Temperance Street
Bowmanville, ON, LlC 3A6
Dear Ms. Taylor;
Re: Municipality of Clarington 2008 Development Charges By-law Review and
Amendment
Further to our discussion, I am pleased to submit this proposal letter to provide consulting
services to the Municipality of Clarington to undertake a Development Charges Review
and related By-law Amendment process to reflect revised growth-related capital costs and
timing of capital works.
1. BACKGROUND & STUDY OBJECTIVES
The main objective of the assignment is to calculate revised development charges for the
Municipality of CIa ring ton incompliance with the provisions of thl0evelopmentCharges
Act, 1997 and its related regulation (Ontario Regulation 82/98), and to provide the
Municipality with a Development Charges Amendment Background Study and
associated by-law{s) amendments.
In addition, the assignment is to undertake the process for amending the Municipality's
current development charges by-law. This will include taking the background study and
associated by-law amendment through the legislated public process.
2
We understand that the need for the study is being driven by rapid increases in the cost
of providing services and infrastructure for new development in recent years. We also
understand that the study is being conducted in the context of a review of a Fiscal Impact
of New Development in Clarington which we have completed on the Municipality's
behalf. With this in mind, we propose to review the Municipality's 2005 Background
Study and current by-laws and policies in their entirety with a particular emphasis on the
following:
1.1 Review of Roads and Related Service
The main focus of the study and anticipated amendments to the Municipality's
development charges rates is for the provision of the roads and related service. We
proposed to:
HEMS ON
· Review the 2005 DC Study roads project list. We anticipate the need to
modify the list by way of substitutions, additions and changes in response
to development currently anticipated by the Municipality;
. Examine the adequacy of the existing road charge in light of required
changes to the reflect project list changes;
. Evaluate the advantages and disadvantages of area specific roads charges.
1.2 Review of Capital Costs for all Services
As part of the DC review, we will examine the cost estimates used to determine
historic service levels and growth-related capital programs for each of the service to
which a development charge applies. Recent tenders for capital projects completed
or underway in Claringron will be examined. A benchmarking review of cost
estimates used in other jurisdictions will be undertaken.
1.3 Review of Growth-Related Capital Programs for all Services
We will review the existing growth-related capital programs for all the general
setvices for which a development charge applies and provide comments and
recommendations on areas for continued monitoring or which require updating at
the time of the Municipality's full DC review prior to the June, 2010 expiry date of
the current by-law. This component will be undertaken in the context of any master
servicing or other studies completed by the Municipality since 2005.
1.4 Growth Forecasts
We understand that a revision of the growth forecasts used to establish the
development charges rates will not be necessary under this study. A review of the
3
growth forecasts used in the 2005 Background Study will however be completed to
determine whether there is a need to update the forecasts.
1.4 By-law Implementation and Policy Issues
The study will examine the Municipality's current DC by-law policies and charges
practices in general, including a specific review of the following:
A. Definition of Local Service
. The DCA prohibits municipalities from recovering through development
charges the cost of providing local services. Under this assignment a review of
how the Municipality defines local service will be undertaken. Particular
attention will be given to the definition of parkland local services. An
examination of local service policies in other municipalities will be made.
B. Separation of DC By-laws
. The study will examine the advantages and disadvantages to the Municipality
of instituting a separate by-law for the roads and related service.
C. Other Policy Issues
. The review will include an examination of the entire by-law to determine if any
other refinements or modifications are worthwhile. This will include an
appraisal of the appropriateness of area specific by-laws in Clarington.
2. STUDY APPROACH & TASKS
The study approach being proposed is consistent with that utilized in 2005 to enact the
Municipality's current development charges by-law. We propose that a draft study be
completed by the end of March to allow time for consulration with Council and staff
prior to holding a public meeting in May. Specific work steps, meetings and the public
consultation process to accomplish the study objectives are displayed in Exhibit I and
outlined below. The proposed schedule is flexible and we would be happy to amend it to
suit the needs of the Municipality.
HEMS ON
We understand that the study process will be led by the Director of Finance and will
involve a Steering Committee made up of staff from all key departments. The workplan
provides for five formal meetings of the Steering Committee. However, it is anticipated
that further informal meetings, perhaps by teleconference, may be required.
4
The workplan and budget also provides for one formal public meeting and one
information session or workshop with Council. We anticipate that the best timing for
this meeting is upon the completion of the draft report. However, the Steering
Committee may decide to hold this meeting at a different point.
The study approach is divided into the following tasks.
2.1 Project Initiation
. Collect and review readily available background information;
· Hold initial meeting with the Steering Committee
To initiate the project, it is recommended that a meeting with the Steering
Committee is held to finalize the study timelines, review available material and
identify any outstanding data and information needs.
HEMSON
Prior to this meeting, the readily available background documentation will have
been reviewed and work towards updating projects cost will have been initiated
based on cost comparisons with other municipalities.
2.2 Background Data Gathering & Assumptions
· Review growth forecasts;
· Review and update project costs;
. Calculate historic service levels.
Immediately following the project initiation meeting, the data analysis component
of the study will be commenced. The initial step in the analysis will be to
incorporate the revised growth-related costs into the development charges
calculation. This will lead to a recalculation of historic service levels and maximum
allowable development charges. We will also review the 2005 growth forecasts to
establish whether an update to these forecasts is warranted.
2.3 Preliminary Analysis
. Review growth-related capital programs;
· Review growth and non-growth shares;
. Review allocation of growth-related costs to residential/non-residential sectors;
. Calculate revised development charge rates;
. Identify capital induced operating costs.
5
As part of the examination of the entite growth-related capital program we will
review the allocation of costs and benefits between growth and non-growth-related
project components and ro residential and non-residential development. Having
established the capital costs and the associated benefitting growth, we will be in a
position to calculate the revised development charges rates. Calculated rates will be
adjusted to account for unallocated development charge reserve fund balances and
a forecast cash flow by service and by development sector. As per the DCA the
impact of the revised growth-related capital program on the Municipality's operating
budget will be assessed.
2.4 Draft Development Charges Amendment Background Study
· Preparation of draft background study document;
. Presentation of draft study to staff.
The background research and preliminary analysis will be compiled in a draft
background study document. The draft study will be presented at a meeting with the
Steering Committee. Discussions at this meeting will focus on the analysis and the
resulting calculated development charges rates. The meeting will also be used to
identify areas of the analysis that require further clarification and review.
2.5 Development Charge By-law and Policy Review
. Undertake by-law policy review;
· Draft development charges by-law;
. Presentation of draft by-law to staff and Council.
Following the meeting to discuss the preliminary findings, review of specific policies
in the current development charges by-law will be undertaken. This will include, but
will not necessarily be restricted to an evaluation of the advantages and
disadvantages of area-specific by-laws, of a separate by-law for the roads and related
service, and of the definitions of local service. A proposed draft amending by-law
will be developed and will be presented to the Steering Committee.
Following input from the Steering Committee the draft Background Study and by-
law will be presented to Council at an information session/workshop.
2.6 Prepare Final Report and Hold Public Meeting
. Prepare final Amendment Background Study and draft by-law;
. Prepare notification of and hold public meeting.
HEMSON
6
Following the meeting to discuss the preliminary findings, a final Amendment
Development Charges Background Study will be completed. It will incorporate
comments received from staff and Council.
As required by the DCA, the notification of the required public meeting will be
prepared. The notice needs ro be circulated 20 days prior to the public meeting. The
Amendment Background Report and proposed by-law amendment must be available
a minimum of two weeks prior to the public meeting.
The DCA requires Council to hold a public meeting when passing an amendment
to a development charges by-law. The purpose of the meeting will be to discuss the
proposed amendment and the supporting background study. The appropriate
materials for the meeting will be prepared and presented by Hemson.
As shown in Exhibit I, we are proposing to have the public meeting at the end of
June. This will allow for a detailed review of all written submissions received at the
meeting, including comments from Council, after which any necessary revisions and
refinements to the study and proposed amending by-laws will be made.
REMSON
2.7 By-law Consideration & Passage
. Finalization of by-law;
. By-law passage.
Following the public meeting, the proposed by-law will be modified to reflect any
necessary changes resulting from the public consultation and Council's
consideration. We will be available to attend the Council meeting to pass the by-
law, although it is not anticipated that this will be necessary.
3. CONSULTING RESOURCES
The assignment will be undertaken by Craig Binning, Partner, author of the
Municipality's 2005 Development Charges Background Study. Craig has extensive
experience with development charges and has a long history of working with the
Municipality on development charges matters and other municipal fiscal issues.
Stefan Krzeczunowicz, Consultant, will assist Craig with the project. Stefan assisted with
the Municipality of Clarington's Development Charges Background Study in 2005 and
with the Municipality's recent Fiscal Impact Analysis of New Development. Stefan and
Craig have worked together on numerous municipal finance assignments.
7
Mr. Russell Mathew, Partner, will undertake a review of the Municipality's 2005 DC
Study growth forecasts which he prepared.
4. BUDGETARY REQUIREMENT AND BILLING ARRANGEMENT
The budgetary requirement of the tasks identified in Section 2 is estimated at $49,600,
inclusive of expenses (net of GST). This upset limit reflects the need to determine the
full extent of services to be reviewed. Invoices will be forwarded on a monthly basis
detailing the time spent on the assignment. Expenses incurred on your behalf will be
billed at cost and are included in the upset budget.
I trust this letter is sufficient for your needs. Should you require additional information
or clarification, please do not hesitate to contact me.
I look forward to the opportunity of continuing to work with you and other Municipal
staff.
Yours truly,
HEMSON CONSULTING LTD.
~
Craig S. Binning
Associate Partner
HEMS ON
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EXHIBIT 2
MUNICIPALITY OF CLARINGTON
DEVELOPMENT CHARGES BY-LAW REVIEW AND AMENDMENT
PROPOSED BUDGET
1. BREADOWN OF COSTS BY TASK AND TIME
Professional Time I Fees
Proiect Director Consultant Growth Forecast
Craig Binning Stefan Krzeczunowicz Russell Mathew
Total Total
Days Fee,
Da~ Fees Da, Fees Davs Fees
Daily Fee Rate (based on 7.5 hour day) $1,875 $825 $1,875
1 Project Initiation 1.0 $1,875 1.5 $1,238 0.0 $0 2.' $3,113
2 Review Background Data and Assumptions 2.0 $3,750 3.0 $2,475 1.0 $1,875 6.0 $8,100
3 Preliminary Analysis 30 $5,625 6.0 $4,950 0.0 $0 9.0 $10,575
4 Draft Amendment Development Charges Study 2.0 $3,750 4.0 $3,300 0.5 $938 6.5 $7.988
5 Development Charges By-law and Policy Review 2.5 $4,688 5.0 $4,125 0.0 $0 7.5 $8,813
6 Prepare Final Report & Hold Public Consultation 1.5 $2,813 3.0 $2.475 0.5 $938 5.0 $6,225
7 By-law Consideration & Passage by Council 1.0 $1,875 0.5 $413 0.0 $0 1.5 $2,288
Subtotal Consultina Davs/Fees 13.0 $24,375 23.0 $18,975 2.0 $3,750 38.0 $47,100
Disbursements & Expenses (I.e. mileage, communication, prlnllng, etc) $2,500
TOTAL FEES & DISBURSEMENTS (net of GST) $49,600
REMSON