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HomeMy WebLinkAboutFND-012-08 Cl~illgron REPORT FINANCE DEPARTMENT Date: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE MONDAY, JUNE 2, 2008 Resolution #: QfA~C3l);;2- 0 ~ Meeting: Report #: FND-012-08 File#: By-law #: Subject: DEVELOPMENT CHARGES AMENDMENT STUDY AND BY-LAW 2008 Recommendations: It is respectfully recommended the General Purpose and Administration Committee recommend to Council the following: 1. THAT the Development Charges Amendment Study, May 2008, prepared by Hemson Consulting Ltd. be approved; 2. THAT the Development Charges quantum for Residential charges be approved as follows, effective July 1, 2008, subject to annual indexing: Residential Single and Semi Townhouse and Row Large Apartment Small Apartment $15,102 $13,153 $10,377 $ 6,577 3. THAT the Development Charge quantum for both Non-Residential-Industrial and Non-Residential - Excluding Industrial charges be phased-in for all units, as follows: Non-Residential - Excluding Industrial (per sq. m.) July 1, 2008 July 1, 2009 July 1, 2010 July 1, 2008 July 1, 2009 $26.98 $31.14 $35.29 $52.36 $63.18 Non-Residential - Industrial (per sq. m.) REPORT FND-012-08 PAGE 2 4. THAT Council in approving the Amendment Study expresses its intent to ensure that the increase in the need for services attributable to the anticipated development will be met and that any future excess capacity identified in the Study will be paid for by development charges or other suitable charges to protect the public interest; 5. THAT Council has reviewed the changes made to the draft By-Law and after having considered the changes, Council determined that there is not a need for an additional public meeting; 6. THAT for completed applications as determined by the Chief Building Official received on or before June 30, 2008, where the development charges will be paid by June 30, 2008, that the applicable development charges be calculated based on By-Law 2005-108, prior to the amendment proposed as attached to this report; 7. THAT the attached By-Law (Attachment "A"), inclusive of any amendments made by Council at the meeting of June 9, 2008, be recommended to Council for approval to amend By-Law 2005-108; and 8. THAT the Region of Durham and recorded interested parties be provided a copy of this report and be notified of Council's decision. ./\ , Reviewed bL/ ~- ~ Franklin Wu, Chief Administrative Officer. NT/hjl REPORT FND-012-08 PAGE 3 BACKGROUND AND INFORMATION: 1.0 The 2005 Development Charges 1.1 On June 2th, 2005, Council adopted the existing development charges with the approval of report FND-007-05 and the accompanying By-Law 2005-108. This By-Law, by statute expires after five years or June 30, 2010. 1.2 On March 31st, 2008, Report FND-007-08 pertaining to Fiscal Impact Analysis of New Development was approved. During the course of this study, it was determined that the Municipality's current development charges rates do not adequately fund the growth related costs eligible for recovery through development charges. Report FND-024-07 was approved December 10, 2007 to authorize an interim review and amendment to the 2005 Development Charges By-Law. 1.3 The legislation only allows calculation of a charge based on the historical average service level of the past 10 years. The legislation does not permit the use of development charges to increase the service levels in any category. If the allowable permitted calculated charge under the legislation is not used, the shortfall is transferred to the tax base and the historic average is eroded, such that in future less development charges can be recoverable. 2,0 The 2008 Development Charges Amendment Study 2.1 Staff from all Departments and the Library worked diligently, as a Steering Committee with Craig Binning of Hemson Consulting Ltd., to bring forward the amendment study May 2008. The result of the analysis was to produce a revised development charge that reflects the costs of services required to support the projected new development to 2014. The executive summary is attached (Attachment "B"), with the full study circulated under separate cover on May 15, 2008. 2.2 The amendment study introduction provides an overview of the areas of focus in this report. The focus of the study was limited to adjusting the development charge rates to reflect the increased cost of servicing growth in Clarington. 3.0 Non-Residential Charge 3.1 In reviewing the non-residential development charges within the lakeshore area municipalities of Durham Region, all lower tier municipalities have a commercial and industrial development charge. The Region of Durham is currently in process to update their rates and is proposing a two-year phasing to the full rate by July 1, 2010. REPORT FND-012-08 PAGE 4 3.2 The cities of Pickering and Oshawa both have a standard charge for all non- residential. Ajax and Whitby have separated industrial at a different rate than the other non-residential components. This is the approach previously undertaken in Clarington also. 3.3 Clarington's non-residential rate for Industrial is currently at $22.82 per square metre and the maximum permissible under the Amendment Study is $35.29 per square metre or a 55% increase. The value for all other non-residential is currently $44.54 per square metre moving to $63.18 per square metre or a 52% increase. 3.4 Council has expressed through the Corporate Strategic Business Plan, 2007- 2010, a clear initiative to promote and attract non-residential activities to Clarington. The Amendment Study, May 2008, is determined based on the substantially increased costs for providing the capital program required to accommodate growth. However, due to the significant effect this may have on Council's priority to attract the non-residential sector, it is proposed that a phasing mechanism be employed. 3.5 Due to the greater price/cost sensitivity surrounding attracting industrial growth as compared to other non-residential (I.e. commercial and institutional), a different phasing mechanism is recommended. It is recommended that the industrial component be phased into the full rates over three increments whereby the full charge would be effective July 1, 2010. For other non- residential development, the full charge would be effective by July 1, 2009. This is reflected in Schedule 2 to the proposed By-Law. 4.0 Residential Charge 4.1 The residential charge being recommended is an increase of 52% over the current charge. 5.0 Tax Impact 5.1 The existing taxpayer picks up any shortfall for the cost of growth related services which is not collected through the development charge. The Amendment Study has fully documented the shares of the capital program that will not be funded from development charges. This will be addressed through the annual budget process as projects come forward. 6.0 Meeting with Developers 6.1 Staff and the Municipality's consultant met with the development community on May 22nd to provide an overview of the amendment study, the methodology applied in the development charge calculation and to provide an opportunity for questions to be answered. The meeting was set up over and above the requirements of the Development Charges Act and in addition to the scheduled public meeting for June 2, 2008. REPORT FND-012-08 PAGE 5 7.0 Exemption Where Permits Applied For 7.1 The effective date of change in the quantum is recommended as July 1,2008. It is recommended that building permit applications that have been submitted to the Chief Building Official on or before June 30 and are complete will not be subject to the new amendment to the By-Law. The increase in the charge is imposed at the time of issue of the building permit and so a specific resolution has been added to this report. Attachments: Attachment "A" - Proposed By-Law Attachment "B" - Development Charges Amendment Study - Executive Summary I nterested Parties: Region of Durham Finance Department 60 Bond Street Oshawa, Ontario L 1 H 8B6 CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905)623-3379 F (905)623-4169 Attachment "A" THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON BY-LAW NO. 2008-XXX Being a by-law to amend Municipality of Clarington Development Charge By-law No. 2005-108, as amended by By- law No. 2007-195 and By-law 2006-160. WHEREAS Subsection 2(1) ofthe Development Charges Act, S.O. 1997, c.27 (the "Act") provides that the council of a municipality may by by-law impose development charges against land,to pay for increased capital costs required because of increased needs for services arising from the development of the area to which the by-law applies; AND WHEREAS the Cnuncil of The Corporation of the Municipality of Clarington enacted By-law No. 2005-108 - Being a By-law to impose development charges against land in The Municipality ofClarington pursuant to the Development Charges Act, 1997 for The Corporation ofthe Municipality ofClarington. By-law No 2005-108 was amended by By-law No. 2006-160 and by By-law No. 2007-195; AND WHEREAS Council has before it a Background Study entitled "Development Charges Amendment Study, Municipality of Clarington" dated May, 2008 (the "Study"); AND WHEREAS Sectinn 19 of the Act provides for the process for an amendment to a development charge by-law, including the requirement that a public meeting ("Public Meeting') be held before an amendment is passed; AND WHEREAS Council gave notice to the public ofthe Public Meeting and held the Public Meeting pursuant to sections 12 and 19 of the Act on June 2, 2008, prior to which the Study and the proposed amending by-law were made available to the public, and Council heard comments and representation from all persons who applied to be heard and considered Report FND-012-08 dated June 2, 2008 (the "Staff Report'); AND WHEREAS staff of the Municipality considered the public comments and representations made at the Public Meeting at the meeting of Council held on June 9, 2008 and submitted to Council Addendum Report to Report FND-OI2-08 dated June 2, 2008; AND WHEREAS at its meeting on June 9, 2008, by Resolution No. C-XXX-08 Council approved the recommendations contained in Report FND-012-08 and the Addendum thereto; NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON ENACTS AS FOLLOWS: 1. THAT By-law No.200S-108, as amended, is further amended by deleting Schedule "1" attached thereto and replacing it with a new Schedule "'1" in the form and with the content of Schedule "I" attached to and forming part of this by-law. 2. THAT By-law No.2ooS-1 08, as amended, is further amended by deleting Schedule "2" attached thereto and replacing it with a new Schedule "'2" in the form and with the content of Schedule "2" attached to and forming part of this by-law. 3. THAT By-law No.200S-108, as amended, is further amended by deleting Schedule "3" attached thereto and replacing it with a new Schedule "3" in the form and with the content of Schedule "3" attached to and forming part of this by-law. 2 4. TRA T By-law No.200S -I 08, as amended, is further amended by deleting Schedule "4" attached thereto and replacing it with a new Schedule "4" in the form and with the content of Schedule "4" attached to and forming part of this by-law. 5. This by-law comes into force and is effective on July I, 2008. By-law read a first and second time this 9th of June 2008. By-Law read a third time and finally passed this 9th of June 2008. Jim Abernethy, Mayor Patti L. Barrie, Municipal Clerk Page 2 SCHEDULE "1" RESIDENTIAL DEVELOPMENT CHARGES SCHEDULE "1" TO BY-LAW NO. 2005-108, AS AMENDED AND AS FURTHER AMENDED BY BY-LAW 20G8-XXX RESIDENTIAL DEVELOPMENT CHARGES PER UNIT Single and Semi-Detached Townhouse, Multiple and Row Units Apartments $15,102 $13,153 Large Small $10,377 $6,577 SCHEDULE "2" NON-RESIDENTIAL DEVELOPMENT CHARGES SCHEDULE "2" TO BY-LAW NO. 2005-108, AS AMENDED AND AS FURTHER AMENDED BY BY-LAW 2008-XXX PHASING SCHEDULE BY EFFECTIVE DATE NON-RESIDENTIAL DEVELOPMENT CHARGES PER SQUARE METRE OF GROSS FLOOR AREA July 1, 2008 July 1, 2009 July 1, 2010 Non-Residential (excluding Industrial) $52.36 $63.18 $63.18 Industrial $26.98 $31.14 $35.29 SCHEDULE "3" ALLOCATION OF RESIDENTIAL DEVELOPMENT CHARGES SCHEDULE "3" TO BY-LAW NO. 2005-108, AS AMENDED AND AS FURTHER AMENDED BY BY-LAW 2008-XXX ALLOCATION OF RESIDENTIAL DEVELOPMENT CHARGES % Allocation General Government 2.57% Library Service 5.89% Fire Protection Services 5.44% Indoor Recreation 32.70% Park Development and Related Facilities 9.50% Operations (Buildings, Equipment and Fleet) 4.43% Parking 0.35% Transit n/a Roads and Related 39.12% Total Development Charge 100% SCHEDULE "4" ALLOCATION OF NON-RESIDENTIAL DEVELOPMENT CHARGES SCHEDULE "4" TO BY-LAW NO. 2005-108, AS AMENDED AND AS FURTHER AMENDED BY BY-LAW 2008-XXX ALLOCATION OF NON-RESIDENTIAL DEVELOPMENT CHARGES % Allocation Non-Residential (excluding Industrial industrial) General Government 2.96% 5.30% Library Service n/a n/a Fire Protection Services 6.28% 11.25% Indoor Recreation n/a n/a Park Development and Related Facilities n/a n/a Operations (Buildings, Equipment and Fleet) 5.11% 9.15% Parking 0.40% 0.71% Transit n/a n/a Roads and Related 85.25% 73.59% Total Development Charge 100% 100% Attachment "B" DEVELOPMENT CHARGES AMENDMENT STUDY Municipality of Clarington REMSON Con sui tin g L t d May 2008 :-1 EXECUTIVE SUMMARY Hemson Consulting Ltd. was retained by the Municipality of Clarington to complete a Development Charges Amendment Study. This Amendment Study provides the basis and background to update the Municipality's development charges to accurately reflect the servicing needs and fully recover the increasing costs related to servicing growth in Clarington. A. BACKGROUND AND INTRODUCTION . In February 2008, a Study of the Fiscal Impact Analysis of New Development in Clarington was completed. The Study examined the effects of allowing several large scale residential proposals to proceed earlier than was anticipated under the Municipality's 2005 Development Charges Background Study. . The results of the Fiscal Impact Analysis show that the Municipality's current development charge rates do not adequately fund the growth-related costs eligible for recovery through development charges. The most significant funding shortages are with respect to the provision of roads and related infrastructure. . A key recommendation of the Fiscal Impact Analysis was that current development charge rates be reviewed immediately and that new rates be established to more fully recover the cost of servicing growth in the Municipality. Following this recommendation, this 2008 Development Charges Amendment Study was initiated in February 2008. . The Amendment Study provides the basis for amending Clarington's current development charges by-law, By-law No. 2005-108, as permitted under section 19 of the Development Charges Act (DCA). . The focus of the Amendment Study is limited to adjusting the development charge rates to reflect the increased cost of servicing growth in Clarington. REMSON ii . The growth forecast for the Amendment Study is consistent with the growth forecast of the 2005 Development Charges Background Study and has been adjusted to account for growth that has occurred since the completion of that Study and data released from the 2006 Census. . The end date of the planning periods in the Amendment Study remains consistent with the 2005 Development Charges Background Study. The proposed planning periods for this Amendment Study are a seven-year period from 2008 to 2014 for the general services and 2008 to 2031 for the engineered services. Historic service levels are based on the ten-year historical period from 1998 to 2007. . This study calculates new development charges for the Municipality of Clarington in compliance with the provisions of the DCA. . The Municipality needs to continue implementing development charges to fund capital projects related to growth throughout Clarington so that development continues to be serviced in a fiscally responsible manner. The calculated changes to the development charges rates are required in order to reflect the revised costs associated with the infrastructure requirements. . This report identifies the growth-related net capital costs which are attributable to development that is forecast to occur in the Municipality. These costs are apportioned to types of development (residential, non- residential) in a manner that reflects the increase in the need for each service attributable to each type of development. This report therefore presents development charges for each type of development. B. ELIGIBLE SERVICES ARE INCLUDED IN THE ANALYSIS . The following Municipal services have been included in the development charges analysis: . Public Library . Emergency Services . Indoor Recreation REMSON iii . Engineering - Park Development and Facilities . Operations . Parking . General Government . Roads and Related (including storm drainage, sidewalks, street lights, streetscapes, intersection and level crossings, etc.) C. THE MUNICIPALITY HAS AN EXTENSIVE GROWTH-RELATED CAPITAL PROGRAM FOR THE PROVISION OF ELIGIBLE SERVICES General Services 2008 - 2014 . Municipal staff, in collaboration with Hernson Consulting, has developed a growth-related capital program setting out projects that are required to service the anticipated growth. The growth-related capital programs are based on a seven-year planning period of 2008 ro 2014. . The gross cost of the Municipality's growth-related capital program for general services amounts to $93.3 million and provides for a wide range of infrastructure expansions. A government grant of $2.2 million for the public library has been identified, and thus the net cost of the growth-related capital program is $91.1 million. Of the $91.1 million, approximately $62.2 million has been identified as eligible for recovery through development charges over the 2008 - 2014 planning period. REMSON iv . The following is a summary of the growth-related capital program for the general services: Capital Forecast DC Gross Subsldlesl Net Recoverable Service Cost Recoveries Cost 2008 - 2014 1$0001 1$0001 ($000) ($000) 1.00 TOTAL - PUBLIC LIBRARY $10,465.0 $2,244.4 $8,220.8 $5,331.3 1.1 Buildings, Land & Furnishings $9,865.0 $2,244.4 $7,620.6 1.2 Material Acquisitions $600.0 $0.0 $600.0 2.00 TOTAL. EMERGENCY SERVICES $11,872.0 $0.0 $11,872.0 $7,076.9 2.1 Buildings, land & Furnishings $10,260.0 $0.0 $10.260.0 2.2 Vehicles $1,500.0 $0.0 $1,500.0 2.3 Firefighter Equipment $112.0 $0.0 $112.0 3.00 TOTAL -INDOOR RECREATION $41,069.0 $0.0 $41,069.0 $30,388.9 3.1 Buildings, Land, Furnishings & Equipment $41,069.0 $00 $41,069.0 4.00 TOTAL - ENGINEERING - PARK DEVELOPMENT AND FACILITIES $17,090.0 $0.0 $17,090.0 $9,927.1 4.1 Park Development, Facilities & Equipment $17,090.0 $0.0 $17,090.0 5.00 TOTAL. OPERATIONS $8,619.4 $0.0 $8,619.4 $5,774.0 5.1 Buildings, Land & Equipment $5,179.5 $0.0 $5,179.5 5.2 Municipal Fleet $3,439.9 $0.0 $3,439.9 6.00 TOTAL. PARKING $518.1 $0.0 $518.1 $432.9 6.1 New Parking Spaces $518.1 $0.0 $518.1 7.00 TOTAL.GENERALGOVERNMENT $3,680.0 $0.0 $3,680.0 $3,312.0 7.1 Growth Studies $3,680.0 $0.0 $3,680.0 TOTAL. 7 YEAR GENERAL SERVICES $93,313.5 $2,244.4 $91,069.1 $62,243.2 . Details regarding the capital programs for each of the general services are provided in Appendix B of this report. REMSON v Engineered Services 2008 - 2031 . The growth-related capital program for roads and related services is based on a build-out planning period of 2008 to 2031. . The Municipality's growth-related capital program for roads and related services amounts to a gross cost of $153.1 million and provides for roads construction, storm drainage, sidewalk, street lights, streetscapes and other related works. No government grants have been identified, and thus the net cost of the growth-related capital program remains at $153.1 million. Of the $153.1 million, approximately $133.6 million has been identified as eligible for recovery through development charges. . The following is a summary of the growth-related capital program for the roads and related services: Caoital Forecast DC Gross Subsidies! Net Recoverable Service Cost Recoveries Cost 2008 - 2014 1$000\ 1$000\ 1$000\ 1$000\ 1.00 TOTAL - ROADS AND RELATED $153,OS8.4 $0.0 $153,058.4 $133,593.0 1.1 Roads & Related Projects $150.961.8 $0.0 $150,961.8 1.2 Other Road Related Projects $2.096.6 $0.0 $2,096.6 TOTAL. ENGINEERED SERVICES $153.0S8.4 $0.0 $1S3,058.4 $133,593.0 . Details regarding the capital programs for the roads and related services are provided in Appendix C of this report. REMSON vi D. DEVELOPMENT CHARGES RATES CALCULATED WITH FULL REFERENCE TO THE DCA . Development charges rates have been established under the parameters and limitations of the DCA This study provides the rationale and basis for the calculated rates. . A Municipality-wide uniform cost approach is used to calculate development charges for the eligible services. This results in uniform residential and non- residential charges throughout the Municipality. . The calculated charges are the maximum charges the Municipality may adopt. Lower charges can be approved; however this will require a reduction in the capital plan and reduced service levels or financing from other sources, most likely through property tax increases. . It should be noted that the capital programs put forward for Operations and Parking have not fully utilized the maximum allowable funding envelope. . The fully calculated residential charges are recommended to vary by unit type, reflecting the difference in occupancy patterns expected in various unit types and the associated differences in demand that would be placed on Municipal services. . The fully calculated non-residential charges are recommended to be applied on a Municipal-wide basis. This study has differentiated a non-residential charge for the roads and related component, remaining consistent with the currently imposed non-residential charges. The charge is differentiated between industrial and all other non-residential land uses (commercial, institutional). REMSON vii . Based on the Municipality of Clarington's gtowth forecast and growth-related capital programs, new residential development charges rates have been calculated. The following is a summary of the calculated residential development charges by unit type: Calculated Charge By Unit Type (1) Charge SERVICE After Rows & Cashflow Singles & Other Large Small Per Capita Semis Multioles Apartments Apartments PUBLIC LIBRARY $287 $890 $775 $611 $387 EMERGENCY SERVICES $265 $822 $716 $564 $358 INDOOR RECREATION $1.593 $4.938 $4,301 $3,393 $2,151 ENGINEERING. PARK $463 $1,435 $1,250 $986 $625 DEVELOPMENT AND FACILITIES OPERATIONS $216 $670 $583 $460 $292 PARKING $17 $53 $46 $36 $23 GENERAL GOVERNMENT $125 $388 $338 $266 $169 SUB.TOTAL GENERAL $2,966 $9,195 $8,008 $6,318 $4,004 SERVICES . MUNICIPALlTY.WIDE $1,906 $5,908 $5,145 $4,059 $2,573 ENGINEERING SERVICES SUB-TOTAL ENGINEERING $1.906 $5,908 $5.145 $4,059 $2,573 SERVICES TOTAL RESIDENTIAL $4,872 $15,102 $13,153 $10,377 $6,577 CHARGE PER UNIT (1) Based on Persons Per Unit Of: 3.10 2.70 2.13 1.35 HEMSON . ..~ ' . viii . Based on the Municipality of Clarington's growth forecast and growth-related capital programs, new non-residential development charges rates have been calculated. The following is a summary of the calculated non-residential development charges: Commercial & Industrial Institutional SERVICE After Cashflow After Cashflow Per Square Metre Per Square Metre PUBLIC LIBRARY $0.00 $0.00 EMERGENCY SERVICES $3.97 $3.97 INDOOR RECREATION $0.00 $0.00 ENGINEERING - PARK DEVELOPMENT AND FACILITIES $0.00 $0.00 OPERATIONS $3.23 $3.23 PARKING $0.25 $0.25 GENERAL GOVERNMENT $1.87 $1.87 SUB-TOTAL GENERAL SERVICES $9.32 $9.32 MUNICIPALITY-WIDE ENGINEERING SERVICES $53.86 $25.97 SUB-TOTAL ENGINEERING SERVICES $53.86 $25.97 TOTAL NON-RESIDENTIAL CHARGE PER SQ.M $63.18 $35.29 REMSON " ' . ix E. NEWLY CALCULATED RATES ARE 50% HIGHER THAN CURRENT RATES . The fully calculated Municipality-wide residential charge for a single/semi- detached unit, $15,102, represents an increase of 52% over the Municipality's current charge, $9,961. . The $63.18 per square metre of gross floor area represents a 52% increase over the Municipality's current non-residential commercial and institutional charge of $41.54 per square metre. The newly calculated non-residential industrial charge is $35.29 per square metre, which is a 55% increase over the current charge of $22.82 per square metre of gross floor area. . The scale of these increases is consistent with the experience of many municipalities in Southern Ontario as the development charge inflation index has outpaced inflation and resulted in rapid increases in construction costs. . The calculated development charges rates are increasing in rhe Municipality of Clarington largely as a result of significant increases in the costs of constructing municipal infrastructure. F. THIS AMENDMENT IS NOT PROPOSING ANY CHANGES TO DEVELOPMENT CHARGE POLICIES AND PRACTICES . The scope of this amendment is limited to a review of the cost of servicing growth in Clarington. . The proposed amending by-law does not alter any of the terms of the by-law and all existing rules, exemptions and other provisions will remain unchanged. . The expiry date of the by-law, June 30, 2010, is not altered by the proposed amendment. REMSON