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HomeMy WebLinkAboutFND-024-08~Ia~~ito.~ Energizing Ontario REPORT FINANCE DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE p JJ Date: MONDAY OCTOBER 20, 2008 Resolution #: P~^ I'd~ Report #: FND-024-08 File #: By-law #: Subject: NOTICE OF APPEAL OF CLARINGTON DEVELOPMENT CHARGES BY-LAW Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report FND-024-08 be received for information. Submitted by: Director of Finance/Treasurer ncy Ta or, B. .A., .A., Reviewed b~ ' ""--~~-_ ~~`' ~`' Franklin Wu, Chief Administrative Officer. NT/hjl REPORT NO.: FND-024-08 PAGE 2 BACKGROUND AND INFORMATION: 1.0 On December 3, 2007, Report FND-024-07 was approved directing staff to undertake an interim review of Development Charges By-Law No. 2005-108 with a view to any necessary amendments in advance of the full five year review required prior to the By-Law expiring in 2010. 1.1 A development charges amendment study was undertaken in conjunction with Hemson Consulting Ltd., completed in May 2008. 1.2 On June 9, 2008, Council approved the recommendations contained in Report FND-012-08 and the Addendum thereto as well as By-Law No. 2008-104. This By-Law amended the Development Charges By-Law No. 2005-108 and included phasing provisions for the new charges commencing July 1, 2008. 1.3 On July 21, 2008, the Clerk received official notice (copy attached) that the Development Charges By-Law No. 2008-104 has been appealed. CONCLUSION: 2.0 The purpose of this report is to advise Council of the nature of the appeal. An in- camera report by the Solicitor will be provided pertaining to this issue later in this agenda. Attachments: Attachment A -Notice of Appeal letter CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T (905)623-3379 F (905)623-4169 Attachment "A" 'OSJUL21 Fn11~24~55 -- Barristers & S°licitors Goodmans July 18, 2008 Our File No.: 04.1205 and 07.1593 Via Courier and Facsimile Municipality of Clazington 40 Temperance Street Bowmanville, ON L1C 3A6 Attention: Ms. Patti L. Barrie, CMO, Clerk Deaz Ms. Barrie: 250 Yonge Street, Suite 2400 Toronto, Ontario Canada M56 2M6 Telephone: 416.979.2211 Facsimile: 47 fi.979.1234 goodmans.ca Direct Line: 416.597.5158 rhowe@goodmans.ca Re: Notice of Appeal of Clarington Development Charge By-law No. 2008-104 We are the solicitors for Smooth Run Developments Inc., Brookfield Homes (Ontario) Limited, Players Business Park Ltd. and West Diamond Properties Inc., all of whom aze owners of land in the Municipality of Clarington in respect of which applications for approval of draft plans of subdivision have been filed but aze not yet approved. We are also solicitors for the Building Industry and Land Development Association, an incorporated association representing the land development, home building and professional renovation industry throughout the greater GTA. On behalf of each of our individual clients we hereby appeal Clazington Development Chage By-law No. 2008-104 (the "By- law") to the Ontario Municipal Boazd pursuant to Section 14 of the Development Charges Act, 1997 (the "Act"). Our clients' objection to the By-law is that the chazge imposed by the By-law was calculated using a flawed methodology that does not comply with the requirements of the Act, and as a result the chazge is too high. The primary reasons supporting our clients' objection are set out below. The By-law amends the Municipality's existing Development Charge By-law No. 2005-108 enacted in June 2005 (the "2005 By-law"), and has the effect of simply increasing the rates of development charges imposed by that by-law. Specifically, the By-law results in an increase in the development chazge imposed for a single detached residential unit of $4,577.00 per unit, which equates to a 46% increase in the development charge over that which was adopted by the Municipality just three yeazs ago in 2005. A review of the Background Study prepazed by Clazington's consultant, Hemson Consulting, in support of the By-laws reveals that a portion of this increase is attributable to new capital cost estimates for projects which are substantially higher than the estimates used in 2005. r Development Charges Amendment Study, Municipality of Clarington, Clemson Consulting Ltd., May 2008 ~~ Goodmans Page 2 However, a substantial portion of the increase is attributable to a change in the methodology employed in the Background Study to calculate the development charge, which our clients believe is not reasonable and does not comply with the requirements of the Act. The Use of Net Versus Gross Population Increases The change in methodology which appeazs to have resulted in the most significant increase in the charge relates to whether the cost of new services that may be funded by the development change should be calculated based on the actual net increase in population in the Municipality, or instead based on the gross increase in population in new housing units. In respect of the Clarington By-law, this issue relates to certain general or "soft" services, namely Public Librazy, Indoor Recreation, Engineering Services -Parks, Operations and Pazking. Pazagraph 4 of subsection 5(1) of the Act requires that the estimated increase in the need for services funded by a development change must not include an increase that would result in the level of service exceeding the average level of service provided in the municipality over the 10-yeaz period immediately preceding the prepazation of the background study. The regulations under the Act provide that both the quantity and quality of a service must be taken into account in determining the level of service and average level of service. The Background Study addresses these requirements for each relevant service by undertaking a calculation of the value of that service provided in the Municipality on a per capita basis for each of the last 10 years. Those annual per capita values are then averaged to calculate an average historical per capita "service level" value for the service. To determine the eligible "funding envelope" for the service that may be included in the charge without exceeding the 10-yeaz historical average service level, the historical average per capita service level value is multiplied by the estimated population increase over the study period. In undertaking this calculation, the Background Study uses the gross increase in population in new housing units. In other words, the eligible funding envelope for the service is calculated by multiplying the historical per capita service level value by the estimated number of persons in new housing units. In the background study prepazed in respect of the 2005 By-law the total or net increase in population in the Municipality was instead used in this calculation. In other words, the eligible funding envelope was calculated by multiplying the historical per capita service level value by the estimated net population increase. The reason why there is a difference between the increase in population in new units and the increase in net population is because the average number of persons per unit is declining in the existing developed azeas of the Municipality, and accordingly the existing developed azeas of the Municipality experience a decrease in population over time. The rationale for using the net increase in population in calculating the eligible funding envelope is that decreases in population in existing developed azeas of the Municipality results in reductions in the use of existing services in the Municipality, and frees up capacity for those services that can be used by the population in new units. The actual increase in the need for a service is based on the net population increase. Our clients believe that this approach, which was used in the Municipality's 2005 background study, is correct and is the appropriate way to calculate the actual increase in the Goodmans Page 3 need for the service arising from development and ensuring that there is no increase in the service level above the average historical service level. The Municipality has indicated that the rationale for changing its methodology is essentially that capacity that might be created for services by declines in existing population does not occur in locations in which development is occurring and where new infrastructure is therefore required. Our clients. do not accept this argument. For the types of services relevant to this change in methodology, such as Libraries and Indoor Recreation, the Municipality provides a relatively small number of facilities that are designed to service a larger geographic area. These services are not provided on a neighbourhood level, within walking distance of all residents. The need for these services is determined by the total population they aze required to serve, and accordingly the costs of new services that should be eligible to be included in the development charge must be based on the actual increase in population. Otherwise, the development charge will include funding for services that aze not needed to service new development and that would result in the level of service exceeding the 10-yeaz historical average level of service, contrary to the provisions of the Act. Further, this methodology does not appropriately account for excess capacity in the Municipality's infrastructure that is available to service new development as required by the Act. Inclusion of Excess Capacity in Historical Service Levels The other significant flaw in the methodology employed in the Background Study relates to the treatment of existing facilities that have been constructed by the Municipality, but aze being debt financed and funded through the development charges imposed by the By-law. Specifically, our clients have identified an issue with respect to the Bowmanville Librazy, the South Courtice Arena and the Bowmanville Indoor Soccer facility. The Background Study includes the outstanding financed portion of the capital cost of each of these facilities as a cost to be funded through the development change, on the basis that these facilities represent excess committed capacity available to service new development that the Municipality indicated would be funded through development charges at the time they were constructed. Accordingly, there is excess capacity in each of these facilities that is not required to service existing development. However, in calculating the historical per capita service level value for the Library and Indoor Recreation service categories, the Background Study includes these facilities without accounting for the fact that there is excess capacity in them that is not required to service existing development and that the Municipality proposes to fund through future development charges. The result is that the historical average service level for these service categories is inflated by excess capacity in facilities that is to be used to service, and funded by, future development. Our clients believe that it is entirely inconsistent on the one hand to require future development to fund the excess capacity in existing facilities on the basis that they were constructed to service that future development, but on the other hand include those facilities in calculating the historic service level provided to existing development. Goodmans Page 4 For the above reasons, and other reasons that may be identified prior to the hearing of this matter, our clients hereby appeal the By-law to the Boazd. We are enclosing herewith one cheque in the amount of $250 in payment of the Board's fees on behalf of Smooth Run Developments Inc. and Brookfield Homes (Ontario) Limited, one cheque in the amount of $250 in payment of the Boazd's fees on behalf of Players Business Pazk Ltd. and West Diamond Properties Inc., and one cheque in the amount of $125 in payment of the Boazd's fees on behalf of the Building Industry and Land Development Association. GOODatAtvS Lt.P Robert D. Howe cc: Bruce Fischer and Tom Albani, Smooth Run Developments, West Diamond Properties and Players Business Park Peter Schut and Cynthia Bird, Brookfield Homes Paula Tenuta, BILD Randy Grimes, IBI Group GOODMANS55614418.1