HomeMy WebLinkAboutFND-022-12 Clarftwn REPORT
FINANCE
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
Date: September 24, 2012 Resolution#: -X69°1 By-law#:
Report#: FND-022-12 File#:
Subject: SERVICING OF NON-RESIDENTIAL DEVELOPMENT OPPORTUNITIES
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-022-12 be received for information.
Submitted by: Reviewed by:
Nancy Tayl , 136A, A, Franklin Wu,
Director o inance/Treasurer Chief Administrative Officer
Andrew Allison, B.Comm.,LLB
Municipal Solicitor
NT/hjl
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T 905-623-3379
REPORT NO.: FND-022-12 PAGE 2
1.0 BACKGROUND
1.1 On July 3, 2012 Council approved a funding policy for the $10 million received
from the federal government through the "Agreement for the Cleanup and Long
Term Safe Management of the Port Granby Low Level Radioactive Waste
Project". The "Strategic Capital Reserve Fund Funding Policy" was summarized
in Attachment "A" to Report FND-018-12 dated June 25, 2012.
1.2 At the same meeting, Council directed staff "to prepare a more fulsome report on
how Item (c) of the [Funding Policy] with respect to how servicing non-residential
development would be used". The precise wording of this portion of the policy is
as follows:
The principle amount of the Strategic Capital Reserve Fund be invested in
three priorities: ... 3) investment in Servicing of Non-Residential areas as a
front-ending tool.
1.3 The theory that underlies this part of the policy was explained in sections 8.1 and
8.2 of Report FND-08-12. Simply put, the objective is to use portions of the
Strategic Capital Reserve Fund to incent non-residential development by
providing necessary municipal infrastructure, but only do so in ways that will
preserve the principle amount of the Fund. Put another way, the objective is to
use the Fund to construct the infrastructure that is required to service new non-
residential development and then fully recover the construction costs from
benefitting landowners.
1.4 There are several ways in which the Municipality can achieve this objective.
Some examples of the legislative and other types of financing tools available to
the Municipality are discussed below.
2.0 MUNICIPAL CAPITAL FACILITIES AGREEMENTS
2.1 Sections 106 through 114 of the Municipal Act, 2001 fall under the heading
"Economic Development Services". Subsection 110(3) states that "a municipality
may provide financial assistance to any person who has entered into an
agreement to provide facilities under this section and such assistance may
include lending money and charging interest."
2.2 Under Ontario Regulation 603/06, municipal roads as well as municipal facilities
for water, sewers and sewage are eligible "municipal capital facilities".
REPORT NO.: FND-022-12 PAGE 3
2.3 Municipal capital facility agreements are in many ways similar to local
improvement by-laws (discussed below) and developer cost-sharing agreements.
They can be used as a means to provide up-front infrastructure financing and to
secure cost recoveries. However, unlike local improvement by-laws and
developer cost sharing agreements, municipal capital facility agreements cannot
bind non-participating landowners. This type of an agreement will work well if all
benefitting landowners are willing to participate in the plan to see services
extended.
3.0 LOCAL IMPROVEMENT BY-LAWS
3.1 Local improvements are now dealt with under Part XI (Fees and Charges) of the
Municipal Act, 2001 and Ontario Regulation 119/03 (Local Improvement Charges
— Priority Lien Status) passed under section 400 of the Municipal Act, 2001.
3.2 Section 391 of the Municipal Act, 2001 authorizes "a municipality to impose fees
or charges on persons for services provided or done by or on behalf of it ..."
Ontario Regulation 119/03 empowers municipalities to finance the construction of
a variety of different services including roads, watermains and sewers through
local improvement by-laws.
3.3 O. Reg. 119/03 sets out a comprehensive set of procedures which must be
followed with any local improvement by-law (e.g. notice to affected property
owners, calculation of costs, allocation of costs, and the recovery of the costs).
Fees or charges for capital costs can be imposed on persons not receiving an
immediate benefit from the service if they will receive a benefit at some later
point in time (subsection 391(2) of the Municipal Act, 2001 and sections 30 and
31 of O. Reg. 119/03). The process can be cumbersome, but the result is
binding on all benefitting landowners.
3.4 Local improvement by-laws can even be used to finance the construction of
private works (section 2 of O. Reg. 119/03). The Ministry of Municipal Affairs and
Housing is currently looking at possible changes to O. Reg. 119/03 to make it
easier for municipalities to assist in the financing of private works (e.g. private
water or sewer systems and projects under the FIT and microFit programs
created under the Green Energy Act, 2009).
3.5 Section 2 of Ontario Regulation 584/06 prohibits the imposition of fees or
charges to recover capital costs if the costs have been, will be or could be made
through development charges or front-ending agreements under the
Development Charges Act, 1997.
REPORT NO.: FND-022-12 PAGE 4
4.0 AREA RATING
4.1 Section 326 of the Municipal Act, 2001 sets out the services for which a
municipality may "area rate". It allows a municipality to identify a "special
service", determine the costs (including capital costs) related to the special
service, designate the area that will receive the additional benefit from the special
service, and determine the method of allocating and securing the repayment of
the capital costs. "Special services" can include roads, water systems, sewage
systems and storm sewers.
5.0 OTHER TOOLS
5.1 Other (rarely used) front-end financing options for municipal infrastructure with
cost recovery mechanisms are available under other Provincial Acts for specified
services (e.g. drainage works under the Drainage Act).
5.2 If the Municipality owns property that will benefit from the extension of services
(for example if the Municipality acquires land in the Clarington Energy Business
Park), it could assist in front-ending the cost of the services and recovery some
of the costs as a participating landowner through a developer cost sharing
agreement. In this scenario, full cost recovery would be delayed — the
Municipality would not recover the portion of the costs that it benefits from as a
landowner until it sells the property.
6.0 CONCURRENCE — not applicable
7.0 CONCLUSION
7.1 The front-end financing options available in any particular circumstance will vary
depending on a variety of factors including the location of the properties, the
specific infrastructure that is required, and whether the cost of the proposed
infrastructure is covered in the Municipality's Development Charges By-law.
7.2 In all cases, it will be Council's decision to determine whether to proceed with
any proposed economic development initiative and whether it is appropriate to
use any portion of the Strategic Capital Reserve Fund to assist with the
construction and financing of the proposed initiative. Staff would bring forward a
comprehensive report at such future time when a detailed proposal warrants
Council consideration.
REPORT NO.: FND-022-12 PAGE 5
CONFORMITY WITH STRATEGIC PLAN —
The recommendations contained in this report conform to the following priorities of the
Strategic Plan:
Promoting economic development
x Maintaining financial stability
Connecting Clarington
Promoting green initiatives
Investing in infrastructure
Showcasing our community
Not in conformity with Strategic Plan
Staff Contact: Nancy Taylor, Director of Finance/Treasurer
List of Interested Parties - None