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Home My WebLink AboutPD-69-89EX�f TOWN OF NEWCASTLE MEETING: General Purpose and Administration Committee DATE: Monday, March 6, 1989 REPORT #: PD-69-89 FILE #: SUB-JECT: SUBMISSION BY THE TOWN OF NEWCASTLE TO THE INTERMINISTERIAL COMMITTEE REGARDING THE GREEN PAPER ON FINANCING GROWTH RELATED CAPITAL NEEDS 5 (r) File # Res. # By -Law # RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report PD -69 -89 be received; and 2. THAT a copy of Report PD-69-89 be forwarded to the Interministerial Committee on Financing Growth Related Capital Needs as the Town's submission on the Green Paper on Financing Growth Related Capital Needs; and 3. THAT a copy of this Report be forwarded to the Association of Municipalities of Ontario, Region of Durham, the Public School Board and the Separate School Board for their information. 1. BACKGROUND 1.1 On December 12, 1988, Honourable Robert E. Nixon, Treasurer of Ontario and Minister of Economics tabled a green paper describing approaches of assisting municipalities and school boards with the financing of growth- related capital needs. These approaches intend to create a consistent framework for municipal lot levies, enable school boards to establish education lot levies and explore other innovative means of financinag capital expenditures. ...2 600 31 REPORT NO.: PD -69 -89 PAGE 2 1.2 The Ontario Government anticipates introducing legislation on the approved approaches early in the next session and have invited briefs regarding possible improvements to these approaches before March 1, 1989. 1.3 The Town of Newcastle has not been circulated a copy of the Green Paper. However, Staff obtained a copy indirectly in early February and have proceeded immediately to review the Green Paper which appears to have a significant impact on the Town. A letter has been sent to the Interministerial Committee of Financing requesting time extension for submission of the Town's brief. 2. SUMMARIES OF GREEN PAPER ON POSSIBLE APPROACHES OF FINANCING GROWTH - RELATED CAPITAL NEEDS The approaches suggested by the Green Paper are: 2.1 Enable municipalites to use lot levies to recover from the various classes of residential, commercial and industrial property up to 100 per cent of net growth - related capital costs. 2.2 Enable school boards to use lot levies to recover from the various classes of residential property up to 100 per cent of net growth - related capital costs (i.e., new pupil places). 2.3 Limit the municipal and education levies on affordable houses to a maximum of 60 per cent of the levies on other houses. 2.4 Lever a greater amount of school construction from current Provincial grant levels by decreasing the average Provincial rate of support on approved school capital from 75 per cent to 60 per cent. ...3 REPORT 0O.: PD-69-89 PAGE 3 2.5 Reduce school board borrowing 000ta" gnztioUlacIy for smaller school boards, by providing them with access to Canada Pension Plan funds for approved capital projects. Priority access would be given to those boards facing the highest borrowing costs. The existing policy, allowing the use of debentures for capital needs, will be maintained. 2.6 Encourage boards to pursue alternative means of financing. Boards could negotiate with developers to provide payment in kind (e.g., facilities or land) instead of paying lot levies. 2.7 Provide legislative authority for municipalities to establish front-end financing arrangements at their discretion, and to reimburse developers for building oversized sewer, water and road services. 3. REVIEW AND DISCUSSION Each of the above proposed approaches was reviewed within the context of implication to the Town and the following concerns, comments and recommendations are identified. 3.1 Approach No. 1 "Enable municipalities to use lot levies to recover from the various classes of residential, commercial and industrial property up to 100 percent of net growth-related capital costs." Comment The Town is currently charging lot levies for all types of residential developments in order to finance growth related capital costs. The Town would welcome the introduction of legislation to formalize such arrangement. However, the legislative changes must be comprehensive and must enable the municipality to charge levy on prezoned land and on ...4 VU �O[l Z7 � �J any application involving increase in residential density. In addition, the growth related capital costs must be net cost, that is minus any government grants, current levy reserve, and developer's voluntary contribution. 3.2 Approach No. 2 "Enable school boards to use lot levies to recover from the various classes of residential property up to 100 per cent of net growth - related capital costs (i.e., new pupil places)." Comment The Green Paper proposed a discretionary power to the school board to impose an educational lot levy which would fund all or part of the growth- related capital costs, net of Provincial Grant, for school capital projects to be approved by ministry of Education. However, the collection of the education levy will be through the local municipality which will have to enact a school board levy by -law and transfer the levy funds to a joint account held in trust by the co- terminous school boards. The Town will support the principle of establishing an education levy. However, the Town cannot support the method of collecting of education levy through the local municipality as it it would require complicated procedures and additional accounting works and is a definite administrative burden on the Town. 3.3 Approach No. 3 "Limit the municipal and education levies on affordable houses to a maximum of 60 percent of the levies on other houses." ...5 600 :�4 REPORT NO.: PD -69 -89 PAGE 5 Comment This approach cannot be supported since the municipality will end up subsidizing the production of affordable housing from its local tax revenue. We believe that housing, affordable or not, will generate new residents who will be requiring municipal services. The Town can be supportive of the Provincial initiative on affordable housing provided that their is no financial impact on the municipality and its taxpayers. 3.4 Approaches No. 4 and No. 5 "Lever a greater amount of school construction from current Provincial grant levels by decreasing the average Provincial rate of support on approved school capital from 75 percent to 60 percent." "Reduce school board borrowing costs, particularly for smaller school boards, by providing them with access to Canada Pension Plan funds for approved capital projects. Priority access would be given to those boards facing the highest borrowing costs. The existing policy, allowing the use of debentures for capital needs, will be maintained." Comment These approaches do not appear to have any direct impact on the municipality and we understand school boards across the Province will be responding to the Green Paper. 3.5 Approach No. 6 "Encourage boards to pursue alternative means of financing. Boards could negotiate with developers to provide payment in kind (e.g., facilities or land) instead of paying lot levies." ...6 REPORT NO.: PD -69 -89 PAGE 6 ------------------------------------------------------------------------- - - - - -- Comment We support the principle of providing alternative to educational levy. We feel that the Interministerial Committee should give serious consideration to the approach similar to the five (5) percent parkland dedication provision in the Planning Act. 3.6 Approach No. 7 Provide legislative authority for municipalities to establish front -end financing arrangements at their discretion, and to reimburse developers for building oversized sewer, water and road services. Comment In general, we do not object to the principle of legislative change to provide authority to municipality to establish front -end financing arrangements. However, it must be on a voluntary basis and solely at the discretion of the municipality. Staff feel that a more cautious approach is warranted to the whole matter of front - ending capital works. In the event legislative changes become reality, it would be advisable to wait and see how other municipalities will be experiencing the proposed changes. 3.7 Other Proposed Changes The Green Paper also makes reference to several proposals that might impact the municipality. Staff review these proposals and would offer the following comments. 3.7.1 The Green Paper suggests that until a Bill is introduced, municipalities are asked to hold lot levies at their current levels. Staff does not feel that this request is unreasonable. However, a more definite timing should be provided as to when the Bill will be introduced. We suggest a deadline date be set no later than June 30, 1989. �A ftEPORT NO.: PD-69-89 -_------__®_____________________®®_____-®_______-_-_--_____---_--_--________--- 3.7.2 The Green Paper also suggests that upper tier levy (regional levy) be collected through local municipality. We cannot support such an approach. Major changes to the Town's subdivision agreement will be required and this places tremendous onus on the Town in terms of administration and accounting. 3.7.3 Indexing of levies in accordance with Southam Construction Price Index is proposed in the Green Paper. We agree with this proposal provided it does not remove the right of the municipality to review and adjust its levy as frequent so it deems necessary. 3.7.4 The Green Paper requires municipalities to inform all new home purchasers in areas subject to lot levies of the levy amounts and their intended uses. We feel that the principle of informing the public has merits but the method of informing is still unclear. We suggest that once a lot levy by -law is passed by the Town, a one time advertisement in local newspapers should suffice. 4. CONCLUSION A copy of the Green Paper is attached herein to assist Committee and Council's deliberation of this matter. Staff respectfully recommend Committee and Council to endorse the content of this report as the Town's brief to be submitted to the Interministerial Committee on Financing Growth - Related Capital Needs. Respectfully submitted, s Franklin Wu, M.C.I.P. Director of Planning & Development FW *jip *Attach. February 17, 1989 600 37 Recommended for presentation to the Committee 0 -- - - - - - -- La rence //E Kotseff Chief Adni `istrative Officer