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HomeMy WebLinkAboutPD-111-95l� THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON DN DEV -CHG GPA REPORT Meeting: General Purpose and Administration Committee File # Date: Monday, October 23, 1995 Report #- Subject. PD -111 -9 �ile #: PLN 20.1 DEVELOPMENT CHARGE BY -LAW 92 -105 SEMI ANNUAL INDEXING ADJUSTMENT MUNICIPALITY OF CLARINGTON FILE: PLN 20.1 Res By -law # Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report PD- 111 -95 be received; 2. THAT Staff be directed to either: (a) implement the provisions within the current Development Charge by -law that permits the current development charge quantum to be adjusted by the amount equal to the corresponding Building Cost Index figure for the six (6) month period prior to November 1, 1995; or (b) bring forth an amending by -law to the Development Charge By- law 92 -105, in compliance with the notice requirements of the Development Charges Act that would freeze the current development charge quantum to April 30, 1996. 3. THAT a copy of Staff Report PD- 111 -95 and the decision of Council be forwarded to the Oshawa - Durham Home Builders' Association. 1. BACKGROUND 1.1 Council at their September 25, 1995 meeting endorsed the following resolution: "THAT the correspondence dated September 7, 1995 from Mr. Stephen Kassinger, President of the Oshawa - Durham Home Builders' Association regarding the Development Charge By -law semi - annual review /adjustment, be received; THAT the correspondence be referred to the Director of Planning and Development for consideration in conjunction with this matter and preparation of a report to be submitted to the General Purpose and Administration Committee; and THAT Stephen Kassinger be advised of Council's action." 51,98 REPORT NO.: PD- 111 -95 PAGE 2 1.2 The Municipality's Development Charge By -law contains a provision which requires the quantum amount to be automatically adjusted on the first of May and November of each year. The indexing adjustments are based upon the market driven Building Cost Index. Unless otherwise directed by Council, staff have and will continue to implement the By -law by adjusting the Development Charge Quantum every six (6) months. 1.3 The purpose of this report is to response to the Oshawa - Durham Home Builder Association's request to forego the November 1995 indexing of the Development Charge as well as to consider a reduction of the quantum amount itself. 2. APPLICABLE PROVISIONS OF THE DEVELOPMENT CHARGES ACT 2.1 The Development Charges Act does permit a Council that has passed a Development Charge By -law, the opportunity to amend the by -law. 2.2 Similar to the procedures followed in passing a Development Charge By -law, Council is required to hold at least one (1) public meeting prior to an amending by -law being considered for approval. The Act requires a minimum twenty (20) day notice period before the public meeting can be held. 2.3 The aforesaid procedure is only applicable should Council choose to either freeze the indexing or reduce /increase the development charge quantum. 3. STAFF COMMENTS 3.1 The underlying principle in the collection of the Development Charges is to assist in the financing of a variety of capital works project such as road construction, park and open space development, libraries, and fire protection. 3.2 The Municipality's share in funding these projects is generated from tax dollars. It is staff's understanding, that if the Development Charge Quantum were reduced or by not utilizing 509 REPORT NO.: PD- 111 -95 PAGE 3 indexing monies the scenario could arise where the tax dollars would have to offset the short fall, or projects would have to be delayed, or not built, and plans of subdivision would be deemed premature due to lack of Municipal funding to finance capital works for the new growth. 3.3 It is noted that during the previous freeze of development charge indexing between October 1992 to November 1994, the Municipality incurred a short fall of approximately $350,000, an amount which otherwise could be in the Development Charge Reserve Account to help finance growth- related services and capital works. 3.4 The Treasury Department has indicated that they would not recommend either a freeze in the indexing or a reduction of the quantum amount. The current quantum is already affected by the Ministry of Transportation's reduction in the costs eligible for provincial subsidy for new roads. The Province will now only subsidize the net cost after the full development charge component has been subtracted from the gross project cost. Previously, the full amount was eligible for subsidy and the development charge portion could be applied to the Municipality's share of the cost. This has a substantial effect in that the current quantum was calculated prior to this change in funding from the Province. The impact is currently being assessed, therefore, any reduction in development charge or freezing the indexing would not be advisable at this time. 3.5 Under the current provisions of the Development Charges By -law, the next indexing would take place on November 1st, 1995. Staff, unfortunately cannot calculate the index adjustment as the indices for the month of October has not been released at the time this Report is being prepared. For comparison purposes, the net change in the Building cost indices for the last five months, between May 1995 and September 1995, is two point three eight (2.38 %) percent. This would translate into an increase in the Development Charge Quantum for a single family /semi - detached dwelling unit from $5,131.00 to $5,253.00. 510 REPORT NO.: PD- 111 -95 PAGE 4 3.6 It was suggested by the Oshawa - Durham Home Builders' Association that inasmuch as other Municipalities have frozen their indexing and /or reduced their development charge quantums, our Municipality may wish to examine the possibility of doing so as well. Staff suggested that this option is not feasible for Clarington. Clarington is a fast growing Municipality in which the existing infrastructure and services were never built to handle the growth. The collection of development charge payments is an essential function to finance the infrastructure that is needed to service a fast growing community such as ours. Big mature cities may be able to reduce development charges as their services and infrastructures are mostly in place. 3.7 The method by which indexing is calculated and implemented on a semi - annual basis is one of the fundamental principles contained within the Development Charge By -law. The use of a building cost indexing benchmark ensures the development charge payments received by the Municipality are consistent with the actual cost of providing the municipal projects in subsequent years. If the development charge is not indexed, the Municipality will be working with deflated dollar value up to the time of construction of capital works. 4. CONCLUSIONS 4.1 In light of the above comments, staff cannot support the reduction or freezing of the Development Charge Quantum. When the October, 1995 Building Cost Index is released, the adjustment made to the development charge quantum will reflect the market driven building costs. It is noted for Committee's information, not all changes in the building cost indices, on a monthly basis have been upward. If the index calculation for the six (6) month period were to drop, the development charge quantum would be adjusted downward accordingly. 511 REPORT NO.: PD- 111 -95 PAGE 5 6.2 If Committee and Council deems it appropriate to amend the Development Charge By -law to either reduce or freeze the indexing of the current Development Charge Quantum the procedures set out in paragraph 2 would be followed -up by Staff. Respectfully submitted, Franklin Wu, M.C.I.P., R.P.P. Director of Planning and Development - -,Marie Marano,, H. BSc. , A. M. C. T. `` Treasurer LT *MM *FW *df 16 October 1995 Reviewed by, W . H :, Stockwell i; Chief Administrative ? Officer Attachment #1: Letter from Oshawa - Durham Home Builders' Assoc. 51? „SAX - DU,,, Z September 7, 1 Oshawa - Durham Home Builders' Association King Street Postal Outlet P O Box 26064 206 King Street East, Oshawa, Ontario L1 H 1 CO Tel (905) 579 -8080 99f9x (905) 579 -8080 "1994 PROVINCIAL LOCAL OF THE YEAR” Corporation of the Municipality of Clarington 40 Temperence St. Bowmanville, Ont. L1 C 3A6 ATTENTION: Mrs. P. Barrie, City Clerk Dear Mrs. Barrie: o i J 5-3 P�J V35 SEF 1 9 1995 MUNICIPALS7Y OF CLARINGTON PLANNING DEPARTMENT SUBJECT.- Municipality of Clarington Development Charge By -Law Semi Annual Review /Adjustment We understand that the Municipality of Clarington will be conducting its semi - annual review of the Residential Development Charge in accordance with the By -Law. The Oshawa - Durham Home Builders' Association on behalf of the local residential construction industry wishes to offer the following comments: Construction activity in the residential sector is in a crisis. The number of starts is at historically low levels and in real terms, accounting for population growth, housing starts are at the lowest levels since World War II. The cost of housing has been forced upward due to factors beyond the control of the industry itself. Building codes, municipal standards, the lengthy approvals process and development charges are but a few examples of these costs which are ultimately transferred to the new home buying public. In light of the current era of fiscal restraint, we urge the municipal staff and Council to weigh these factors when considering an adjustment to the quantum amount of the Residential Development Charge. Other municipal jurisdictions throughout the province have recognized this crisis and have imposed freezes, reductions and some have actually waived the collection of levies in order to restore an industry which has been debilitated. Residential construction is a proven job generator and is a net gain for municipalities. New development pays its own way and broadens the tax base. Our industry welcomes the opportunity to retake our position as one of the leading economic forces. '913 With the cooperation of public agencies, we will be able to create new jobs and new wealth for our communities We therefore urge you to consider not merely freezing the quantum but actually reducing the Development Charge in order to allow the residential construction industry to regain its footing and provide assistance to today's consumer who is seeing the Canadian Dream of home ownership slowly slip away. We would be pleased to meet with your representatives to discuss this crucial matter further. cc: Mayor Diane Hamre F \STEPHEN \DOCS \ODHBA \0907LEV2 SAM Sincerely, Oshawa -D=er Lciation Home Bui Stephen Kassinger President CLERK ACK BY F�IF Page 2 514