HomeMy WebLinkAboutFND-019-13 CiarhWn REPORT
FINANCE DEPARTMENT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
Date: December 9, 2013 Resolution#: � � By-law#:
Report#: FND-019-13 File#:
Subject: DEVELOPMENT CHARGES ACT CONSULTATIONS
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-019-13 be received;
2. THAT Attachment "C" be endorsed as the Municipality of Clarington's comments
with respect to the Ministry of Municipal Affairs and Housing consultations on the
Development Charges Act, 1997, parkland dedication and Section 37 of the
Planning Act density bonusing;
3. THAT the Province of Ontario be requested to remove Section 5(1), paragraph 8
of the Development Charges Act, the step in "Determination of development
charges" that requires municipalities to reduce their capital costs by 10%;
4. THAT the Province of Ontario be requested to update Section 5(1), paragraph 4,
which provides that the service levels development charges are based on is an
average service level for the previous ten years, with more permissive language
whereby municipalities may apply development charges in ways that best suit
their local growth-related needs and priorities;
5. THAT the Province of Ontario be requested to eliminate Section 2(4), "Ineligible
services," so that all services are eligible for development charges;
6. THAT the the legislation be clearly structured to permit the gross population to be
used in determining the allowable funding envelopes for development charges
calculations;
7. THAT the Development Charges Act be structured to promote the
implementation of the Growth Plan for the Greater Golden Horseshoe,
specifically to facilitate improved transit infrastructure across the entire Greater
Golden Horseshoe, to encourage intensification and to minimize future
expansions of the urban boundary;
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T 905-623-3379
REPORT NO.: FND-019-13 PAGE 2
8. THAT no changes be made to the cash-in-lieu of parkland provisions of the
Planning Act; and
9. THAT a copy of this Report, including Attachment "C" be copied to the
Association of Municipalities of Ontario, Municipal Finance Officers Association,
and the Ministry of Municipal Affairs and Housing.
Submitted by: f� Reviewed by: r
Nancy ylor, BBA,CPA,CA, Franklin Wu,
Director of Finance/Treasurer Chief Administrative Officer
NT/hjl
REPORT NO.: FND-019-13 PAGE 3
1. BACKGROUND
1 .1 On August 20, 2013, a review of the municipal development financing regime was
announced. It was to include the Development Charges Act, 1997 (DC Act), and
the density bonusing and parkland dedication provisions in the Planning Act. On
October 24t", the Ministry of Municipal Affairs and Housing issued a press release
(Attachment "A") and the development charge consultation document (Attachment
"B"), launching the consultation process to review the municipal planning process
and development financing regime.
1.2 On October 29, 2013 an email went out from MMAH inviting all treasurers to
indicate their interest in attending a consultation. Clarington staff participated in a
consultation interactive webinar on Friday, November 22nd. The webinar was
recorded by MMAH staff so the comments made by Clarington staff in the webinar
will be included as input in the Province's consultation process.
1.3 January 10, 2014 is the last day to submit evidence-based concerns and ideas for
improving the legislation to MMAH. Clarington was specifically requested to
submit written comments based on our participation in the webinar. This report
represents staff's recommendations to Council for the Municipality of Clarington's
comments to the DC Act consultations by the Province of Ontario.
2 CONTEXT FOR CHANGE
2.1 AMO, in every provincial budget submission since 2008, has called for new
Development Charges Act legislation. While the Province has clearly indicated
that the Minister is not looking at radical changes to the DC Act, this is a significant
opportunity to express municipal concerns with respect to the existing legislation
and call for reforms to the DC Act in order to address key concerns.
2.2 AMO has issued four key messages and considerations:
• Growth must pay for growth. Development charges are important
to ensuring tax equity among property taxpayers;
• Discounted development charges can drive up property taxes for all
residents;
• Delaying infrastructure investments does not eliminate the problem,
but can exasperate it; and
• If we devalue the public services which support our homes we
shortchange our communities and their long term future.
2.3 In 2007, provincial-municipal research and a resulting report identified specific
action. "Four priority areas appear to be most inconsistent with the `growth pays
REPORT NO.: FND-019-13 PAGE 4
for growth' principle." The four areas are ineligible services, the mandatory 10%
discount for "soft" services, the 10 year historic average service level cap and the
treatment of grants and subsidies. Despite a comprehensive review, no legislative
changes were made.
2.4 For the past number of months the Building and Land Development Industry
through BILD, has been undertaking an aggressive public campaign for reform to
development charges and parkland dedication legislation with a view to reform of
applicable legislation reducing cost implications to new growth and/or the
development community. This will likely have a negative impact upon
municipalities financial capacity. They will also be participating in the MMAH
consultation process.
2.5 Metrolinx, in its Big Move transit proposals for the GTHA, is looking for enhanced
development charges funding.
2.6 Ontario's Environmental Commissioner released a report in September 2013 also
seeking reforms to the DC Act. "Public transit is treated inequitably, despite the
clear benefits it provides in addressing traffic congestion" and "statutory limitations
were specifically identified as a key barrier for municipalities wishing to enhance
their public transit system".
2.7 As Council is aware, the Municipality of Clarington's current DC by-law has been
under appeal since it was enacted in 2010. A full hearing is being scheduled for
the fall of 2014.
3 COMMON DEVELOPMENT CHARGES MISCONCEPTIONS
3.1 Before diving into specific issues, it is worthwhile to highlight some common
misconceptions regarding development charges in order to enhance our
understanding of the changes being requested. Municipal Finance Officers
Association has prepared a background paper on this topic and the bulk of the
information below comes from that backgrounder.
3.2 There is a belief that development charges are high because municipalities
provide services at `gold plated' service levels that were not provided to existing
residents. The Development Charges Act prevents gold plating in that the ten year
average service level cap depresses, not inflates, service levels. If `gold plating' is
suspected, a DC by-law can be appealed to the OMB. This is not the basis of the
appeal in Clarington. DC increases are generally driven by general cost
escalation, elimination of conditional grants for infrastructure and new provincial
regulations in some service areas. Particular to Clarington, the development
community supported an early update to the DC Background Study and By-law in
2008. A result of a Financial Impact Study in New Growth Areas, it became
obvious that the cost of works in the previous Background Study were outdated
REPORT NO.: FND-019-13 PAGE 5
and a barrier to proceeding with growth related works being requested by
developers to proceed.
3.3 A second common complaint is that residential development charges can increase
the price of some kinds of housing. Critics suggest that DC's make new homes
less affordable. The extent to which developers pass on DC's to new homes
depends greatly upon market factors. Many studies question the assumption that
the full DC is passed on to the purchaser as many factors influence the cost of
housing. Over time, DC's have remained a relatively stable percentage of housing
prices (6% to 9% depending upon location). There is a financial impact of not
levying DC's on other municipal tax and fee rates charged to all ratepayers.
3.4 Another common belief that has a little more traction is that non-residential DC's
can make municipalities less economically competitive. There is a lot of research
around how firms make locational and business expansion decisions. The key is
to consider the total cost of serviced land acquisition. Particularly in areas where
the land costs alone are lower, the combined cost of the DC's and land costs per
acre are not necessarily an impediment to development. There are a number of
studies that go further and suggest that current non-residential DC's are not a
barrier to economic development. The quality of services and infrastructure
appear to be much more significant locational factors. As an indicator, based on
municipal Financial Information Returns, many municipalities with comparatively
high non-residential charges issued many high value building permits. The
challenge in smaller municipalities is that large players in the overall provincial
market factor in DC's as a cost of business. However, smaller local developers do
not have the same financial capabilities and since they often already own their
location, they are not making tradeoffs between land costs and DC's and therefore
often struggle with the DC costs.
3.5 Finally, there is a belief held by some in the development community that some
growth related capital should be paid for through property taxes. They feel that
there are broad and indirect community benefits associated with people-related
services. Unfortunately, existing ratepayers already pay the operating,
maintenance and replacement costs for the first round of growth related capital,
the full costs of the municipal asset base, as well as existing restrictions under the
D CA.
4 COMMENTS
4.1 The Province has requested that submissions be structured as answers to 19
questions they have incorporated into their Development Charges in Ontario
Consultation Document (Attachment "B"). As a result, Attachment "C" -
Clarington's Comments to the Development Charges Act Consultations is attached
to this report and is in the format requested.
REPORT NO.: FND-019-13 PAGE 6
5 CONCURRENCE
This report has been reviewed by David Crome, Director of Planning who concurs
with the recommendations.
6 CONCLUSION
6.1 It is recommended that Council endorse the Attachment "C" as Clarington's
comments with respect to the current Development Charges Consultations being
undertaken by the Ministry of Municipal Affairs and Housing.
6.2 Based on the comments provided in Attachment "C", specific recommendations
around amendment to the current Development Charges Act are provided for
Council endorsement.
CONFORMITY WITH STRATEGIC PLAN
The recommendations contained in this report conform to the general intent of the
following priorities of the Strategic Plan:
x Promoting economic development
x Maintaining financial stability
Connecting Clarington
Promoting green initiatives
x Investing in infrastructure
Showcasing our community
Not in conformity with Strategic Plan
Staff Contact: Nancy Taylor, Director of Finance/Treasurer
Attachments:
Attachment `A" — Ministry of Municipal Affairs of Housing Press Release- Land Use
Planning and Development Charges Review
Attachment "B" - Development Charges in Ontario- Consultation Document, Fall 2013
Attachment "C" - Clarington's Comments to the Development Charges Act
Consultations
List of interested parties to be advised of Council's decision:
Development Charge Consultation, Ministry of Municipal Affairs and Housing
Matthew Wilson, Senior Advisor, Association of Municipalities of Ontario
Emily Harris, Municipal Finance Officers Association
Attachment "A" to FND-019-13
�r
Ontario
Ministry of Municipal Affairs and Housing
Land Use Planning and Development Charges Review
October 24, 2013 9:30 a.m.
Over the next several weeks, the Ontario government will be holding workshops across the
province.
The workshops will collect ideas from participants on making the land use planning and appeals
system and the development charges system more effective to ensure they support local and
provincial objectives while securing sustainable financing for new development. The goal is to
ensure the systems are predictable, transparent, cost-effective and responsive to the changing
needs of Ontario's communities.
Discussion papers on land use planning and development charges are available at
ontario.ca/landuseplanning, where interested individuals can also provide their feedback and
suggestions.
Feedback is being requested on:
• how to improve the province's land use planning system, including what can be
appealed to the Ontario Municipal Board (OMB)
• accountability and transparency measures for development charges and other tools that
exchange community benefits for increased density, such as parkland dedication and
section 37 benefits (i.e., community infrastructure investments).
Specific issues related to land use planning and development not within the scope of this review
are:
• eliminating or changing the OMB's operations, practices and procedures
• removing or restricting the provincial government's approval role and ability to intervene
in planning matters
• removing municipal flexibility in addressing local priorities
• changing the "growth pays for growth" principle of development charges
• education development charges and the development charges appeal system
• creating additional fees and/or taxes
• matters involving other legislation, unless minor housekeeping changes are needed.
Mike Maka Minister's Office Available Online
416-585-6842 Disponibie en FranCaIs
May Nazar Communications Branch
416-585-7066
11/25/13 Land Use Planning and Appeal and Dmelopment Charges Systems Reuew
fi Ministry of Municipal Affairs and Housing
'Ontario
ABOUT I NEWSROOM I JOB OPPORTUNITIES I CONTACT US
You are here > Home > Your Ministry > Land Use Planning > Land Use Planning and Appeal and Ievelopment_Charges
Systems Review
Land Use Planning and Appeal and Development Charges Systems
Review
.............................................................................................................................................................................................
..................................................................
The Government of Ontario is taking a look at the way cities and towns plan for development and how.
to help pay for it.
We want to ensure that the land use planning and appeal systems, and the development charges
system are predictable, transparent and cost effective.
The Ministry of Municipal Affairs and Housing is consulting from October 2013 to January 2014 across
the province with the public, municipalities and stakeholders on what changes to the systems are
needed.
Scope of the review
We want to hear your suggestions on:
i
• how we can improve the province's land use planning systems, including what can be appealed to
the Ontario Municipal Board (OMB)
• the Development Charges Act
• parkland dedication
• section 37 of the Planning Act, which enables a municipality to negotiate with a developer for
items such as affordable housing in exchange for permission for the developer to build in excess
of zoning limits
Please note that, while we are interested in hearing your views, at this time we are not considering
recommendations that would result in a complete overhaul of the Planning Act. More specifically, this
consultation will not discuss or consider:
® eliminating or changing the OMB's operations, practices and procedures
removing or restricting the provincial government's approval role and ability to intervene in
matters
removing municipal flexibility in addressing local priorities
changing the "growth pays for growth" principle of development charges
education development charges and the development charges appeal system
other fees and taxes and matters involving other legislation, unless housekeeping changes are
needed.
Comments on issues that are not the focus of the consultation will be shared with the ministries
responsible.
You are ,invited to share your comments and ideas by lanuarg 10, 2014.
wmw.mah.gov.on.ca/Page10355.aspx 1/2
11125/13 Land Use Planning and Appeal and De\,elopment Charges Syste m� Re\,iew
Select the system you wish to comment on for more information and to find out how to participate.
• Land Use Planning and Appeal System (Workshops)
• Development Charges System
vmw.mah.g ov.on.ca[Pag ei 0355.aspx 2/2
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Development Charges Act, 1997 Review Consultation Document
Ontario is reviewing its development charges system, which includes the Development Charges Act and
related municipal measures that levy costs on development (i.e. section 37 and parkland dedication
provisions of the Planning Act), to make sure it is predictable, transparent, cost-effective and responsive
to the changing needs of communities.
The Ministry of Municipal Affairs and Housing is consulting in the fall of 2013 with municipalities, the
building and development industry and other key stakeholders on what changes to the system are
needed.
This document is intended to help focus the discussion and identify potential targeted changes to the
current framework.
Development Charges Act, 1997
The Development ChaLges fact, 1997 lays out Ontario's regulatory and legislative framework which
municipalities must follow to levy development charges.
This legislation resulted from negotiations with municipalities and developers and is based on the core
principle that development charges are a primary tool in ensuring that "growth pays for growth".
Development Charges Act, 1997 Processes
To determine a development charge, a municipality must first do a background study. The background
study provides a detailed overview of a
municipality's anticipated growth, both Did you know?
residential and non-residential; the services 200 of Ontario's municipalities collect
needed to meet the demands of growth; and a development charges.
detailed account of the capital costs for each
infrastructure project needed to support the $1.3 D in development charge revenue was
growth. The growth-related capital costs collected in 2011.
identified in the study are then subject to
deductions and adjustments required by the Development charges accounted for 14 per
legislation. These include: cent of municipal tangible asset acquisition
• Identifying services ineligible for a financing in 2011.
development charge. The reason
some services are exempt from development charges is that they are considered "discretionary"
and not required for development to occur (e.g. entertainment and cultural facilities).
• Requiring a service level cap tied to a ten-year historical average. Capital costs for each
service must be reduced by the costs associated with a service level greater than a 10-year
historical average. This ensures new resident/business do not receive a service level greater than
that provided to current residents/businesses.
Development Charge Consultation Document Page 1 t/��Ontar
i
• Reducing capital costs by the amount of growth-related infrastructure that benefits existing
development. For example, installation of a new transit line needed to service growth becomes
part of the overall municipal system and the also benefits existing residents. Municipalities
must estimate the financial.impact of this benefit and reduce growth-related capital costs
accordingly.
• Reducing capital costs by an amount that reflects any excess capacity for a particular
service. Municipalities must account for uncommitted excess capacity for any municipal service
for which they levy a development charge. For example, if a municipality wants to construct a new
library they must examine if the current municipal library system is at capacity. If the system is not
at capacity, a deduction to growth-related capital costs for the new library must be made. An
exception is made if a municipal council indicates that excess capacity at the time it was created is
to be paid for by new development.
• Reducing capital costs by adjusting for grants, subsidies or other contributions. If a
municipality receives a grant, subsidy or other contribution for a municipal service for which a
development charge is being levied growth-related capital costs must be reduced to reflect the
grant, subsidy or other contribution. This attempts to prevent "double-dipping".
• Reducing capital costs for soft services (e.g. parkland development, transit, libraries) by 10
per cent. The legislation specifically identifies seven municipal services for which growth-related
capital costs are not subject to a 10% discount (i.e. water, wastewater, storm water, roads,
electrical services, police and fire). All other services are therefore subject to a 10% discount. This
measure was put in place so that a portion of growth-related costs is paid out of municipal general
revenues. The deductions and adjustments attempt to identify the capital cost that can be
attributed to the infrastructure needed to service growth and development. Therefore, revenue
municipalities raise through development charges will help ensure growth-related capital costs are
not borne by existing taxpayers.
While the legislation provides for deductions and adjustments, in some instances the Act does not specify
how these are determined by municipalities. For
example, municipalities must account for the impact of
Did you know?
growth-related infrastructure benefits on existing
development but the Act does not say how this impact is Bard services, such as roads,
to be calculated. water, sewer and waste water,
account for 67 per cent of all
Based on an analysis of current background studies for collection.
19 of the largest municipalities in Ontario (single and
lower tier) capital costs recovered from development greater Toronto Area
charges on average accounted for 44 per cent of gross municipalities collect 70 per cent
capital expenditure estimates for sef„ices that would be of all development charges in
eligible for development charges. At a regional level �Intar:o.
(Durham, Halton, York and Peel) development charges
recovered 63 per cent of gross capital expenditures (See Appendix Figure 1).
Development Charge Consultation Document Page 2
''Ontario
Eligible Services
The Development Charges Act, 1997 sets out specific services on which development charges cannot
be imposed to pay for growth-related capital costs. This is a
significant change from the Development Charges Act, 1989 which Did you know?
gave municipal councils the authority to pass by-laws imposing In 2011, 37 municipalities
charges on all forms of development to recover the net capital costs collected $74.21VI in
of services related to growth. transit development
charges; reserves stood
The scope of services funded under the Act was reduced by at $259.4M.
eliminating services which are not considered essential for new
development and which benefit the community more broadly. Without the 10 per cent
discount applied to
Municipalities have argued that a number of services that are transit development
currently ineligible, such as hospitals and waste management should charges, municipalities
be made eligible services for a development charge. Municipalities would have collected an
would also like to recover the full cost of new growth associated with additional $8.2M.
particular services that are currently subject to a discount, such as -
transit.
The collection of development charges for transit is subject to a 10 per cent discount along with services
such as parkland development, libraries, daycares, and recreational facilities. This broad category is
generally referred to as "soft services" as opposed to "hard" services, such as roads and water which are
not subject to the discount. The 10 per cent discount is seen as a way of ensuring that municipalities do
not "gold plate" services with development money above and beyond general municipal standards.
$30,000,000.00
$25,000,000.00
Transit Development Charge Collections 9 20-JD-
132011
Selected Municipalities 2010 and 2011 ji�i
$20,000,000.00
$15,000,000.00
$10,000,000.00
$5,000,000.00
$0.00 .— --- .®
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°��o °��O��ra \\�o� eee\SS\SSa�� ���a 4a�y\\ 4`�Q�a ()'C
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Development Charge Consultation Document Page 3 tl;��Ontario
Services for which a development charge is levied are also Did you know?
subject to the 10-year historical service average cap.
Municipalities and transit supporters have suggested that A number of recent reports (i.e.
transit levies be based on a peak or forward- looking Metrolinx Investment Strategy,
service average. This would potentially allow municipalities Environmental Commission of
to better co-ordinate transit infrastructure with planned Ontario and Environmental
growth. Defence) have advocated for
amendments to the Development
Charges Act, 1997, reflecting those
made for the Toronto-York Subway
Extension, for all transit projects in
Ontario.
Transparency and Accountability
Public input
Municipalities must pass a development charge by-law within one year of the completion of a background
study. Before passing the by-law, a municipality is required to hold at least one public meeting, making
both the by-law and background study publicly available at least two weeks before the meeting.
The content of a by-law may be appealed to the Ontario Municipal Board (OMB) within 40 days of
passing, after which the imposition of a specific development charge may be challenged within 90 days of
the charge payable date. The OMB has broad powers to change or cancel (repeal) a by-law or to make
the municipality do so. A number of appeals that are launched are settled between the parties involved
before the Board makes a decision. If the Board orders a change to the by-law, it is considered to have
come into force on the day that the by-law was passed. The municipality may then need to refund any
amounts owed to anyone who paid the higher charge, with interest, within 30 days of the decision.
Deserve Funds
Municipalities must establish an "obligatory" reserve fund for each service for which a development
charge is collected. The development charge funds must be spent on the infrastructure projects for
which they were collected. In 2011, municipalities collected $1.313 in development charges and had
$2.7B in obligatory reserves funds.
Most development charges are collected for non-discounted services with roads, water and wastewater
infrastructure accounting for the largest share.
Each year the treasurer of a municipality is required to submit a development charge statement to council
Development Charge Consultation Document Page 4
�r Wr io
and to the Minister of Municipal Affairs and Housing, providing a detailed account of activities for each
reserve fund. The statement must show the connection between the infrastructure project and the
reserve fund supporting it.
Despite the thoroughness of the development charge background study and the requirement to prepare
and submit an annual development charge reserve fund statement, questions have arisen as to whether
or not the funds collected are spent on projects for which they were intended.
Planning Act: Section 37 (Density Bonusing) and Parkland Dedication
The Planning Act allows municipalities to receive "benefits" from development in exchange for allowing
greater density(more compact form of development) and to require developers to contribute land for
parks or other recreational use.
Section 37 (Density Bonusing)
Section 37 (Density Bonusing) allows local municipal councils to authorize increases in the height and
density of development beyond the limits set out in their zoning by-law, provided they have enabling
official plan policies, in exchange for providing specified facilities, services or matters, such as the
Section 37 "Cash-in-lieu" Financial Compensation
$160,000 Secured, Received & Spent: Toronto, 2007=2011
c $140,000 $137,869
Out of the total 386 benefits received in
$120,000
- Toronto between 2007-2011, 179 were in kind
benefits and 207 were "cash-in-lieu".
$100,000
$80,000
$63,569
$60,000 —
$40,00'0
$20,000
$10,990. -
$0 -
i Financial Compensation Secured Received to Date Spent to Gate
Recreated from:Section 37:What'Benefits'And For Whom?,Aaron A.Moore(Institute of Municipal Finance and Governance)
provision of public art, or affordable housing or other matter provided on or in close proximity to the
Development Charge Consultation Document Page 5
,` Ontario
property being developed.
Municipalities often undertake planning exercises through extensive public consultation to identify how
their communities will grow, resulting in the adoption official plans to reflect their vision. The application of
section 37 (Density Bonusing) may be seen as departing from that approved community vision.
Consequently, the application of section 37 (Density Bonusing) has sometimes been characterized as
being ad hoc or unstructured. As well, questions have been raised about whether the payments are being
used for the intended purpose and whether the appropriate accountability and reporting measures are in
place.
Parkland Dedication
Municipalities have the authority to require that a developer give a portion of the development land to a
municipality for a park or other recreational purposes either at the plan of subdivision approval or consent
approval stage QPIanninq Act subsection 51,1 1 or as a condition of development or redevelopment
of land f Planning Act, section 42). Instead of giving over the land, the municipality may require the
developer to pay an amount of money equal to the value of the land that would have otherwise been
given. This is known as cash-in-lieu.
In addition, municipalities have the ability to require an alternative parkland dedication rate, which is
based on the principle that parkland dedicated should bear some relation to population and need. Under
subsection 42(3) of the Planning Act, an alternative parkland dedication rate of up to a maximum of 1
hectare per 300 dwelling units may be imposed. In order to use this, a municipality's official plan must
have specific policies dealing with the use of the alternative parkland dedication rate.
The alternative parkland dedication rate was enacted to correct an inequity because parkland
conveyances based on a percentage of lot area did not provide enough parkland for higher density
residential areas. The philosophy of setting an upper limit for the Alternative Rate enables municipalities
to set their own standards in relation to clearly demonstrated needs. These needs must be reflected in
the goals, objectives and policies of the official plan to avoid unjustified use of higher conveyance
standards.
Concerns have been identified that the alternative parkland dedication rate in the Planning Act acts as a
barrier to intensification and makes it more difficult to reach the intensification goals of the Provincial
Policy Statement, set out in the Growth Plan for the Greater Golden Horseshoe.
Overall, concerns have been raised that there is a need for more accountability and transparency with
section 37 (Density Bonusing) and parkland dedication.
Development Charge Consultation Document Page 6
t);:>Ontcaffrio
Voluntary Payments
Several municipalities require developers to make "voluntary payments" to help pay for infrastructure
costs over and above development charges. Municipalities get additional funding from the development
community to help finance capital projects so as to potentially reduce the impact of growth on tax rates
and the municipality's debt capacity limits.
Economic Growth
Many stakeholders view the use of development
charges as either a help or hindrance to economic Did you know?
growth in communities. Most of the discussion has
focused on housing affordability and the development based on information obtained
of transit, as mentioned above. from Will Dunning Inc. Economic
Research, 322,100 jobs and $17.1 13
The housing sector plays a significant role in economic in earnings resulted from the
growth in Ontario. This is a key sector that stimulates 76,742 housing starts in Ontario in
the economy through linkages with other sectors, and is 2012. In the same year, 25,416
a leading employer in the Province. A healthy housing Toronto housing starts created
sector can have positive economic and employment 89,000 jobs and resulted in $4.7 B
impacts in many other sectors. For example, new home in wages.
construction can relate to expenditures for building
materials, architectural services, construction crews and contractor services, in addition to other
additional costs such as landscaping improvements, new furniture and moving expenses. Incomes
generated from employment in this sector have a direct impact on consumer spending.
Housing Affordability
Since the Development Charges Act, 1997 was passed, development charges have risen steadily,
leading some people to suggest development charges are having a direct impact on rising housing
prices. Housing price increases can be due to several factors including (but not limited to) the general
health of the economy, income levels, availability of financing, interest rate levels, cost of construction,
material and land values.
For example, from 19508 to 2009 the composite Construction Price Index for seven census metropolitan
areas across Canada rose by 53.5 per cent. The index for Toronto has increased by 57.2 per cent and for
Ottawa by 52.6 per cent. Subsequently, increasing construction costs would be one factor leading to
Development Charge Consultation Document Page 7 q
rising development charge rates.
Analysis of development charges for Ontario's 30 largest municipalities shows rates, in some cases, have
risen substantially since 1997 (see Appendix Figure 3). Most of the municipalities experiencing larger
than average increases in development charges are also ones which have experienced high.levels of
growth.
Despite the increases, development charges as a percentage of the cost of a new home have remained
somewhat stable (5 per cent to 9 per cent) since the Act first came into force. (See Appendix Figure 4)
Non-residential Development Charges
The Act also allows municipalities to levy charges for non-residential development. The way in which
municipalities treat non-residential development charges may play a significant role in the attraction of
industrial, commercial and institutional development. Such development can act as a lever in informing
the location of employment/employers, residential neighbourhoods, transportation networks, and transit.
Some municipalities provide exemptions for particular types of non-residential development to address
job creation and growth in their municipality. For example, the Cities of Toronto and Kingston exempt
development charges for all industrial development and the Town of Kincardine waives the development
charges for all major office development.
Growth, intensification and the Development Charges Act, 1997
Over the last decade, two provincial plans have been released that promote the importance of
incorporating intensification in growth planning. The Provincial Policy Statement, integrates all provincial
ministries' land use interests and is applicable province-wide, states that there should be sufficient land
made available through intensification and redevelopment and, if necessary, designated growth areas, to
accommodate an appropriate range and mix of employment opportunities, housing and other land uses.
The Growth Plan for the Greater Golden Horseshoe, which was developed to better manage growth in
the Greater Golden Horseshoe through compact, complete communities, support for a strong economy,
efficient use of land and infrastructure, the protection of agricultural land and natural areas, seeks to
focus growth within intensification areas. Intensification areas include urban and intensification growth
centres, intensification corridors, major transit stations areas, .nfill/redevelopment/bro��,nfield sites and the
expansion or conversion of existing buildings and greyfields.
The regional transportation plan, The Sig Move: Transforming Transportation in the Greater Toronto and
Hamilton Area (GTHA), released by Metrolinx in 2008, is consistent with the implementation of these
Development Charge Consultation Document Page 8
OnLcano
provincial policies by helping to shape growth through
intensification. Did you know?
To steer growth and
Under the current Development Charges Act, 1997, encourage greater density, the
municipalities may apply development charges in ways that City of Ottawa'levies a lower
best suit their local growth-related needs and priorities. A development charge ($16,447
number of municipalities use local development charges as per Single Detached Unit) for
an incentive for directing land and building development
development within the inner
through reductions and exemptions of development charges boundary of the city's
in areas such as downtown cores, industrial and designated Greenbelt than
commercial areas and in transit nodes and corridors, where areas beyond the outer
higher-density growth is desired. boundary of the Greenbelt
Municipalities may also set area-rated development charges ($24,650 per Single Detached
that reflect the higher cost of infrastructure needed to service Unit) .
lands that are distantly located outside of higher density,
serviced areas. These charges reflect a localized need for development-related capital additions to
support anticipated development.
There is significant interest in using development charges more strategically by discounting development
charges where growth and development is preferred, while setting maximum payable charges in areas
outside of existing set-vice areas (e.g. greenfields).
Questions have been raised over whether this strategy is being fully utilized to achieve intensification in
areas such as transit, nodes and corridors. There is concern that levying development charges generally
halts growth in areas targeted for intensification and that waiving development charges in these areas
should be considered to stimulate development.
Development Charge Consultation Document Page 9
r n tar iv
ISSUES AND QUESTIONS TO DISCUSS
Developmeht ChamesProcess
1. Does the development charge methodology support the right level of investment in growth
related infrastructure?
2. Should the Development Charges Act, 1997 more clearly define how municipalities
determine the growth-related capital costs recoverable from development charges? For
example, should the Act explicitly define what is meant by benefit to existing development?
3. Is there enough rigour around the methodology by which municipalities calculate the
maximum allowable development charges?
4. The Development Charges Act, 1997 prevents municipalities from collecting development
charges for specific services, such as hospitals and tourism facilities. Is the current list of
ineligible services appropriate?
5. The Development Charges Act, 0997,-allows municipalities to collect 100% of growth-related
capital costs for specific services. All other eligible services are subject to a 10% discount.
Should the list of services subiect to a 10 % discount be re-examined?
6. Amendments to the Development Charges Act, 1997 provided Toronto and York Region an
exemption from the 10 year historical service level average and the 10% discount for
growth-related capital costs for the Toronto-York subway extension. Should the targeted
amendments enacted for the Toronto-York Subway Extension be applied to all transit
projects in Ontario or only high-order (e.g. subways, light rail) transit projects?
- e
7. Is the requirement to submit a detailed reserve fund statement sufficient to determine how
municipalities are spending reserves and whether the funds are being spent on the projects
for they were collected?
3. Should the development charge reserve funds statements be more broadly available to the
public, for e ple °e uiri g mar—s`,!atort posting �. a municipal website?
9. Should the repoeting requirements of the reserve funds be more prescriptive, if so, how?
Development Charge Consultation Document Page 10
3
0l� r In,
• I=1 Una: • • • • 0 - • • !� •
10.How cari Section 37 and parkland dedication processes be made more transparent and
accountable?
11.How can these tools be used to support the goals and objectives of the Provincial Policy
Statement and the Growth Plan for the Greater Golden Horseshoe?
12.What role do voluntary payments outside of the Development Charges Act, 1997 play in
developing complete communities?
13.Should municipalities have to identify and report on voluntary payments received from
developers?
U.Should voluntary payments be reported in the annual reserve fund statement, which
municipalities are required to submit to the Ministry of Municipal Affairs and Housing?
15.How can the impacts of development charges on housing affordability be mitigated in the
future?
16.How can development charges better support economic growth and job creation in Ontario?
17.How can the Development Charges Act, 1997 better support enhanced intensification and
densities to meet both local and provincial objectives?
13.How prescriptive should the framework be in mandating tools life area-rating and marginal
cost pricing?
19.What is the best way to offset the develorinient charge incentives related to densities?
Development Charge Consultation Document Page 11 �r��
Ontario
SUBMIT YOUR COMMENTS AND IDEAS
You are invited to share your comments and ideas by January 10, 2014. You can:
Share your views at a meeting.
'•''. Submit your comments through an online version of this guide at
tW www.ontario.callanduseplanning
•.+ ,J it
Environmental Bill of Rights Registry Number: 012-0281
www.ebr.ciov.on.cal
. Email a submission to DCAconsultation(Dontario.ca
"" • Write to us at:
Development Charge Consultation
Ministry of Municipal Affairs and Housing
Municipal Finance Policy Branch
777 Bay Street, 13`" Floor, Toronto, ON M5G 2E5
Preparing an Email or Mail Submission
Please structure your submission as answers to the question listed above or submit responses in each of the
theme areas.
Personal Information
Personal information you provide is collected under the authority of the Ministry of Municipal Affairs and Housing
Act.
Development Charge Consultation Document Page 12 r�
I
NOTES
Development Charge Consultation Document ( Page 13 rN�
t� Ontario
Appendix
Figure 1
Potential Development Charges Recoverable as a Percentage of Estimated Gross
Capital Costs
o a
Brampton* $ 1,678,874,000.00 $' 112;475;000:00 .$ 1,566,399,000.00 7% " 93%
Clarington $ 254,239,710.00 $ 20,571,670.00 $ 201,312,480.00 8% 79%
Oakville* $ 823,629,200.00 $. 107,088,800.00. .$. 647;754,800.00 139/. 79%
Ajax $ 179,644,683.00 $ 14,802,562.00 $ 132,178,950.00 851. 74%
Vaughan* $ 643,512,000.00 $ 36;829;000.00 .$ 460,066;400.00 6% 71%
Mississauga $ 989,730,700.00 $ 30,593,000.00 $ 700,515,500.00 3% 71%
Whitby' $ 440,855,969.00 .$ :.:80,927;290:00. $ 272,745,844.00 18% 62%
Kitchener $ 390,672,800.00 $ 89,942,800.00 $ 228,426,500.00 23% 58%
Hamilton .. $ 1,781,878,533.00 $ 631,S16,015.60 $ 1,033,155,431.00 35% 58%
London $ 1,729,685,700.00 $ 227,041,600.00 $ 967,697,900.00 13% 579'.
Markham - $ :.:..1,494,277,927:00 $ 70,414,681.00 $ 818,6M,146:00
Oshawa $ 193,128,184.00 $ 11,511,939.00 $ 104,370,560.00 6% 54%
Guelph $ 404,908,107.00 $ 95,688,376.00 $ 211,504,251.00 24% 52%
Kingston $ 190,705,912.00 $ 42,827,072.00 $ 79,647,807.00 22% 42%
Greater Sudbury*. $ 221,107300.00 $. 85,916,000.00 $: 9%886,500.00 39% <.41%
Burlington $ 229,077,092.00 $ 45,917,472.00 $ 90,150,635.00 20•% 39%
Barrie $ 748,574,393.00 $ 128,057,074.00 $ 287,251,520.00 17% 38%
Pickering $ 303,321,897.00 $ 84,875,990.00 $ 55,980,222.00 28% 18%
Toronto $ 8,728,196,882.00 $ 2,469,202,375.00 $ 1,560,139,984.00. 28% 18%
Total $ 21,426,020,989.00 $ 4,386,198,716.00 $ 9,508,786,430.00 20•%o 445,66
Peel Reion $ 5,409,160,201.00 $ 347,247,987.00 $ 4,422,521,625.00 6% 82%
Halton Region $ 4,393,600,000.00 $ 598,600,000.00 $ 3,576,100,000.00 1451. - 81%
Durham Region $ 3,941,500,000.00 $ 908,900,000.00 $ 2,505,300,000.00 23% 64%
York Region $ 14,368,403,527.00 $ 1,572,260,757.00 $ 7;134,128,076.00 11% 50•�
Total $ 28,112,663,728.00 $ 3,427,008,744.00 $ 17,638,049,701.00 12% 63%
Total ST/LT/Regions $ 49,538,684,717.00 $ 7,813,207,460.00 $ 27,146,836,131.00 16%1 55%
Note: Based on information contained in current municipal background studies. *Net of Subsidies. **Benefit to Existing Development
To determine a development charge,a municipality must first do a background study. The background study provides a detailed overview
of a municipality's anticipated growth,both residential and non-residential;the services needed to meet the demands of growth;and a
detailed account of the capital costs for each infrastructure project needed to support the growth.
The chart is designed to show the how much revenue municipalities recover from development charges based on the infrastructure capital
costs related for municipal services considered in the background study. Using Kingston as an example,the background study identified
capital costs of$190.7 M. After making the deductions and adjustments required by the legislation Kingston was able to recover$79.6 M
from development charges representing 42%of all capital costs identified in the background study. Benefit to Existing Development
(B.E.D.)is highlighted to show the deduction municipalities must make to account for the benefit growth-related infrastructure provides to
existing residents.
Source: Based on information contained in current municipal background studies.
Development Charge Consultation Document Page 14
onto-1 o
Figure 2
Determining Recoverable Development Charge Costs($ Millions)
Ezpeliditure SerUCe Leal Capacity - Discount NefA %
Toronto. $8,728.20 $910.70 $2,469.20 $762.80 $2,956.10 $69.20 $1,560.10 18%
Uxbridge $26,00 $1120 - $3 00 $0,34 $11,40 44%°
Region of Waterloo $4,393.0 $10.10 . $598.60 $203.90 $4,80 $3,576.2 81%
i
. ...._.a._.... ......... ...... .. ...._...... .!._ d�..._..... __.__........ .. ._....._. .... ............ .....__._._..
Expenditure Service Le!41 Capacity Discount . Net.
Toronto $1,485.00 $531.10 $120.50 $27.20 $475.80 $33.10 $297,60 20%
Region ofWatedoo $100,30 $11,80 $66,20 $220 $20.10 20%
To determine a development charge,a municipality must first do a background study. The background study provides a detailed
overview of a municipality's anticipated growth, both residential and non-residential; the services needed to meet the demands of growth;
and a detailed account of the capital costs for each infrastructure project needed to support the growth.
The chart above indicates the various deductions and adjustments municipalities must make to the capital costs for each infrastructure
project needed to support the growth. Using Uxbridge as an example,the municipality is able to collect 44%of the capital costs identified
in the background study from development charges.
Source: Based on information contained in current municipal background studies for Toronto, Uxbridge and Region of Waterloo
Development Charge Consultation Document Page 15
tP"Ontario
Figure 3
Historical Perspectives of Municipal Development Charges
ElamF.
Greater.Sudbury $3,079.00 $14,829.00 505%
Imississauga $3,333.53 $6,442.56 $16,887.11 407%
Toronto $4;370.00 $12,366.00 $19,412.00 344%
London $5,152.00 $13,714.00 $17,009.00 230%
Brantford $4;763.00 $9,305.00 $15,017:00 215%
Markham $7,170.00 $10,174.00 $22,357.00 212%
Cambridge ;; $4,322.04 $7,322.20 $11,788.00 1730
Kingston $5,608.00 $9,490.00 $15,138.00 170%
Oakville T $9620.00 $12;044.00 $25;530.00 165%
Barrie $13,728.00 $26,060.00 $30,707.00 124%
Guelph $11,721.00 $24,05100 :.$24,208.00 107%
Waterloo City $S,750.001 $13,372.00 $11,753.00 104%
Windsor $9,006.00 $15,787:00 $17,792.00 98%
Clarington $8,377.00 $14,623.00 $15,518.00 85%
Brampton $14,029.59 $24,415.09 $25,518.97 82%
Richmonnd Hill $7,002.00 $11,654.00 $12,152.00 74%
Kitchener(Suburban) $5, 4.00 $9,887.00 $9,662.00 71%
63
Vaughan $7,922.00 $12,284.00 $12,715.00 61%
Whitby $7,722.00 $10,208.00 $12,058.00 56%
Ajax $7,709.00 $11,631.00 $12,029.00 56%
Ottawa(inside Greenbelt). $10,566.00 $15,446.00 $16,447.00 56%
Hamilton $7,887.00 $10,014.00 $10,445.00 32%
Pickering $7,813,001 $9,694.00 $10,114.00 29%
Oshawa $6,232.001 $6,920.00 $7,256.00 16%
Burlington $7,075.00 $7,538.0ol $8,018.00 . 13%
Chatham-Kent $1,013.00 $4,640.001 NA
Average;°�� ,.; N:: �} ;ry• .$4�46,Q7 �,, ,��... ... .. $$,98660...,..`;° $,�.6,55464 . -;`
139'
Rates are those for Single Detached units.
When the current legislation came into force municipalities that wished to levy a development charge were required to enact a development
charge by-law.The initial by-laws are referred to as first generation by-laws,generally enacted in 1998 to 2000 period.
The legislation requires municipalities to undertake a new background study at least once every five years and enact a new by-law based on
the new study. In the 2003 to 2005 period municipalities began the process of preparing new background studies and new by-laws. These
by-laws are referred to as second-generation. Third-generation by-laws represent the renewal process municipalities undertook in the 2008
to 2010 period.
Source: Based on information contained in current municipal background studies for Toronto, Uxbridge and Region of Waterloo
Development Charge Consultation Document Page 16 �
f',1---"'r)nta"lo
I
Figure 4
Development Charges and Cost of New
Housing
60,000 ®1996
01999
❑2004 8%
50,000 M2007
m2010
9%
m 40,000
m
0 7%
� 9%
rn
`m
cL.t 30,000 6% 6%
c 5% 6� 8%
6% 8� 5� 6%
n 6% 115%20,000 J5 .5% 7%'/ 6/ 6/5/ 1°/a
5% 1%
10,000
1%
0 —
Ottawa Durham Waterloo York(Vaughan) Peel Halton Toronto
(Nepean) (Whitby) (Cambridge) (Missisauga) (Oakville)
Note:Toronto data for 1996 and 1999 was not available.
The chart indicates the impact development charge have on the cost of new housing. For example,for Mississauga development charges
have historically comprised 5 to 7 percent of the cost of a new house.
Source: Information for 1996, 1999,2004 was compiled for the Ministry by CN Watson and Associates. Data for 2007 and 2010 was
prepared by the Ministry of Municipal Affairs and Housing based on municipal development charge by-laws and housing price data from
CMHC.
Development Charge Consultation Document Page 17 t/��Ontario
ATTACHMENT C TO FND-019-13
Clarington 's Comments to the
Development Charges Act
Consultations
ISSUES AND QUESTIONS TO DISCUSS
The Development Charges Process
1. Does the development charge methodology support the right level of
investment in growth-related infrastructure?
Clarington holds the position that there should be maximum flexibility within the Act for
local Councils to set DC's that recover the cost of growth in their municipalities and that
respect their local intentions regarding economic development. Clearly following from
this is that the current development charge methodology does not support the needed
level of investment in growth-related infrastructure. Specific references to this will be
included in the specific questions below.
One area not covered in the questions below pertains to a methodology often referred
to as the gross methodology. Of particular issue to Clarington, with a large geographic
size and multiple communities that are geographically distant, the legislation should be
clearly structured to permit the gross population to be used in determining the allowable
funding envelopes for development charges calculations. The notion of capacity being
"freed up" in older neighbourhoods in population decline does not apply to a
geographically diverse municipality and in effect, creates an additional funding cap for
soft services. This is an issue currently under appeal in Clarington. Clarington has
used the `gross' population increase in new housing instead of the net population
increase to calculate the maximum allowable capital cost. Growth within Clarington is
largely focused on three distinct urban areas, which are separated by some
considerable distances. The difference in the charge per single dwelling unit between
the gross method and the net method is for the soft services is approximately $1,200
per unit.
In the same vein, the service level for neighbourhood parks measured at a
neighbourhood level is lower for older neighbourhoods than the overall municipal
average. We simply didn't keep much green space in those days as individual property
sizes were typically much larger. As a result, any decline in population only moves that
service level for that older neighbourhood closer to what other neighbourhoods enjoy.
The DC Act states that when Council expresses a clear intention that excess capacity
would be paid for by development charges and is therefore is not uncommitted, this is
how Clarington has treated its indoor recreation facilities. The net methodology would
force some of this to be uncommitted excess capacity. In that case, how do they get
removed from the excess capacity argument if not through some numerical mechanism
like an alternative methodology?
There are obvious examples such as fire response times and public works that are
clearly linked to geography. Purchase of operations vehicles like snow clearing are tied
to lane kilometers in order to comply with minimum maintenance standards under the
Municipal Act, 2001. That would link to households rather than population because,
again, it doesn't matter how many people are in a house it is about the kilometers of
roads constructed to accommodate the number of households constructed. Storm
water management equipment would also more relate to land area and drainage which
results in number of households being a better proxy as population is irrevelant. Also
things like snow storage requirements to address salt contamination is more about lane
kilometers than people so links to geography. Similarly erosion protection works are
triggered by tracts of land being developed and resulting stormwater implications.
In answer to this question, the above examples support both the position that the
existing methodology does not support the appropriate required level of investment in
growth related infrastructure particularly when you consider the interpretation of the
existing methodology by the development community and supports the notion of an
alternative methodology to the net population methodology. The DC Act should clearly
allow for maximum flexibility in Municipal decision making around methodology.
2. Should the Development Charges Act, 1997 more clearly define how
municipalities determine the growth-related capital costs recoverable
from development charges? For example, should the Act explicitly
define what is meant by benefit to existing development?
Clarington, for roads and related services, uses a roadside environment methodology,
in conjunction with asset maintenance/management plans to determine benefit to
existing development. On the soft services side, Clarington generally considers things
such as replacement portions to determine this. Specific to this category, there does
not need to be specific definitions in the Act. With respect to the general question, costs
can generally be relatively easy to establish based upon recent market costs for each
particular service category.
3. Is there enough rigour around the methodology by which
municipalities calculate the maximum allowable development
charges?
Clarington's position on this matter is covered in question #1 as well as the following
specific questions.
Eligible Services
4. The Development Charges Act, 1997 prevents municipalities from
collecting development charges for specific services, such as
hospitals and tourism facilities. Is the current list of ineligible
services appropriate?
The current list of ineligible services is not sufficient as it restricts Council's ability to
determine its priorities for the services to be provided. As referenced above, Clarington
holds the position that there should be maximum flexibility within the Act for local
Councils to set DC's that recover the cost of growth in their municipalities and that
respect their local intentions regarding economic development.
Elimination of ineligible services would affect Clarington in the areas of park land
acquisition, municipal administration buildings, and computers. Particular to Clarington,
expansion to municipal administration buildings is only necessary as a result of space
requirements to accommodate growth and will be facing us in the coming years. Land
acquisition for parks is also currently funded from tax levy beyond the Planning Act
parkland dedication requirements. As Clarington is large geographically and has
multiple waterfront communities, there is a significant demand for improved access to
the Lake Ontario waterfront. This need cannot be met with current funding capabilities
and are not located within new subdivision areas but are being planned to provide
services to both the existing and future population. The parkland dedication standards
really only address local parks and not community or district parks.
5. The Development Charges Act, 1997, allows municipalities to collect
100% of growth-related capital costs for specific services. All other
eligible services are subject to a 10% discount. Should the list of
services subject to a 10 % discount be re-examined?
The list of services subject to a 10% discount should be re-examined. The Province''s
consultation paper specifically notes that "The 10 per cent discount is seen as a way of
ensuring that municipalities do not "gold plate" services with development money above
and beyond general municipal standards". The Development Charges Act 1997
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prevents gold plating in that the ten year average service level cap depresses, not
inflates, service levels so this issue is already addressed within the legislation.
Removing the mandatory 10% discount would have an immediate and lasting impact
upon Clarington. As an example, currently our indoor recreation development charges
are insufficient to meet debt repayment obligations, made worse because 10% is
automatically deducted from eligibility for charge. There is currently a deficit in this
development charges reserve fund in excess of $2 million due primarily to poor
economic conditions affecting projected growth in new units. An arbitrary discount
being applied when service level caps are also applied has a multiplier effect on all
discounted services. If a DC Background Study and By-law is seen to have a "gold
plated" service, than this can be appealed to the OMB.
6. Amendments to the Development Charges Act, 1997 provided Toronto
and York Region an exemption from the 10 year historical service level
average and the 10% discount for growth-related capital costs for the
Toronto-York subway extension. Should the targeted amendments
enacted for the Toronto-York Subway Extension be applied to all
transit projects in Ontario or only high-order (e.g. subways, light rail)
transit projects?
Clarington does not have responsibility for transit. This service category is addressed
through the upper tier, The Regional Municipality of Durham. However, Clarington is
subject to the provisions of the Growth Plan for the Greater Golden Horseshoe (Growth
Plan). Under the Growth Plan, the Municipality is required:
• To have 40% of all residential development occurring annually after 2015 within
the build boundary on a regional basis. Clarington's share of Durham's target
amounts to 32% annually.
• To build a "transit-supportive, pedestrian-friendly environment in designated
Greenfield Areas."
We can only implement the Growth Plan with transit. In Clarington's case, this does not
include subways and light rail. To make the paradym shift in the suburban communities
of the GTA, transit cannot be limited to higher order transit and cannot be subject to the
10 year historic service cap.
With the general issue of the 10 year historic service level cap, it is Clarington's position
that this is too rigourous a methodology. There needs to be a revision to how the
service level cap is determined. Currently it is based on the 10 year historic service
level. This means that DC's are only paying for capital costs on a historic basis, not on
the current basis. It also "freezes" service level determinations based on older
preferences of the community rather than modernizing the types of services provided.
Citizen demands change over time as well as the method of providing some services.
The 10 year historic service level cap does not take any of this into account. It also
does not provide for new and emerging service levels. The municipality is responsible
to provide new service levels to existing citizens but should be able to effectively fund
the new service levels for new residents through a development charges mechanism.
Reserve Funds
7. Is the requirement to submit a detailed reserve fund statement
sufficient to determine how municipalities are spending reserves and
whether the funds are being spent on the projects for they were
collected?
This requirement is sufficient. Clarington provides a quite detailed statement annually
that is approved by Council and publicly available through the Municipality's website or
upon request. Clarington also includes commitments in this report in order that Council
has a clear picture of the status of the reserve funds for future decision making
purposes.
8. Should the development charge reserve funds statements be more
broadly available to the public, for example, requiring mandatory
posting on a municipal website?
All reports to Council are automatically available through the Municipality's website.
9. Should the reporting requirements of the reserve funds be more
prescriptive, if so, how?
See the comments under question #7.
Section 37 (Density Bonusing) and Parkland Dedication Questions
10. How can Section 37 and parkland dedication processes be made more
transparent and accountable?
As referenced in the Province's consultation document, Section 37 allows local
municipal councils to authorize increases in the height and density of development
beyond the limits set out in their zoning by-law in order for a public benefit in terms of
facilities or services provided on or in close proximity to the property being developed,
provided that they have enabling official plan policies. The Clarington Official Plan has
provisions for Section 37 bonusing however, given the economics of building in this part
of the GTA, there is no demand for increased densities.
Parkland dedication processes are relatively straightforward in Clarington. Where parks
are not required, cash-in-lieu of parkland is based on appraisals or recent purchase
prices for individual properties.
Clarington has a reduced parkland dedication standard for residential development
within Town Centres. To date, it has not had any significant impact to incent
development. Most of our higher density residential development has occurred outside
of Town Centres.
Reporting on incentives that reduce a charge or fee is difficult because it is lost revenue
rather than additional revenue that can be picked up in financial statements. An
additional information schedule to the Municipal Information Returns may be one option
in providing a reporting mechanism.
11. How can these tools be used to support the goals and objectives of
the Provincial Policy Statement and the Growth Plan for the Greater
Golden Horseshoe?
As mentioned above, Clarington has a reduced parkland dedication standard within
Town Centres to promote intensification and vibrant downtown cores. It should be
voluntary, not mandatory, to consider reducing standards as it is a decision that needs
to be made taking into consideration local circumstances.
Voluntary Payments Questions
12. What role do voluntary payments outside of the Development Charges
Act, 1997 play in developing complete communities?
Voluntary payments should be an acceptable tool if parties are looking to resolve
specific concerns or problems. A form of this has occasionally been used in Clarington
whereby park development has been undertaken at the developers cost (beyond the
local service parks) or some road improvements in circumstances where the developer
wants to proceed and is deemed premature. In this case, the existing development
charges are committed to developments in the next five year window. This is
addressed through draft plans of subdivision.
To prohibit municipalities from receiving voluntary payments creates the potential for
OMB battles as developers compete for the use of the limited development charge
dollars for their projects. We have had experience where developers have received a
credit on their development charges for upfronting certain services but this has led to a
distortion in municipal infrastructure planning since these funds were not available for
other projects/developments in progress. This is particularly difficult in a multi-urban
area municipality, such as Clarington.
13. Should municipalities have to identify and report on voluntary
payments received from developers?
In Clarington's case, the transaction is recorded through a donated asset as part of our
capital asset reporting through the Financial Information Return.
14. Should voluntary payments be reported in the annual reserve fund
statement, which municipalities are required to submit to the Ministry
of Municipal Affairs and Housing?
In circumstances where voluntary payments scenarios are implemented, this is not part
of the development charges regime authorized through the DC Background Study and
By-law and therefore should be addressed through a separate reporting mechanism.
These are authorized by Council and therefore are undertaken through a public
reporting process.
Growth and Housing Affordability Questions
15. How can the impacts of development charges on housing affordability
be mitigated in the future?
There are many differences of opinion in this category. Over time, DC's have remained
a relatively stable percentage of housing prices (6% to 9% depending upon location).
There is a financial impact of not levying DC's on other municipal tax and fee rates
charged to all ratepayers. The DC rates should be left to Municipal Council decision
making flexibility in determining appropriate rates and there should be maximum
flexibility within the Act for local Councils to set DC's that recover the cost of growth in
their municipalities and that respect their local intentions regarding economic
development.
In Clarington's case, development charges partial and full exemptions are provided for
apartment units beginning with the fourth floor. Any units of the sixth floor and above do
not pay development charges. In the past four years, since this incentive was
implemented, we have not had one project qualify for this.
Even for ground-related units, the demand is for the largest of the lot sizes and we have
difficulty maintaining a supply of starter homes.
16. How can development charges better support economic growth and
job creation in Ontario?
This question seems to be pinning everything on development charges. Municipalities
need a tool kit with this being one component of a complete financing plan. Clarington
is investing funds outside the DC Act to open capacity for serviced land, but is restricted
in how broad it can go based on capital requirement needs under Asset Management
planning. A better mechanism to support job creation and economic growth in Ontario
should be addressed through stable and predictable funding from upper levels of
government.
High Density Growth Objectives
17. How can the Development Charges Act, 1997 better support enhanced
intensification and densities to meet both local and provincial
objectives?
The limitation for enhancing intensification and densities stems from the lack of
financing capacity by the municipality for the costs of the intensification incentives. If a
municipality has to fund the shortfall in DC collections based on the cost of the
incentives, the tax base has to be prepared to pick up this cost. Current initiatives
around long term asset management strategies will consume financial resources of
municipalities without long term stable funding from upper level governments. The
Federal Gas Tax funds are a greatly appreciated financial component to asset
rehabilitation but is not sufficient to meet the needs.
A second limitation is the decisions at the Ontario Municipal Board that are counter to
the provincial objectives. This is beyond the scope of the current consultations.
18. How prescriptive should the framework be in mandating tools like
area-rating and marginal cost pricing?
Again, there should be maximum flexibility within the Act for local Councils to set DC's
that recover the cost of growth in their municipalities and that respect their local
intentions regarding economic development. Prescribing mandatory area-rating in a
municipality with Clarington's size and geographic mix would be very restrictive. It
would be very difficult to collect sufficient funds from an area specific basis to proceed
with significant projects. Growth within Clarington is largely focused on three distinct
urban areas, which are separated by some considerable distances. Services are
demanded by residents within each of their respective urban areas, but there is not
sufficient growth in each area to proceed independently for larger projects.
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19. What is the best way to offset the development charge incentives
related to densities?
As Clarington is on the eastern most edge of the Greater Toronto Area, the issue faced
with respect to the densities primarily relates to the lack of market interest. Clarington
has a number of incentives within its existing development charges by-law such as
credits/exemptions for conversions, exemptions for certain types of industries, and
exemptions that escalate for multi-story development within defined intensification
areas. The development community has been unable to take advantage of these
opportunities due to lack of market interest.
Intensification projects are always more costly than Greenfield development. There are
costs to land assembly, contamination clean-up, risk of appeals, deficient infrastructure
for intensification projects.
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