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Home My WebLink AboutTR-62-97 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON ill III 14X!1iI"1QCIiIEH 1314 11 REPORT REVISED Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File# `t) ? I Date: June 16, 1997 Res. # fir, ` 321-Cl ) By-Law# Report#: — 62 -7 File#: Subject: FINANCING OF GARNET B. RICKARD RECREATION COMPLEX - TWIN PAD Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: i 1. THAT Report TR-62-97 be received in conjunction with Report TR-56-97 and Report CS-06-97; 2. THAT the estimated project cost of $3.5 million for the Garnet B. Rickard Recreation Complex Twin Pad be financed 90% from the Development Charges - Community Services Reserve Fund per the Development Charges Policy Report and 10% from the Arena Reserve Fund ; 3. THAT Staff continue to monitor the progress of the proposed Bill 98 - the Development Charges Act, 1997 and regulations and report back should the final legislation require changes to the financing proposed; i 4. THAT Staff be authorized to transfer uncommitted funds available from the Civic Administration Development Charges Reserve Fund and the Public Works Development Charges Reserve Fund to the Community Services Development Charges Reserve Fund and the Library Development Charges Reserve Fund to cover potential uncollected levies for the Courtice Community Complex core and library components and the Garnet B. Rickard Recreation Complex twin pad up to and during the transition period provided by Bill 98; 5. THAT once the Courtice Community Complex has been completed and interim financing repaid to the applicable reserve fund, that Staff be authorized to transfer any remaining funds in the Courtice Community Complex Reserve Fund (separate from the Development Charges Reserve Fund) to the Municipal Capital Works Reserve Fund; i APIfl DE CYC C AP ER RECYCLE THIS 8 PRINTED ON RECYCLED PAPER i ---�/ X TR-62-97 Page - 2 - 6. THAT once start-up funds have been repaid, that Staff be authorized to use any fundraising proceeds to repay interim financing provide by various reserve funds (including the Municipal Capital Works Reserve Fund), for the library component of the Courtice Community Complex; and 7. THAT the Courtice Community Complex Fundraising Committee be requested to provide Council with a status update and anticipated timing of the transfer of funds raised. BACKGROUND AND COMMENT: 1.0 Original Cost - Twin Pad 1.1 As noted in TR-56-97, this project was approved for initial investigation and design through the 1997 budget deliberations. Initial funding was proposed from the Development Charges Reserve Fund, the Arena Capital Reserve Fund and the Municipal Capital Works Reserve Fund. It was identified in the original Development Charges Policy Report, approved in 1992 at $2.5 million, as a growth related capital project to be financed through development charges collected at 90% of the net capital cost. 2.0 Existing Development Charge Policy 2.1 The Development Charges Policy Report established growth related capital projects that were to be built and financed over a ten year development time frame. In the Community Services category and the Library category, the primary projects were the Courtice Community Complex and the twin pad on the Garnet B. Rickard Recreation Complex. This differs from the Public Works category in which there were a significant number of projects that would be staged in the ten year time frame. 2.2 Since ten years of collection of development charges levies has not yet occurred and there was less than anticipated development growth during the recession years, insufficient levies have been collected to date in the Community Services Development Charges Reserve Fund and the Library Development Charges Reserve Fund to finance the full cost of the construction of the Garnet B. Rickard Recreation Complex twin pad and potentially a portion of the Courtice Complex Core and Library. 3.0 Bill 98 - Proposed Development Charges Act 3.1 As Council is aware, the Provincial Legislature has given two readings to Bill 98 - Development Charges Act, 1997. The Bill has not yet received third reading. The Municipality will have an eighteen month transition period from the date of proclamation of the Bill to update the necessary background study and pass a new Development Charges By-law. Until either a new by-law is passed or the transition period expires the present Development Charges By-law (By-law No. 92-105 as amended) will continue in effect under the current Development Charges Act. TR-62-97 Page - 3 - 3.2 Under the proposed new Act, growth related roads projects will be eligible for 100% funding from development charges levies collected. However, recreation facilities will only be eligible for 90% financing. Also, a new ten year averaging for service standard and a new use of excess capacity provision will provide additional restrictions on the Municipality in passing a new Development Charges By-law, in particular respecting recreation facilities. The scope of the standard and provision and their impact cannot be determined until the Province releases new regulations under the new Act. 4.0 Application of Existing Reserve Funds 4.1 As a result of the above, it appears to be reasonable to maximize the use of the existing Development Charges Reserve Funds prior to the expiry of the transition period for Bill 98. It is allowable under the current Act to pool reserve funds for development charge levies collected provided that the funds are only spent on eligible growth related capital projects. Both of the projects under discussion were included in the original Development Charges Policy Report as eligible growth related capital projects. 4.2 The major potential implications of pooling of the reserve funds for development charges relate to the Public Works Development Charges Reserve Funds and the Civic Administration Development Charges Reserve Funds since those categories have accumulated levies for which the projects identified in the policy report have not yet commenced. 4.3 Use of public works levies to finance the community services projects for which levies remain uncollected may result in minor balances available to carry forward to the next development charges regime. This has implications for Public Works growth related capital projects identified in the existing Development Charges Policy Report, that have not yet commenced but are experiencing development pressures to proceed (ie. Longworth Avenue and bridge). However, the Municipal Capital Works Reserve Fund which was established to finance the Municipality's share of costs relating to development charges projects (ie. non-growth related portion, commercial portion and municipal share of growth related costs) has been relatively under-utilized and could therefore be made available to finance public works development charge projects until there are sufficient new development charges levies collected for this purpose. 5.0 Garnet B. Rickard Twin Pad Financing 5.1 As explained above, there are insufficient funds available in the Development Charges Community Services Reserve Fund to finance the 90% share of the currently estimated cost of the proposed twin pad for the Garnet B. Rickard Recreation Complex. The Development Charges Policy Report and levy calculation reflected in By-Law 92-105 were based upon an estimated gross capital cost for the twin pad on the Garnet B. Rickard Complex of $2.5 million. It is now estimated that the gross cost will be approximately $3.5 million. Also the Policy Report assumed a grant available of $250,000. As Council is aware, Provincial grants for recreation facilities are no longer available. TR-62-97 Page - 4 - 5.2 Although the estimated cost of the twin pad for the arena has increased by $1 million, under the original Development Charges Policy Report in the Public Works category, $1 million was included ($100,000 per year over the 10 year time frame), for construction associated with development in the establishment of the Policy. 5.3 It is proposed that the twin pad project still be charged against the Development Charges Community Services Reserve Fund. Staff anticipate that this will result in a negative balance in the Reserve Fund that will be recouped by continued development charges collections from the present time until 18 months after Bill 98 has been proclaimed. 5.4 It is proposed that Staff monitor collections over this time period and that Staff be authorized to transfer uncommitted funds from the Civic Administration Development Charges Reserve Fund and the Public Works Development Charges Reserve Fund over the transition period of Bill 98 in order to cover potential uncollected levies for the Courtice Community Complex core and library components and the Garnet B. Rickard Recreation Complex twin pad. 6.0 Future Funding Under Bill 98 6.1 Subject to regulations that maybe published in the transition period, any remaining potential deficit in the Reserve Fund could be included as a debt in the new development charge policy to be recovered over the subsequent five year period. If the regulations prohibit internal debt as a capital cost for the new development charge quantum, then the shortfall could be debentured at that point and included as a debt in the new development charge policy. As a result of potential greater restrictions upon recreation facilities as noted in Section 1.4 above, it would appear to be more prudent for the Public Works Development Charges Reserve Fund to be in this position. Also, as noted above, the Municipal Capital Works Reserve Fund could be utilized to alleviate financing difficulties on an interim basis for future public works development charges capital projects. 6.2 If the revised Bill 98 that has received second reading at the Provincial level is given third reading and proclaimed to be in effect, it will provide that only 90% of recreation facilities can be financed by development charges. This does not pose a problem because the Municipality's current development charges policy already allows for only 90% financing from development charges. 6.3 Staff propose to continue to monitor the situation as it is anticipated that the Bill will receive final reading before the summer recess of the provincial legislature. As a result should changes be made to Bill 98 or new regulations are published that could have a severe effect upon the project financing as proposed, the project will have only been committed to the extent of the architectural services of $158,000 proposed in TR-56-97. Council would at that point have the option of determining alternate financing or not proceeding with the project at that time. ADDENDUM TO REPORT TR 56 97 Page - S - 6.4 Since both the existing Development Charge legislation and the proposed Bill 98 allow for interest charges to be financed from the Development Charges Reserve Funds, the Development Charges-Civic Administration Reserve Fund can be allocated an interest charge to reflect the loss of interest revenue to the pool of reserve fund investments resulting from the Development Charges - Community Services Reserve Fund's deficit should it occur. 7.0 Courtice Community Complex Reserve Fund 7.1 It is anticipated that the Courtice Community Complex Reserve Fund which is a separate fund from the Development Charges Reserve Fund will have funds remaining once the project is complete due to interest earned on the interim financing that has been provided in prior years budgets as well as financing transferred from the Community Services Development Charges Reserve Fund that has not yet been expended on the project. It is Staff's recommendation that any remaining funds in this reserve fund once the project is complete, after any interim financing provided has been repaid, be transferred into the Municipal Capital Works Reserve Fund. 8.0 Fundraising - Courtice Community Complex 8.1 At this point, the municipality has not yet received any funds or been notified of a firm commitment of the amount of fundraising proceeds that will be provided from the Courtice Community Complex Fundraising Committee. It is recommended that any fundraising proceeds remaining after the start up funds have been repaid, be used to repay interim financing provided by various reserve funds (including the Municipal Capital Works Reserve Fund) for the library component of the Courtice Community Complex. 9.0 Conclusion 9.1 The Municipality's Solicitor has reviewed the report and concurs with the recommendations. The Director of Public Works has also been consulted on the above. Respectfull submitted, Reviewed by, arano, H.BSc., A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/DH/NT/hjI r TR-62-97 Page _ 5 - 6.4 Since both the existing Development Charge legislation and the proposed Bill 98 allow for interest charges to be financed from the Development Charges Reserve Funds, the Development Charges-Civic Administration Reserve Fund can be allocated an interest charge to reflect the loss of interest revenue to the pool of reserve fund investments resulting from the Development Charges - Community Services Reserve Fund's deficit should it occur. 7.0 Courtice Community Complex Reserve Fund 7.1 It is anticipated that the Courtice Community Complex Reserve Fund which is a separate fund from the Development Charges Reserve Fund will have funds remaining once the project is complete due to interest earned on the interim financing that has been provided in prior years budgets as well as financing transferred from the Community Services Development Charges Reserve Fund that has not yet been expended on the project. It is Staff's recommendation that any remaining funds in this reserve fund once the project is complete, after any interim financing provided has been repaid, be transferred into the Municipal Capital Works Reserve Fund. 8.0 Fundraising - Courtice Community Complex 8.1 At this point, the municipality has not yet received any funds but has been notified of a commitment from the Fundraising Committee of proceeds that will be provided from the Courtice Community Complex Fundraising Committee. It is recommended that any fundraising proceeds remaining after the start up funds have been repaid, be used to repay interim financing provided by various reserve funds (including the Municipal Capital Works Reserve Fund) for the library component of the Courtice Community Complex. 9.0 Conclusion 9.1 The Municipality's Solicitor has reviewed the report and concurs with the recommendations. The Director of Public Works has also been consulted on the above. Respectfully submitted, Reviewed by, Make A:M arano, H.BSc., A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/DH/NT/hjl