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HomeMy WebLinkAboutP-66-80 W.11uY 1 !NS �SI� I11/11 1\T�I CORPORATION OF THE TOWN OF NEWCASTLE PLANNING AND DEVELOPMENT DEPARTMENT D.N.SMITH,M.C.I.P.,Director HAMPTON,ONTARIO LOB 1JO TEL. (416)263-2231 IN CAMERA REPORT TO THE PLANNING AND DEVELOPMENT COMMITTEE MEETING OF APRIL 14, 1980. RE-PORT NO. : P-66-80 SUBJECT: Attached correspondence from East Woodbridge Develop- ments Ltd, regarding the Romney Mead Subdivision, Newcastle Village. Please note that the attached correspondence from East Woodbridge Developments Ltd. was forwarded to the Town on the understanding that discussions in respect of the financinof the subdivision were to be "confidential". Staff feel that the wishes of East Woodbridge Developments should be respected in that regard. BACKGROUND: The above noted correspondence was considered by the Planning and Development Committee on March 3, 1.980 and referred to staff via resolution PD-79-80: "That the correspondence from East Woodbridge Developments Ltd. , dated February 14, 1980 relative to Romney Mead - Village of Newcastle, be received for information and referred to staff for comment." Planning staff have requested the Works Department and the Treasurer to comment on the letter of February 14, 1980, copies of their comments are attached. (� U ��U 2 _ COMMENT: Planning staff have reviewed the letter of February 14, 1980 and feel that the letter serves to raise a number of issues relevant to development in Newcastle. Staff note that East Wood- bridge Developments Ltd. have requested a reduction in the level of services and a reduction in levies as applicable to the Romney Mead subdivision. Planning staff feel that these mattersshould be considered in the context of a general review of the Town's overall development policies whereby the implications of such reductions to the Town as a whole could be evaluated. Planning staff feel that such a general review of development Policies might be appropriately undertaken in conjunction with the "Financial Analysis and Development Strategy Study" and as "Recreation Master Plan". As the Committee is aware, these two studies will include a review of "levels of service" related to the Town's development levy and will include some evaluation of the Town's future works requirements. Planning staff note that the two studies will not directly deal with current engineering standards although this aspect will, of course, have a bearing on the conclusions of these studies. At this time, staff suggest that the possibility of redesigning all or a portion of the Romney Mead subdivision be considered as a pos- sible alternative to a reduction in engineering requirements or levy charges. Staff note that the current draft approved subdivision of 99 single family lots includes lots of 5,500 square feet and larger. Lot frontages of 55 and 60 feet could be reduced to allow for a greater unit yield, thereby 3 - helping to reduce per lot development costs. In this regard, staff would like to review lot size standards with the Committee and if deemed appropriate suggest that the Committee invite East Woodbridge Developments Ltd. to undertake a redesign of the subdivision in con- junction with staff: Staff feel that the draft plan could be revised through a "red-line" revision to include a mixture of lot sizes without seriously jeopardizing the character of the plan and/or the Village of Newcastle. RECOMMENDATION: That the Planning and Development Committee recommend to Council that: 1. East Woodbridge Developments Ltd. be requested-,tio con- sider a redesign of the Romney Mead subdivision in con- junction with Town Staff, and further 2. That East Woodbridge Developments Ltd. be advised that the Town will be reviewing its development policies in conjunction with the "Financial Analysis and Development Strategy Study" and the preparation of the Recreation Master Plan. Respectfully submitted, ;l / DNS:lb / D. N. Smith, M.C.I.P. April 8, 1980 Director of Planning 4: M la M 0 R A N D U M To: J. Dunham, DirecLor of Public Works. From: J. Ferguson, C.II.T. , Deputy. Subject: ROMNEY MEAD SUBDIVISION. Village of Newcastle. Date: April 2, 1980. 4 This is in response to your request for a report on the corr- espondence from East Woodbridge Developments-. Led. (February 14, 1980) regarding the development costs for Romney Mead Subdivision, and their request for assistance in a reduction in the level of services requested by the Town. To -date, the Town has already made several concessions in fav- our of this subdivision, for such items as storm drainage, road patterns, sidewalk construction, etc, , and the following should be noted: 1. Road Pattern: In 1974 & 1975 a Plan of Subdivision for this same area had draft approval ; this was in respect of a 100 Lot Subdivision and the Engineering Drawings had been pre- pared ane were in the final stages of. approval. The proposal, with a minor collector roadway systen through the subdivision, was quite satisfactory to the Town. In 1977, a Revised Plan was submitted showing drastic changes in the road patterns and to this the Public Works Department objected quite severely. Following several discussions with the Developer's representative, Mr. C. Hodgins, the roads pattern was accepted, with hesitation, by the Public Works Department . At chat time it was felt that, although the road pattern did not meet exactly with our approval, concessions were made so that the least stress possible would be imposed on existing roads, and residents of the immediate area. / 2 . . . 2 - 2. Storm Drainage: Upon the presentation of the Engineering Drawings the basic concept was that a major outfall would be req- uired to handle the storm drainage from the area which drains naturally towards Rudel.l Road. The drainage system would have been piped, along Rudell Road in a southerly direction to Highway 401, thence westerly to Wilmot Creek. The preliminary costs for this pro- posal were quite excessive so the Town further conceded that, if there was no greater runoff from the Subdiv- ision after development than had existed prior to same, then the Owners would not be required to construct the massive storm sewer outfall, but would simply improve the existing drainage facilities. The system was engaged and thus will be constructed so that no greater runoff will be handled by the existing drainage facilities. Should any changes be made to the present proposal then the outfall to Wilmot Creek will be required. 3. Sidewalks: The Town of Newcastle Design Criteria stipulates that sidewalks are required on both sides of the road in many developments; however, within the development now under discussion, sidewalks were deleted from such areas as: (a) the cul-de-sac at the west limit of the development . (b) along the south side of Rosemead Lane. The foregoing details further allowances made in respect of Romney Mead Subdivision. It is felt that the Developer is requesting that the Town reviews Policy in regards to this subdivision, and requesting that they be allowed to construct a rural-type road as opposed to the required urban-type, the latter of which has already received approval. It has been stated, above, that the storm sewer system cannot be changed to an open ditch system, unless the Owner is prepared to construct the necessary outfall. / 3 . . . 3 - With the development proposed for the South-West Quadrant of the Village of Newcastle (Neighbourhood Plan) it is felt that it would be a retrogressive step to allow Fast Woodbridge Developments Limited to construct rural -type rondo within their development. In the event of reconstruction of any roads within the Village of Newcastle, by the Town under it's road construction program, the urban design would be used; therefore any construction with- in development must also conform to the same standard. All other Items such as tree planting, fencing, walkway con- struction are all subjects of the Town of Newcastle Design Criteria and related Policies; any deviation from same would require a Resolution of Council prior to any changes being recommended or endorsed by this Department. _-' Wol/Angf e "L/fr,ve6TJ11C1Wf)NL ' TELEPHONE (416) 669-4432 8481 KEELS STREET (at Langstaff Rd.) AND ASSOCIATES UNIT 11A P.O. 80X 5000 CONCORD,ONTARIO February 14, 1980. L4K 1136 The Corporation of the Town of Newcastle, 40 Temperance Street, Bomanville, Ontario. Attention: D.N. Smith, M.C.I.P. Director, Planning Department Dear Sir: Re: Romney Mead - Village of Newcastle Further to the meeting held December 20, 1979 between the Council of the Town of Newcastle and the principals of East Woodbridge Developments Limited with regard to the Romney Mead development in the Village of Newcastle, please find enclosed a breakdown of the development costs for the project. You may recall that Mr. Goldfarb, in his presentation, advised you that the development cost was +$16,000 per lot. This figure, however, did not make provision for interest charges, and based on current interest rates over a period of a one year build-out, the total per lot development cost is $18,537. The accumulated land costs as indicated by Mr. Goldfarb are approximately +$20,000 per acre. Based on 28.9 acres in the subdivision and an average lot size of 7,243 sq. ft. , for the 99 lot subdivision the per lot land costs are $5,838. As was noted at the meeting, our analyses indicate that the maximum market price at which these homes could be sold is between $55,000 and $65,000. Based on the construction costs of $25/sq, ft. , a 1,700 sq. ft. house would cost approximately $42,500 to construct. The $25/sq. ft, construction cost figure does not include interest during construction nor does it make provision for a reduction of the mortgage interest rate. Our marketing analysis indicates that the highest marketable interest rate would be at 11.5% and that the preferable term would be 5 years. Based on mortgage rates for new construction quoted on October 10, 1979 of 13.75%, the . . .2 y,. Corporation of the Town of Newcastle - 2 - February 14, 1980 reduction required to bring the interest rate to a marketable level would be 2.25%. Based on a 5 year term, the cost to pay down the mortgage would be 1% of the mortgage amount per �% of reduction, and, for example, on a $50,000 mortgage, the cost to pay down the interest rate from 13.75% to 11.5% would be $4 ,500.00. To summarize then, our per lot costs based on the above are as follows : ` Development Costs $18,537 Land Costs 5,838 Construction Costs 42,500 Mortgage Reduction Costs 4,500 TOTAL - $71,375 As Mr. Goldfarb indicated, even if the land costs are discounted and assumed to be at zero, the cost still remains $65,537. At the meeting we were requested to provide you with an analysis of the increase in our costs in terms of the fact that the development did not proceed in early 1979, as well as projected cost increase increments for proceeding in 1980 and 1981. In terms of the increase in costs that has taken place between our projected construction start in the spring of 1979 to date, there are several items to be considered. Our servicing experience has shown (based on actual contract documents) that sel:vict.ng construction costs from the fall of 1.978 to the fall of 1979 have increased some 15%. Housing construction costs have risen approximately 15% in that time period. Mortgage rates had risen some 38% during the year in question, and the prime rate had gone from 11% on October 18, 1978 to 15% on November 2, 1979, an increase of 36%. Despite the rather marked increases that took place in terms of cost from the fall of 1978 to the fall of 1979, there was not a similar increase in the sale price of the finished product. Furthermore, the increase in mortgage interest rates, coupled with increased transportation costs, have generally decreased the marketability of the development. In terms of cost increases for future years, bearing in mind the increases in costs of oil-based construction materials, I would estimate the increase in the cost of construction of services to be a minimum of between 20%-25% annually, and the cost of house construction to be 15% annually. . . .3 Corporation of the Town of Newcastle - 3 - February 14, 1980 At the meeting, we requested assistance from the Town both in terms of a reduction in the level of services and a reduction in the levies. We would be pleased to arrange for our consultants to discuss these matters further with your staff so that we may reach a mutually satisfactory arrange- ment which will allow this development to proceed immediately. Yours very truly, EAST WOODBRIDGE DEVELOPMENTS LTD. , Milena Protich, Project Manager. MP:bm Encl. I I NANCI A1, APPRAI SAI, ROMNEY MEAD DEVELOPMENT COST: Servicing: Internal (includes sodding and paving as per tender June/79) $ 736,000 External (as per Subdivision Agreements) 43,402 Hydro (as per contract of June/79) 78,000 Professional Services : Consulting Engineering (as per contract June/78) 51,833 Consulting Planning (as per contracts) 14 ,450 Legal (as per quotation September/79) 30,200 Surveying (as per contract June/78) 8,025 Government Fees : Municipal Lot Levies (99 units @ $1,500/unit) 148,500 Regional Lot Levies (99 units @ $2,565/unit) 253,935 Municipal Engineering (as per Subdivision Agreement) 18,500 Regional Engineering (as per Subdivision Agreement) 7,299 Utility Levy (99 units @ $150/unit) 14 ,850 Utility Supervision (as per Utility Agreement) 5,000 Newcastle Village Arena Fund _ 25,000 - Park Dedication (2.25 acres - 5% = 1.45 acres) Landscaping (as per Subdivision Agreement) 25,321 Management Fee 50,000 Contingencies (@ 5% of servicing costs) 43,070 Financing Costs: Interest (@ 16%/annum for one year) 240,244 Letters of Credit (@ 2%/annum for a one year period) 19,164 Discharge Penalty (to permit registration of plan) 22,388 ESTIMATED DEVELOPMENT COST - $1,835,181 AVERAGE DEVELOPMENT COST PER UNIT ($1,835,181 y 99 units) - $18,537 i M E M O R A N D U M TO: D. N. Smith, M.C, I .P. , Director of Plan 'ngn tY F19-Al: 1<.1,uts, DegrooL, C.G.A. , Tr ea, ut•or DATE: March 31, 1980 SUBJECT: Ronuley Mead Subdivision In reviewing the correspondence from East Woodbridge Developements in relation to the subject subdivision, I have chosen to take a purely analytical approach. In doing so I do come to the conclusion that the Town of Newcastle through planning policies can have effect on some of the problans encountered, the majority are outside of our sphere of influence. The problem the developer faces can be broken down to two areas, Market and Cost of Final Product. The area of Marketing has two significant components a) the depressed housing market, resulting in low prices and b) the high interest rates on mortgages. The cost of the Final Product has four significant components, a) size of the building b) subdivision density, c) cost of services and d) interest rates on construction loans. In examining the individual component one can clearly see that the municipality can only directly affect the following. 1) SIZE OF BUILDING - The municipality can adopt policies which permit the construction of housing with a smaller floor area, this would reduce the cost of the finished product, it may also decrease the selling price accordingly and therefore have possibly no effect on the problem the developer is facing. 2) SUBDIVISION DENSITY - The municipality can adopt policies which will Permit the creation of smaller lots, thereby increasing the number of lots in a subdivision thereby lowering the land cost component on a per unit basis. This I believe would also reduce the per lot cost of servicing. Again this may have some affect on the selling price but would in all likelyhood not be proportionate to the cost reduction. . . .2 H 3) Services - The municipality can adopt policies which would reduce the service level in the proposed subdivision. These services reductions would include reduced sidewalk requirments, open ditches instead of stone sewers, reduced street lighting and reduction in impost levies. If past experience is of any guide to us we would find that where the services have been reduced initially they have eventually been installed at a much greater cost to the home owner through local improvEment changes. The reduction of impost levies is again I believe a short term solution because the capital cost developments would then have to be financed frcm general tax revenVes, in other words the eventual owner of the property would be subject to higher taxes due to his initial lower price. In reflecting on what the possible municipal action may have on a project such as this I conclude that they are in total not enough to make the project viable under present market conditions especially considering the escalati:- of interest rates since their calculations were made. It would be, my opinion that council take no action on the request made by East Woodbridge Developments since the conditions affecting their profit ability are not those over which council has influence. l