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HomeMy WebLinkAboutTR-41-81 Memorandum TO: Chairman & Members of the Finance and Administration Committee FROM: K1aas Degroot, C.G.A. , Treasurer DATE: June 16, 1981 SUBJECT: Lot Levy Seminar - January 20th, 1981 ITEM: TR-41-81 Recommendation: "Receive for information" Report: The subject seminiar was presented by Giffels Associates Limited, who in . preparation for the seminar prepared a booklet entitled "Survey of Lot Levy Practice in Ontario" , which presents the latest information on Lot Levy practices in 125 municipalities throughout the Province. The survey revealed that the charge for Lot Levy for single detached dwellings run as high as $5,500 per unit, most being less than $1,500. The charges tend to be higher in the areas with the highest rate of growth. The seminar format was designed to bring forward a balance of views. The municipal portion was brought by Harry Henderson, Treasurer of the Town of Oakville, Donald C. Schaefer, Treasurer, City of Waterloo, Donald Ogilvie, Commissioner of Finance, City of Mississauga and Sid Morehouse , Sr. Consultant Giffels Associates. The legal perspectives were brought by Robert W. Macaulay, Q.C. , of Macaulay Lipson & Joseph, Charles C. Onley, Q.C. , City Solicitor, City of North York, W.D. (Rusty) Russell , Q.C. , of Russell , Waite , Christie and Miller and Stanley B.Stein of Weir & Foulds. The developer perspectives were brought by Dr. Frank A. Clayton, President of Clayton Research Associates Limited, Donald F. Fleming , President, The Equity Development Group Inc. & Vice-President of Urban Development Institute, and Ted Phelps, Vice-President, of Planning Paramount Development Corporation Ltd. Page 2 Finance & Administration Committee TR-41-81 The municipal perspective dealt with the need to arrive at a balance between existing and new taxpayers;the need for municipalities to subtantiate the correctness of the levies that are being imposed; to develop policies that are related to commerical and industrial development; to establish a methodology for updating their lot levy practices; to identify the services to be recovered from lot levies ; to establish service standards to be used in the municipality and to establish this policy in a manner that is defendable. The legal perspective identified the following issues or practices; lot levies must satisfy the test of necessity, equity and reasonableness; identify lot levy as practice of replacing public debt with increasing individual mortgages; identify lot levies as a tax without a statute; indicated the desirableness to have clear legislative base for the imposition of lot levies; questioned if legislation should set the procedure for the determination of level of levies; suggested that there may be a need to make municipalities more accountable for the use and possible refund of let levies collected in excess of the actual costs; indicated that there is no rational in the Ontario Municipal Board decisions on lot levies and that the decisions may be in conflict; indicated that lot levies create an unstable municipal income base and that lot levies conceal the true cost of government and that the lot levies may be inequitable and constitute double taxation. The developer perspective included that lot levies reduced the developers profits which is the biggest variable in the final price of housing; that lot levies create a long term decline in the housing starts ; that there are no checks and balances on levies such as there are on the tax levy (election) and debentures (O.M.B. ) ; that the prepayment of lot levies created a difficulty for the developers in the way of cash flew; that the uniformity of lot levies cause development in peripheral areas to suffer because the opportunity of recovery in price is not the same i .e. in the Durham Region, the Regional lot levy is the same in both Beaverton and Pickering; indicated that the Urban Development Institute is in favour of lot levies but not as a means to increase the standard of service in a municipality. A review of the proposed legislation dealing with lot levies indicated there are some of areas of agreement and some contentious issues outstanding. Both sides agree that payment must made prior to the issuances of a building permit; agreed that the role of the Ontario Municipal Board must be to approve the by-law and hold hearings only if there are objections to the by-law. The developer believe that lot levies should only cover had services , whereas municipalities believe that services should include off site soft services. Both agreed that lot levies would be appropriate on rezoning, if there is significant change in use. The developers believe no levies should be collectible on prezoned land , whereas municipalities believe that levies would be appropriate after two years , agreed that an index such as a construction cost index should be used to update the levies policies. Page 3 Finance & Administration Committee TR-41-81 The developers believe that the legislation should not be optional for municipalities whereas, the municipalities believe that they should have the option. In summary, it is readily apparent that the area of lot levies is fraught with different practices and approaches to the subject. There appear to be two very distinct and definite needs. One, that the legislation authorizing the lot levy practices be clarified and two, that municipalities develop lot lelyy practices which are clearly ideh frable and defendable. In this context the Town of Newcastle has taken a large step in the right direction by commissioning a lot levy study which is presently being reviewed by your staff. Secondly, I believe the Town must be supportive of legislative action to clarify the issues and must be vigilant to ensure that just and fair legislation is enacted. K. Degroot.