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HomeMy WebLinkAboutADMIN-10-01 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: General Purpose and Administration Committee File# il / Res. ttf'YfI- ;2%yO / Date: April 23, 2001 ADMIN-10-01 File#: By-law # Report #: Subject Clarington Report on Local Governance Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That Report ADMIN-I0-01 be received. 2. That Council endorses the "Clarington Report on Local Governance" prepared by the Chief Administrative Officer. 3. That the decision of Council and copies of the Report be forwarded to the Region of Durham and all Durham municipalities. REPORT 1. In response to the Region of Durham's request to address the issue of governance, the Chief Administrative Officer has now completed the Report entitled "Clarington Report on Local Governance" which has been provided to Council earlier under separate cover. 2. The Chief Administrative Officer respectfully recommends Council endorse the content of the Report. Respectfully submitted. o~~~ Franklin Wu Chief Administrative Officer FW*j1c 1001 j EXECUTIVE SUMMARY Clarington has completed this report in response to the Regional Council resolutions of January 2000 which endorsed a modified, slimmed down regional system, encouraged amalgamation or governance studies, and committed to a review of the number of regional councillors. The criteria which formed the basis of this report are accountability, accessibility, appropriate geographic size, streamlining government and ,A reducing duplication, efficient service delivery, and possible tax savings. , Clarington has demonstrated its ability to continue as a separate municipality within the evolving municipal system in Durham and the GTA. It has been one of the fastest growing municipalities in Canada over the past decade, with a population approaching 76,000. It has maintained a near zero tax increase since 1993, and has one of the highest reserve fund per capita among GTA municipalities. Following a comprehensive organizational review in August 1999, Clarington established a new organizational structure featuring reduced levels of management and a cross-department, multi-discipline approach to handling complex matters. In early 2001, a three year Business Plan to guide the municipality was developed. Clarington is embarking on a comprehensive program of performance measurement in 2001, one which will go well beyond the "report card"being mandated by the province. Since Clarington was created out of the amalgamation of four municipalities in 1974, there has been no increase in the size of its seven member council, even though its population has more than doubled (from 30,000 to 76,000). With strong population growth expected to continue, there is no reason to consider any decrease in the size of Clarington's council, especially since any savings would be negligible which might be offset by increased support staff for the remaining members. However, Clarington is willing to work with the other Durham municipalities to reduce the size of the regional council. Clarington has the right size of local government with the political and administrative structure which are easily accessible.and responsive to the citizens. It has proven track record of cost effectiveness in service delivery and is pursing a number of initiatives to improve service delivery including; streamlining planning approval and rationalizing public works functions with Durham Region; exploring service purchases or sharing with neighboring municipalities such as transit and emergency fire dispatch services; embarking on a comprehensive customer service program; and continuing to promote community involvement and volunteerism. Studies carried out by independent consultants indicate that it would not be beneficial for Clarington to amalgamate with the northern municipalities (in any combination), nor to have the Courtice area of Clarington annexed to Oshawa. i Table of Content 1. Introduction 2. Understanding The Current Local Government System 3. Criteria For Improving Local Government 4. Clarington Model For Success s ? 5. Service Delivery Improvements 6. Fewer Municipal Politicians 7. Financial Impact of Boundary Adjustment 8. Conclusion Appendix A. Administrator <� Report 12-00 The Future Prospects of the ' Municipality of Clarington B. ;) Randolph Group Management Municipalities of Brock, Clarington, Consultants Inc. & Enid Slack Scugog & Uxbridge Joint Municipal Consulting Inc. Governance and Service Delivery Study - Phase I C. Enid Slack Consulting Inc. An analysis of the Impact of a Potential Annexation of Courtice by Oshawa Franklin Wu, C.A.D. April, 2001 1 i SECTION 1 Since the mid-1990 and with the passage of Bill 26, The Savings and Restructuring Act 1996, the Provincial Government of Ontario has embarked on an initiative to restructure local governments in accordance with certain principles. To date, following on the recommendations of the Special Advisors appointed by the Provincial Government, the Municipalities of Hamilton-Wentworth, Ottawa- Carlton and Haldimand-Norfolk have been restructured into single-tier municipal administrations. In the meantime, acting on the directives of the Provincial Government, a number of other upper tier municipalities including Waterloo, Niagara, Oxford and Muskoka are working independently and/or collaborating with lower tier municipalities to arrive at local solutions in order to meet the intent of the Provincial initiative. Within the GTA, the Provincial Government has always maintained that local government restructure or amalgamation would not be dealt with until the Greater Toronto Services Board review is completed. Further the Premier has recently stated that future amalgamation plan will only go ahead if there is strong local support for it. Despite this recent position taken by the Province, municipalities should continue to explore all options to save the taxpayer dollars. In Durham Region, at a Regional Council retreat at the Fern Resort in January 2000, a variety of resolution were passed and subsequently endorsed by Regional Council and all the local municipalities. The resolutions of Regional Council are: • To pursue a modified two-tier system of regional government with a "slimmed down" region acting as an agent of the lower tier. • Review potential amalgamations or governance reform process. • Review of a reduction of the number of politicians in Durham Region. In response to the Regional Council's resolution, Clarington Council and its senior staff held a study session in March 2000 to define and discuss a local process for responding to the need for governance reform in Durham. Subsequent to this session, Council adopted a report from the Chief Administrative Officer in April 2000, outlining a process for developing Clarington's approach to achieving the Provincial objective with respect to local government reform (see Appendix A). This report is a follow-up of the CAO's report in April 2000. The basic tenet of this report is to demonstrate that the Municipality of Clarington has the ability to stand on its own as an efficient local government unit in a "slimmed down" Region. Page 1 SECTION 2 UTInGd,, cl stna the _rre, -it 41 Gavoew nti Sy/ste,min I Clarington and Regional Government in Durham The Municipality of Clarington is one of the eight municipalities of the Region of Durham created in 1974 to manage accelerated growth within the Greater Toronto Area. As part of the creation of the Regional government, the town of Newcastle (subsequently renamed Municipality of Clarington) was created through the amalgamation of the former Town of Bowmanville, the Village of Newcastle and the Townships of Clarke and Darlington, making it the largest geographic unit of the eight municipalities in the Region. In fact, Clarington is equivalent in geographic size to Oshawa, Whitby, Ajax and Pickering combined. Although Clarington started as a collection of hamlets, villages and small urban areas, it has evolved into an integrated community with a well-established governance and administrative structure to serve its residents. The municipality has seen unprecedented growth over the last decade placing it amongst the fastest growing municipalities in Canada. Between 1991 and 2000, Clarington saw a population increase of 47% and is projected to follow similar growth patterns in the future. It is important to note that despite tremendous pressure for growth and change, with sound planning and astute financial management, Clarington managed to balance various stakeholders interests and provide a variety of services in a cost effective manner. Much of this success has also come about as a result of working cooperatively with the Durham Region, other municipalities in the Region and forging partnership arrangements with the private sector. 2 Clarington Within the Greater Toronto Area The Provincial Government has recognized that there are major problems facing the Greater Toronto Area today. Problems such as loss of valuable farmlands and environmentally sensitive areas, traffic congestion and lack of affordable housing are all escalating. Some of these problems are no doubt attributable to the Provincial Government's withdrawal from its historic role in inter-municipal coordination, including its responsibility for land use planning and transportation policies, social cohesion, equity and urban infrastructure. Page 2 Section 2— Understanding the Current Local Government System In an attempt to alleviate in part these problems, the Greater Toronto Services Board (GTSB) was established by the Provincial Government to administer GO f Transit as well as to address several GTA issues. The GTSB has experienced certain growing pains in the last couple of years and its effectiveness has been questioned from time to time. In order to clearly define its role and responsibility as well as to satisfy the requirement of the GTSB legislation, a review was undertaken by Deloitte Consultants which proposed four options for consideration by the GTSB. The four options are: 1. Planning authority 2. Planning Services Board 3. GTSB Council 4. Provincial Ministry Located at the easterly end of the GTA, Clarington is a member of the GTSB by virtue of being a local municipality within Durham Region. Clarington does not believe that the GTSB is of significant benefit to us. However, we do see that the GTSB has a significant role to play in solving the GTA transportation problems. Our opinion is that the GTSB should focus on solving the transportation problem and only after it has shown significant progress in meeting this challenge, be it allowed to take on additional GTA wide responsibilities. Of the four (4) options proposed, Clarington Council prefers Option D - establishing a GTA Provincial Ministry. This option will enable the Province to play a major role to assume the GTSB responsibilities, particularly in solving the GTA transportation problem which can only be resolved through significant financial commitment from the Provincial Government. Clarington would not support any other option, and certainly would not support any option that would lead to creating another level of government. Page 3 I SECTION 3 C y B- .e,7,t�Ir -a lve L e x Ma Ele�c, caly Before an analysis of the current system of local government and before evaluating its effectiveness, the criteria by which the system is judged should be carefully laid out. These criteria, whether they are originated from the Provincial government or developed by Clarington, must be closely examined to determine their applicability and relevancy. The success of Clarington to achieve a better and effective local government rests with how well we meet the criteria. Prior to discussing the criteria, Clarington would like to reiterate its position that we do not believe amalgamation is the panacea of the perceived ills of local governments. We do not necessarily share the view of the Province that amalgamation would lead to lower taxes, better and more efficient service delivery, less bureaucracy and better accountability. We do however, agree that these are important criteria for better and effective local government. Accountability There would be no argument that local government must be held responsible for the decision it makes. This is the fundamental cornerstone of democracy in local government as residents will exercise their right to select those who represent them. This clear system of responsibility to a voter is often reflected in responsiveness of local government in addressing the needs of the citizens. 2 Accessibility Of all levels of governments, local government is most accessible to its citizens. This applies both to staff and elected officials who are often in direct contact with its citizens. The ease of contact and ability to get results readily is what makes local government effective. As the municipality gets larger, you tend to lose the immediacy which is really the hallmark of local government where citizens can get on the phone and call their elected official to get immediate responses. This personal touch and easy accessibility should never be compromised in any model Page 4 Section 3—Criteria for Better and Effective Local Government _ of local government restructure scheme. Once a local government becomes less accessible, it places the value and relevancy of local government at risk. 3 Appropriate Geographical Size A key criterion in determining the effectiveness of a local government rests with its geographical size, its population base today and that of the future. t How big should a local government be before its effectiveness is reversed as the cost of doing business increases over coverage of a huge geographical area? There would be no saving at all if satellite operation centers are to be established to serve local residents who otherwise would be deprived accessibility due to increased distance from the central government office. There is no known scientific stud that y would shed light on the optimal geographical size of a local government because there are many varying subjective determining factors such as its geographical diversity, community identity, population, service delivery effectiveness, accountability and accessibility, to name a few. From a eo ra hic g g p al size perspective, Clarmgton is the second largest municipality in the Greater Toronto Area, comprising 220 square miles of land area. From the Oak Ridges Moraine in the north to Lake Ontario to the south, it consists of a mixture of agricultural activities and many settlement areas varying from a hamlet of 100 persons to an urban center of 30,000. Clarington's geographical diversity and heritage is second to none in the GTA. In more ways than one, Clarington is already an amalgamated municipality created in 1974. It now functions as an effective local government unit. Its current population of 76,000 and an array of commercial and industrial development provide a solid tax base to enable the Municipality to deliver services in a cost effective manner. Its viability as a local government unit will be further enhanced as it captures its fair share of growth in the future. 4 Streamlining Government and Reducing Duplication Does amalgamation lead to streamlining government and reducing duplication as we were led to believe by the Provincial Government? We believe the contrary is closer to the truth. Large governments generally require more complicated management systems and layers of administration. In addition, as government gets larger, top management becomes further removed and ultimately loses touch from the front line workers that deliver services to the citizens. With long chains of communication in such large bureaucracy, those operating in ground zero are often working in a vacuum guided only by cumbersome policy manuals. Page 5 j Section 3—Criteria for Better and Effective Local Government Further, the large administrative superstructure that amalgamation produces would tend to keep tasks and activities within organizations and is less inclined to look at other service delivery options. The reason is simple because it validates the superstructure's existence. This is no argument that reducing duplication and streamlining government operation are one of the cornerstones for a better and effective local government but amalgamation, in our opinion, would have the opposite effect in achieving this z' goal. Instead, local government should be encouraged to critically review all operations and services delivery to integrate related services, remove non-value added tasks, reduce layers of management and develop an organization structure tthat meet these objectives. 5 Efficient Service Delivery One of the compelling reasons for amalgamation advanced by the Provincial Government lies with the alleged ability of larger government unit to deliver more efficient and cost effective services. This is probably true for many rural townships with a very small population base and with little or no growth opportunity, as they simply cannot cope with the effects of provincial downloading and the increasing need for innovation and sophistication in operating local governments. However, for the larger, mature municipalities, amalgamation does not necessarily result in more efficient and cost effective service delivery. In municipalities that have gone through amalgamation in recent years, saving in service delivery, if any, either did not materialize or fell short of projections and the jury is still out for the recently amalgamated municipalities. There is no conclusive evidence that amalgamation reduce service delivery cost or make it more efficient. In fact, there is considerable evidence that large organizations, especially those in public sector, deliver services more expensively as they grow and get bigger. We agree with the Provincial Government that better, more efficient service delivery system in local government is paramount to save the taxpayer dollars. However, we do not agree amalgamation is the way to achieve this objective. Municipalities can be resourceful and innovative in looking beyond the traditional way of service delivery and to find new ways of delivering services to the citizen in the most cost effective and efficient manner. After all, services delivery need u not be restricted by municipal boundaries. Clarington can buy services from, share services with, or sell services to our neighbours. We can also look at other service-arranger models or alternative service deliveries such as privatization, joint venture, and contracting. Of all the criteria to effect a better local government from a cost saving perspective, service delivery effectiveness must be given a top priority and this will be elaborated in Section 5 of this Report. Page 6 7 I+ Section 3 — Criteria or Better rand Effective Local Government 6 Property Tax Considerations The basic premise for local government restructure or amalgamation as advanced by the Provincial Government is to save taxpayer dollars. Clarington agrees with this criteria and would insist that a Financial Impact Study be made mandatory for any amalgamation or annexation proposal. In this regard, Clarington has commissioned two separate studies (Appendix B and Appendix C), with the summary findings provided in Section 7 of this Report. , i i i i i Page 7 `:I SECTION 4 Improving L ocal Government I; g Clarin ton Model for Success. As an amalgamated municipality since 1974, the Municipality of Clarington has matured ; r over the past 27 years from a collection of hamlets, villages, and small urban areas into a solid local government unit delivering a variety of services to its 76,000 residents. As one of the fastest growing municipalities in Canada during this past decade, Clarington has managed its growth through good planning and sound financial management which is reflected in 88% overall service satisfaction rating from our residents in the survey carried out in May 2000. Although Clarington's excellent track record speaks for itself, it is worth noting the following achievements and initiatives will ensure us continuous success in the future. To ensure we can continue to build on our success, it is prudent that Clarington be allowed to continue as a viable local government in our pursuit for excellence. 1. Financial Management The Municipality of Clarington has maintained a near zero percent tax increase since 1993. It is of note that during the same period since 1993 the other two local taxing authorities, namely the Region and the School Board, were not able y to maintain their tax impact at zero percent. The Municipality was able to achieve such fiscally prudent tax practice without depleting Reserves and Reserve Funds, and in fact has continued with tax support to the essential funds during the lean years of Provincial downloading, expenditure control plans etc. In accordance to the 1998 financial information return (F.I.R.), the Municipality of Clarington ranks among the top five GTA municipalities having the highest reserve fund per capita and is the highest among all Durham municipalities. This trend is expected to continue provided that the Municipality can retain direction over its finances and expenditures. The Municipality's healthy reserve fund balance and stable tax base contribute significantly to the Region of Durham's triple "A" credit rating. Clarington relies on a heavily residential tax base at 11% Commercial/Industrial to 89% Residential. This assessment split requires a greater amount of tax support for residential services such as roads, parks and facilities. The Municipality has been able to sustain operating as well as providing levels of service at the historical average without using any significant amount of reserves. Page 8 Section 4—Improving Local Government The Municipality has an excellent debt management philosophy and is currently at 25% of its debt capacity limit. It therefore has an available debt capacity of 75% for future capital debenture requirements. The Municipality has maintained an aggressive investment approach, while still operating within the bounds of appropriate Municipal risk. It has approximately 2% of its revenue derived from this source, and budgeted targets have been achieved even in the lean years, as a result of an ownership of this function. ' The Municipality has always operated in a surplus situation every year. Through its sound financial management, the surplus is used for tax support to ensure its citizens that there will not be an unreasonable property tax increase. This assurance can only be given if the Municipality of Clarington is allowed to continue to manage its own resources without any further downloading from the Provincial government. 2. Administration Clarington prides itself on two basic principles in the operation of local government; that being lean and efficient as evidenced in the following statistics based on an estimated 76,000 population served. No. of Per 1000 Staff Population Full-time Employees—Management 24 0.33 Full-time Employees—Other 164 2.28 Part-time Employees 240 3.33 Management Staff Ratio 1 per 17 employees N/A In terms of looking at the total cost of administration, Clarington's total staff, salary and benefit expenditure for Year 2000 is $12.27 million which works out to $161.00 per capita. Although we do not have comparable figures from other municipalities at this time, we believe these figures are better than average and would support our claim of a lean and efficient administration. Not only are we light on the management side in staffing, most managers are working managers handling complex assignments and multi-discipline tasks. We believe our citizens are getting good value for their tax dollars for the wide variety of services provided by the Municipality through such a lean administration. Page 9 i� Section 4—Improving Local Government Despite our track record, we also believe there is room for improvement and to be leaner and more efficient as we continue our quest to save the taxpapers' dollars. 3. Organization Redesign Efficient and effective service delivery are contingent on an organization structure that can meet those challenges. A lean administration does not necessarily mean it's efficient and effective. The presence of non-value added works, red tape, duplication etc. are generally not readily identified unless an in-depth review is undertaken to look at what we do, how we do it and why we do it. In this regard, senior management staff embarked on a comprehensive organizational review exercise in August, 1999 culminating in a new organization structure that would meet the following criteria of excellence. • Close to and responsive to citizens • Service integration to reduce cost • Well defined work functions to ensure clear line of responsibilities • Organization flattened to ensure maximum 2 levels of management staff in any department • Cross department multi-disciple approach to handle complex matters The new organization structure now forms a solid foundation for the Municipality to pursue its ultimate goal of service excellence and cost effectiveness in service delivery. Building on this foundation will be the commencement of a new initiative in performance measurement and benchmarking. 4. Business Plan Council recognized the importance of developing business goals and strategic directions to guide the business operation of the Municipality. As a result of a two day workshop held in February 2001, a Business Plan was developed to guide the Municipality for the next three years. The business goals contained in the Business Plan are: • To be accountable in resource management and service delivery • To be accessible, responsible and responsive to customers • To strengthen both internal and external communication • To continuously seek innovative ways to enhance and maintain services • To respond to the changing needs of the community s Page 10 Section 4—Improving Local Government To further elaborate on the business goals various strategic initiatives were developed and were further refined into many action items and tasks. The Business Plan now provides a tangible framework for managing the Municipality's affairs and will be fundamental to the success of all business operations. 5. Performance Measurement Clarington has already commenced several performance measure initiatives including the successful implementation of its pavement management system for several years. Commencing in 2001, the Municipality will be embarking on a comprehensive program of performance measurement. This program will measure and quantify where possible, all the services the Municipality delivers. Clarington's performance measurement will consist of the following elements: • Establish service standards to enable staff and citizens understanding of the expected output and results 3 • Identify all costs associated with the delivery of any given service • Ensure that staff achieve the defined service standard within the costs budgeted • Strive for continuous improvements from the established benchmark This program is not to be confused with the "Report Card" initiative mandated by the Provincial Government, which only requires nine service areas to be measured. Clarington will go beyond' the nine service areas because Clarington believes that the real value of doing performance measurement is to establish benchmarks for our employees in order to allow us to strive for better performance in all service delivery areas. Clarington will fully disclose this information to our citizens as we also believe in the notion of accountability and no one can argue otherwise that local government scores the highest rating among all levels of government when it comes to accountability. I� it z� Page 11 SECTION 5 Real savings in any government restructuring is unlikely to be realized from the reduction of politicians or by amalgamation of local governments, at least not in the Clarington context. If the provincial government truly believes in the notion of "saving taxpayers dollars", we would suggest that municipalities should undertake a critical review of how effective services are being provided. This is an area where there is a real potential to find savings. Clarington has a reasonably good track record in cost effectiveness of service delivery and an above average satisfaction rating from our citizens using the services, programs and facilities offered by the Municipality. However, we also believe there are other initiatives that are worthwhile to pursue. Externally, Clarington should continue to enter into open-ended discussion with the Region and our neighbouring municipalities to examine possible areas of cost savings through service realignment or purchase of services. Internally, it is also prudent to look at all areas of responsibility to examine how we can reduce costs and deliver services more effectively and efficiently. In this regard, Clarington has been very proactive in pursuing various alternatives in service delivery. 1. Past Track Record Not only does the Municipality of Clarington recognize the increasing number of local governments are looking into alternative service delivery options to reduce operating costs and maximize revenue, we have made great strides in the last few years by implementing many service delivery options for several years and this includes privatization, contracting out, joint venture, and co-op efforts with neighbouring municipalities. Examples of current alternative service delivery options are: Privatization Economic development is performed by the Clarington Board of Trade by agreement with the Municipality j Contracting Out Page 12 Sections—Service Delivery Improvements • grass cuttin g n parks arks • engineering design and construction inspection j • legal service • senior sidewalk snow clearing • waste collection and transfer station operation Joint Venture • Electricity provided by Veridian Corporation comprising of Belleville, r Pickering, Ajax and Clarington as shareholders. i Co-op Effort • Insurance pooling with Durham municipalities • Geographic Information System (G.I.S.) with Ottawa-Carleton municipalities • Provincial Offences Act administration with Durham municipalities it • Co-op purchasing with Durham municipalities • Joint service agreements with neighbour municipalities on boundary roads and fire services • Joint fire dispatch service among all Durham municipalities currently under discussion i The above are examples of Clarington's current track record on alternative service delivery that have realized substantial savings and generated additional revenue to the Municipality. Notwithstanding, there is a need to continue to be innovative and vigilant in examining other models in service delivery. In so doing, the Municipality is cognizant that a proper balance must be struck between i operational efficiency of service delivery and the quality of service to its citizens. r 2. Current Initiatives Streamlining Services Between Regional and Local Government There is no denying that duplication of services leads to red d tape and perpetuates cumbersome bureaucracy. If any real saving in taxpayers' dollars is to be realized, this is one area that must be given top priority. Both the Region of Durham and the local Municipalities recognized that there are certain services offered by both levels of government that are problematic in the area of perceived duplication and inefficiency. In this regard all municipalities agreed in 1998 to review two key service areas of planning and public works. y Page 13 i Sections—Service Delivery Improvements Planning System Review Through 1998 and 1999, the Durham Region Planning Directors undertook the first phase of a process to overhaul the planning system in Durham Region. The objectives of this review were enhanced accessibility for the public, improved quality of service, improved efficiency and improved planning decisions. The phase 1 report dealt with improvements to the planning application approval process, in effect resulting in a transfer of planning approval functions to the local municipalities. The major changes recommended were: • Exemption of local official plan amendments from Regional approval except where a regional interest is identified • Delegation of subdivision and condominium approval to local municipalities that are willing hosts 3 • Delegation of part-lot control approval to local municipalities Upon endorsement by all Councils in Durham, planning staff worked on detailed implementation procedures. The exemption of local official plan amendments was implemented effective March 1, 2000. The delegation of subdivision, condominium and part-lot control approval is being phased across the Region. The Municipality of Clarington will assume delegated responsibilities effective September 1", 2001. This in effect fulfills our goal to streamline the approval process. The Planning System Review Team continues to meet to work on Phase 2 of the Review. The second phase includes data collection and analysis, studies and policy formation. There is the possibility for the Region to have an improved role to undertake research and analysis using consistent region-wide standards that support area municipal planning policy and decision. In addition, the Region could have an improved role in the formulation of broad regional and GTA policy. While much of this will be tackled in 2001, two early initiatives were the standardization of building permit information for regional analysis and a co- operative purchase of ortho-rectified photos. Public Works Services Review The Public Works Officials' Who Does What (WDW) Committee, comprised of the heads of Public Works Departments for the Region and local Area Municipalities, has been actively reviewing the many works-related services being performed in the Region of Durham since 1999. The objective is to streamline operation so that any duplication of services or inefficient utilization of resources are eliminated. The review consists of two stages. Stage one is completed and contains the following cost saving possibilities: Page 14 Sections—Service Delivery Improvements f • The road network was reassessed and certain road segments are proposed for assumption by the Area Municipalities and by the Region, complete with timing implications and assumptions for future consideration. 0 Regional Road Maintenance (and Storm Sewer Maintenance) should be i transferred to the Area Municipal level. • Some depots are to be decommissioned or combined to reduce from 22 depot locations to 15 in the short-term, with the possibility of further reductions. • Engineering development approvals processing should be expedited by introducing a one-window approach. The concept of the area municipalities taking the lead for processing engineering development applications is recommended. • Weed Control Act enforcement be transferred from the Region to local municipalities. e Feasibility of purchasing vehicles and equipment on a co-operative tender basis to be further explored. 9 A one-window approach for obtaining licenses and permits on roads should be introduced to allow an applicant to go to the closest location for permit processing. • The Region should have responsibility for all aspects of Solid Waste, including collection. The Committee will be following up on all of the above suggestions in the preparation of a Stage II business case, demonstrating cost efficiencies, as well as an implementation strategy and stakeholder consultation, where applicable. Dialogue with Uxbrid g e, Brock and Scugog Townships Discussion is currently underway with these northern neighbours to examine sharing of services and/or investigate services Clarington could offer to these municipalities at a lower cost such as information technology, planning and engineering and/or contract services such as road maintenance and fire protection. At a meeting held on March 8th, 2001 all Council agreed to further pursue various initiatives. c i Page 15 I' i y Sections—Service Delivery Improvements Dialogue with the City of Oshawa Council has recently expressed a desire to explore transit service for Bowmanville and Courtice. This initiative will commence with a public interest survey and a subsequent feasibility study. If feasible, it is the view of the Municipality that contracting such service from an experienced operator as the Oshawa Transit I. Commission would be the most cost effective way to introduce this service to the citizens of Clarington. Dialogue with Durham Lakeshore Municipalities There has been ongoing discussion with Ajax, Pickering, Whitby and Oshawa to explore a central fire dispatch centre. This work is ongoing and details are being worked out to deal with both the issue of technology and the issue of human resources. Once implemented, it will reduce overall operating costs for all municipalities and improve services to all fire and fire assist calls. Internal Service Improvements Internal initiatives to improve service delivery include: • Review intern ally to consolidate various administrative functions of library � services with the municipal administration such as payroll and benefits administration, contract negotiations, sharing of equipment and other resources. • Embark on a comprehensive customer service program including "one- window" client service, improve access and service to citizen and enhance the current one stop shopping process to expedite development and permit approval for industrial and commercial applications. • Review other alternative service delivery models, such as "services marketing" where the Municipality will take an entrepreneurial approach to offer services for a fee to private business and property owners of tree trimming, parking lot sweeping, landscaping management, etc. This approach will generate additional revenue to the Municipality. • Examine the option of competition, or competitive bidding by employees on a given service which may be privatized in the future. Promote community involvement and volunteerism Municipalities in recent years have been hard pressed to maintain a level of service and at the same time, to cope with the total elimination of provincial grant and other downloading consequences. It is no longer trying to do "more" with Page 16 Sections—Service Delivery Improvements less but with a real prospect of actually doing "less" with "less. In Clarington we have managed to maintain a level of service in spite of a period of several years of tax freezes. This is accomplished in part by significant assessment growth and in part due to a high degree of community involvement and volunteerism in service delivery. Clarington long recognizes the importance of community involvements in providing and maintaining certain facilities and services. For example, the Municipality provides buildings and small operating grants to several community groups and hall boards to operate and provide community programs. This includes two arenas, a senior center, a youth center and two museums. In fact, Clarington is the only municipality in Durham Region that provide grants to community and volunteer groups because we value their contributions and it is the most cost effective way to deliver community programs and services particularly in the smaller communities and villages. In addition, general abuse and vandalism are least likely to occur in facilities run by volunteers and community groups. Volunteerism and community spirit should be nurtured and enhanced in Clarington in an effort to continue to be cost effective in service delivery. What concerns most observers is that as government gets bigger through amalgamation, so will be the waning interest of community groups to volunteer their time to help. j i 1 f i I Page 17 #I f' SECTION 6 11, fill) 4 ' ."wi ", The Ontario Government has identified the reduction in the number of municipal politicians as a means of lowering municipal taxes. Indeed the Ontario Government has reduced the number of municipal politicians in Ontario from 4,586 to 2,804 between 1996 and January 2001.1 With the advent of regional government in Durham Region in 1974, the amalgamation of four municipalities, which now comprise Clarington, resulted in a reduction from 24 to 7 councillors. 1 Current Representation in Durham Region As a two-tier system of government, municipal politicians are elected to sit on local and Regional councils. The Mayor and the regional councillors elected in each municipality sit on both the local and Regional councils. The elected members of Regional Council appoint the Regional Chair. Political representation by Municipality Number of Politicians i Municipality Municipal Politicians Total Regional Council Representatives Ajax Mayor+2 regional councillors+4 local councillors 7 3 Brock Mayor+ 1 regional councillor+5 local councillors 7 2 Clarington Mayor+2 regional councillors+4 local councillors 7 3 Oshawa Mayor+7 regional councillors+3 local councillors 11 8 Pickering Mayor+3 regional councillors+3 local councillors 7 4 Scugog Mayor+ 1 re ional councillor+5 local councillors 7 2 3 Uxbridge Mayor+ 1 regional councillor+5 local councillors 7 2 Whitby Mayor+3 regional councillors+4 local councillors 8 4 Total(including 61 61 28+ 1 Regional Chair In-1997, the number of regional councillors in Durham Region was reduced from 33 to 29 including a reduction from 4 to 3 for Clarington. i ' Ministry of Municipal Affairs and Housing,"New municipalities mean better government for Ontario ' taxpayers",News Release January 2,2001. 1 r Page 18 Section 6—Fewer Municipal Politicians Most residents view the current system of political representation in Clarington to be working efficiently and representing their interests. Clarington Council currently consists of 7 politicians: the mayor, two regional councillors and four local councillors. Only the mayor is elected by general vote; all other are elected through a ward system. Given Clarington's unique mix of urban and rural populations, the four wards have been aligned so that each member has an urban/rural mix thus avoiding the "urban versus rural" mentality. 2 Comparison of representation Regional Council At the present time, there is an average of I regional councillor for 17,885 residents in Durham Region. There is not even representation by population since the rural municipalities have a greater proportion of representatives. This enables the rural issues to retain some� prominence. The three northern municipalities have I regional councillor for every 9166 residents while the four urban municipalities average 1 regional councillor for every 23,117 residents. Clarington's ratio of representation on Regional Council is the second highest serving all Durham municipalities. Current Representation on Regional Council Municipality Representation by Population 1:26,000 _Ajax Clarington 1:25,333 Pickering 1:23,000 Whitby 1:22,500 Oshawa 1:18,750 Average Souther�Tier 1:23,117 Scugog 1:11,000 Uxbridge 1:10,000 Brock 1:6,500 Average all Municipalities 1:17,885 Local Council Loc'al councils in Durham Region are based on a minimum size of seven. As a result there are wide discrepancies in the efficiency of political representation. Overall local council representation average 1 councillor per 8486 residents. The lakeshore municipalities, however, average I councillor per 12,006 residents while the north municipalities average I councillor per 2,619 residents. Page 19 Section 6—Fewer Municipal Politicians I Current Representation on Local Councils Municipality Representation by Population Oshawa 1:13,636 Pickering 1:13,143 7 Whitby 1:11,250 Ajax 1:11,143 Clarington 1:10,857 Average Southern Tier 1:12,006 Scu o 1:3,143 Uxbridge 1:2,857 Brock 1:1,857 Average All Municipalities 1,8,486 3 Costs of Representation The Treasurers of each municipality report annually on the remuneration and expenses of municipal politicians. In 1999, the Regional Chair received a salary of $85,572. Regional councillors received a salary of $23,072. Committee chairs received an additional $6,000. The average costs for regional politicians exclusive of the Regional Chair is $25,600 including remuneration, mileage and expenses. In Clarington, the Mayor of Clarington receives a salary of $50,000 while a local councillor receives $20,000. The total salary budget for the Mayor and all members of Council, including 2 support staff totaled $260,000 in 2000 which is approximately I% of the Municipality's annual operating budget. u 4 Options for Fewer Politicians , t Reducing politicians to save the taxpayer dollars as advocated by the Provincial Government appears to be a noble objective. However, the saving has been demonstrated to be negligible. Be that as it may, the Municipality of Clarington is prepared to collaborate with other Durham municipalities to reduce the size of Regional Council in order to meet the provincial objectives. Regional Council Representation It has been said that the size of Regional Council is too large despite the fact that Regional Council complement was reduced from 32 to 28 in 1997 when Clarington voluntarily agreed to reduce its regional representation from 4 to 3 seats. s Page 20 I 1 1 Section 6—Fewer Municipal Politicians d The current regional councillor representation is approximately 1 politician per 17,885 persons for all Durham population. This could be increased to 25,000 which will result in fewer politicians at Regional Council. The three northern municipalities will be given 1 regional seat each despite that their population falls under the 25,000 threshold in order to ensure their representation. Under this scenario,Regional Council's composition could be as follows: t 2001 Estimated Number of Reduction in Municipality Munidpality Population Regional Seats Regional Seats Ajax 78,000 3 0 Brock 13,000 1 1 Clarington 76,000 3 0 t Oshawa 150,000 6 2 Pickering 92,000 3 1 Scugog 22,000 1 1 Uxbridge 20,000 1 1 Whitby 90,000 3 1 Total 541,000 21 plus 1 chair 7 As the number of seats is predicated on the population base which is either projected or estimated, it is suggested that the 2001 June Census be used as a common base for each municipality. However, since June Census data would not be available until early 2002, it would be appropriate for each municipality to adjust the census data to year end 2002 by adding the residential building permit activity data. Therefore, by year end 2002, each municipality would have a fairly accurate estimate of its population to determine the number of regional seats available. This would be in time for implementation for the next municipal election in November 2003. To account for potential margin of error in the estimation of population, a two percent adjustment leeway should be provided. Further, the agreed-to formula of one regional representation per 25,000 should be reviewed every five (5) years to ensure fair and equitable representation over time. Local Council Representation Clarington Council has been served by one (1) mayor and six (6) councillors since its inception as an amalgamated municipality in 1974 at a time when the population was just under 30,000. Today, Clarington has grown to approximately 76,000 and is still served by the same number of elected officials. As a result, the Mayor's job has grown from a part time to a full time job, and the councillors have taken on many responsibilities. Page 21 Section 6—Fewer Municipal Politicians i The seven members Council has worked well and has proven to be very effective in its decision making roles. The Municipality is cognizant of the desire of the Provincial Government to reduce the number of politicians. However, we are of the opinion that reduction in the complement of Clarin gton Council is not advisable having regard for the following factors: I 9 The negligible savings ($20,000 and minor benefits) from eliminating ohe council position would be off set by the additional clerical and administrative staff required by the remaining councillors to handle the increased workload. • Clarington population is growing by leaps and bounds and any reduction would not be in the public interest. It would severely compromise citizens' accessibility to their councillors, a cornerstone of the success of local government • Democracy is at its best in local government when decisions made by Council reflect that of the majority of a fair number of the elected. Reducing the number of politicians cause the decision making power rest in as few as three (3) councillors assuming the number of local elected officials could go as low as five (5) as permissible by the Municipal Act. Page 22 SECTION 7 Flu 'al. Imp act anc Q Boundary, .�,►,. _V lustuaexiat Clarington does not foresee any benefits accruin from an bound z S y boundary adjustments or amalgamation. Nonetheless, Clarington undertook investigations for possible boundary changes with municipalities with which it shared common interests. There were two amalgamation options explored with other municipalities, which Clarington was open to consider as a possible positive change in light of provincial interests to reduce the number of municipalities. These were as follows: • Possible Amalgamation with northern Durham Municipalities • Possible Amalgamation with Hope Township and Port Hope In addition, due to the expressed interest of the City of Oshawa in incorporating Courtice area into an enlarged City of Oshawa, this was examined to understand the financial impacts of such a scenario. 1. Possible Amalgamation with Municipalities in Northern Durham The three northern Durham municipalities (Scugog, Brock and Uxbridge) and Clarington retained The Randolph Group and Enid Slack Consulting Inc. to review a variety of governance issues including possible amalgamations. Their report entitled "Municipalities of Brock, Clarington, Scugog and Uxbridge: Municipal Governance and Service Delivery — Phase 1 Reviewing the Current Situation" was completed in October er 2000 (Appendix B). The following provides � a summary of its findings. The authors examined the status quo in comparison to three amalgamation options. No partial amalgamations were examined (e.g. Adding the former Cartwright Township which now comprises the east part of Scugog to Clarington). The four options were as follows: Option Four Municipalities 1 (Status Quo) Option Three Municipalities 2 (Scugog and Uxbridge amalgamate while Brock and Clarington remain as is) Option Two Municipalities 3 (Scugog, Uxbridge and Brock amalgamate while Clarington remains as is) Option One Municipality 4 (Scugog,Uxbridge, Brock and Clarington amalgamate) Page 23 it I Section 7—Financial Impact of Boundary Adjustment The four options were examined on the basis of the followin g criteria: • Financial viability • Efficiency including reduction and overlap • Community of interest • Geographic size • Long term planning • Ease of implementation The study noted that there are widely varying service levels in the four municipalities. Since the level of service in the rural municipalities is traditionally lower than more urban areas, there would be pressure to harmonize standards upwards. This could actually increase the number of staff in the northern municipalities. There was concern that there would be a trend to fewer volunteers and more staff. The consultants also found that geographic size was an impediment to achieving efficiencies in service. The financial analysis that was undertaken assumes that there would only be changes to the area municipal share of the tax bill and that regional and education taxes would be unaffected by an amalgamation. The tax impact is calculated- entirely as the result of combining the assessment base of each of the amalgamated municipalities and determining the amount of redistribution that would occur. The estimates do not account for possible efficiencies from F amalgamation, nor do they account for the impact of wage and service level ' harmonization. Potential Municipal residential Tax Impact of Four Amalgamation Scenarios Under the Assumption that Expenditures and Non-Tax Revenues are Unchanged i F Brock Scugog Uxbridge Claringtonm Status Quo I - 1999 municipal residential rate(%) 0.62 0.35 0.33 0.42 tax on$150,000 house $ 934 526 490 626 Three Municipalities 1999 municipal residential rate(%) 0.62 0.34 0.34 0.42 - tax on$150,000 house $ 934 508 508 626 Two Municipalities - 1999 municipal residential rate(%) 0.40 0.40 0.40 0.42 - tax on$150,000 house $ 597 597 597 626 _ One Municipality 1999 municipal residential rate(%) 0.41 0.41 0.41 0.41 tax on$150,000 house $ 611 611 611 611 Note: These estimates do not include the $50 flat fee per household for garbage collection in Clarington nor special area rates in Brock,Scugog and Uxbridge. Source: Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery—Phase I i Page 24 `I Section 7—Financial Impact of Boundary Adjustment i The study identified virtually no benefit to Clarington from the amalgamation with the three northern municipalities. There was marginal reduction of property taxes, which could be easily lost through wage and service level harmonization. Scugog and Uxbridge would face higher property taxes as the result of the amalgamation of all four municipalities. 2. Possible Amalgamation with Municipalities East of Clarington r Clarington was willing to investigate the benefits of amalgamation with Hoe p Township and Port Hope. There is a community of interest that includes rural issues such as farming, aggregates, rural settlement and the Oak Ridges Moraine. Port Hope share similar characteristics to the lakeshore urban centres of Newcastle and Bowmanville in Clarington with growth potential derived from lake-based services. Clarington shares the watershed of the Ganaraska River with Hope and Port Hope. Clarington has worked co-operatively with these municipalities in dealing with low-level nuclear waste problems and recently completed negotiations with the Federal Government for a long-term solution to this problem. With these points of common interest, Clarington held initial discussions with officials in Hope Township. Before this could proceed further, on March 28, 2000 the Province announced restructuring within Northumberland County, which included the amalgamation of Port Hope and Hope. i 3. Annexation of Courtice.by Oshawa The Municipality of Clarington does not foresee any benefit from the amalgamation of all or part of the Municipality with the City of Oshawa. Nonetheless, the Municipality felt compelled to study this option in light of Oshawa's previous interest in annexing Courtice. In light of this known objective, Enid Slack Consulting Ltd. was retained to examine the fiscal implications of such an annexation. (Appendix 3) The study included three scenarios for incorporating "Courtice" into the City of Oshawa. These were as follows: Option 1 The lands bounded by the 407 on the north and the 401-407 connecting freeway on the east. Option 2 Lots 26 - 35 (plus or minus) of the former Darlington Township Option 3 East half of the former Darlington Township, including the Darlington Nuclear Generation Station and the proposed ITER Research Facility Page 25 i t :I� 9 Section 7—Financial Impact of Boundary Adjustment � This report has analyzed the impact of a potential annexation of Courtice by I Oshawa under three different boundary options for Courtice only. The key findings of this analysis are summarized here. j Property Taxes Impact for a House Assessed at $150,000 in 1999 Status QUO Option I Option 2 Option 3 Rest of Clarington $679 $695 $697 $806 Courtice $679 $908 $905 $859 The analysis shows that residential property taxes on a typical $150,000 house will increase substantially for the Courtice residents and increases of a lesser degree to residents in the rest of Clarington. The largest increase, under Option 3, reflects the loss of the Darlington Nuclear Generating Station and the associated payments in lieu of taxes for municipal purposes and the education-retained portion of payments of lieu. Although it is difficult to determine future impacts, preliminary estimates indicate that the future financial impact would likely be greater than the current impact. The reason is that there is anticipated growth in Courtice that will result in a larger tax base that will be lost to Clarington. It is also estimated that the loss of linear property taxes will increase in the future. In the event of annexation of Courtice, capital expenditures and revenues for capital would decrease in Clarington. In the past five years, the amount spent by Clarington on development charge projects in Courtice exceeded the amount collected in development charges in Courtice. This means that development charges in other parts of Clarington were used to assist in the financing of projects in Courtice. { There could be a change in service levels for residents of Clarington following owing an annexation. In particular, the loss of a fire station, library, and indoor recreation complex could mean a lower level of service and the need to build additional 4 facilities sooner than planned. The disposition of assets and liabilities would have to be determined following an annexation. Compensation for the loss of physical assets such as rolling stock, buildings, and equipment would have to be estimated. In terms of financial assets and liabilities, Clarington would have to transfer a portion of its net financial assets to Oshawa. Preliminary estimates indicate a possible transfer of $13.6 million, including tax arrears. Page 26 SECTION 8 • Conclusion The primary responsibility of the Council of the Municipality of Clarington pis governance which includes a readily accessible political and administrative structure in which citizens can express their wishes and work with councillors to make decisions on policies, determine the types of services to provide as well as what their quantity and quality should be, and last but not least how they are to be produced and financed. This Report has demonstrated that Clarington has met the test of good governances and satisfies the criteria for better and effective local government. Most importantly, Clarington possesses all the good and valid reasons to stand on its own as a sound local government unit within the current regional government system in Durham. Therefore, it is the position of the Council of the Municipality of Clarington that it is not interested in participating in any discussion with any neighbour municipality with respect to boundary change or amalgamation because such would not be in the public interest of the citizens of Clarington. Instead, Clarington would prefer to devote its resources to good governance and would co-operate with all municipalities in Durham Region to adopt a consistent approach in reducing the Regional Government representatives. i Page 27 s �C � _ ___ v _..----- "'"�-..- .--�'' ,--''.' _, . i y THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: COUNCIL File# P Date: April 25 2000 Res.# (�7�� C= G Report# ADMIN. 12-00 Subject: Future Prospects of the Municipality of Clarington Recommendations: 3 y_ It is respectfully recommended that Council approve the following: 1. That Report ADMIN.12 - 00 be received; I i 2. That Council approve the contents of this report as the basis of completion of a I Comprehensive Study that would provide Council with all the necessary information in order to� determine the future prospects of Clarin b ton for the benefit of all its residents. 3. That the Regional Municipality of Durham be advised that Report ADMIN. 12-00 as approved by Council of tile Municipality ofClarington. represents our response 3 to the Region of Durham pertaining to our local initiated process dealing with the issue of potential amalgamation or governance reform; and 4. That a copy of Report ADMIN.12-00 be forwarded to all local municipalities %N ithin Durham Region, the Township of Port Hope, the Town of Port Hope, the Count}, of Northumberland, the G.T.S.B., Mr. John O'Toole, M.P.P. and, the Honourable Mr. Tony Clement, Minister of Municipal Affairs. i _r ADMIN.12-00 REPORT: 1. BACKGROUND 1.1 On January 11 and 12, 2000, Regional Council met informally to review and discuss various issues related to governance. This cumulated in an eight (8) points resolution passed by Regional Council on January 26, 2000. One of the key points contained in the resolution states: "That recognizing the Province's direction in pursuing a reduction in the number of municipalities, the Region.encourages potential amalgamations in governance reform processes to be determined by June 30, 2000, with a further report by June 30, 2001". 1.2 Arising out of the above resolution, Council of the Municipality of Clarington. together with senior staff, held a study session on March 20 and 21, 2000 to discuss the local process and to determine the various tasks that need to be attended to so that a process can be put in place by June 30, 2000, and that a final report be ready by June 30, 2001. 1.3 At the conclusion of the study session, consensus was reached that Clarington has the demonstrated capacity and future growth potential to remain as a viable, separate local municipality ithin Durham am Region. However, there was also consensus that Clarington should examine the financial impact of possible combinations with other municipalities with which is shares common interests. Accordingly, discussion with these municipalities will take place concerning possible studies in this regard. 1.4 At the study session, it was also agreed that staff would report back to Council to provide the necessary framework for: I � i ADMIN.12-00 a) demonstrating the viability of Clarington, and b) developing communication strategy with our citizens. 2. PURPOSES The purposes of this report are as follows: 2.1 Outline a process to carry out various* financial impact analysis, specifically as it pertains to any impact to residents of Clarington, including the retention of consultants to undertake such works; and provide an approximate timetable for completion of all studies. 2.2 Comments on the viability of Clarington, outlining the matters that will be elaborated on in a subsequent report. 2.3 Provide a communication strategy whereby our residents are to be kept informed of various governance issues. 3. FINANCIAL IMPACT ANALYSIS Fundamental to any governance or boundary change, it is imperative that sufficient information be gathered and detailed research be carried out so that Council can make an informed decision on behalf of the common good of all its residents. In this regard, the Municipality of Clarington has commenced or is in the process of commencing the following financial impact studies. The primary objective is to determine the impact on the residents of Clarington under various is partnership and/or boundary change scenarios. ADMIN.12-00 4 3.1 Partnerships with Scu o , Uxbridge and Brock These three rural municipalities share common interests with the Municipality of Clarington, as each municipality possesses a large geographic land base and significant agricultural activities. Arising out of the direction of the study session, a meeting was held with representatives of these municipalities to explore possible partnerships. These three municipalities have earlier agreed among themselves to retain a consultant to study possible governance scenarios and are receptive to include Clarington in their study. The consultant firm of Randolph Group, in partnership with Enid Slack Consultant Inc. has been retained. This study will examine how levels of services will be,affected as well as to determine the impact on the taxpayers of the respective municipalities. Said study is in its early stage and is tentatively scheduled for completion before the summer recess. 3.2 Partnership with Hope Township and Port Hope Although these two municipalities are not located in Durham Region and the G.T.A., they have approached Clarington to explore possible partnerships. Similar to our northern neighbouring municipalities, Clarington also shares common interests with our two eastern neighbours. Subsequently, a meeting was held with representatives from Port Hope and Hope Township to explore the possibility of funding a joint study to determine the impacts of service levels and cost implications to the tax payers. It should be noted that the Minister of Municipal Affairs has recently issued an Amalgamation Order to cause Hope Township and Port Hope to be mer ged into one municipality effective January 1, 2001. Notwithstanding, the Order allows the Transitional Board, comprising of all the Councillors of these two municipalities, to explore partnerships and possible service realignment issues with its neighbours. As a result of the Order, it was felt that it would be premature to conduct a financial impact study at this time as the two ADMIN.12-00 5 municipaliti es will need time to address their transitional issues. However, all parties agree that we should maintain continuous dialogue of possible partnership in the future. With respect to the question of leaving the G.T.A., which is one of the conditipris requested by both Port Hope and Hope Township, it was agreed that this issue not be addressed at this time. 3.3 Courtice annexed by the City of Oshawa This scenario is put forward only out of the necessity in response to past and present annexation overtures from the City of Oshawa. As a result, Council authorized a financial impact study, which commenced in the latter part of last year. Enid Slack consultant Inc. has been retained to carry out a detailed financial analysis to determine what impact, if any, such annexation scenario would have on those residents residing in Courtice, as well as on the balance of resident's in Clarington. Said study is near completion and will be finalized in conjunction with other financial studies under other amalgamation scenarios. 3.4 The results of the three studies will be coordinated ensuring they will be released simultaneously and in conjunction with the Comprehensive Study on the future prospect of Clarington. 3.5 The three financial impact studies are of critical importance to determine whether or not any of the scenarios make financial sense to the residents of Clarington since the Provincial Government has indicated repeatedly that amalgamation saves taxpayers money. ADMIN.12-00 6 4. CLARINGTON AS A VIABLE MUNICIPALITY 4.1 Despite the fact the Municipality of Clarington is prepared to examine the financial impact of any and all possible partnerships and/or governance scenario models, it should be made absolutely clear that Clarington has the demonstrated g ability, now and in the future, to be a viable municipality as it now exists as an effective and efficient local government in delivering services to our local residents. The strength of Clarington to stand on its own within a slimmed-down I Regional government structure lies primarily with its: I • Large Geographical size; • Healthy mix of urban communities and agricultural activities; • Common interest of various communities within its boundary; • Future potential growth, particularly in the industrial and commercial sectors; • Efficient service delivery provided by a Ylean administration and active community voluntarism; • Sound financial management and healthy reserves; • Accessible elected officials and staff, • Excellent quality of life enjoyed by all residents who are proud to be ") associated with Clarington; i • Quality customer service commitment by employees, with continual I performance measurement and improvement; • Continuous commitment to collaborate with Region of Durham and other municipalities to streamline service delivery such as planning approvals, insurance pooling, co-op purchasing, road maintenance, emergency communication dispatch, sharing of resources a.id any and all possibilities of removing duplication of services and any and all efforts at becoming more cost-efficient, etc. All of these factors and more will be elaborated on in the Comprehensive Study, inclusive of all financial impact analysis, targeted, for completion in the fall of this ADMIN.12-00 7 year. As information required to demonstrate Clarington's viability is readily available in our municipal departments, it would be prudent that this part of the study be carried out by in-house staff. However, assistance from consultants may be necessary as the study progresses. 5. COMMUNICATING WITH OUR RESIDENTS The decision of Council pertaining to the future prospects of Clarington must have regard to the opinion of its residents. This is a cornerstone of democracy. I Council, and we believe the Provincial Government, should be so guided in their future decisions on local government reform. In order to solicit public opinion, certain principles should be established. These include full disclosure of study findings and all related information, unbiased presentation of facts, and opportunities for'public debates. Following these principles, our communication strategy would include regular reporting of unfolding events related to governance issues. Various i communication tools such as press release the � municipal web site, employee newsletters, newspaper advertising, and extra editions of Clarington Today could be used to convey the necessary facts and information to the residents. Upon completion of the Comprehensive Study, a series of public information forums would be held, to solicit public comments in various communities within Clarington. We believe strongly that public input on this most important matter of local government reform should only be sought after all the facts are gathered and all the analysis completed. This equally applies to any referendum that Council may deem necessary in the future. Due to the complexity of the subject matter and time requirement to coordinate and complete all studies, it is uniikely that we would be in a position to hold any information forums or undertake a I f referendum, if any, before the November municipal election. Cis , ADMIN.12-00 g 6. RELATED MATTERS Two related matters on governance that should be included in the Comprehensive Study are outlined below. 6.1 Relationship with the Greater Toronto Services Board (GTSB) Clarington is currently a member municipality within the GTSB. Prior to its formation, Clarington has requested the Provincial Government to include in the GTSB legislation, a provision that would allow for the GTSB fringe municipalities to opt out. As the GTSB is currently under review, it is important that this issue does not get overlooked amidst other major issues. As Clarington is unlikely to be in a position to address this issue in the absence of the completion of our comprehensive study and be able to decide on the future prospect of Clarington I prior to the completion of the GTSB review by the end of the year, it is imperative that the current provision to allow for opting out not be affected by any future amendment to the GTSB Act. Our Solicitor has advised that in the event that opting out becomes a reality, the GTSB Act would have to be amended. This issue need not be addressed at this time. However, what is of parainount importance to Clarington at this time, is that this opting out alternative remains open to Clarington in the event the future prospects of Clarington requires it. i ADMIN.12-00 9 6.2 Fewer politicians As the Provincial Government has repeatedly asserted that fewer politicians would save taxpayers dollars, it is incumbent on Clarington to review this issue as a part of the Comprehensive Study, even though we may not necessarily agree that „ such assertion is correct. There is no suggestion at this time as to how this issue will be addressed. However, the pros and cons of reducing the number of elected officials in Clarington will be examined, both in terms of representation on Clarington 3� Council and on Regional Council, as well as on any possible amalgamated Council model. 7. CONCLUSION Aft Clarington does not necessarily agree with the Province advocating that amalgamation would lead to: fewer municipal politicians, lower taxes, better, 3 more efficient service delivery, less bureaucracy, clear line of responsibility and i - better accountability. In fact, one could argue that amalgamations gamations will result in bigger government, more bureaucracy, and reduce 1� Y e accessibility and accountability. �E Clarington does agree with the principles of lower taxes, efficient service delivery, less.bureaucracy and better accountability and believes these are the areas where we should focus our attention as opposed to amalgamation. Therefore, in conjunction with our study to demonstrate Clarington's viability, we will also document how these principles have been and/or will be met. i �I The content of this report sets out Clarington's processes and all the matters that will be reviewed in addressing the issue of governance reform. The i E� ADMIN.12-00 10 Comprehensive Study referred to'in the recommendation, inclusive of all financial impact studies, will be completed by the fall of this year. It should be noted that the Comprehensive Study only represents one milestone in the locally initiated process. The information contained in the Study will be used in the public consultation process, leading to a decision by the Council prior to submission of the final report and recommendations to the Region of Durham before June 30, 2001. Respectfully submitted, Franklin Wu, Chief Administrative Officer FW:nof i r P MUNICIPALITIES OF BROCK, CLARINGTON ' SCUGOG' AND UXBRIDGE MUNICIPAL GOVERNANCE AND SERVICE DELIVERY PHASE 1 REVIEWING THE .CURRENT SITUATION I FINAL REPORT I _ THE R4NDOLPH R O U P MANAGEMENT CONSULTANTS INC. AND ENID SLACK CONSULTING INC. OCTOBER,� TOBER, 2000 I TABLE OF CONTENTS CHAPTER PAGE 1. INTRODUCTION 1 Municipal Governance In Durham Region 1 Four Municipalities Reviewing Governance Options 2 11. UNDERSTANDING THE CURRENT SITUATION 3 Review of Municipal Services 3 Assessment of Municipal Financial Situation 8 Perspectives on Municipal Restructuring 11 111. EVALUATION OFFOUR RESTRUCTURING OPTIONS 14 Evaluating the Four Options 15 I. Analysis of The Tax Impact of Amalgamation 16 IV. OPPORTUNITIES FOR IMPROVING SERVICE DELIVERY 18 Sharing Municipal Services 18 V. RECOMMENDATIONS AND NEXT STEPS 22 Recommendations 22 Proceeding with Phase 2 24 ATTACHMENTS A. Description p n of Existing Municipal Services S. Individuals Interviewed I c I. INTRODUCTION I ' i In March, 2000, The Randolph Group and Enid Slack Consulting Inc. were retained by the municipalities of Brock, Clarington, Scugog and Uxbridge to review various options I for municipal restructuring. This report documents the results of the Phase 1 work. It reflects the opinions of the consultants based on their interviews with municipal staff, review of various background materials, experience with municipal restructuring initiatives in Ontario and knowledge of municipal services obtained through other municipal management assignments. t E MUNICIPAL GOVERNANCE IN DURHAM REGION I On January 26th, Durham Regional Council passed a resolution in support of two tier government in Durham Region. The resolution endorses the continuation of a modified two tier system of Regional government, with a slimmed down Region acting as an agent of the lower tier. It supports and encourages potential amalgamations or governance reform processes by the local municipalities. The timeframe is to have work underway by June 30th, 2000, with a final report by June, 2001. ~~ Since the January decision of Regional Council, Regional and local municipal staff have been participating in "who does what" reviews in the areas of planning and public works. In addition, there has been joint work done in the areas of Provincial Offences and the pooling of insurance. These efforts are resulting in an increased understanding of the municipal services now provided; some service realignment and opportunities to improve service delivery. In addition to these projects, municipalities within Durham Region are independently p . . Y pursuing municipal governance reviews.' Some Some are working alone while others are undertaking reviews jointly. i i i Phase 1: Reviewing the Current Situation,Final Report Pa I e 1 g Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery FOUR MUNICIPALITIES REVIEWING GOVERNANCE OPTIONS Given this situation, the municipalities of Brock, Clarington, Scugog and Uxbridge are undertaking a joint study to examine potential municipal governance options. Carolyn Kearns of The Randolph Group and Enid Slack of Enid Slack Consulting Inc. have been hired to assist with the evaluation of amalgamation services. The work has involved examining four municipal options: 1. Status Quo: The current arrangement where all four municipalities continue as separate municipalities 2. Three Municipalities: Scugog and Uxbridge amalgamate to become one municipality, and Brock and Clarington each remain as separate municipalities. 3. Two Municipalities: Brock, Scugog and Uxbridge amalgamate to become one municipality and Clarington remains as a separate municipality. 4. One Municipality: Brock, Clarington, Scugog and Uxbridge all amalgamate to become one municipality. four All o r options assume the continuation of the Region of D urham as described in the resolution passed by Regional Council on January 26th The municipalities were interested in addressing two main areas as part of this review. ♦ The financial implications of the four mun'ici,pal options ♦ Opportunities for increased sharing of municipal services and improved service delivery The analysis was not to result in a municipal governance recommendation. The work does not commit the municipalities to adopting one of these four municipal governance options. Rather, it is intended to provide background information to assist municipalities in deciding how best to proceed with municipal governance and service delivery for their respective municipalities. Depending on the outcome of the Phase 1 work, there may be an interest in proceeding with Phase 2 which would involve more detailed analysis of municipal governance options and service delivery. � 1 Page Z Phase 1: Reviewing the Current Situation,Final Report J II. UNDERSTANDING THE CURRENT SITUATION } F . 4 Three of the four municipalities — Brock, Scugog and Uxbridge — are located in the northern part of the Region, while Clarington is situated in the southeast. Each municipality is currently providing a full range of municipal services and there are some examples of sharing of staff and equipment. There have been no formal discussions of amalgamation among these municipalities. However, the Regional position, there is interest in reviewing various municipal governance options. REVIEW OF MUNICIPAL SERVICES fThe consultants reviewed the following key municipal services provided by each of the four municipalities: ♦ Animal Control I' ♦ Building ♦ Clerk's ♦ Finance ♦ Fire ' ♦ Library ♦ Parks, Recreation and Culture ♦ Planning and Development l ♦ Public Works municipality,As the largest� g rncipality, the Municipality of Clanngton has proportionately more staff f than the other three municipalities and they have more specific job functions. I Two municipalities, Scugog and Uxbridge, retain consultants to provide their planning and development services. All municipalities rely on volunteers to assist in operating their programs. In Brock, volunteers provide a full range recreation programs as there are no full-time municipal recreation staff. li Phase !: Reviewing the current situation,Final Report Page 3 III Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery For the most part, these four municipalities operate independently. There are some examples of service sharing with the Region in areas such as joint purchasing. The Region is currently working with the local municipalities on "Who Does What" initiatives in land use planning and public works. Summary information on the services analyzed and the potential amalgamation issues is contained in Appendix A. A summary of amalgamation issues for each service is provided in Figure 1. Figure 1 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery �., rllunic pal�Serv� cs"< � " ` �, 4 =9ma s ions sues Y �( ,Yj •+ i..3 G ?;. Animal Control • Longer distance to retrieve pets Building Large geographic area to cover • Need to interpret different by-laws X Clerk's • Standardize by-laws r • Standardize records management Finance • Standardize tax collection software plus training I • Harmonize tax payment options and due dates • Allocation of debt and reserves Fire • Volunteer versus full-time firefighters • Firehall boundaries;= • Standardize training ' Library • Brock's library is not automated • Integrating collections Parks, Recreation Maintaining volunteer commitment and involvement and Culture 0 Rationalizing volunteer boards 1 • Standardizing recreation programs • Developing appropriate service levels Planning and Use of consultants vs.full-time staff Development Interpreting different Official Plans and planning policies/by-laws Public Works Varying age and condition of infrastructure including roads and fleet • Rationalizing services standards i I Phase 9: Reviewing the Current Situation,Final Report Page 4 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery In addition to the key amalgamation issues for the specific services, the following general issues also need to be addressed: ♦ Wage and service level harmonization: When municipalities amalgamate, there is a tendency towards harmonization of wage levels and service levels. As an example, firefighters in the four municipalities currently do not earn the same rates of pay. With an amalgamation, there will be an expectation that wages will be equalized. Furthermore, staff in some municipalities are unionized but in other municipalities they'are not. This is an issue that has been adequately resolved in other amalgamations in Ontario (such as Kingston). With respect to service levels, there are two possibilities. One is that service levels are equalized across the new municipality; the other is that special area rates are charged in those parts of the new municipality that receive urban services (such as garbage pick-up and street lighting) but are not charged in the areas that do not receive the services. ♦ Transitional costs: There will be one-time costs associated with an amalgamation. For example, there will be a heed to harmonize technology. As noted earlier, all four municipalities do not currently use the same financial software and would need to standardize software if they amalgamated. Training on the software would also be required in municipalities that have not used it I before. There may also be costs associated with renovating existing municipal facilities to accommodate the new municipal structure. 1 _w ♦ Allocation of assets and liabilities: In the event of an amalgamation, there will be a need to address the disposition of assets and liabilities. The decision on how to allocate assets and liabilities is generally made b a transition board set up to implement the amalgamation. y Physical y 1 assets and liabilities include land, buildings, rolling stock, and equipment. Physical assets located in one municipality generally become the property of the newly amalgamated municipality without financial adjustment or restriction on use or disposal. Financial assets and liabilities include: reserves, reserve funds, surpluses, deficits, and net long term liabilities. Reserves, reserve funds and debt (net long j term liabilities) can be treated in one of two ways. They can be charged back to j the original municipalities by a refund or additional levy, or they may be pooled in the newly amalgamated municipality. The argument in favour of charging them c - back to the originating municipalities is that these reserves and reserve funds were created through the tax rate levied on ratepayers of the former Phase 1: Reviewing the Current Situation,Final Report �__ Page 5 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery municipalities. Similarly, the debt was incurred to pay for facilities enjoyed by the residents of the former municipalities. The argument against charge back is that some facilities (such as recreational facilities) will benefit all residents of the newly amalgamated municipality and that future repairs will be funded through the tax rate of the new municipality. 3 The review of the current situation has led to five main observations. 1. Good examples of municipal service sharing currently exist. While each of the four municipalities operates autonomously, there are some positive examples of shared services among municipalities: • Scugog and Uxbridge share animal control service (including an animal control officer and a facility) • All of the fire departments!have mutual aid agreements • All municipalities have local road boundary agreements for maintenance • There is some sharing of equipment (e.g. related works and emergency I services between Brock and Uxbridge)( • Whitby is assuming responsibility for work formally done by Scugog Hydro • Three northern municipalities often use the same service providers (e.g. lawyers, consultants for development charges, engineers) I • Scugog and Uxbridge share Hand!-Transit • The Durham Community Network (DCN) is comprised of four libraries, three northern municipalities, one police force, and two school boards. Its purpose is to share high-speed broad band network but it is not fully operational yet. , • Brock, Scugog and Uxbridge created a manual for elections purposes. • Brock, Scugog and Uxbridge have a combined plan for health insurance and extended health benefits. In general, all four municipalities share information and expertise informally. The Who Does What (WDW) Regional exercises have provided an excellent vehicle for information sharing. 2. Staff often responsible for multiple functions and often only one person is responsible for the function. Given their size, staff can be involved in activities that cross different areas of responsibility. Often this work is associated with the 1 Individual rather than with a specific job function. As well, the staffing structure is I Phase 1: Reviewing the Current Situation,Final Report rage 6 i Municipalities of Brock, Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery such that there is often little backup for staff which can be a problem during vacation/illness and during busy periods. Brock has one building official which makes it difficult to provide service when the individual is away (requires making special arrangements for contract staff) 7 In Scugog, a new organization structure is being implemented to better align job functions (e.g. garbage and street lighting used to be with the Clerk- Administrator and are now moving to Public Works) • Public Works Coordinator in Brock is responsible for community centres and Parks and Recreation budget in addition to normal Public Works functions 3. Municipalities are operating.lean organizations. The analysis indicates that all four municipalities appear to be operating efficiently. The three northern municipalities and especially Brock and Scugog have small numbers of staff providing core municipal services and rely on volunteers to supplement the 3 professional staff. They are also rationalizing the provision of services through consolidation in certain areas (e.g. reducing.-the number of works depots). t' 4. Municipalities do not have harmonized technology or services. While there is some joint sharing of municipal services, municipalities are purchasing l independent systems and do not offer standardized services. Sense that municipalities could, if they wanted to, improve sharing of public ry works equipment, especially for roads • Municipalities do not all use the same financial software. 5. Difficult for northern municipalities to manage increasing pressure for growth and development. Clarington is well positioned to manage its growth and in fact has been responsible for up to 20% of Durham Region's growth in recent years. The three northern municipalities are responding to the ongoing Pressure for either accommodating new growth or meeting the service demands of new residents. • Citizen expectations for urban level of service in rural areas —e.g. snow Ploughing, parks and recreation programs and facilities, etc. • Growth in the three northern municipalities can be seen as a threat to the current quality of life and services now available to residents. l I Phase 1: Reviewing the Current Situation,Final Report _,t Pana 7 Municipalities of Brock, Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery ASSESSMENT OF MUNICIPAL FINANCIAL SITUATION A key component of the Phase 1 work involved analyzing the current municipal financial situation for the municipalities of Brock, Clarington, Scugog and Uxbridge. While these municipalities are financially stable today, there are concerns about their ability to assume increasing financial responsibilities. . 1. The four municipalities are'financially stable today. Municipalities in Ontario are required to provide a wide range of services. Figure 2 compares total operating expenditures per household made by the four municipalities and shows expenditures per household for each of the main expenditure categories. On a per household basis, the largest expenditures are made by Brock; the smallest by Scugog. Figure 2 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Operating Expenditures per Household, Four Municipalities, 1998 ($) e cued,. x en t ' a egor�es roc cu o r. ge, larl on ; General government 247 156 189 300 Fire 93 83 79 117 Roads and transit 606 346 400 328 ' Garbage collection 21 26 43 40 Parks and recreation 180 132 303 192 [ Libraries 36 40 77 62 Planning and development 32 19 1 23 78 , Total expenditures* 1,310 849 1,185 1,172 * Total expenditures refers to all operating expenditures not just those in the table Source: Ministry of Municipal Affairs and Housing, MARS database To finance these services municipalities p s rely mainly on property taxes, provincial � grants, and user fees plus some other miscellaneous revenues. Several financial indicators can be used to determine a municipality's financial health or its ability to provide services. These include the total amount of assessment per household, the proportion of assessment that is commercial and industrial, dependence on provincial grants, debt charges relative to operating expenditures, the amount of reserves per capita, the amount of debt per capita, Phase 1: Reviewing the current Situation,Final Report page 8 +� Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery i and tax arrears as a proportion of the tax levy. These indicators (summarized in Figure 3) can be explained as follows: I The amount of taxable assessment per household shows the dollar value of residential, commercial, and industrial properties in a municipality. This amount reflects the ability of a municipality to raise taxes. The highest taxable assessment per household is in Uxbridge; the lowest is in Brock. l • The higher the ratio of commercialrndustdal to total assessment, the greater is the fiscal capacity of the municipality because the tax rate on commercial and industrial property is higher than the tax rate on residential property. I At the same time, it could be argued that commercial and industrial properties use fewer services than residential properties, making I commercial and industrial property even more attractive from a fiscal perspective. The ratio is highest in Clarington followed by Uxbridge; it is lowest in Brock. • The greater the dependence on provincial grants, the less a municipality relies on its own revenue sources to provide services. The extent to which each of the four municipalities depends on provincial grants is very low, with the exception of Brock. i • The amount of debt incurred by a municipality also reflects its financial stability. Provincial guidelines suggest that debt charges of municipalities not exceed 20 percent of their operating expenditures. This is to ensure that debt charges do not crowd out other operating expenditures. Debt charges relative to operating expenditures are well below provincial guidelines in all four municipalities. • The amount of reserves and reserve funds per capita give an indication of the ability of a municipality to finance future capital expenditures and to stabilize taxes. Reserves and reserve funds er capita range from p p g a low of $193 in Scugog to $728 in Clarington. These estimates do not reflect the recent sale of Uxbridge Hydro which has added almost$2.5 million to its -reserves. The Township of Brock has also made the decision to sell its hydro commission and this sale is not reflected in these numbers. I i Note that taxable assessment does not include assessment for payments in lieu of taxes. Clarington in particular has a significant amount of payment in lieu assessment from Ontario Hydro and thus the assessment per household in Figure 3 understates its fiscal capacity. LPhase 1: Reviewing the Current situation,Final Report Page 9 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery • Tax arrears show the extent to which municipalities have been unsuccessful in collecting taxes in any given year. The most recent year for which comparable data are available for all four municipalities is 1998. Unfortunately, this is not a particularly good year for analysis of tax arrears because of the implementation of property tax reform in that year. In many municipalities, for example, billing was later than usual. On the basis of these indicators, all four municipalities appear to be financially stable today. Possible areas of-concern are the relatively low reserves per capita in Scugog and the relatively small total assessment per household and ratio of commercial and industrial assessment in Brock and Scugog. The relatively greater dependence on provincial grants (mainly Community Reinvestment Funds) in Brock could also be a cause for concern if these grants are reduced or eliminated in the future. Figure 3 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Financial Indicators, Four Municipalities, 1998 ci o x n e G an on Total Assessment per 148,473 178,055 215,973 166,150 i Household excluding payments in lieu ($) Commercial and Industrial as % 6.2 7.2 8.5 9.6 , of Total Assessment(%) Provincial Grants relative to 12.3 2.2 1.1 0.6 i total revenues Debt Charges relative to 2.7 0.2 0.1 3.3 Operating Expenditures Reserves and Reserve Funds 333 193 317 728 per capita ($) Debt per capita ($) 84 2 10 81 Tax Arrears as % of Tax Levy 19.8 18.2 16.2 16.1 I Source: Ministry of Municipal Affairs and Housing, MARS database 2. There will be increased pressure on the property tax, given increasing municipal responsibilities. The local services realignment (LSR) which took 3 place in 1998 has meant that municipalities are responsible for more services # ' than ever before. In particular, the elimination of Ministry of Transportation road r Phase 1: Reviewing the Current Situation,Final Report Page 10, Municipalities of Brock,Claris t on Scugog and Uxbridge Municipal Governance and Service Delivery subsidies could seriously impact the rural parts of the municipalities when the Province's transition funding assistance ceases. At the same time, growth in the four municipalities will result in increased demands for services by people moving l in. As noted above, citizen expectations for urban service levels in rural areas will increase the costs of the four municipalities significantly. Service provipion will become increasingly complex in the four municipalities in the future. The service realignment and increased growth raise the issue of the extent to which each of the four municipalities will continue to be able to finance the services that have been downloaded and whether they can accommodate further services being downloaded oaded in the future. In particular, concerns have been expressed about the diminishing level of reserves needed to make future capital expenditures and the deterioration of existing infrastructure. In short, the stable financial situation described today is being threatened. PERSPECTIVES ON MUNICIPAL RESTRUCTURING At this time, the pressure for municipal restructuring is the result of Provincial direction and the Region of Durham's request that the area municipalities examine municipal ! governance options. However, the analysis of the existing situation suggests that at this stage more could be gained from municipal service sharing than from the municipal options analyzed as part of this review. I. There are opportunities to improve service delivery within the existing municipal structure. This review has identified opportunities for municipalities to share services and work more cooperatively within their existing municipal cipal organization structures. There is the observation that municipalities are still absorbing the amalgamations that occurred as a result of the creation of the Region of Durham. In Brock Township for example, services are still provided quite independently for the three communities of Beaverton, Cannington and Sunderland. A number of potential suggestions for municipal service sharing and realignment will be discussed in more detail in the next section. However, this type of increased cooperation requires political support if municipal staff are to work together successfully. 2. Amalgamation would create a large a � g geographic area with service delivery Issues. There are issues related to the size of the new municipalities that would be created especially with options 3 and 4. Within the three northern i l l` Phase 1: Reviewing the Current Situation, Final Report 11 Page 11 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery municipalities, there are large areas to service and the addition of Clarington further increases the distances. It is difficult to serve such a large geographic area given the existing staff and resources within the four municipalities. All municipalities, especially those in the north are very stretched in terms of front line delivery staff with the result that staff reductions/savings are unlikely. In addition to physical coverage there are other issues related to service delivery. All four municipalities have both urban and rural areas, but there are considerable differences in tho'types of services provided and service levels. Clarington and Uxbridge provide a comprehensive range of services under the direction of professional staff. These staff tend to be specialized in terms of backgrounds and job responsibilities. In Brock and Scugog, there is a greater reliance on volunteers to provide community services (e.g. parks and recreation programming) and there is 'a, less developed infrastructure of municipally owned facilities. Staff also tend to be more generalist and perform multiple tasks. 3. Amalgamation raises concern about the loss of community identity and volunteerism. Experience with other municipal restructurings in Ontario has shown that it is difficult for former municipalities to maintain their unique sense of ? identity. Services tend to be harmonized andaprovided by professional staff. The communities within these municipalities relate strongly to the local history of the , area and volunteers play a major role in the services provided. Municipal restructuring could threaten the sense of community and the ability of residents to stay connected and involved with the delivery of municipal services particularly in the areas of recreation and culture. 4. Municipal restructuring tends to increase costs, at least in the short-term. A review of other municipal restructuring initiatives suggests that although cost savings can be achieved, there will also be some cost increases. In the case of these four municipalities, there will likely be wage harmonization, service level harmonization and technology harmonization costs to be incurred by all municipalities. 5. There are some shared communities of interest between Scugog and Uxbridge, and between Clarington and Scugog. The analysis undertaken as part of this review suggests that there are some shared interests among the four municipalities. For example, Uxbridge and Scugog are currently sharing animal control services and Flandi-Transit. Citizens from Scugog are able to participate in the recreation programs provided by Uxbridge and vice-versa. Some of the f pressures for development/redevelopment are similar between the two municipalities. Scugog also has relationships with the Town of Whitby in the areas of hydro and public works. Phase 1: Reviewing the Current Situation, Final Report Page 12 i Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery i At first glance, Clarington appears to be quite different than the three northern municipalities. However, upon closer examination, Clarington does have I significant portions of the municipality that are rural and are planned to remain in rural uses. Clarington and Scugog share similar geographic features particularly in terms of the Oak Ridges Moraine. This physical connection suggests that there could be joint interests in the area of environmental and land use planning. I { I .. I I` i Phase 1: Reviewing the Current Situation,Final Report Page 13 i III. EVALUATION OF FOUR RESTRUCTURING OPTIONS The consultants were asked to review four municipal governance options. Each was evaluated to understand how they meet the interests of the municipalities in the foreseeable future. The options were described in the first chapter and are summarize below: 1. Status Quo: The current arrangement where all four municipalities continue as separate municipalities. The population of the municipalities and representation would be: Representation on Council Clarington 66,000 7 (Mayor, 2 Regional Councillors and 4 local Councillors) Brock 11,640 7 (Mayor, 1 Regional Councillor and 5 local Councillors) Scugog 18,500 7 _.(Mayor, 1 Regional Councillor and 5 local Councillors) Uxbridge 15,810 7 (Mayor, 1 Regional Councillor and 5 local Councillors) Total 111,950 28 (1 elected official for every 3,998 citizens) 2. Three Municipalities: Scugog and Uxbridge amalgamate to become one municipality, and Brock and Clarington each remain as separate municipalities. The populations and representation of the;.new municipalities would be as follows: Representation on Council Brock 11,640 5 (Mayor, 1 Regional Councillor and 3 local Councillors) Scugog/Uxbridge 34,3107 7 (Mayor, 1 Regional Councillor and 5 local Councillors) Clarington 66,000 7 (Mayor, 2 Regional Councillors and 4 local Councillors) Total 111,950 19 (1 elected official for every 5,892 citizens) pays 14 Phase 9: Reviewing the current situation,Final Report Municipalities of Brock, Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery 3. Two Municipalities: Brock, Scugog and Uxbridge amalgamate to become one municipality and Clarington remains as a separate municipality, The populations and representation of the new municipalities would be: Representation on Council Brock/Scugog/Uxbridge 45,950 7 (Mayor, 2 Regional Councillors and 4 local Councillors) Clarington 66,000 7 (Mayor, 2 Regional Councillors and 4 local Councillors) w Total 111,950 14 (1 elected official for every 7,996 citizens) 4. One Municipality: Brock, Clarington, Scugog and Uxbridge all amalgamate to become one municipality. The population of the municipality would be - approximately 111,950. Under this model, the Council could consist of 9 elected officials consisting of 1 Mayor, 3 Regional Councillors and 5 local Councillors. This model would result in 1 elected official for every 12,439 citizens. Under each option, the municipalities would provid6'the same services to the taxpayers as they now do. i We have suggested elected representation for each option based on the Provincial objective of reducing the number of elected officials. Current legislation does not permit Councils of fewer than 5 elected officials including the Mayor. We recommend the j continuation of Regional Councillors although in some municipalities all members of the local Council also sit on Regional Council (e.g. the City of Mississauga). Local Councillors would continue to be related on a ward basis. There are opportunities to discuss these representation models further should municipalities want to seriously consider a specific municipal governance option. 1 EVALUATING I THE FOUR OPTIONS i Each of the-options has some strengths and weaknesses depending on different perspectives. The following criteria were used to evaluate the options. They incorporate the Provincial objectives and are listed in priority order. 1. Financial viability. There is strong interest in understanding the financial situation of the current municipal structure (Option 1) and the various other governance options. Municipalities generally feel that they should only Phase 1: Reviewing the Current Situation,Final Report i 1 Pagc 15 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery amalgamate if it is financially beneficial. Every municipality should have an adequate tax base to be able to provide a full range of municipal services through its own tax resources. Obviously, options which reduce costs will be attractive to the municipalities involved. 2. Efficiency including reduced duplication and overlap. Each option has been reviewed in terms of efficiency. Every municipality should be able to provide services with the greatest possible efficiency in terms of economies of scale, specialization and the application of modern technology. If it is found that an option can provide for more timely, cost effective and responsive service, it should be given serious consideration. Less bureaucracy by simplifying and streamlining government, reducing duplication and overlap in provision of services is also part of being more efficient. 3. Community of Interest. Another very important criterion is the degree to which an option is sensitive to the culture, history, economic and social characteristics, services and interests of residents. It is important to deliver high quality services i at the lowest possible cost and to preserve volunteerism. 4. Geographic Size. The physical area and population served is an important i evaluation criteria. Taxpayers need to feel that municipal services are accessible and that they are available locally and within manageable distances. 1 5. Long term planning. Options have been evaluated in terms of their ability to accommodate and deal with the issues related to growth and development in the j area to meet future needs. 6. Ease of Implementation. Options have been evaluated in terms of their ability to be approved and implemented. If municipalities are seriously in favour or opposed to joining, these views should be reflected in the discussion of options. The evaluation of the six options is shown in Figure 4. � I ANALYSIS OF THE TAX IMPACT OF AMALGAMATION Figure 5 shows the estimated impact on the residential municipal tax rate and the municipal property tax on a $150,000 house under each of the four options. It is assumed that the regional and education tax rates would be unaffected by an amalgamation. These estimates assume that neither expenditures nor non-tax revenues change following any of the proposed amalgamations. The tax impact is Phase 1: Reviewing the Current Situation,Final Report Page 16 n s AN WNW am SWO am gm gAAG fi Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options 1. Status Quo Although the four municipalities are financially viable today,there are some areas of concern. (Four separate Reserves are low and being depleted in Scugog. The ratio of commercialfindustrial to total municipalities) assessment is low, especially in Brock and Scugog. Further downloading=of services to the municipal level in the future could seriously undermine the financial viability of all four municipalities. 2. Three Municipalities This option would do little to change financial viability relative to the status quo. Since Scugog and (Scugog/Uxbridge, Uxbridge currently have similar tax rates,the amalgamation of these two municipalities would Brock and Clarington) have a minor financial impact. This option would improve the financial viability of Brock because the tax rate would fall. Tax rates 3. Two Municipalities p p qty (Brock/Scugog/ in Scugog and Uxbridge would increase. Uxbridge and Clarington) 4. One Municipality The amalgamation of all four municipalities would result in lower property taxes in Brock, (Brock/Scugog/ somewhat lower property taxes in Clarington and higher taxes in Scugog and Uxbridge. Uxbridge/Clarington) Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options aio yv t x 1. Status Quo Currently all four municipalities operate independently and with some notable exceptions, all (Four separate provide a full range of municipal services. Although the organizations are not overstaffed and in municipalities) fact there have been staff reductions in recent years,there are inefficiencies to the extent that the municipalities do not take advantage of economies of scale which would result through municipal amalgamations (e.g. each municipality has azChief Administrative Officer, Treasurer, etc.). 2. Three Municipalities Combining the three northern municipalities would reduce duplication to the extent that (ScugogflJxbridge, departments could each be headed by one senior person. There would also be opportunities to Brock and Clarington) increase efficiencies and reduce duplication in the areas of administration and financial services. However,the physical size of the area included could result in the need for increases in staff positions, especially for counter-type customer services. 3. Two Municipalities The analysis suggests that Uxbridge and Scugog are currently sharing certain services (Brock/Scugog/ animal control) and there would be efficiencies and reduced duplication/overlap if additionnal al serves Uxbridge and were shared. Brock would continue to have its own autonomous municipal services as would Clarington) Clarington. Therefore, Option 2 is not as efficient as Option 3. 4. One Municipality Initially, one municipality would seem to be the most efficient municipal governance option. (Brock►Scugog/ However, upon further review,the varying service levels currently in place and the large area to be Uxbridge/Clarington) covered, could require increased staff in Brock, and perhaps Scugog and/or Uxbridge k J Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options f ' 04 . 1. Status Quo Maintaining four independent municipalities is the best option for ensuring that the citizens are (Four separate able to continue with their communities intact including the local culture and customs which form municipalities) part of the fabric of the municipality and its quality of life. 2. Three Municipalities The creation of three municipalities would allow the most northern (Brock) and southern (Scugog/Uxbridge, (Clarington) municipalities to maintain their sense of community. The amalgamation of Scugog Brock and Clarington) and Uxbridge would build on some common links that now exist(e.g. recreation services, cultural services). 3. Two Municipalities Two municipalities would link the three northern municipalities and leave Clarington as a separate (Brock/Scugog/ municipality in the south. In terms of community of interest, it would be difficult for the three Uxbridge and northern municipalities, especially Brock,to continue to maintain its separate community identity. Clarington) 4. One Municipality One municipality would pose a challenge to residents interested in maintaining their unique (Brock/Scugog/ identity. Local hamlets and community facilities would remain, but there would be pressure to Uxbridge/Clarington) consolidate and harmonize services and service levels. As one municipality, there would be a trend towards fewer volunteers and more services provided by staff. The negative affects of this option would be felt most by Brock, Scugog and Uxbridge. Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options `aa & vs d.S F i 2 1. Status Quo The current situation reflects the geography that people know. However, the location of Brock in (Four separate the north suggests that it naturally affiliates with the Oriilia or Lindsay areas as opposed to the municipalities) other municipalities in Durham Region. 2. Three Municipalities Three municipalities suggests that Scugog and Uxbridge are geographically comfortable together. (Scugog/Uxbridge, However, in many ways, all three municipalities are geographically closer to other municipalities. Brock and Clarington) 3. Two Municipalities The same comments apply to Option 3 as for Option 2. While there are some geographic (Brock/Scugog/ connections among these municipalities,there are others which seen stronger in terms of Uxbridge and north/south relationships. Clarington) 4. One Municipality There are issues related to creating a single municipality stretching from Brock in the north to (Brock/Scugog/ Clarington to the south. The travel distances are significant and make it difficult to provide the Uxbridge/Clarington) same level of service throughout the municipality. The sparse population in the north, particularly in Brock, coupled with the geographic distances make it difficult to imagine one single municipality. t 1 a ti Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options .I IT LER .: . 1. Status Quo The current situation allows for municipalities to plan their future growth with advice and (Four separate coordination from the Region of Durham. While this arrangement works well, there could be municipalities) advantages from a long term planning management perspective,to have�a larger municipal entity. 2. Three Municipalities Option 2 is marginally better than the current situation. Scugog and Uxbridge as one municipality (Scugog/Uxbridge, would develop a coordinated plan for growth and development Brock and Clarington) , 3. Two Municipalities The creation of two municipalities would allow for effective planning of land uses and services that (Brock/Scugog/ cross the boundaries of these two municipalities. However, it is less ideal than Option 4. Uxbridge and Clarington) 4. One Municipality One single municipality is the best option to ensure long term planning that reflects the interests of (Brock/Scugog/ the entire area. It would allow for comprehensive planning for servicing, urban and rural Uxbridge/Clarington) development, protection of the natural environment and the provision of municipal services. Figure 4 Municipalities of Brock, Clarington, Scugog and Uxbridge Municipal Governance and Service Delivery Criteria for Evaluating Municipal Governance Options IBM -Mom' * r 1. Status Quo The current situation is the one which elected officials and-citizens understand and support. (Four separate Provided that there is ongoing financial viability,these municipalities could continue to provide an municipalities) acceptable range of municipal services which meet the needs of their taxpayers. 2. Three Municipalities Scugog and Uxbridge have some affinity with each other but also with other municipalities. (Scugog/Uxbridge, Brock and Clarington) 3. Two Municipalities There is some support for amalgamating the three northern municipalities in Durham Region. (Brock/Scugog/ However, Brock is still considerably distant from Scugog and Uxbridge, and relates in many ways Uxbridge and more to Lindsay and Orillia. Clarington) 4. One Municipality Past experience has shown that majority municipalities have difficulty voluntarily amalgamating. (Brock/Scugog! Significant amalgamations have been the result of Provincial direction and studies undertaken by Uxbridge/Clarington Commissioners or Special Advisors appointed by the Province. These decisions are usually the result of years of being unable to come to an acceptable local solution. 1 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery I entirely the result of combining the assessment base of each of the amalgamated municipalities and determining the amount of redistribution that would occur. These estimates do not include the $50 flat fee per household for garbage collection in I Clarington nor the special area rates in the other three municipalities. It is assumed that these would continue following an amalgamation and should be added to the tax where appropriate. On a $150,000 house, the additional levy is $62.00 in Brock, $42.06 in j Scugog and $33.00 in Uxbridge. i Estimates of the property tax impact indicate the following: i ♦ The amalgamation of Scugog and Uxbridge (Option 2) would result in higher ,I property taxes in Uxbridge and lower property taxes in Scugog ♦ The amalgamation of Scugog, Uxbridge and Brock.(Option 3) would result in higher property taxes in both Scugog and Uxbridge and lower property taxes in I Brock. ♦ The amalgamation of Brock, Scugog, Uxbridge and Clarington (Option 4) would I[ result in higher property taxes in Scugog and Uxbridge, somewhat lower property taxes in Clarington, and lower property taxes,in Brock. t Figure 5 r, Municipalities of Brock, Clarington, Scugog and Uxbridge li Municipal Governance and Service Delivery Potential Municipal Residential Tax Impact of Four Amalgamation Scenarios Under the Assumption that Expenditures and Non-Tax Revenues are Unchanged ttK WKCX'i;N Status Quo -1999 municipal residential rate(%) 0.62 0.35 0.33 0.42 l -tax on$150,000 house $ 934 526 490 626 a w Three Municipalities -1999 municipal residential rate N 0.62 0.34 0.34 0.42 j -tax on$150,000 house $ 934 508 508 626 Two Municipalities - 1999 municipal residential rate(%) 0.40 0.40 0.40 0.42 -tax on$150,000 house $ 597 597 597 626 One Municipality -1999 municipal residential rate(%) 0.41 0.41 0.41 0.41 -tax on$150,000 house $ 611 611 611 611 Note: These estimates do not include the $50 flat fee per household for garbage collection in Clarington nor special area rates in Brock, Scugog and Uxbridge. These taxes are only the municipal portion and do not include regional or education g Property taxes. Only municipal property taxes would be affected by an amalgamation. Phase !s Reviewing the Current Situation,Final Report Page 17 IV. OPPORTUNITIES FOR IMPROVING SERVICE DELIVERY As mentioned in the last chapter, there are significant opportunities for these municipalities to increase sharing and cooperation in the provision of municipal I , services. These service sharing arrangements have started and should continue. SHARING MUNICIPAL SERVICES In almost every service area, there are opportunities to share services and/or enhance the existing arrangements. Sharing would involve both the Region (being discussed as part of the separate Regional Who Does What initiatives) and the local municipalities. Twenty-nine service sharing suggestions to consider are listed below, by service area. Animal Control 1. Use the Uxbridge/Scugog current arrangement as a model for discussion with Brock Township 2. Consider administration by one municipality Building 1. Develop a reciprocal system so that municipalities can benefit from staff backup during vacationAllness'and busy periods 2. Use specific expertise of Clarington building officials for specialized proposals in Brock, Scugog and Uxbridge 3. Consider centralized administration to manage the building permit processing of applications 4. Investigate the appointment of one CBO for the four municipalities Phase 1: Reviewing the Current Situation,Final Report page Municipalities of Brock C larington,Scugog and Uxbridge Municipal Governance and Service Delivery Finance and Administration (including Clerk's) 1. One I person could oversee records management with respect to a central filing system, retrieval of records, computerization of records 2. Consider centralized administration of tax billing and collection 3. Explore cooperative purchasing in addition to Regional initiatives b y developing' a potential list of opportunities by,municipal service area 4. Explore opportunities NN s fer joint tendering 5. Develop a centralized capability for information,technology and human resources (perhaps through Clarington) that can be used as a purchase of service by the three northern municipalities Fire i 1. Continue mutual aid agreements 2. Investigate joint training initiatives f 3. Explore opportunity for northern municipalities to share one full-time fire chief ��• responsibility with res � p ility for the three northern fire services 4. Coordinate emergency planning among the four municipalities 5. Explore opportunities for sharin g q a ui ment p l t Library 1• Examine opportunities for integrated computer systems among existing public libraries I 2. Explore feasibility of developing comparable staff positions in terms of job descriptions, qualifications and compensation nsation ' 3• Consider centralized materials purchasing I Phase 1: Reviewing the Current Situation,Final Report Page 19 Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery Parks, Recreation and Culture 1. Develop joint marketing and promotion materials for the three northern municipalities so that citizens can learn about and participate in the programs and use the facilities of neighbouring municipalities 2. Investigate a coordinated, computerized facilities booking and program registration system 3. Review job descriptions and compensation with a view to adopting common practices for staffing 4. Consider hiring one overall Director of Parks, Recreation and Culture for the three northern municipalities Planning and Development 1. The three northern municipalities should work together to explore how best to provide land use planning services —optioniOnclude jointly hiring a professional planner or purchasing this service from darington. 2. Review policies and procedures for development approvals with a view to l' harmonizing the process 3. Investigate centralized tracking of planning development approvals i Public Works V 1. Develop a schedule and policies for sharing expensive, highly specialized equipment among municipalities 2. Use expertise of Clarington staff to provide project management services K 3. Explore opportunities for coordinated services for such areas as signage, materials testing, etc. These are some suggestions to consider. Staff should review this initial list, modify it, develop any additional opportunities for sharing municipal services and develop a priority list. The philosophy of this approach is based on the belief that the existing municipalities (especially Brock, Scugog and Uxbridge) can provide improved services to citizens through the existing municipal governance structure. It presumes that these improvements can be made cooperatively and that they do not require municipal Phase 1: Reviewing the Current Situation,Final Report Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery restructuring to be successful. However, as mentioned earlier, success does require strong political leadership and support. I It is felt that increased municipal service sharing should be undertaken first as an introduction to see if there is value in establishing a more permanent relationship which could result in a municipal restructuring. Municipalities should establish municipal service sharing as a top priority for the next term of Council. ` r t_ Phase 9: Reviewing the Current Situation,Final Report Page 21 V. RECOMMENDATIONS AND NEXT STEPS When this project was initiated in the spring of 2000, it was seen as an exploratory exercise. Specifically, there was an interest on the part of the three northern municipalities of Brock, Scugog and'Uxbridge, and later Clarington, to understand the financial implications of various amalgamation options, as well as opportunities for increased municipal service sharing. The analysis has led to a number of recommendations and suggestions if the four participating municipalities wish to proceed with Phase 2. RECOMMENDATIONS The review has led to six recommendations: r�x 4' 1. There is no value at this point in proceeding with any of the three identified restructuring options. At this stage, based on the Phase 1 work, there does not appear to be sufficient compelling reasons to proceed with any of the three I amalgamation options included as part of this review. The financial benefits are likely to be outweighed, at least in the short term, by the increased costs. Also, there do not appear to be any other examples of municipal restructuring proceeding with Durham Region or el7ewhere in the 905 area. 2. Proceed with a strategy for enhanced Municipal sharing of services. The results of the Phase 1 work support the continuation of municipal service sharing in the areas of animal control, mutual aid agreements for fire service, Hand!- Transit (Scugog and Uxbridge) and the Durham Community Network (DCN) among others. These examples should be profiled as successful initiatives and used as prototypes to develop a framework for additional municipal service sharing arrangements. The Phase 1 work has identified additional areas for sharing of municipal services. Staff from each municipality should meet to develop a list of priority items. Specific areas to explore include the following: • Tourism marketing. The three northern municipalities should develop joint tourism promotion materials including brochures advertising the attractions, resorts and facilities in the area. Page Z2 Phase 1: Reviewing the current situation,Final Report ' Municipalities of Brock, Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery • Parks and e ' recr anon services. Again, the three northern municipalities should develop standardized brochures outlining the parks and recreation programs and services available. This brochure would enable residents to know about and participate in programs and services available in the three northern municipalities. They should also explore shared staffing arrangements. Land use planning and development services. Again, the three northern municipalities should collectively review their land use planning needs and' decide how best to meet them. Alternatives include contracting with the E Town of Clarington, or hiring a planner(either on staff or as a consultant) to serve all three municipalities. These are just some examples of municipal service sharing o pp ortunities to be explored by municipalities. 3. Review Phase 1 findings with municipal Councils. As a first step, it will be Important to review the Phase 1 findings and analysis with municipal Councils. This review should include a discussion of work undertaken and the overall assessment of the consultant that it is premature to move to any municipal amalgamations at this time. The municipal Councils should be made aware of the consultants' observations on the opportunities for municipal service delivery among municipalities. The municipal Councils should review this Phase 1 work t and decide on the value of proceeding with Phase 2 of the project. Phase 2 would focus on specific municipal service sharing arrangements. w� 4. Advise Region of Durham of Phase 1 findings and follow-up by municipalities. The Region has requested that municipalities undertake independent municipal governance studies. The four municipalities participating j in this review should advise the Region of the work undertaken and the decision to proceed in the short-term, with additional municipal service sharing j arrangements. Review experiences of other restructured municipalities. At the present time, there are numerous municipalities that either have restructured or are considering restructuring. The four municipalities participating in this review j should seek out information on the experiences of other comparable municipalities. As an example, the Town of Port Hope and Township of Port Hope have recently agreed to amalgamate as have the municipalities g that have been united to create the new City of Kawartha Lakes. The experiences of the municipalities participating in these municipal restructurings should be Phase 1: Reviewing he current Trent Sltuatlon,Final Report Page 23 3 .. Municipalities of Brock,Clarington,Scugog and Uxbridge Municipal Governance and Service Delivery considered and factored into the decisions taken by the four municipalities participating in this study. 6. Continue to explore an expanded number of municipal restructuring g options. This review has recommended that in the short-term, the four municipalities continue to share municipal services and identify additional opportunities for municipal service sharing. In addition, these municipalities should continue to investigate municipal restructuring options. These options should be expanded to include north/south amalgamations. PROCEEDING WITH PHASE 2 It was agreed that there would be a discussion of the interest in proceeding with Phase 2, based on the outcome of the Phase 1 work. Phase 2 would involve a more detailed investigation —either of municipal restructuring options, or of enhanced municipal service sharing. i The region of Durham continues to expect municipalities to develop their own plans for improving municipal service delivery. Municipalities are supposed to be looking at restructuring initiatives as part of this process. This project has identified that there are significant opportunities to improve municipal I services among the four municipalities without necessarily restructuring. However, these cooperative efforts will require a change in political direction and an aggressive plan to develop shared service arrangements. r 1 Based on this Phase 1 report, the four municipalities need to decide on how best to proceed. It is recommended that they develop a'work plan for investigating increased municipal service sharing including a description of services to be included as part of I this exercise. I Phase 1: Reviewing the Current Situation,Final Report Page 24r i nure^^rryhygR � wwnu i 2 , 3 r' 4 G 4w an i i swo s i 's i I i i Clarington's Future Prospects: An Analysis of the Impact of a Potential Annexation of Courtice by Oshawa A Report prepared by e Enid Slack Enid Slack Consulting Inc. for The Municipality of Clarington February 2001 The purpose of this report is to estimate the financial impact of a potential annexation of Courtice by the City of Oshawa. The analysis in this report determines the financial impact on Clarington without Courtice,both at the present time and in the future. It also provides some preliminary i estimates of the tax impact on Courtice residents if Courtice were annexed to Oshawa. 1. Boundary Options The analysis has been conducted for three different boundary options for Courtice. The attached maps show.three possible boundaries for an annexation. Table 1 describes each of the option z areas and the estimated population and households. 2- v Estimate of Financial Impact on Clarington _01mates ofthe financial impact on Clarington of a potential annexation of Courtice under each } ( option)are made as if the annexation had taken place in 1999. This is done by estimating the ' impact on expenditures and revenues as they appear in the 1999 Financial Information Returns FIts ( ).The FIRs were used because they provide comparable data across municipalities for the most recent year available, 1999. Because more recent data are available on assessment, pxelirninary assessment information for 2001 is used(based on 1999 assessed values). These assessment data could not be used to estimate tax impact, however, because tax rate information t is-not'yet available for 2001. The future impact is estimated by extrapolating operating expenditures, non-tax revenues, and assessment and by using information on future capital expenditures and revenues from Clarington's Development Charges Background study. 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Average occupancy rates for Courtice are 3.05 persons per unit and 2.89 persons per unit for rural areas. In this table, an occupancy rate of 3.0 was used. Impact on Operating Expenditures To determine the impact on operating expenditures in Clarington following an annexation; it is necessary to know what Clarington is currently spending in Courtice. Financial Information Returns only provide expenditures by function for the municipality as a whole and do not break down expenditures by area within a municipality. For some services, such as parks and recreation, fire protection, libraries, and roads, Clarington staff were able to provide estimates of what is currently spent in Courtice. For the remaining services, expenditures were distributed between Courtice and the rest of Clarington on the basis of assessment or population, as appropriate. Table 2 summarizes the methodology used to distribute operating expenditures by study areas under each of the three options. Table 3 shows the amount of expenditures in Courtice under each of the three options. By subtracting the expenditures under each option from the expenditures for Clarington as a whole, the expenditures in the remainder of Clarington were determined for each option. Table 3 shows, for example, that in 1999, operating expenditures in Clarington as a whole were $29.2 million. Of this total, it is estimated that $7.2 million were spent in Option Area 1 of Courtice, $7.7 million in Option Area 2, and$9.5 million in Option Area 3. 2 C Table 2: Allocation of Operating Expenditures - Expenditure Category Distribution General government Taxable assessment Fire protection Estimate of full and part-time salaries and benefits at Courtice fire station t Conservation authority Taxable assessment Protective inspection/control Taxable assessment Emergency Measures Taxable assessment Roadways,street lighting,winter control Based on road maintenance costs per kilometre of road for urban and parking and'rural areas and proportion of roads in each option plus a share E of administration,engineering and inspection,overhead and railway costs Transit Population Storm sewers All costs attributed to Courtice Garbage collection Households Cemeteries No costs attributed twCourtice Parks Average cost of park maintenance per hectare applied to number of hectares in Courtice Recreation Total operating expenditures of Courtice Community Centre were ' attributed to Courtice including facilities,program,and canteen Libraries Estimate of the cost of the Courtice library including staff costs, administration,office supplies,and licences Other cultural(museum) No costs attributed to Courtice . Planning and zoning Residential building;permits Commercial and industrial Commercial and industrial assessment Tile drainage/shoreline assistance No costs attributed to Courtice 3 it tt7ii" i r n,r 3 Table 3:Impact on Operating Ex enditures,1999 � 3 emainder a�ta z ran ttn Total"' Expendctur option't 00,011 2 C>kphon 3 Upton 1' Uption 2 Qphott 3 l , >1999 t`y General Government 8,3$2,615' 2,451621 2547,?81I 2,97 ;392 `6,930;994 5,834,82fi ;�S,405,223 '. ,` Fire 2,858;683 807x157 " 807,I57 .$07,157 2,051;526 2;aS1,526 :2,051,526 Conservation Authority 0 .0 0 0 0 0;, 0 Protective Inspection/Control 856,776 250,577 260,40f `304,315 606,199 596,370 552,461 Emergency Measures 32,791 9,590 -9,966 ` 11,647 23,201 22,825 21,144 Total Protection to Persons&Property 3,748,250 1067 324 1077 529 1 1,23,119 2,680,926 2 670 721 2,625,131 Roadways,winter control,parking,street light' 7,701,616 12549,138 1,921,398 2,766,973 6,151,471 8 5,780,218 4,934,643 Transit 91,372 27,271 28,372 32,097 64,101 63,000 59,275 Total Transportation Services 7,792,988 1,576,409 1,949,770 2,799,070 6,216;579 5,843,218 4,993,918 Storm Sewer System 23,333 23,333 23,333 23,333 0 0 0 Garbage Collection 867,434 258,895 269,344 304,709 608,539 598,090 562,725 Total Environmental Services 890,767 282,228 292,677 328,042 608,539 598,090 562,725 Cemeteries 101,565 0 W 0 1012565 101,565 101,565 Total Health Services 101,565 0 0 0 101,565 101,565 101,565 Parks and Recreation 4,833,555 840,848 840,848 1,235,059 3,992,707 3,992,707 3,598,496 Libraries 1,346,720 325,000 325,000 325,000 1,021,720 1,021,720 1,021,720 Other Cultural 263,562 0 0 0 263,562 263,562 263,562 Total Recreation&Cultural Services 6,443,837 1,165,848 1,165,848 1,560,059 5,277,989 5,277,989 4,883,778 Planning and Zoning 1,232,142 548,022 553,466 562,539 684,120 678,676 669,603 Commercial and Industrial 545,514 76,899 76,954 140,968 468,615 468,560 404,546 Tile Drainage/Shoreline Assistance 7,718 0 0 0 7,718 7,718 7,718 Other 3,416 0 0 0 3,416 3,416 3,416 Total Planning and Development 1,788,790 624,921 630,420 703,507 1,163,869 1,158,370 1,085,283 Total Operating Expenditures 29,148,812 7,168,350 7,664,032 9,491,189 21,980,462 21,484,780 19,657,623 I i i Impact on Non-Tax Operating Revenues Estimates were prepared of the impact on non-tax revenues (and non-payment in lieu of tax revenues)` using the information in Table 4. Estimates of non-tax revenues are shown in Table 5 for each of the three options. Linear properties in Ontario (Ontario Hydro, CN, and CP) are now taxed on the basis of the number of acres multiplied by a provincially-determined tax rate. In 1999, the rates increased significantly for Ontario Hydro. For other linear properties, rate increases are being phased in over the next six years. As Table 5 shows, the non-tax, non-PIL revenues range from almost$2.8 million in Option Area 1 to $3.2 million in Option Area 2. In Option Area 3, these revenues are considerably higher at over$5.8 million. The reason is that linear property taxes (especially Ontario Hydro) and the education-retained portion of the PILs from.Hydro (that Clarington is currently permitted to keep) provide significant revenues in Option 3.2 Impact on the Assessment Base Table 6 summarizes the impact on the assessment Base under each Option, using assessment for 2001 (based on 1999 values). It shows the taxable assessment that would be removed from Clarington under each of the three options and the taxable assessment that would remain in Clarington. The loss in assessment to Clarington increases with each option. The largest amount (under Option 3) reflects the loss of Hydro PIL assessment. Impact on Property Taxes ' To calculate tax rates, it is necessary to weight taxable assessment by the tax ratios used in Clarington. Tax ratios reflect differential tax rates l6ied on class of property. To estimate the tax impact, 1999 assessment (based on 1996 values) was used for two reasons. First, it corresponds to the 1999 expenditures used and second, tax ratio information is not yet available for 2001. Revenues from payments in lieu of property taxes are excluded from non-tax revenues because they are assessment-based and calculated as part of the property tax. 2 Table 5 does not show the municipal PILs from Ontario Hydro that would also be lost to Clarington in the event of an annexation. The loss of PILs is calculated as part of the tax impact because it is assessment-based. 4 °N r 77" Table 4:Allocation of Non-Tax,Non-Payment in Lieu Operating Revenues Revenue Category Distribution Linear properties Actual taxes collected in 1999 BIA levies None were allocated to Courtice Waste management collection charges Allocated on a per household basis ft" Ontario Grants Allocated for each expenditure category in the same way as expenditures were allocated _ Canada Grants Allocated for each expenditure category in the same way as expenditures were allocated Fees and service charges Allocated for each expenditure category in the same way as expenditures were allocated Licenses and ermits Allocated on basis P of building permits Rents,concessions,franchises Information taken from Courtice Complex Fines Allocated on the basis of assessment Penalties and interest on taxes Allocated on basis of assessment Investment income Allocated on basis of assessment _' Donations None allocated to Courtice Sales of publication,equipment Allocated on the basis of assessment Contributions from reserves,reserve funds Allocated on the basis of assessment '- Other Allocated on the basis of assessment Education retained portion of Hydro PILs Allocated to the area in which PILs are paid i s s �1� 5 _ __ Table 5: Impact on Non-tax,Non-PIL revenues, 1999 Remainder of Clarin ton Clarington Option 1 Option 2 Option 3 Option 1 Option 2 Option 3 Linear properties 1,959,366 0 316,314 1,009,841 1,959,366 1,643,052 949,525 BIA levies 109,849 0 0 0 109,849 109,849 109,849 Waste management collection charges 1,017,558 303,712 315,986 357,470 713,846 701,572 660,088 Ontario specific grants 180,454 43,516 44,471 48,739 136,938 135,983 131,715 Canada specific grants 17,625 2,966 3,013 3,225 14,659 14,612 14,400 Fees and service charges 2,168,777 742,312 758,993 808,292 1,426,465 1,409,784 1,360,485 Subtotal revenues for specific functions 2,366,856 788,793 806,477 860,256 1,578,063 1,560,379 1,506,600 Licences and permits 1,104,648 491,316 496,197 504,331 613,332 608,451 600,317 Rents, concessions and franchises 1,000,858 169,000 169,000 169,000 831,858 831,858 831,858 Fines 35,961 10,517 .-:,16;930 12,773 25,444 25,031 23,188 Penalties and interest on taxes 1,091,642 319,267 331,791 387,737 772,375 759,851 703,905 Investment income from other 554,000 162,026 - '�168,381 196,773 391,974 385,619 357,227 Donations 9,713 0 0 . 0 9,713 9,713 9,713 Sales of publications, equipment etc. 15,008 4,389 4,561 5,331 10,619 10,447 9,677 Contributions from reserves/reserve funds 1,931,571 564,917 587,076 686,068 1,366,654 1,344,495 1,245,503 Education Retained Portion of PIL 1,631,232 415 415 11631,232 1,630,817 1,630,817 0 Subtotal other revenue 7,374,633 1,721,847 1,768,351 3,593,245 5,652,786 5,606,282 3,781,388 Total non-tax,non-PIL revenue 12,828,262 2,814,352 3,207,128 5,820,812 10,013,9101 9,621,1341 7,007,450 t m......... Table 6: Impact on Taxable Assessment Based on 2001 Current Value Assessment $ millions Option 1 Option 2 Option 3 Taxable Assessment in Study Area 1,235 1,283 1,500 Taxable Assessment remaining in Clarington 21465 2,416 2,200 . t Table 7 summarizes the impact on a typical residential property in the remaining art of Clarington under each of the annexation options.The tax impact is estimated by subtracting the non-tax,non-PIL revenues from expenditures to determine the amount of the tax levy. The tax levy is divided by the weighted assessment under each option to determine the residential property tax rate. This tax rate is then multiplied by$150,000 to determine the tax impact on a typical house. Table 7 shows that the residential property tax on a typical property in Clarington increases somewhat under Options 1 and 2, and increases significantly under Option 3. The significant a increase under.Option 3 reflects the loss of Hydro property. Table 7: Impact of Potential Annexation on Property Taxes in the rest of Clarington. 1999 Residential property tax on a house assessed at $150,000 1999 tax Option 1 Option 2 Option 3 $679 $695 $697 $806 Note: Property taxes in each year include the municipal portion of the flat rate for garbage. 6 I LC-- fir. Impact on Capital Expenditures and Revenues Table 8 provides a breakdown by Option Area of capital expenditures on development charge related projects from 1994 to 1999. Unlike operating expenditures, capital expenditures generally do not follow a pattern over time. Rather, they respond to particular needs in particular years. For this reason, Table 8 provides information on capital expenditures over the last six years. The bulk of expenditures were made in the Option 1 area with only small additional expenditures in Options 2 and 3 for public works and parks development. z Table 8: Ca ital Expenditures, 1994 to 1999 Option 1 Option 2 Option 3 Public Works 4.655 204 4,686,740 4,686,740 Parks Development 492,033 492,033 623,476 Indoor Recreation 41755,295 4,755,295 4,755,295 General Government 0 0 0 Fire 5,034 5,034 5,034 Library 2,904,161 2,904,161 2,904,161 Total 12,811,727.1 12,843,263 1 12,974,706 In terms of financing capital expenditures, Table 9 shows a breakdown of all sources of capital financing for development charge related projects in Clarington (not broken down by Option Area) for the years 1994 to 1999. The largest source of capital financing is from development charges followed by outside contributions (these include infrastructure grants, debentures for libraries and Ontario Hydro funds for the fire headquarters). 0 Table 9: Sources of Ca italjFinancin , 1994 to 1999 $ % Tax Levy 5,823,900 14.1 y Development Charges 15,602,766 37.9 Non-DC Reserve Funds 7,784,286 18.9 Reserves 3,814,554 9.3 Outside Contributions 8,159,576 19.8 Total 41,185,082 100.0 I In the event that Courtice were annexed by Oshawa, there would be a decrease in capital 7 expenditures to Clarington and a decrease in each of these revenue sources. With the exception of development charges, it is not possible to tell from the above information whether the reduction in revenues for capital purposes raised in the Option Areas would be greater than or less,than expenditures. Table 10 compares development charges collected and development charges expended for each of the Option Areas in the last six years. The table indicates that, in each of the Option Areas, the amount spent in Courtice exceeded the amount collected. This means that DC revenues in other parts of Clarington have been available to assist in financing projects in Courtice over the last six years. Table 10: Development Charges, 1994 to 1999 Option 1 Option 2 Option 3 _ DCs collected 6,832,262 6,847,982 7 050 0 30 DCs expended 7,947,219 7,947,219 7,947,219 Note: Development charges(collected and expended) were allocated to study areas where these could be determined.For municipal-wide projects, 30 percent of collections and expenditures were allocated to Courtice.They were added to Option 1, which is contained in all other Option areas. 3. Impacts on Service Levels in Clarington In addition to the impact on property taxes noted above there will be other impacts mpacts on residents of Clarington in the event that Courtice is annexed by Oshawa: • Fire: If Courtice were annexed to Oshawa the Courtice fire station would no longer be f_ part of Clarington. The northern part of Clarington would be serviced from the Enniskillen fire station and the southern part from the Bowmanville fire station. Although there are unlikely to be additional costs to the existing fire stations, the response time will increase. For example, the response time to Mitchell's Corners could increase by five minutes. Furthermore, if the Courtice fire station is lost to Clarington, it may be necessary `. to speed up the construction of the proposed second fire station in the development charges by-law from 2008. Under an agreement with Ontario Hydro, Clarington is contractually bound to provide 24 hour a day fire protection service to the Darlington Nuclear Generating Station. The fire I ; ' 8 i stations in Courtice and Bowmanville both respond to the Darlington nuclear plant. If the Part of Courtice in which the fire station is located were annexed by Oshawa and if Ontario Hydro did not agree to an amendment to the agreement with Clarington nngton with � respect to fire protection to the Darlington facility, fire protection for Darlington could be addressed in one of two ways. Either Clarington would have to speed up construction of a fire station appropriately located to serve the function of the Courtice station would have to be made to the Automatic Aid Agreement under which fireprotect ages service would continue to be provided from the Courtice fire station. • Libraries: Each library in Durham has a different, specialized P d collection. If the library in the Courtice complex became part of Oshawa, there would be a gap in the system-wide collection in Clarington. Up until a few years ago, Oshawa did not participate in reciprocal borrowing arrangements with other libraries in Durha P awl Rnon-residents a fee in the range of$20 to $25. In the last few years, recip ocalborrowing charged arrangements in the Durham library system have meant that a library card in one municipality, one could obtain a library card to libraries in another municipality in the region at the cost of$1.00. This is an informal arrangement, however, and can be terminated at any time. There are plans for a new Northern Gateway Branch in the Clarington library system in about 15 years. Since the northwest part of Clarington would be poorly served by libraries if Courtice were annexed to Oshawa, there may be a need to construct the proposed library sooner. • Recreation facilities: If Courtice were annexed to Oshawa, the Courtice become part of Oshawa. This would Complex would because it currently has the only fitness facility in Clarington Depending residents for the facility, g n the demand ty residents of Clarington may no longer be permitted to use the facility, they may be restricted at prime times, or they may be charged extra fees a The use of the facility would be determined by Oshawa. snon-residents. Under the approved development charge,study, there is a proposed expansion Courtice Complex in 2001. Furthermore;the council recently approved a majoro the community centre in Courtice to commence in 2002. 4• Assets and Liabilities In the event of an annexation of Courtice, there will be a need to osition address the dis and liabilities. A municipality's assets and liabilities are generally divided i p of assets financial and physical. Financial assets and liabilities are reported in the annual finan iagories: statements of the municipality and include: reserves, reserve funds, surpluses, f long term liabilities. Physical assets are not reported in financial statements and include land, f buildings, rolling stock, and equipment. f 7-77-771-�- A In the case of an annexation,physical assets located in the part of a municipality that is annexed by another municipality generally become the property of the annexing municipality. In the usual case, one would expect that compensation would be paid to Clarington for the loss of these physical assets. No estimates of the value of these assets have been made at this time. Net,financial assets can be calculated as the difference between total assets and current liabilities or by the fund balances at the end of the year. Fund balances include funds to be used to offset taxation or user charges, unexpended capital financing, and reserves and reserve funds. Axeserve is an appropriation from net revenue after the provision of all known expenditures. It has no reference to any specific asset and does not require the segregation of money or assets. A reserv6 fund differs from a reserve in that reserve fund assets are segregated and restricted to meet the purpose of the reserve fund. Reserve funds can be obligatory or discretionary. Obligatory reserve funds (as in the case of development charges, for example) must be created whenever a sta te tu requires revenue received for special purposes to be segregated from the general revenues of the municipality. Discretionary reserve funds are established whenever a municipal council wishes to earmark revenues to finance a future capital expenditure. Table I I shows the methodology used to allocate reserves and reserve funds to Courtice. Rather than analyzing each of the Option areas, Option 3 was used for the purpose of allocating reserves and reserve funds to Courtice. The general principle behind the allocation of assets and liabilities is to allocate on the basis of the purpose to which the funds were established and where they are intended to be used. Where there is no clear purpose, reserves and reserve funds were allocated on the basis of where they were collected,using taxable disessment to allocate the funds. The reserve fund balance as of December 31, 2000 was estimated to be $25.8 million. Of this amount, $5.8 million or 22.4 percent has been allocated to Courtice. The reserve balance as of December 31, 2000 is estimated to be$7.3 million of which $2.5 million or 34 percent has been allocated to Courtice. Funds to be used to offset taxation or user charges plus unexpended capital financing totalled$4.3 million of which$1.6 million was allocated to Courtice. Finally, tax arrears in 1999 were $8.8 million in Clarington. Based on actual estimates, $3.7 million were allocated to Courtice. The total amount that would be allocated to Courtice in the event of an annexation(including tax arrears)would thus be$43.6 million. 10 Table 11: Basis of Allocation of Reserves and Reserve Funds Reserves and Reserve Funds Allocation Reserves assessment except for GIS,Sick credit and jr.firefighting program for which nothing was allocated to Courtice Reserve Funds: Industrial/Eco development assessment Municipal Capital Works assessment Debenture retirement assessment Impact/Escrow assessment Clarington/Region Stn.A Account nothing allocated to Courtice Admin,improvement assessment Parking Lot nothing allocated to Courtice Fire primary response nothing allocated to Courtice Lot levy fire assessment ' [ I Roads capital building permits Parkland cash in lieu building permits Engineering and inspection building permits Roads contributions building permits Public works and parks capital assessment Cove Road/Westside Bridge nothing allocated to Courtice ' RRC site development nothing allocated to Courtice Arena-capital nothing allocated to Courtice Community services capital assessment Courtice Complex allocated to Courtice WestsideBowmanville Marsh nothing allocated to Courtice Newcastle waterfront nothing allocated to Courtice Development Charges development charge collections Courtice library two library reserve funds were combined and allocated on the basis of Library main branch assessment; Courtice library already constructed so funds will become part of overall library reserve fund Older adults centre-operations nothing allocated to Courtice Older adults centre-capital nothing allocated to Courtice Museum capital-Bowmanville nothing allocated to Courtice Museum capital-Clarke nothing allocated to Courtice Bowmanville BIA nothing allocated to Courtice Darlington cemetery-capital nothing allocated to Courtice Courtice OHAP allocated to Courtice 11 �° ; i 5. Estimate of Future Financial Impact To estimate the future tax impact of an annexation of Courtice, it is necessary to project expenditures,revenues, and assessment. Projecting expenditures and revenues can be done on a per household basis. The projection of the residential assessment base is also based on population or household projections; non-residential assessment is projected on a square foot basis. Projections were made from 1998 to 2008. Table 12 shows the projected additional assessment for each of the options. Future industrial assessment is based on historic trends. This methodology results in conservative estimates of the possiblefuture industrial development in Courtice for several reasons. First, the assessment estimates downplay the impact on industri'al development in Courtice once water and sewer services are extended to that area. Second, it is anticipated that future industrial assessment in Courtice will be substantially higher because of economic and locational considerations. In particular, industrial lands in other Durham municipalities lack exposure to Highway 40 1. Third, the ITER Nuclear Fusion Research Centre could generate a significant increase in tax revenue. Even if the research facility were tax-exempt, associated industries attracted to this location will generate significant assessment and property tax revenues. Fourth, the reassessment in 2001 (based on 1999 values) shows a larger increase in assessment (from 1996 values) in the three Option Areas of Courtice than for Clarington as a whole. The increase in assessment in Clarington was 12.5 percent compared to 13.2 percent f6i'Option Area 1, 13.3 percent for Option Area 2, and 14.2 percent for Option Area 3. This increase is a combination of higher assessed values and growth. Table 13 shows the impact on the tax rate and the property tax on a$150,000 house in the rest of Clarington for the case where there is no annexation and under each of the annexation options. The estimate,based on no annexations is $597 compared to $589 in 1998 (the starting date r fo the projections). The difference results from an estimated expenditure increase of 36.4 percent over the ten-year period that exceeds both the estimated increase in non-tax revenues (3 5.6 percent over ten years) and the increase in assessment (35 percent over ten years). The estimates in Table 13 are very preliminary because it is difficult to predict what changes will occur in ten 'Yelars.For example, the additional assessment represents only additions to the number of properties and not increases in the value of properties. A $150,000 house would presumably be worth more and would be assessed at a higher amount in 2008. Furthermore, expenditures are not increased by an amount for inflation but only for an increase in the size of the population. The estimates in Table 13 continue to include $1.4 million in the education-retained portion of the Hydro,payments in lieu. It is anticipated that this source of revenue will likely be eliminated in the next three years. If it is, there could be an additional tax burden under all scenarios. One of the differences in revenues, compared to 1998, relates to .linear property taxes which are expected to increase over the next five years. Projected revenues from linear property taxes are shown in Table 14. These are based on the projected tax rates to be applied by the Province in the 12 next five years. Since linear properties are only applicable under Option Areas 2 and 3, Table 14 only shows these taxes for those two options. ta Table 12: Projections of Additional Assessment in each Option Area, 2008 Option 1 Option 2 Option 3 Assessment: Residential 388,816,000 397,966,000 408,641,000 Commercial 26,062,500 26,062,500 26,362,500 Industrial 17,939,000 17,973,000 18,041,000 Total 432;817,500 442,001,500 453,044,500 Note: The number of units was calculated from estimates from the revised DC draft (December 1999). Average assessed values by type of property were provided by OPAC. Table 13: Estimated Tax Im act on`the test of Clarin on in 2008 a No Option 1 Option 2 Option 3 Annexation Tax on a $150,000 house $597 $748 $757 $870 Notes: Estimates do not include the potential revenue loss if the education-retained portion of Hydro payments in lieu werg eliminated. The property tax in the absence of annexation($597) is different than the starting point 3 of$589 estimated for 1998 (or for the$670'estimate of 1999)because of changes in assessment, expenditures and revenues over the ten-year period. These estimates include the$50 municipal flat rate for garbage. f i 13 ' i r, Table 14: Taxes on Linear Properties, Options 2 and 3 for the ears 2000 to 2005 <Op ion Area 2 CN CP Ontario Hydro Total 000 8,409 6,515 386,428 401,352 = 001 12,292 9,581 386,428 408,301 2002 16,175 12,648 386,428 415,251 `200 20,057 15,174 386,428 421,659 °2004 23,940 18,780 386,428 429,148 2005 27,824 21,846 386,428 436,09$, Option Area 3 CN CP Ontario Hydro Total 2000 8,409 13,554 1,250,925 1,272,888 2Q01 12,292 19,934 1,250,925 1,283,151 2002 16,175 26,314 1,250,925 1,293,414 2003 20,057 32,694 1,250,925 1,303,676 2004 23,940 39,073 1,250,925 1,313,938 2005 27,824 45,451 1,250,925 1,324,200 Future Capital Requirements Future capital expenditures are shown in Table 15 for both development charge projects and non- development charge projects. Table 15 also shows projected development charge revenues under each option. The development charge projects in Courtice are mainly for roads plus indoor recreation,park development, and libraries with a relatively small expenditure for fire. For the balance of Clarington, the breakdown is similar with the exception that fire expenditures are relatively larger. The non-development charge projects directed to Courtice are fairly small; most of the expenditures are for municipal-wide services to which a 30 percent share has been allocated to Courtice. Table 15: Future Ca ital Expenditures Option 1 Option 2 Option 3 Remainder of Clarin ton DG residential share allocation 199-200$ 20,851,528 20,851,528 21,024,868 33,293,589 C revenue , 18,528,639 18,738,459 18,983,249 n.a. r,ton DC capital expenditures, 4002609 - 8,595,066 9,093,358 9 376,239 37,953,596 Nt�e a t es of DC revenues do not include the residential phase-in program. 14 Under each of the options, the amount of revenues collected from the development charge in g � Courtice is expected to be less than the amount of expenditures to be made. As in the previous six years, the approved DC study assumes that DC revenues collected in Courtice in other parts of Clarington would be available to assist in financing projects in Courtice. Table 15 also compares future capital requirements by function in Courtice with future capital requirements in the rest of Clarington. Analysis of the information in Table 15 indicates that the i remainder of Clarington accounts for 61 percent of DC capital projects and 80 percent of non-DC projects. e ' t 6. Impact on Courtice Residents Under each of the three Options, residents of Courtice will become part of Oshawa. The level of expenditures that these residents will enjoy will be determined by the City of Oshawa. Table 16 I estimates the tax impact on Courtice residents, assuming that expenditures in Courtice will be the 4 same as expenditures in Oshawa on a per capita basis following an annexation. The non-tax revenues are also assumed to be similar, on a per capita basis, to Oshawa with the exception of taxes on linear properties and the education-retained portion of PILs. These are assumed to be B transferred from Clarington to Oshawa. I Table 16 shows that, on a$150,000 house, taxes would increase significantly from $679 in Courtice in 1999 to over$900 in two of the three'options. The tax increase is smallest under Option 3 because of the PILs from Ontario Hydro. In 1999, the municipal property tax on a $150,000 house in Oshawa was $892. Table 16 also'shows that taxes in the rest of Clarington would increase from $679 under all three options. If all of Clarington were annexed to Oshawa, the property tax on a $150,000 would increase to $879. Table 16: Property Tax Impact for Residents of Courtice compared to Residents of the Rest of Clarin ton Option 1,;' Option 2 Option 3 Tax on a $150,000 house in Courtice $908 $905 $859 Tax on a $150,000 house in the rest of $695 $697 $806 Clarington 15 r iI t �I , �-�°-�r"� ,. i AV 7. Impact on Commercial and Industrial Assessment Base 3 When part�of.a municipality is annexed by another municipality, the ratio of commercial and jo, 0st atAssesssment to total assessment in both municipalities can change. The greater the /* iibn o f total assessment that is comprised of commercial and industrial assessment, the ratetthefseal capacity of a municipality. Since commercial and industrial properties are : -herd !;levied a higher rate of tax and since they generally use fewer services than owners of residential-properties,a larger proportion increases the financial capacity of a municipality. Table 17 compares the ratio of commercial and industrial taxable assessment to total taxable ` assessment for both Clarington and Oshawa under each of the Options. The loss of commercial and industrial assessment to Clarington increases its ratio but decreases Oshawa's ratio for 2001. Estimates for 2008 show a slightly greater impact on the rest of Clarington. Table 17: Commercial and Industrial Assessment Relative to Total Assessment No Option 1 Option 2 Option 3 Annexation Clarington, 2001 9.6% Oshawa, 2001 17.6% Rest of Clarington, 2001 11.1% 11.3% 10.0 % Oshawa plus Courtice, 2001 15.7% 15.6% 15.9% Clarington, 2008 9.7% Rest of Clarington, 2008 11.2% 11.4% 10.8% 8. Other Issues Other issues that would have to examined if Courtice were annexed to Oshawa include education and electricity. 16 It � i Education I If Courtice were annexed to Oshawa, there would also be implications for education. Currently, Clarington is part of the Kawartha Pine Ridge District School Board and the Peterborough Victoria Northumberland and Clarington Catholic District School Board. Oshawa, on the other I hand, is included in the Durham District School Board and the Durham Catholic District School I Board. If Courtice were annexed to Oshawa, they may become part of the Durham school boards. If this were the case, there might be implications for where students can go to school. P t I From a financial perspective, there would not be a direct impact on residential property taxpayers because the provincial government currently levies a residential property tax for education that is uniform across the province.' There would be a difference in property taxes paid by non- residential properties, however, because the provincial non-residential property tax for education is not uniform across the province. There would also be implications for development charges if Courtice were annexed by Oshawa and became part of the Durham school boards. i Electricity Courtice is currently included in Ontario Hydro's direct service area for electricity. Oshawa has its own public utilities commission and is required,as are all utilities commissions under the Electricity Act, to form an independent entrepreneurial corporation. In the short run, Ontario Hydro will likely continue to deliver electricity service to Courtice. In the long run, however, Oshawa will have to consider if and how it can bring the Courtice area under the authority of its entrepreneurial corporation. 8. Summary of Key Findings This report has as analyzed the impact of a potential,anneXation of Courtice by Oshawa under three different boundary options for Courtice. The key findings of this analysis are: • Residential property taxes on a typical $150,000 house in Clarington are estimated to increase significantly under Option 3 and increase somewhat under Options 1 and 2. The largest increase, under Option 3, reflects the loss of the Darlington Nuclear Generating Station and the associated payments in lieu of taxes for municipal purposes and the education-retained portion of payments of lieu. s There could be an indirect impact, however, arising from the calculation of the Community Reinvestment Fund(CRF). The CRF is a provincial grant designed to compensate for the net impact of downloading municipal services and uploading education costs. 17 ll li • Courtice, capital expenditures a In the event of annexation�f G p p n1 revenues for capital would decrease in Clarington. In the past six years, the amount spent by Clarington on development charge projects in Courtice exceeded the amount collected in development charges in Courtice. This means that development charges in other parts of Clarington were used to assist in the financing of projects in Courtice. • There could be a change in service levels for residents of Clarin g gton following an annexation.In particular, the loss of a fire station, library, and indoor recreation complex could mean a lower level of service and the need to build additional facilities sooner than ! planned. • The disposition of assets and liabilities would have to be determined following an annexation. Compensation for the loss of physical assets such as rolling stock, buildings, and equipment would have to be estimated. In terms of financial assets and liabilities, Clarington would have to transfer a portion of its net financial assets to Oshawa. Preliminary estimates indicate a possible transfer of about $9.8 million. • Although it is difficult to determine future impacts, preliminary estimates indicate that the future financial impact would likely be greater than the current impact. The reason is that there is anticipated to be growth in Courtice that will result in a larger tax base that will be lost to Clarington. The growth in assessment between 1996 values and 1999 values was greater in all three Option Areas than for Clarington as a whole. It is also estimated that the loss of linear property taxes will increase`in the future. Estimates indicate that development charge revenues from Courtice in the next ten years will fall short of forecast capital expenditures in Courtice by about $2 million. It is thus anticipated that development charges in the rest of Clarington will continue to be used to assist in the financing of projects in Courtice. • Assuming hat Courtice c e residents will enjoy services at the same level (in terms of expenditures per household) as residents of Oshawa, it is estimated that property taxes in Courtice would increase significantly under all'of the options. The increase is somewhat less under Option 3. I 18 I