Planning
and Environment Committee
Comité de l'urbanisme et de l'environnement
Submitted
by/Soumis par : Nancy Schepers, Deputy City Manager
Directrice municipale adjointe,
Infrastructure Services and Community
Sustainability
Services d’infrastructure et
Viabilité des collectivités
Contact Person/Personne ressource : John L. Moser, General
Manager/Directeur général, Planning and Growth Management/Urbanisme et Gestion
de la croissance
(613) 580-2424
x28869, John.Moser@ottawa.ca
SUBJECT:
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OBJET :
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Présentation de l'analyse préliminaire des redevances d'aménagement |
Staff will circulate this
report for public comment and input by May 25, 2009 and return to Planning and
Development Committee with the final Development Charges report on June 9,
2009.
Le personnel fera circuler le présent rapport
en vue de recueillir les commentaires du public d'ici le 25 mai 2009 et
présentera le rapport final sur les redevances d'aménagement au Comité de
l'urbanisme et de l'environnement le 9 juin 2009.
Assumptions and Analysis:
The Development Charges Act, 1997 (DCA) states that municipalities must update and complete a new background study to determine development charges within a five-year period of the existing by-law in force date. City staff from various branches collaborated in compiling the necessary data as required to complete the revised study.
As a result, the City of Ottawa must adopt new development charge successor by-laws before July 14, 2009. The basic formula behind the calculation is to input the total value of growth-related works anticipated over the defined period and then divide these costs by the growth that will occur over the planning period (see below).
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Cost of Capital Works |
= |
Development Charge Rate |
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Growth Projections |
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The City’s Official Plan and related Transportation Master Plan, Infrastructure Master Plan, and strategies and reports have provided the basis for identifying and prioritizing growth-related works required to support future growth in Ottawa. These requirements are divided by the City’s future projections for residential and non-residential development over the near (10 years) and long-term (22 years). Issues that are always contentious in preparing a background study relate to the geographic allocation of project costs, deductions for the benefit to existing development, post-period capacity and predicting the timing of future capital works, to name a few.
The draft background study provides a summary of the various inputs into the calculation of the charges that could be imposed. With the help of an external consultant and upon completion of the review process and publication of the draft, staff determined that further consideration be given to various options for adjusting the rates. An intensive series of meetings with Council sponsors were held and the results are outlined in this report.
This report provides a summary of the rate information contained in the City of Ottawa Development Charges Background Study dated April 9, 2009, which sets out the proposed approach to the new by-laws and summarizes the draft calculation methodology. The report addresses some of the cost implications for the City in terms of growth-related municipal services. There is also a brief discussion of other issues such as front-ending agreements and exemption policies.
Legal/Risk Implications:
Development Charge by-laws may be appealed to the Ontario Municipal
Board. On appeal, the Board may uphold
the by-law or reduce a charge; the Board has no authority to increase the
amount of a development charge.
Financial Implications:
The Fiscal Framework
requires, to the extent permissible under the legislation, that capital costs
related to new development be paid for by growth. This policy protects taxpayers by ensuring they do not bear a
disproportionate burden of the cost of capital expenditures which will
primarily benefit new development. The
revised background study identifies a total overall capital program of $6.6
billion over the next 10 to 22 years.
The development charge recoverable portion has increased by $81.5
million over the 2004 total but population/employment projections are now
lower; however, the planning horizon is 22 years versus 17 for Roads, Water,
Sanitary and Stormwater Management Services.
Also, the localized inflation benchmark for amending infrastructure
costs has increased 23.8 per cent over the last five years.
However, it should be noted that, despite efforts to forecast development costs and to defray these through development charges, DCA regulations prevent the City from passing on 100 per cent of development-related costs to the development community. For example, there is a 10 per cent statutory deduction applied to all “soft services” including Public Transit. Therefore, $53.8million in costs are borne by taxpayers, beyond the attribution of the benefit to existing development, which is calculated and applied to all capital expenditures.
Public Consultation/Input:
A Development Charge Stakeholders’ Group was formed in September 2008 to obtain feedback at key stages of the study process. Staff members from all departments and the various branches have collaborated in compiling the necessary data to complete the study. They have participated in numerous meetings with the external consultant, Watson and Associates, and in consultation meetings with the various groups involved in the process. Staff has for the most part, responded to questions and comments received as a result of the meetings.
This report is being tabled at Planning and Environment Committee meeting on May 11, 2009 for circulation and public comment. Following the meeting on May 11, 2009, there will be a period to receive written comments from the public. The revised Development Charge Background Study will be made available on May 25, 2009. The report, with any subsequent recommendations resulting from the consultation, will return to Planning and Environment Committee on June 9, 2009.
Hypothèses et analyse :
La Loi
de 1997 sur les redevances d’aménagement (ci-après la LRE) prévoit que les
municipalités doivent, en vue d'établir les redevances d’aménagement, mettre à
jour et achever une étude préliminaire dans les cinq ans qui suivent la date
d'entrée en vigueur du règlement municipal existant. Des membres du personnel
municipal, provenant de différentes directions, ont collaboré afin de réunir
les données nécessaires pour terminer l'étude révisée.
La Ville
d'Ottawa est ainsi tenue d'adopter avant le 14 juillet 2009 de nouveaux
règlements sur les redevances d’aménagement pour remplacer les règlements
existants. La formule de base du calcul consiste à diviser la valeur totale des
aménagements liés à la croissance pendant la période définie par la croissance
qui surviendra au cours de la période de planification (voir ci-après).
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Coût des travaux d'immobilisation |
= |
Taux des redevances d’aménagement |
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Projections de croissance |
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Le nouveau Plan officiel de la Ville, du Plan
directeur des transports, du Plan directeur de l'infrastructure et des
stratégies et rapports s'y rattachant constituent la base à partir de laquelle
la détermination et la priorisation des travaux liés à la croissance qui sont
exigés pour soutenir la croissance future à Ottawa. Ces exigences sont divisées
par les projections de la Ville quant à l'aménagement futur résidentiel et non
résidentiel à court terme (10 ans) et à long terme (22 ans). Les questions qui
posent toujours problème dans une étude préliminaire se rapportent, entre
autres, à la répartition géographique du coût des projets, aux déductions pour
les avantages apportés aux aménagements existants, à la capacité pendant la
période postérieure aux projets et à la prévision du moment de réalisation des
travaux d'immobilisation futurs.
L'ébauche de l'étude préliminaire donne un
résumé des divers facteurs qui entrent dans le calcul des redevances qui pourraient
être imposées. Grâce à l'aide d'un consultant externe et après avoir achevé
l'examen et la publication de l'ébauche, le personnel a déterminé qu'il
convenait d'étudier plus à fond diverses options d'ajustement des taux. Une
série de réunions intenses ont eu lieu avec des responsables du Conseil, qui
ont abouti aux résultats et aux recommandations qui figurent dans le présent
rapport.
Le présent rapport donne un sommaire de
l'information sur les taux qui était contenue dans l'étude préliminaire sur les
redevances d’aménagement de la Ville
d'Ottawa, en date du 9 avril 2009, dans laquelle est décrite l'approche
proposée pour les nouveaux règlements municipaux et résumée la méthode de
calcul projetée. Le rapport porte sur certaines des répercussions de coût pour
la Ville en ce qui concerne les services municipaux liés à la croissance. Il
comporte également une brève discussion d'autres points, tels que les accords
initiaux et les politiques d'exemption.
Répercussions
d'ordre juridique et sur les risques :
Un règlement
municipal sur les redevances d'aménagement peut faire l'objet d'un appel auprès
de la Commission des affaires municipales de l'Ontario, qui est habilitée, en
appel, à confirmer le règlement contesté ou à réduire une redevance d'aménagement,
mais non à en accroître le montant.
Répercussions financières :
Le cadre budgétaire exige, dans la mesure où la
loi le permet, que les coûts d'immobilisation liés à de nouveaux aménagements
soient supportés par la croissance. Cette politique protège les contribuables
en faisant en sorte qu'ils n'aient pas à supporter une part disproportionnée du
coût des dépenses d'immobilisation qui sont faites principalement au bénéfice
des nouveaux aménagements. L'étude préliminaire révisée prévoit un programme d'immobilisations
d'une valeur totale de 6,6 milliards de dollars au cours des prochains 10 à 22
ans. La partie recouvrable des redevances d'aménagement a augmenté de 81,5
millions de dollars par rapport au total de 2004, mais les projections de
population et d'emploi sont maintenant plus faibles; toutefois, l'horizon de
planification est de 22 ans, plutôt que 17, pour les routes et les services de
gestion de l'eau, des eaux usées et des eaux pluviales. De plus, le taux repère
localisé de l'inflation, utilisé pour ajuster les coûts d'infrastructure, s'est
accru de 23,8 % depuis cinq ans.
Il importe cependant de signaler que, malgré
les efforts pour prédire les coûts d'aménagement et les absorber au moyen des
redevances d’aménagement, les règlements d'application de la LRA empêchent la
Ville de répercuter la totalité de ces coûts sur les promoteurs des projets
d'aménagements. Par exemple, il existe une déduction réglementaire de 10 %
qui s'applique à tous les services « immatériels », dont le transport
en commun. Par conséquent, 53,8 millions de dollars de ces coûts sont à la
charge des contribuables, outre les avantages attribués aux aménagements
existants, lesquels sont calculés puis appliqués à toutes les dépenses
d'immobilisation.
Consultation publique / commentaires
:
Un groupe de parties concernées par les
redevances d'aménagement a été formé en septembre 2008 afin d'obtenir une
rétroaction aux étapes clé de l'étude. Des membres du personnel, provenant de
tous les services et de différentes directions, ont collaboré afin de réunir
les données nécessaires pour terminer l'étude. Ils ont participé à de
nombreuses réunions avec le consultant,
Watson and Associates, et à des réunions de consultation avec les divers
groupes participant au processus. Le personnel a répondu à l'essentiel des
questions et des commentaires qui lui ont été adressés à la suite de ces
réunions.
Le présent rapport est déposé à la réunion du
11 mai 2009 du Comité de l'urbanisme et de l'environnement en vue d'être
diffusé et de susciter des commentaires du public. Il y aura par la suite une
période pendant laquelle le public pourra envoyer ses commentaires par écrit.
L'étude préliminaire révisée sur les redevances d'aménagement sera disponible
le 25 mai 2009, après quoi il sera présenté, assorti d'éventuelles
recommandations découlant de la consultation, au Comité de l'urbanisme et de
l'environnement le 9 juin 2009.
The purpose of this report is to present a summary of the proposed City of Ottawa Development Charge rate structure. The Development Charges Act (DCA) 1997 was proclaimed by the Province on March 1, 1998. Under the DCA, all development charge by-laws expire five years after they come into force. As a result, the City must have the successor By-laws in place prior to July 14, 2009 in order to be able to continue collecting development charges. The draft Background Study has been prepared pursuant to Section 10 of the DCA.
In March, Council approved the report, "The New Development Charge By-law - Approach and Timetable", which set out for departments the basic methodology in which growth-related municipal services should be assessed in relation to the charges and the timing of the preparation work for the background study.
Background studies are collaborative exercises. After the publication of the initial set of draft rates, further adjustments were made to the proposed capital works program required over the forecast period. The refinement of the calculation methodology contained in this report attempts to reflect this underlying principle of assessing the future growth related infrastructure requirements by establishing a set of residential and non-residential rates, which will produce the corresponding funding amounts.
Development
Charge Background Studies
The DCA sets out the essential steps necessary to create successor Development Charges By‑laws. Most importantly, the DCA requires that a Development Charge Background Study be completed and ultimately approved by Council. Copies of these studies, entitled City of Ottawa Development Charges Background Study Report (dated April 9, 2009), are available for review. The Development Charges Background Study Report clarifies the types of services for which the City will be imposing charges, provides detailed information on how the draft rates were calculated and the projects intended to be financed from development charges. The Development Charges Background Study charges should be reviewed along with this policy report in order to gain a clear and comprehensive understanding of the proposed polices and rates.
Staff have developed a number of recommendations to address concerns over the initial calculation of the rates. In conjunction with Council sponsors, staff have attempted to make the appropriate adjustments to the capital program that provides a reasonable allocation of project financing between development charges revenue and non-growth sources. For example, of the $6.6 billion in capital costs included in the 2009 study, $2.4 billion is recoverable from development charges. This represents 36 per cent of the total program as compared to 45 per cent in 2004. With lower growth projections, there is a recognized need to allocate a greater percentage of the costs to post period benefit, which is now $269 million more than in 2004, while preserving the overall capital program requirements identified for Roads, Water, Sanitary Sewer and Public Transit in both the Transportation Master Plan and Infrastructure Master Plan, passed in conjunction with the Official Plan update.
Calculation Methodology
The Development Charges Background Study reviewed all City services and infrastructure requirements that will be impacted by the residential and non-residential growth projected in the Official Plan. The service components included are: Roads and Related Services, Public Transit, Water, Sanitary Sewer (Wastewater), Stormwater Drainage, Police, Emergency Services (Fire), Paramedic Services, Recreation, Parks Development, Libraries, Child Care, Public Works, Corporate Studies and the inclusion of a new service for the Affordable Housing Program.
The study methodology reviewed the capital requirements of each of the above service components. Water, Roads, Sanitary, and Stormwater drainage were assessed on a 2010 to 2031 planning horizon. Other qualifying service projects required for growth were assessed 10 years consistent with the DCA. Existing projects from 2004 to 2009 that have unrecovered growth components (where sufficient funds have not been allocated from the reserve fund) were also assessed and any outstanding funding requirements included in the calculation of the charge. To determine the servicing requirements of growth, staff had the benefit of the proposed updated Official Plan, integrated with the Transportation Master Plan and Infrastructure Master Plan (Water and Sanitary Sewer updates). Other Master Plans and Strategies have also been prepared for Council adoption in 2009. As part of the Development Charges Background Study, a report was prepared by Stantec Consulting to address and consolidate information on additional servicing needs related to area-specific Stormwater charges. The Official Plan growth forecast and the Master Plans and studies, City standards and historical service levels provided the basis for identification of projects required to meet future planning objectives.
The basic methodology for calculating the charge for each component, described as follows, is essentially the same for all municipalities:
1. Capital project costs for the particular planning period are based on conceptual estimates founded on service level standards as expressed in the City’s historical experience, Council approved master plans, reports, Provincial regulations and City design guidelines and specifications;
2. The costs are allocated between existing population and growth to arrive at the net growth-related share (with any grants, subsidies and other contributions such as direct developer share, as well as any anticipated benefit to post-2031 growth being netted off);
3. The net growth-related costs are divided between residential and non-residential sectors;
4. The net growth-related costs for the residential sector are divided by the estimated gross population increase. The person per unit values, based on Statistics Canada, 2006 Census data, multiplies this per capita cost by type of housing to arrive at each residential component cost;
5. The net growth-related costs for the non-residential sector are divided by the estimated growth in gross floor area to arrive at a charge per square foot.
6. Where any portions of the capital works are exempted from inclusion in a development charge, this funding must be recovered through non-development charges sources.
Net Growth-Related Capital Program
The growth-related capital program, net of benefit to existing grants and subsidies and other contributions, was developed based on providing municipal services to meet the growth forecast. The service standards (used in the cost estimates) are in accordance with the requirements of the DCA. Table 1, which follows, identifies the net growth-related capital expenditure requirements by service component except for Stormwater Ponds as they are allocated on an area specific basis. The residential and non-residential allocation of this amount is then identified.
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Table 1 |
Net Growth Related
Capital Costs ($2008) |
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($000s) |
($000s) |
($000s) |
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Total |
Residential |
Non-residential |
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Roads |
1,422,990 |
880,460 |
542,530 |
|
Sanitary
Sewers |
282,675 |
189,928 |
92,747 |
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Water |
182,133 |
162,076 |
20,057 |
|
Stormwater
Drainage |
8,064 |
4,972 |
3,092 |
|
Police Stations & Vehicles |
20,795 |
12,675 |
8,120 |
|
Emergency
Services (Fire) |
15,343 |
9,360 |
5,983 |
|
Public
Transit |
253,978 |
153,911 |
100,067 |
|
Housing |
8,505 |
8,505 |
0 |
|
Parks
Development |
45,740 |
43,453 |
2,287 |
|
Recreation
Centres |
117,852 |
111,963 |
5,889 |
|
Libraries |
19,881 |
18,886 |
995 |
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Child Care
Facilities |
6,413 |
3,886 |
2,527 |
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Paramedic
Posts & Vehicles |
3,928 |
2,396 |
1,532 |
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Public Works |
36,317 |
22,153 |
14,164 |
|
Corporate
Studies |
13,414 |
8,418 |
4,996 |
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TOTAL |
2,438,028 |
1,633,042 |
804,986 |
Table 2 on the next
page summarizes the development charges for a residential single-family unit
and the non-residential square foot charge; again, these were calculated in
accordance with the DCA.
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Table 2 |
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Comparison
of Current Single Detached Development Charges |
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1) Inside Greenbelt |
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Current |
Draft |
Amended |
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Inside Greenbelt |
Inside Greenbelt |
Inside Greenbelt |
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Roads |
3,384 |
8,162 |
7,826 |
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Sanitary Sewer |
1,342 |
2,933 |
2,222 |
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Water |
344 |
1,272 |
1,184 |
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Storm |
1 |
48 |
48 |
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Fire Stations & Vehicles |
0 |
0 |
0 |
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Police Stations & Vehicles |
118 |
27 |
27 |
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Transit Corridors & Vehicles |
3,105 |
3,457 |
3,431 |
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Parks |
946 |
210 |
164 |
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Recreation Centres |
1,637 |
1,626 |
278 |
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Libraries Materials & Central |
245 |
432 |
432 |
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Child Care Facilities |
50 |
77 |
77 |
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EMS Posts & Vehicles |
21 |
48 |
47 |
|
Vehicles & Works Yards |
526 |
442 |
438 |
|
Housing |
0 |
170 |
168 |
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Corporate Studies |
161 |
142 |
141 |
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Total |
11,880 |
19,046 |
16,483 |
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2) Outside Greenbelt |
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Current |
Draft |
Amended |
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Outside Greenbelt |
Outside Greenbelt |
Outside Greenbelt |
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Roads |
9,740 |
8,877 |
8,927 |
|
Sanitary Sewer |
1,844 |
2,814 |
2,031 |
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Water |
1,039 |
2,159 |
2,039 |
|
Storm |
1 |
48 |
48 |
|
Fire Stations & Vehicles |
196 |
280 |
282 |
|
Police Stations & Vehicles |
172 |
350 |
353 |
|
Transit Corridors & Vehicles |
3,104 |
3,457 |
3,431 |
|
Parks |
944 |
719 |
1,125 |
|
Recreation Centres |
2,839 |
2,438 |
3,434 |
|
Libraries Materials & Central |
491 |
343 |
343 |
|
Child Care Facilities |
50 |
77 |
77 |
|
EMS Posts & Vehicles |
22 |
48 |
47 |
|
Vehicles & Works Yards |
526 |
442 |
438 |
|
Housing |
0 |
170 |
168 |
|
Corporate Studies |
202 |
185 |
184 |
|
Total |
21,170 |
22,407 |
22,927 |
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3) Rural |
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|
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Current |
Draft |
Amended |
|
|
Rural Serviced |
Rural Serviced |
Rural Serviced |
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Roads |
1,645 |
10,111 |
8,387 |
|
Sanitary Sewer |
2,455 |
1,810 |
1,102 |
|
Water |
0 |
1,246 |
980 |
|
Storm |
0 |
51 |
51 |
|
Fire Stations & Vehicles |
61 |
131 |
122 |
|
Police Stations & Vehicles |
145 |
267 |
250 |
|
Transit Corridors & Vehicles |
0 |
3,457 |
3,431 |
|
Parks |
945 |
1,066 |
999 |
|
Recreation Centres |
1,768 |
1,835 |
459 |
|
Libraries Materials & Central |
245 |
421 |
405 |
|
Child Care Facilities |
50 |
77 |
77 |
|
EMS Posts & Vehicles |
22 |
48 |
47 |
|
Vehicles & Works Yards |
526 |
442 |
438 |
|
Housing |
0 |
170 |
168 |
|
Corporate Studies |
591 |
142 |
141 |
|
Total |
8,453 |
21,274 |
17,057 |
|
¹ Includes estimated rate adjustments to both area-specific
Parks and city-wide Recreation Centres |
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Table 2
(Cont'd) |
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Comparison
of Current Non-residential General Development Charges |
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|
|
|
|
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1) City-Wide |
|
|
|
|
|
|
|
|
|
|
Current |
Draft |
Amended |
|
|
Non-res General |
Non-res General |
Non-res General |
|
Roads |
6.34 |
12.70 |
12.43 |
|
Sanitary Sewer |
0.86 |
3.21 |
2.25 |
|
Water |
0.26 |
1.05 |
0.49 |
|
Storm |
0.00 |
0.07 |
0.07 |
|
Fire Stations & Vehicles |
0.11 |
0.28 |
0.28 |
|
Police Stations & Vehicles |
0.13 |
0.38 |
0.38 |
|
Transit Corridors & Vehicles |
2.04 |
4.95 |
4.95 |
|
Parks |
0.07 |
0.07 |
0.12 |
|
Recreation Centres |
0.17 |
0.28 |
0.28 |
|
Libraries Materials & Central |
0.04 |
0.05 |
0.05 |
|
Child Care Facilities |
0.04 |
0.12 |
0.12 |
|
EMS Posts & Vehicles |
0.02 |
0.07 |
0.07 |
|
Vehicles & Works Yards |
0.46 |
0.66 |
0.66 |
|
Housing |
0.00 |
0.00 |
0.00 |
|
Corporate Studies |
0.11 |
0.24 |
0.24 |
|
Total |
10.65 |
24.13 |
22.39 |
|
|
adjustments for
prior year's discounting |
|
1.23 |
|
|
DC net of
discounting |
|
21.16 |
|
¹ Includes estimated rate adjustments to both area-specific
Parks and city-wide Recreation Centres |
|
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Post-period capacity (PPC) is defined as the portion of the growth project that is intended to benefit the increase in population and employment that occurs after the chosen time development time horizon (2031) or 2019 in the case of Transit. An analysis of project timing revealed that various Water, Sanitary Sewer and Road projects were estimated to be constructed during the latter portion of the 22‑year planning horizon. These projects were adjusted to include a post-period development percentage with five per cent added to Road projects and 20 per cent added to both Water and Sanitary Sewer items. These changes will result in lower residential and non-residential development charge rates. These new rates are set out in Table 2. Major growth-related capital projects will continue to be funded from development charges. If, in the future, a developer wishes to construct the capital works in advance of the anticipated timing in the study, he may enter into a front-ending agreement. The post period component would be partially recoverable in the next update of the by-law in five years.
Increase in the Benefit to Existing (BTE) for some Water and Sanitary Sewer projects.
Staff
have added a 10 per cent BTE to certain Water and Sanitary Sewer projects. This
adjustment is an estimate only and is necessary despite staff’s careful
analysis of the mix between growth and existing population. A more conservative
approach is recommended by allocating an additional 10 per cent benefit to
existing in recognition that the existing community will benefit from the
provision of capital projects. Capital project eligibility or inclusion
criteria for the charge have not been addressed in this situation. However, if the entire growth-related
project costs were excluded from the background study, they may result in a
shortfall in various reserve fund balances.
Move Recreation Complexes to an area-specific charge.
The initial direction from staff in approaching the revised study was to change the allocation of Recreational Complexes from an area-specific to a city-wide charge. Staff is recommending the continuation of the 2004 methodology of assessing the cost of these works as currently imposed. This will a provide continuity in the allocation of existing reserve fund balances to fund the facility costs that are being carried forward into the new charge.
Cost Allocation Methodology.
The development charge was calculated by dividing development charge recoverable residential expenditures by gross population increase for the period involved and multiplying that per capita recovery by the persons per unit (based Statistics Canada Census data) for each unit type. Upon review by staff, some technical changes were required to align the 2009 background study with the calculation criteria used in 2004. These modifications will provide a more accurate set of occupancy inputs into the underlying rate calculation. Staff have provided the consultant with the changes, which have been incorporated in the amended set of rate calculations found in Table 2.
In 2004, the City
calculated Roads based solely on three geographic divisions – Inside Greenbelt,
Outside Greenbelt and Rural, on a residential allocation basis. The primary reason for having three large
area-specific charges was that the Greenbelt provided a clear delineation for
basic sub-areas. The February 2009,
Planning and Environment Committee report proposed allocating costs based on the
Vehicle Kilometres Traveled (VKT) generated from each of these three
areas. However, since services such as
transportation involve commuting patterns that are inter-connected network
services, through out the city, it has been difficult to allocate costs on a
smaller geographic basis. For example,
the initial distribution of the costs resulted in a Rural residential
single-family dwelling charge of over $30,000.
Therefore, there are
two options for allocating costs: keeping the status quo, subject to a review
of how costs are differentiated, or adopting the generally accepted municipal
practice of using a uniform, city-wide charge.
It is recommended to keep current city-wide charges for the arterial
roads network, as identified in the Transportation Master Plan. This is similar
to the methodology used for Public Transit, which is also calculated on a
municipal-wide basis.
Over the course of the development charge policy review other issues have been raised. Staff have reviewed these issues and provide the following updates since the February 24, 2009 Planning and Environment Committee report (Ref N°: ACS2009-ICS-CSS-0002).
Development Charges Category
Reductions
Given that there has been increased 'take up' of the former reduction for residential units in the vicinity of transit and light-rail stations due to the qualifying requirement for parking space limits, it is proposed that the reduction be continued in the new bylaw.
Phasing of
the Charges
The City will continue to work with the development community to develop financing strategies that will provide the necessary funds to undertake works on a timely fashion and assist with mitigating the impact of rate increases. For example, this could be achieved by reviewing and adjusting the timing of new infrastructure to better coincide with future requirements of new development. Some of the strategies are currently in place and involve front-ending agreements, along with services-in-lieu payments of a portion of future development charge collections.
Front-ending Agreements
The City currently has a
number of front-ending agreements in place. In order to ensure consistency and
to limit the City’s financial exposure, a revised front-ending agreement policy
is being proposed as part of the Background Study.
Often developers want to
enter into these agreements as it is in their best financial interest to do
so. The major principle is that
front-ending agreements should be financially neutral to the City. The
advancement of the work should not increase the City’s costs related to the
construction of the project, as the acceleration will itself increase the
City’s operating and maintenance costs.
In addition, the City will only begin to repay the City share of any
projects to the developer in the year the project was forecast to be undertaken
in the Background Study. The
development industry and City staff will meet to discuss issues and concerns
relating to the current policy framework.
Most municipalities calculate a uniform charge applicable to all forms of non-residential development. Any differentiation in the charge by type is based on discounting one or more types of development, resulting in less than full cost recovery, mainly for economic policy objectives.
It would be preferable to differentiate the non-residential charge to the extent permitted by specific service usage data, based on clear differences in the need for service, rather than via DC discounting and the associated revenue loss.
Cash Flow
Model
It is proposed
that the City use the cash flow methodology in its development charge
calculation, recognizing that this approach requires more disciplined yearly
capital budgeting, forecasting and funding arrangements. Before project timing can be accelerated,
either a front-ending agreement or a commensurate delay in other projects would
be mandatory to maintain established annual cash flow plans.
As part of a pre-consultation process during the development of the Background Study, the City established a Development Charges Stakeholders' Group to provide feedback at each major phase of the process. The Stakeholders' Group included: Greater Ottawa Homebuilders’ Association, Building Owners and Managers Association of Ottawa, the Federation of Community Associations, representatives of community associations, additional developers and consultants. Issues addressed at meetings included:
· Growth forecasts
· Ten year average service levels
· Development Charges Calculation Guidelines
· Growth related infrastructure and cost estimates
· City-wide vs. Area-specific charges
· Indexing
There has also been an increase to both the Parks and Recreation service rate components in order to maximize the unused level of service-cap room. This has resulted in an increase of approximately $34 in the City-wide Recreation Centre charge and a $409 increase in the Outside Greenbelt Parks charge.
CONCLUSION
The amended three large area development charge rate structure is recommended for residential development and the amended city-wide rate for non-residential development. Staff recommends that the full value legislated residential rates as set out in this report be adopted and that the non-residential rates be set at a non-residential (general) full value legislated rate excluding other classes of non-residential development.
Following the period of public consultation, a report will be prepared summarizing the public input, received along with any further recommendations for the consideration of Committee and Council.
Development Charge by-laws may be appealed to the Ontario Municipal
Board. On appeal, the Board may uphold
the by-law or reduce a charge; the Board has no authority to increase the
amount of a development charge.
The background study identifies capital projects with a growth component of $6.6 billion over the next 22 years. The proposed development charges rates will generate, during the term of this by-law approximately $2.4 billion or 36 per cent of the total capital requirement with the City's share of these projects being $1.7 billion.
The Department will have the background studies and proposed by-laws available to the public on May 25, 2009 for comment and input at Committee on June 9, 2009. Following the public meeting on June 9th, 15 days will be provided for written submissions regarding the proposed Development Charges By-laws and Background Studies. Upon receipt of comments, staff will prepare a report summarizing the public input received with further recommendations for the consideration at Council on June 24, 2009.