Report to: General Committee Report
Date:
SUBJECT: Development Charge Credit Policy
PREPARED BY: Mark Visser (Ext. 4260)
Veronica Siu (Ext. 2232)
Kevin Ross (Ext. 2126)
RECOMMENDATION:
THAT Council approve the detailed policies included as Appendix A of this report regarding development charge credit requests for Town capital works undertaken by development proponents;
That the Town Treasurer be delegated authority to approve applications for development charge credits in respect of works done by and at the expense of developers of site plans, in accordance with the policy attached hereto;
AND THAT the policies
regarding development charge credits be applied to the current and future Town
of
AND THAT staff be authorized and directed to do all things necessary to give effect to this resolution.
EXECUTIVE SUMMARY:
Not applicable
PURPOSE:
To seek Council approval on the adoption of a development charge credit policy.
BACKGROUND:
Since inception of
the initial Town of
In order for a new subdivision to be developed, it is often a requirement that certain Town works be constructed in order to allow the development to proceed. The works may include total construction of roads, intersections, traffic control signals, watermains and sanitary sewers.
The design of
these works is normally carried out by Town staff and then tendered for
construction in a program year, subject to approval of the Town’s capital
budget. Funding for capital projects is
split, in accordance with the Town of
In some cases, a developer may wish to carry out the works necessary for private development to proceed. In these cases, a Credit Agreement is necessary in order to establish the Town’s obligations to reimburse the developer’s costs in financing the construction and to establish the developer’s obligations for construction. Should this occur, the developer may request that the Town consider development charge credits against development charges payable at agreement registration (residential) or building permit (non-residential).
The rationale behind the proposed development charge credit policy is that for each specific request, Council will have the discretion to ensure the project is funded in that specific capital budget year by authorizing revisions to the capital program and/or requiring the developer to make a contribution to the non-growth costs of the capital works, in order that they may proceed in conjunction with the development.
Where Council allows a developer to expedite capital works in advance of the capital forecast, the developer benefits because the infrastructure is being constructed and financed with certainty and the subject development is allowed to proceed. It is important to note that if the development charge credits allowed for the growth component of the works requires the Town to amend its capital program forecast, there may not be sufficient Development Charge funding available for the other forecasted improvements.
Development
Charges Act
The Development Charges Act, (the “Act”) permits development proponents to provide a service (e.g. reconstruction of a Town road) in lieu of the payment of Town development charges.
The sections of the Act governing such an agreement are as follows:
9.(9) …a municipality may by agreement permit an owner to provide services in lieu of the payment of all or any portion of a development charge.
13.(1) A municipality that permits the provision of services in lieu of the payment of all or a portion of a development charge shall give a credit for an amount equal to the reasonable cost to the owner of providing the services.
Such agreements are clearly, therefore, permissive, not mandatory. A developer may not unilaterally demand specific development charge credits. Once a municipality has agreed in principle to the provision of services in lieu of the charge, the Act does, however, address how the credit is to be administered.
The municipality may allow credits for an “amount equal to the reasonable cost” of providing the services and therefore the Town must consider non-growth impacts on existing residents (tax levy, user rates), the planned expenditure for the works (cash flow) and the actual amount of the credit prior to the works being constructed.
OPTIONS/ DISCUSSION:
Where development applications require specific Town infrastructure improvements, the Act provides certain mechanisms by which the infrastructure may be initially financed in whole or in part by a developer. Through the services-in-lieu provision, the developer may be required to construct the infrastructure or to finance its construction. Credits are then eligible for development charges which would otherwise be payable at registration of subdivision agreements or building permit issuance. As a matter of negotiation, a contribution may also be required towards the non-growth component which would otherwise be funded through tax levies or rates. The requirement of this contribution recognizes the advantage to the developer in being permitted to proceed with construction in advance of the Town’s anticipated capital program. It also acts as a mechanism to not place additional burden on tax payers before it is necessary.
It is imperative that the amount of the works eligible for development charge credit, the developer contribution to the non-growth share of the works, and the mechanisms for administering the credit be approved by Council prior to allowing the developer to proceed and/or the works to be constructed. If a developer proceeds with construction in advance of receiving development charge credit approval from Council, such works shall be constructed at their own risk.
It is recommended
that Council delegate approval authority to the Treasurer in the case of more
straight forward agreements where the following criteria are met:
·
the Town will not be asking for the developer to fund the non-growth
share
·
the credit request is contained within one by-law (i.e. does not span
multiple Areas specific by-laws)
·
the capital project is being proposed as a part of a subdivision
agreement
·
the credit request is equal to (or less than) the indexed cost of the
component set forth in the background study
·
the credit request is less than $500,000
Given the
foregoing, it is proposed that the following provisions form the basis of a
detailed policy regarding Town of
The proposed policies are outlined in Appendix A, attached to this report.
FINANCIAL CONSIDERATIONS AND TEMPLATE: (external link)
A cost recovery fee applicable to each credit request will be charged for Engineering, Legal and Finance department costs incurred relating to the preparation and administration of the development charge credit agreement. The fee is structured in the following manner, which is similar in nature and value to fees charged by the Region of York through its credit policy:
- A minimum fee of $1,500 shall be required to review a development charge credit request
- A fee equivalent to 1.0% of the value of the works to a maximum of $10,000 shall be applicable for all capital works
- In instances where the Town fees to prepare and administer the agreement are beyond the cost recovery provisions outlined above, such fees shall be separately quantified and invoiced to the developer
Other fee bylaws (i.e. Legal, Finance and Development Fees) will be reviewed and adjusted where necessary to eliminate any redundancies in cost recovery.
ENVIRONMENTAL CONSIDERATIONS:
Not applicable
ACCESSIBILITY CONSIDERATIONS:
Not applicable
ENGAGE 21ST CONSIDERATIONS:
Not applicable
BUSINESS UNITS CONSULTED AND AFFECTED:
Engineering and Legal departments has reviewed this report and their comments have been incorporated.
RECOMMENDED
BY:
________________________ ________________________
Treasurer Commissioner, Corporate Services
ATTACHMENTS:
Appendix A: Development Charge Credits Policy
Appendix B: Procedures
Appendix C: Credit Agreement Process Flowchart