Report to: General Committee Report
Date: November 30, 2009
SUBJECT: Development Charge
Deferral – St. Mark’s Coptic Orthodox Church
PREPARED BY: Kevin Ross, Ext. 2126
RECOMMENDATION:
1)
That the report titled “Development
Charge Deferral – St. Mark’s Coptic Orthodox Church” be received;
2)
That Council authorize the Town of Markham to enter into an agreement with St. Mark’s Coptic Orthodox Church for a deferral of the payment of the Town Wide
Hard and Area Specific Development Charges relating to the construction of a
Cathedral at 455 Ferrier Street,
to the satisfaction of the Town Solicitor;
3)
That
the agreement provide for Development Charge payments of $50,000 on building
permit issuance, $50,000 on the landscaping of the grounds, with the remainder
to be paid in 20% increments over 5 years commencing at the date of occupancy;
4)
That
the agreement provide that the Town Wide Hard and Area Specific Development
Charges to be deferred be fully secured;
5)
That the agreement provide that
payment of the Town Wide Hard and Area Specific Development Charges be
calculated at the rate that is in effect at the time of payment;
6)
That this report
be taken to the December
1, 2009 Council meeting;
7)
And that staff be directed to
do all things necessary give effect to these recommendations.
In accordance
with the Town’s development charge by-laws, Town Wide Hard (TWH) and Area Specific Development Charges (ASDC)
for a development being approved via a site plan agreement, are payable in
their entirety upon the issuance of the first building permit. The TWH for non-residential development and ASDC are
both land based charges calculated on a per net hectare basis.
St. Mark’s
Coptic Orthodox Church is a non-profit, community oriented organization with plans
to develop 4.88 hectares of land located at 455 Ferrier Street, commencing with a Cathedral for which a
site plan agreement is currently being prepared. The first phase of the development, based on
the current site plan application, includes the building of the Cathedral, an
adjoining courtyard and the required parking spaces (Appendix A). Over time, the church would like to develop a Coptic Canadian
Village on the property
to include a theatre, museum, community centre, residence, daycare, private
school and office building (Appendix B).
They anticipate that the construction of these other structures will
commence in the next 10-15 years.
The church
approached the Town with a request for a deferral of the development charges over
6 years. The Church has advised that
payment of the development charges (DC’s) for the entire site, will limit the
development funds available to build the Cathedral, for which the parishioners
have a great and immediate need. They
have proposed the following payment schedule:
- $50,000 on building permit issuance
- $50,000 within 18 months (to
coincide with the landscaping of the grounds)
- 20% of the outstanding development
charge obligation on the date of occupancy (estimated at December 2011)
with the remaining 80% outstanding to be paid in 20% increments each year
thereafter, to be fully paid on or around December 2015. The amount payable in each year will be
based on the rates in force on the date of payment.
Pursuant to
section 27(1) of the Development Charges Act, 1997, “a municipality may enter
into an agreement with a person who is required to pay a development charge
providing for all or any part of a development charge to be paid before or
after it would otherwise be payable”.
The Town
typically assesses the merits of providing a development charge deferral based
on factors outside the owners control. A
review of some approved deferral agreements indicated that these were based on
(1) providing an incentive to promote and encourage affordable housing, (2)
servicing constraints, (3) the subject property being severed and (4) the
premises being used as a temporary sales centre. In the church’s case, the request appears to
be based in the context of limited financial resources, as the cost to
construct the Cathedral has exceeded expectations.
OPTIONS/ DISCUSSION:
Applicable
Charges
The church is
required to pay the TWH, ASDC and
Regional development charges (DC’s) on the proposed development. The Town’s
portion of the charges amounts to $1,044,603.04 as detailed in the table below.
The church will
benefit from exemptions to the Town Wide Soft DC’s, the School Board DC’s as
well as a partial exemption from some Regional charges. The Region’s exemption applies to the worship
area of the Cathedral which is estimated at 2,500m2 (26,910 sq. ft.),
however the church will still be required to pay approximately $400K to $500K
in Regional DC’s.
The church plans
to use a section of the building as a temporary community centre until its
plans to build a permanent structure is realized. The Region has indicated a willingness to enter
into a deferral agreement for this portion of the structure, until the space
reverts to its original planned function (i.e. a worship area) when the
community centre is built. The size of
this area is being reviewed but indications are that an additional $70K to
$100K may be available for deferral from the Region. The estimated size of the entire structure is
7,187m2 (77,360 sq. ft.).
Security
For a deferral
of this nature, the Town will require that the church secure the estimated
indexed value of the DC liability over this time period. The church (with the agreement of their bank)
has indicated that this can be accomplished by way of a second charge over
their property until the date of occupancy, after which the Town will receive a
letter of credit to secure the remaining (estimated) indexed DC’s outstanding.
The church has
been made aware that their future payments and obligation could be increased
beyond the normal indexing percentage as the DC by-laws will be renewed prior
to the completion of their payment. The
Town is not able to estimate what the new rates may be at this time; the church
has however agreed to accept this risk.
This request is
not one that fits the Town’s past practice in making a deferral recommendation
(i.e. external influences), however based on the church’s plans to further
develop the property with structures that will enhance the provision of
services to the community, staff recommend the deferral of the development
charges based on the church’s proposal.
FINANCIAL CONSIDERATIONS:
The deferral of development charges is essentially a cashflow issue
which results in a delay in the receipt of the funds by the Town. If Council agrees to defer the DC’s, then
approximately $1M (subject to indexing) will be collected over 6 years rather
than at building permit issuance.
The development charge reserves are
currently being depleted at a rate quicker than revenues are being received and
staff are currently reviewing the potential need for external borrowing to fund
development charge related capital projects. By indexing the required payments, any cost
of borrowing which may be incurred, should be offset.
Town staff will be developing a Development Charge Deferral Policy
in 2010 aimed at creating parameters within which future deferral requests will
be assessed. This policy will set the
framework for the principles and procedures to be followed in the execution of
deferral agreements.
RECOMMENDED
BY: ________________________ ________________________
Barb Cribbett, Treasurer Andy
Taylor, Commissioner
Corporate
Services
ATTACHMENTS:
Appendix
A – Church Site Plan
Appendix
B – Church Concept Masterplan