Report to: General Committee Report Date: May 18, 2010

SUBJECT: Development Charges Indexing – July 1, 2010

PREPARED BY: Kevin Ross, extension 2126

RECOMMENDATION:

1) That the report titled “Development Charges Indexing – July 1, 2010” be received;

2) That Council approve a reduction in development charges of 0.35%, effective July 1, 2010;

3) And that staff be directed to do all things necessary to give effect to this report.

1. Purpose 2. Background 3. Discussion 4. Financial 5. Environmental

6. Accessibility 7. Engage ^21st 8. Affected Units 9. Attachment(s)

PURPOSE:

The purpose of this report is to recommend the indexing of development charges, effective July 1, 2010, in accordance with the Statistics Canada Quarterly, Construction Price Statistic for non-residential buildings in Toronto.

BACKGROUND:

Section 15 of the Town’s Development Charge by-laws state that the charges referred to in the “Schedule of Development Charges” shall be adjusted semi-annually without an amendment to the by-laws, on the first day of January and the first day of July, of each year, in accordance with the most recent change in the Statistics Canada Quarterly, Construction Price Statistics (Catalogue No. 62-007).

In accordance with the by-law it is recommended that the development charges be indexed down by 0.35%. This represents the reduction in the Statistics Canada Quarterly, Construction Price Statistic for non-residential buildings in Toronto for the fourth quarter of 2009 and the first quarter of 2010. This is the third successive reduction in the indexing following semi-annual index reductions of 3.06% on July 1^st, 2009 and 2.07% on January 1, 2010.

The Town’s development charge by-laws were not updated in the same year (the Town Wide Soft was approved in June 2009 and the Town Wide Hard and Area Specific approved in June 2008) and hence there is a difference in the impact of indexing on the charges. Taking this reduction into account, the Town Wide Soft DC’s has been indexed down 4.00% since its enactment whereas the Town Wide Hard and Area Specific DC’s have been indexed up 5.56%. Below is a history of the indexes approved by Council since the by-laws were enacted.

Based on the recommended reduction, the new Development Charge rates effective July 1, 2010 are shown below.

FINANCIAL CONSIDERATIONS

The Construction Price Index includes costs associated with the construction of industrial, commercial and institutional buildings which more closely aligns with the costs incurred by the Town of Markham for these services. The Construction Price Index for the fourth quarter of 2009 and the first quarter of 2010 declined mostly as a result of a slight decline in the price of construction materials along with competitive pricing and continued weakness in the non-residential building construction market. The Town will monitor the reduction in the index to see whether development charge revenues are keeping pace with the costs of growth-related projects.

RECOMMENDED BY: