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TO: |
Mayor and Members of Council |
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FROM: |
Barb Cribbett, Treasurer Alan Brown, Director, Engineering
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PREPARED BY: |
Barb Cribbett, Treasurer Alan Brown, Director,
Engineering Jennifer Nelson, Manager of
Development Finance |
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DATE OF MEETING: |
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SUBJECT: |
Development Charge Update |
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RECOMMENDATION:
THAT the report and presentation on the
“Development Charge Update” be received;
THAT the
summary responses to the comments from the public and the development community
be received for information;
THAT the policy exempting non-residential
additions and expansions from Town Wide Hard and Area Specific development
charges for properties that paid lot levies prior to 1991 be continued;
THAT a policy exempting additions or expansions
for business office up to 50% of the original floor space, similar to the
mandatory industrial exemption, be approved;
THAT the Option 4 development charge exemption
endorsed at the public meeting on August 3 include an additional qualifying
criteria that the exemption be subject to the provision that an application for
recognition of the exemption be made on or before September 1, 2005;
THAT the residential Town-wide hard development charge for Apartment Units - 2 or More Bedrooms - be reduced to $1,516 and subsequently indexed in accordance with the Development Charges Act, 1997;
THAT the revised Town Wide Soft, Town Wide Hard
and Area Specific development charges, as amended and including an exemption to
non-residential properties that paid lot levies prior to November 1991 and
remaining in the ownership of the original benefiting owner (Option 4 endorsed
at the public meeting on August 3rd) be brought forward for approval
to the August 31, 2004 Council Meeting;
THAT the public be advised of the proposed
amendments to the Town Wide Soft, Town Wide Hard and Area Specific Development
Charge By-laws at the second Public Meeting on August 31, 2004;
THAT no further public meeting is required under
Section 12 of the Development Charges Act;
THAT Council approve the development charge
background study prepared by Hemson Consulting Ltd. Dated July 2004;
THAT it is the intent of Council to meet the
increased need for services resulting from the anticipated development through
the implementation of the amended capital program attached;
THAT Council recognizes that there are
operating costs associated with the implementation of the capital program; and
THAT the Town of
PURPOSE:
The
purpose of this report is to update Council on the proposed changes to the
information, assumptions, and rates in the draft July 2004 Town of Markham
Development Charges Background Study, and to obtain Finance and Administrative
Committee’s approval to forward the revised Development Charge rates and
Development Charge by-laws to Council on August 31, 2004 for approval.
BACKGROUND:
On
That correspondence with comments regarding the proposed Development Charges By-law, from Mai Somermaa of Emery Investments; David M. Farmer, representing Woodchester Building Corporation; Barry A. Horosko, Bratty and Partners, representing 2015776 Ontario Inc.; Randy M. Grimes, IBI Group, representing UDI/GTHBA; and Angela S. Iannuzziello, Entra Consultants, representing the Urban Development Institute/Ontario, York Chapter and the Greater Toronto Home Builder's Association, be received;
And that the deputations by Richard Goldberg, Emery Investments; Mike Everard, Augusta National Inc., representing Greenbelt Volkswagen; Glenn Baron, 251 Helen Avenue; Paula Tenuta, representing the Greater Toronto Home Builder's Association; Nik Mracic, representing Urban Development Institute, York Chapter; Fred Darvish of Liberty Development Corporation; the owner of a building lot in Cachet Estates, and Dagmar Teubner, be received;
And that the report and presentation on the "2004 Development Charge By-laws" be received;
And that discussions between staff and the development community
with regard to the proposed Development Charge By-laws continue;
And that Council approve the additional policy changes
recommended in this report by staff in the following areas:
· Exemption of Farm building;
And that the policy for
Cancellation of Exemption for Additions and Expansions be
referred to Economic Development staff;
And that Option 4 for exemptions from
development charges (to exempt lands developed for non-residential purposes
whose beneficial owner has not changed) be endorsed, and the proposed development charges be
revised appropriately;
And that staff report back to Finance and Administrative Committee on
August 30, 2004 with responses to, and any recommendations resulting from,
comments from the public and the development community concerning the proposed
Development Charge By-laws;
And that Council approve a second public meeting on
And that the Town-Wide Soft, Town-Wide Hard and Area Specific
Development Charges by-laws, as amended and approved by the Finance and
Administrative Committee, be brought to the August 31, 2004 Council Meeting for
approval.
OPTIONS/DISCUSSION:
Written Submissions:
The submissions from Randy Grimes, IBI and Angela S. Iannuzziello, Entra Consulting are
discussed in Section B – Town Wide Consulting Process.
Woodchester Building Corporation and Emery
Investments both requested grandfathering status under an exemption provided in
the Town’s expiring Development Charge By-laws.
Failing that, both requested that their properties be subject to Area 4
(Don Mills/Browns Corner) Development Charge rates rather than Area 42B
(Markham Centre). This submission is dealt with under Section C, Recommendation
#4 of this report.
Barry Horosko, Bratty and Partners,
representing 2015776 Ontario Inc. commented that the proposed increases for
non-residential development are contradictory to the Town’s mandate to
encourage the development of office uses throughout the Town. Mr. Horosko also
commented on the increased development charge for high density residential
units (apartments) and requested that the Town consider allocating Development
Charges on the basis of square footage, rather than unit type for residential
development. This subject is discussed
in Section B under “General”.
Verbal Submissions:
Mike Everard, Augusta National, spoke on behalf
of his client, Greenbelt Volkswagen. Mr.
Everard’s issue is not related to the passing of these by-laws, but rather the
application of a current by-law to his client’s proposed expansion. Staff have been in
contact with Mr. Everard and have agreed to meet in early September to discuss
his concerns.
Glenn Baron spoke, and subsequently
submitted his concerns in writing. A
copy of Mr. Baron’s letter is attached, along with the written response from
Staff.
Randy
Grimes, IBI Group, and Angela S. Iannuzziello, Entra Consultants (representing the Urban Development Institute/Ontario, York Chapter and
the Greater Toronto Home Builders’ Association) have participated in a number
of meetings with staff to review in detail their issues and comments raised in
the submissions to the Public Meeting, as well as further questions raised in
the meetings. In addition, developers participating in the consultative process
for the area specific development charges also had questions related to Town
Wide (TW) charges.
I. General
· Increased residential charge for high density units (apartments) – This issue was raised both through written submission, and during meetings with the developers. The development charges for apartment units presented in the draft background study increased from existing charges, whereas the charges for single/semis and multiple units decreased. This result is a function of the growth forecast, and the application of census data. Hemson consultants were directed to review this issue and examine any defensible alternative approaches to the calculation. An alternative approach was provided by Hemson, and examined by staff, but did not have a material affect on the apartment rates (less than 0.5%), therefore staff recommend that the person per unit (PPU) standard set out in the draft Town of Markham Background Study continue to be applied. In any case, the proposed amendments to the TWH projects has now resulted in decreases for all unit types, other than 2 or more bedroom apartment units which are increasing by $300 per unit.
Proposed Revision:
In order to support Council’s objective of encouraging high density development, staff recommend that the hard services development charge for apartment units with 2 or more bedrooms be reduced from the proposed rate of $1,816 to $1,516. This will return the combined hard and soft services development charge for 2 or more bedroom apartment units to the existing total development charge of $4,800, down from the proposed total development charge of $5,100. The financial impact of reducing the charge is approximately $600 thousand.
·
Exemptions to previous
Schedule C properties and affect on Town Wide Hard (TWH) development charges
and Area Specific Development Charges (ASDC) (particularly in Area 4) – This issue was raised during meetings with the developers and
comments were made regarding the
increase to the non-residential TWH and ASDC charges that occurs when these
properties are exempted from paying development charges. At the August 3rd public meeting,
Council debated several options put forward by staff regarding the treatment of
properties that were exempted until
In addition to the options presented, Council Members at the August 3rd Public Meeting also questioned staff about the option of providing credit for previous lot levies paid by these properties. During the consultative process, the option of providing credits was again raised by developers. Research since the public meeting indicates that, while the cash component of lot levies paid can be identified, the services in lieu components (works external to subdivision or site plans constructed by the developers) will be more difficult to confirm and quantify to establish accurate credits, however, the Director of Engineering could be given the authority to estimate the value of the services in lieu and establish the total credit available.
Proposed
Revision:
With regard to the Option 4 exemption endorsed by
Council, staff are recommending the following
additional criteria be approved:
“THAT the Option 4
development charge exemption endorsed by Council on August 3 include an
additional qualifying criteria that the exemption be subject to the provision
that an application for recognition of the exemption is made on or before
A mandatory application process will define within the one year period all properties that can take advantage of this exemption during the next five year period, until the by-law expires.
II. Town Wide Soft Development Charges:
Randy Grimes (IBI) questioned the increase in
per square foot cost for recreation facilities, the increase services level for
Park Special Facilities, and the land value ($500,000 per acre) used in the
background study. Staff
have supplied explanations and justifications for these items.
III. Town Wide Hard Development Charges:
Several submissions with detailed questions or requests for additional information concerning elements of the hard services capital program were received and discussed in the meetings with the development community, in particular Entra Consultants. Some of the broader issues that were discussed by several different developer groups were:
Proposed
Revisions:
After consultation
with the development industry, the capital program was revised by staff and is
attached to this report.
In the past 3 weeks, staff
have met with the majority of the Area Specific Development Charge
(ASDC) developers. Letters were sent to
the interested developers within these specific areas on
1.
Revised detailed TWH and
ASDC capital programs are attached. The
revisions to the capital projects have reduced to varying degrees the TWH and
Area Specific development charges. The
revised charges are discussed under “Financial Considerations”
2.
Continuation of Exemption
from Town wide hard and the Area Specific development charges for Additions and
Expansions for pre 1991 lot levy properties – A clause was added to the Town
wide hard and the Area Specific By-laws through an amendment to the by-laws in
May 2000. The staff report recommending
this amendment is attached. Based on the
rationale in the May 2000 report, and a discussion with Stephen Chait, Director
of Economic Development, staff is recommending that this clause be retained in
the proposed Town Wide Hard and the Area Specific By-laws. The financial impact of these exemptions is
expected to be minimal and has not affected the development charges.
3.
A policy exempting additions
or expansions for business office up to 50% of the original floor space,
similar to the mandatory industrial exemption – Staff are recommending that
expansions or additions to business office properties be offered an exemption
similar to the mandatory industrial exemption as an incentive to intensify. This would allow a business office to enlarge
its original gross floor area by up to 50% without having to pay additional
development charges.
4.
Realignment of Area 42B and
Area 4 (Emery and Woodchester) – Staff have reviewed the request from Emery
Investments and Woodchester Building Corporation to realign their properties
into Area 4 (Don Mills/Browns Corner Industrial) rather than Area 42B (Markham
Centre), and recommend that these properties be moved to Area 4.
FINANCIAL CONSIDERATIONS:
Revised
Development Charges:
The chart below outlines the current
development charges, the charge that was included in the draft development
charge background study, and the proposed charge. The proposed charge differs from the charge
included in the draft background study due to revisions in the engineering
program. In addition, the proposed
apartment charge for 2 bedroom and greater has been adjusted to reflect the
recommendation that the rate be reduced to $4,800 per unit to be consistent
with Council’s commitment to promote high density development.
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Charge Type |
Existing Charge |
Draft |
Proposed |
Inc/(Dec) |
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Residential: |
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Singles and Semis |
$7,380 |
$7,324 |
$7,170 |
-2.8% |
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Multiple Unit Dwellings |
$6,130 |
$5,754 |
$5,633 |
-8.1% |
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Apartments - 2 Br and
Greater |
$4,800 |
$5,209 |
$4,800 |
0.0% |
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Apartments - Bachelor and
1 Br |
$3,056 |
$3,117 |
$3,051 |
-0.2% |
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Non- Residential: |
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Town Wide Soft / m2
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$2.38 |
$2.90 |
$2.95 |
23.9% |
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Town Wide Hard / net
hectare |
$39,436 |
$64,770 |
$64,770 |
64.2% |
Non-Growth
Share:
Unlike the soft services, the hard services non-growth share is not a legislated percentage. The hard services non-growth percentage is based on the benefit the infrastructure will provide to the existing population. Consistent policies are applied to all hard service capital projects to determine the non-growth share. The amount to be funded from non-development charge sources for hard services equates to approximately $27 million over the ten-year period (2004-2013), with an additional $20 million estimated for the period 2014 to 2021.
In total, the non-growth share of the capital program is approximately $37 million over the 10 year period.
Implementation
of Capital Program:
The Development Charges Act requires Council to indicate that it intends to ensure that the increase in the need for service attributable to the anticipated development will be met. Therefore, the enactment of the development charge by-laws commits Council to ensure that the capital program is undertaken as outlined in the development charge background study.
The capital program included in the background study anticipates a large portion of the infrastructure will be installed in advance of development. The Town will be required to borrow internally and/or externally to meet this capital program. The borrowing costs associated with the front-loading of the capital program has been included in the development charge. This places an increased commitment on Council to ensure that the capital program is implemented as outlined in the background study.
In approving the development charge by-laws,
Council is also committing to the costs associated with the ongoing operation
and maintenance of the assets included in the capital program. This cost is anticipated to be approximately
$13.5 million of the ten-year period.
The approved 2004 operating budget includes ‘ramp-up’ provisions for
some of these operational costs. Staff
will continue to include provisions, where possible, in the operating budget to
help offset the impact the capital program may have in any given year.
BUSINESS UNITS CONSULTED AND AFFECTED:
Economic Development and Legal Services were
consulted.
ATTACHMENTS:
May 2000 Staff Report – Exemptions for
Additions & Expansions
Revised Capital Projects
Revised Development Charge Tables
Letter from Mr. Glenn Baron
Staff Response to Mr. Glenn Baron
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Barb Cribbett, Treasurer |
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Andy Taylor, Commissioner of Corporate
Services |
Q:\Finance and Administration\Finance\SHARED\2004
Finance_Admin Cttee Reports\0461 Development Charge Update.doc
