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HomeMy WebLinkAboutCS 60-05REPORT TO COUNCIL Report Number: CS 60-05 Date: July 20, 2005 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Approval of Terms of Reference for Seaton Financial Impact Study Recommendations: It is recommended that Report CS 60-05 of the Director, Corporate Services & Treasurer be received and that: the Terms of Reference for the Seaton Financial Impact Study (Attachment 1) be approved and that the terms of reference be used as a basis for the preparation of the study by the Province and future landowners; the requirements of the Financial Impact Study be funded by the landowners and or the Province; the Director, Corporate Services & Treasurer be authorized to retain the consulting services of C.N. Watson and Associates Ltd., in order to assist staff with the peer review of the above noted Financial Impact Study with the cost to be funded by the Province and or the landowners; and, the appropriate officials of the City of Pickering be given authority to give effect thereto. Executive Summary: The Province, in their discussions with the City of Pickering, Region of Durham and future Seaton area landowners have come to the point where they would like to proceed with a Financial Impact Study (FIS) for Seaton. The proposed terms of references reflects input from City staff (Planning & Development, MPE Division; Culture & Recreation Division, Library and Corporate Projects and Policy Division). The terms of reference will ensure that the financial impact study identifies and examines all City services to be impacted by the development of Search. Financial Implications: The cost of the study is being funded 100% by either the landowners or the Province and therefore, there is no cost to the City. Report CS 60-05 Date: July 20, 2005 Subject: Approval of Terms of Reference for Seaton Financial Impact Study Page 2 Background: The City of Pickering and the Region of Durham both require a fiscal assessment of Search before the development of this community. A key aspect of the development of Seaton is the requirement that the development does not create a financial burden on the City or Region with respect to facilities, services and infrastructure. The City's terms of reference are asking for potentially up-to four scenarios as the table below indicates. Seaton Development With Airport Without Plans Airport City Plan 1 2 Provincial Plan 3 4 Where the City's Seaton development plan differs from the Provincial development plan, the City is asking that these differences be examined to ensure that under either plan the true fiscal impact is known and understood. In addition, the City would like the study to address the development from the perspective of either having or not having an airport. Staff want to ensure that if there is no airport, that the Seaton plan is still economically viable and therefore, no financial burden to the City. In addition to the four scenario's, the City is requesting as part of the terms of reference that the study consider the financial impacts and economic benefits associated with having the employment lands/area (407 corridor) ready for development prior to approving residential development Peer Review Study After the study has been completed, the City will undertake an extensive peer review of the financial impact study, verifying the validity and accuracy of all of the assumptions and calculations to ensure that the study's conclusions regarding the financial impact on the City is complete and reliable. Recommendation 4, will allow the Director, Corporate Services & Treasurer to hire C.N. Watson and Associates who are also conducting a similar review for the Region of Durham. C.N. Watson and Associates will be able to assist the City in verifying and reviewing the conclusions of the fiscal impact study. The cost of the peer review will be funded either by the Province and or landowners. Attachments: 1. City of Pickering - Seaton Financial Impact Study, Terms of Reference 00l~Jeport CS 60-05 Date: July 20, 2005 Subject: Approval of Terms of Reference for Seaton Financial Impact Study Page 3 Prepared By: Stan Karwowski ~ Manager, Finance & Taxation GAP:vw Attachment Copy: Chief Administrative Officer U Approved / Endorsed By: Grills A. Paterson Director, Corporate Services & Treasurer Recommended for the consideration of Pickering City Council ThOff~,~ J. Ouinn,~hief{~,~lministr~t~. ATTACHMENT# ! TO REPORT 06i CITY OF PICKERING SEATON FINANCIAL IMPACT STUDY TERMS OF REFERENCE July 20, 2005 06 INTRODUCTION 1.1 The City of Pickering is preparing an Official Plan Amendment under the Planning Act to establish planning policies and designations for the Seaton Community. As well, the Province of Ontario is completing a development plan under the Ontario Planning and Development Act for Seaton. 1.2 1.3 The City of Pickering and the Region of Durham both require an assessment of fiscal impact of Seaton before the development of this community may commence. The general policies of the Durham Regional Official Plan require new development to bear the full cost of its share of municipal costs, such that the Region does not undertake any actions that would place it at a financial risk. Section 6 of the Regional Plan includes the following goal: "To maintain the financial stability and integrity of the Region by managing its financial resources and by undertaking its development in a fiscally responsible and prudent manner." Deleted 1.4 The City of Pickering also requires an assessment of fiscal impact to determine the municipal costs and revenues associated with the development of Seaton. Specific City of Pickering Official Plan policies that relate to fiscal impact include the following: "City Policy (Input to the Seaton Planning Exercise) 2.14 As input to the planning exercise for the Seaton Urban Study Area, City Council supports, (c) the adoption of appropriate measures, incentives and controls to ensure the community, (vii) does not cause a financial burden on the City or Region." "City Policy (Integrating Community Services and Land Use Planning) 7.4 To help ensure community services planning is properly integrated and co- ordinated with municipal land use planning, City Council, when preparing Development Guidelines for Detailed Review Areas, and/or as part of the detailed planning for the Seaton Urban Study Area, shall consider, (c) the anticipated timing and phasing of community uses and services, parks and other facilities relative to the timing of development." "City Policy (Integrating Community Services and Land Use Planning) 7.10 sharing of explored;." "Supporting Reports City Council shall, (d) consider developing a financial plan for the provision and maintenance of new and existing municipal infrastructure under which, (i) infrastructure in newer areas will be funded from development charges, other available infrastructure programs, from a scheduled capital works program, or paid for by a benefiting landowner; (ii) infrastructure in older areas will be funded as local or community improvements, or under other available infrastructure programs, or an approved capital works program; (iii) full advantage will be taken of the availability of subsidy or contribution from other agencies and levels of government; and (iv) innovative arrangements respecting the joint-funding and cost- infrastructure projects with other partners will be 15.2 City Council may require the proponents of development, to submit for review in conjunction with development applications, appropriate inventory, impact and mitigation reports associated with one or more physical, social, economic or environmental considerations such as transportation, noise, vibration, parking, shadowing, wind, natural hazards and resources, heritage resources, market conditions, finances, recreation opportunities, services and infrastructure." O63 A recently adopted Pickering Official Plan Amendment, CPA 13 By-law 6410/04, was passed which still requires the Region of Durham's approval. For the Central Pickering Urban Area, City Council shall, "(i) require the landowners to enter into satisfactory financial arrangements to ensure that there is no financial burden on the City or Region with respect to facilities, services, and infrastructure;" 064 The Province and North Pickering Landowners' Group (NPLG) have agreed to undertake and fund a Regional fiscal impact study of the development of Seaton to determine the effect on the Region's financial position, including identification of any adverse financial impact on the Region and to recommend any necessary corrective actions with respect to development phasing, servicing capacity allocation and subdivision agreement processing. A similar study is to be undertaken for the City of Pickering and these terms of reference are meant to address the study parameters for the City study. 1.5 It is understood that the Pickering fiscal impact study outlined herein will address all of the Seaton lands (residential and non-residential) to be serviced under both the City's and the Province's Seaton development plans, if different. In addition the fiscal impact study will also address the fiscal impact from two additional scenarios - with and without the proposed airport (for a total of up to four scenarios). The study findings and associated requirements are to continue to apply to all such lands despite any changes in ownership which may occur prior to development. Under the four scenarios outlined above, the study will also consider the financial impacts and economic benefits associated with having the employment lands/area (407 corridor) ready for development (and therefore with the extension of services) to coincide with the first residential development. 1.6 It is understood that a parallel but separate fiscal impact analysis will be undertaken for the Region of Durham. These two studies will be provided under separate-cover to the respective municipalities but the intention is to utilize, where appropriate, common input assumptions as to the build out development potential of Seaton, the rate and sequence of development within Seaton for both residential and non-residential development and realty assessments. 1.7 In order to foster co-operation of all parties, a Steering Committee will be established to review the input assumptions and reach consensus, where possible, for a uniform set of assumptions. The Steering Committee will be led by a Provincial representative who will act as the point of contact for City staff with respect to this study. The Steering Committee will include appropriate representatives from the following: City of Pickering Region of Durham Province of Ontario NPLG Greater Toronto Airports Authority Transport Canada O65 4. It is agreed that IBI Group will undertake the study (and report to the Steering Committee at regular intervals). Further the Region of Durham and the City of Pickering will both have a peer review analysis undertaken by C.N. Watson and Associates Ltd. (CNWA) and similar peer review role will be undertaken for the Province of Ontario by Hemson Consulting. The results of the peer review studies (City, Region and Province) will made available to all of the parties involved (City of Pickering, Region of Durham and Province of Ontario). 2. FISCAL IMPACT STUDY STEPS 2.1 Development Char.qe Recovery 2.1.1 The City of Pickering forecast of capital requirements for all of Seaton will be made available to the consultant conducting the fiscal impact assessment, together with the City's estimate of growth related shares and allocation to residential and non-residential growth. This statement of capital requirements will be compared to the capital requirements and allocations prepared by the NPLG engineering consultants (Sernas Associates). The objective is to reach consensus on the capital requirements, costs and allocations. If this cannot be achieved, the consultant will undertake analyses utilizing the two input assumptions. 2.1.2 Development and growth forecasts including overall build out and absorption rate assumption will be provided by the Province and confirmed by the City and Region. These forecasts will form the basis for the City's draft statement of capital requirements for all of Seaton. 2.1.3 As part of this task, the City with input from the NPLG/Province will identify those types of local works which are the direct financial responsibility of landowners, pursuant to subdivision and related development agreements, versus a listing of those municipal non-local works which are of broader benefit and are to be covered under the City development charge policy. 2.1.4 The consultant will undertake analyses to calculate a development charge for recovery of all eligible growth related costs. The consultant will specifically calculate what the charge would be on the basis of an area specific charge for Seaton, as well as, incorporating Seaton's growth related costs into the current City charge calculation. The basis of the calculation for the City wide charge will be City Development Charge By-law and capital programs/allocations for the rest of the City based on the capital program included in the City of Pickering DC Background Study dated June 4, 2004, as amended for its DC By-law 6349/04 adopted, July 26, 2004 and as may be amended or otherwise updated by the City. 2.2 Municipal Tax Levy Impact 2.2.1 The study will identify all of assessable land/development within Seaton, indicating the land area by planning unit and its anticipated buildout over specified time periods, with respect to the amount and type of development, including: · the number and type of residential units, including frontage, density and expected market value (2005); (2006 to 2018) by year, · the population occupancy thereof; · the net developable quantity of commercial, industrial and institutional land, the expected development density in each case; the employment occupancy thereof; · a similar description for mixed use land; · overall tabulation of open space and all other lands which are not to be developed or are allocated to roads or other similar municipal purposes, in order to account for the total gross land area of Seaton. 2.2.2 The study, with input from Transport Canada, will provide a similar description of the amount and timing of development of the Federally owned lands north of Seaton and the PILT (Payment in Lieu of Taxes) payments which would result from the phased and ultimate development of these lands. 2.2.3 The foregoing development description is to have specific regard to the expected phasing of residential versus industrial/commercial/institutional development and for Iow vs. medium vs. high density residential development over time in Seaton. It is also to have regard for the increase in employment land uses, densities and values that are expected to occur over the next fifteen or more years, as Highway 407 is extended easterly and connected to Highway 401 within Durham, as the Pickering Airport is developed and becomes fully operational and as the Seaton residential community is built. 2,2.4 The consultant is also expected to estimate the impact of the Seaton development including specifically with and without the development of the Pickering Airport on the amount and rate of development in the rest of the City and calculate separately an order of magnitude fiscal impact associated with this "spin-off" impact in the City. In other words, there will be two scenarios (with and without the proposed airport) for the City's development plan for Seaton and for the Province's development plan for Seaton, if different (for a total of up to four scenarios). 2.2.5 Based on the assessment of comparable properties, prepare a City tax revenue forecast expected to be produced by the Seaton development by year (over time) and as a full buildout. This forecast would reflect the product of assessment values and applicable tax rates, in accordance with 2003/4 assessed values for 2005 tax purposes. 2.2.6 Estimate the amount of City non-property tax revenues, in addition to PILT payments associated with the Pickering Airport, non-property tax revenues to be produced by the Seaton development, in addition to property tax revenues including building permit revenue and user rate revenue. 2.2.7 Establish the anticipated increase in City operating expenditures required to provide City services to the Seaton development, as it builds out over time (e.g. Parks, Recreation, Library and Cultural Services, Roads, Protection Services, Transportation Services, Environmental, Stormwater Drainage, General Government and Planning and Development Services, etc.). These expenditure increments are to be based on a 068 combination of population/employment costs based on 2005 budget and the costs of the capital facilities to be constructed in, or for Seaton, based on order of magnitude estimates. The study will also include "start-up" or "ramp-up" costs (direct and indirect) associated with the Seaton project. In this regard, the City wishes to provide major community facilities concurrent with residential development commencing in each phase. Therefore, the Consultant should identify the cost implications and funding options of providing this level of service. 2.2.8 Make suitable provision for capital spending from the operating budget for Seaton purposes, to cover: · capital costs not covered by development charges as a result of exemptions, non-development-related needs for the area, discounts or ineligible services; · provision for lifecycle costing, consistent with the current practice in effect in the City, including repair and replacement of those municipal capital assets directly or indirectly providing service to the Seaton community. 2.2.9 Net the anticipated increase in annual City revenues against the expected increase in annual City operating expenditures on an annual basis up to the full buildout of the Seaton community. Determine the tax impact that can be expected to result from the development and potential means of eliminating any negative tax impact. 2.3 Capital Financin.q Plan 2.3.1 The development charge recovery analysis is to produce a complete listing of those capital works which are required for the servicing of Seaton, for all services for which the City is responsible (both "hard" and "soft"), recognizing the City's interest in providing major community facilities at same time as residential development is commencing in each phase. 2.3.2 The Capital Financing Plan is to indicate the funding by project, year and funding source from: · development charge reserve funds; · property tax budget; · user rate budget, with particular reference to land owner front-end financing, municipal long term debt, use of existing reserve fund balances, municipal capital spending from operating budgets and other sources. 2.3.3 Any financial risks to the City are to be identified, with respect to potential development variability, debt funding requirements and front-end financing risks. 2.3.4 Provide an overall analysis of the fiscal impact to the City, from the Seaton development, incorporating capital and operating impacts. 2.4 Periodic Monitorinq 2.4.1 A planned monitoring schedule including identification of key parameters to be monitored such as rate of development, assessment values and capital costs is to be established in order to assure that the actual development of Seaton is resulting in an impact within the reasonable range of impacts forecasted by the Fiscal Impact Study. 3. Proiect Timing & Scope Time is of the essence. It is anticipated that this financial analysis would be carried out over a period of approximately 10-12 weeks. The fiscal impact study would be carried out in standard industry fashion, similar to related studies previously undertaken by Burlington, Halton, Milton, Whitchurch-Stouffville, Ajax, Caledon and elsewhere, adapted to the subject circumstances and the significant capital funding requirements involved in this case. 4. City Project Coordinator 4.1 The City contact for the fiscal impact assessment project is Mr. Gillis Paterson, Director of Corporate Services/Treasurer, (telephone 905-420-4640).