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HomeMy WebLinkAboutCS 27-10 Executive Committee AP1CKE0kR1ftN Report To Report Number: CS 27-10 Date: June 14, 2010 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: SR&R Bay Ridges Ltd. - Request to Defer Payment of Development Charges and Other Related Financial Matters Recommendation: 1. That Report CS 27-10 of the Director, Corporate Services & Treasurer be received; 2. That as provided for under By-law 6978/09: a) the request by SR&R Bay Ridges Ltd. to defer the payment of Development Charges in the amount of approximately $1,069,000 to the earlier of six months after the commencement of foundation construction or when above grade work is commenced, plus interest, be approved; b) the requirements of Section 16(2) be waived so that the Development Charges in effect at the time of payment apply to this project; 3. That the Director, Corporate Services & Treasurer be authorized to pay engineering fees in the amount of $51,793 to be funded from the Invest in Ontario Grant for the City's portion of the reconstruction of Wharf, Douglas and Front Streets; and, 4. That the appropriate officials of the City of Pickering be authorized to give effect thereto. Executive Summary: SR&R Bay Ridges Ltd., in its letter of March 17, 2010 to the Chief Administrative Officer, requested that they be allowed to defer payment of the City portion of their Development Charges (DCs). In addition, the outstanding payment of the City's portion of engineering fees remained to be resolved. On Friday, May 28, 2010, the incoming CAO and the Director, Corporate Services & Treasurer met with Steven Warsh, Development Partner for the Greyrock Group of Companies and Kevin Dwyer, Sernas & Associates, engineering consultant on the SR&R Bay Ridges Project. This was following an internal meeting earlier in the week with all City staff who had previously been involved in this matter. Report CS 27-10 Date: June 14, 2010 Subject: Request by SR&R Bay Ridges Ltd. Page 2 to Defer Payment of Development Charges 133 The Recommendations in this report should bring to a conclusion the ongoing discussions between SR&R and.City Officials regarding: 1. The deferral of development charges for the first apartment tower. 2. The amount of Development Charges payable could be affected by timing of payment under the By-law 6978/09 and Report CS 22-10 whereby, for the first time, they are being reduced. Recommendation 2 clarifies this issue and could provide a benefit to SR&R of approximately $26,000 depending on when the permit is issued. 3. The payment of engineering fees in the amount of $51,793 for the portion of the road and curb work that was undertaken at the request of the City depending on when the permit is issued. Financial Implications: Deferral of the payment of development charges will not result in any loss of interest income, as SR&R will make up the lost interest. By waiving the requirements of By-law 6978/09, Section 16(2), clarity in regards to the Development Charges in effect at the time of payment is provided. Otherwise, under. this Section, uncertainty could result and SR&R could pay approximately $26,000 more as a result of the reduction of Development Charges by 2.4% under Report CS 22-10. Payment of the engineering fees should, in retrospect, have been considered at the time the work was contracted for by SR&R and subsequently agreed upon by the City. The cost of $51,794 will be paid from the Invest in Ontario Grant that was applied in the 2009 Capital Budget to fund the City's share of the construction costs. Sustainability Implications: By approving the Recommendations the City is encouraging and demonstrating its commitment to residential intensification which is aligned with the Provincial Growth Plan. Background: The Council of the City of Pickering adopted the Report CS 26-09 of the Director, Corporate Services & Treasurer on the 2009 Development Charges Study. Included in this Report was By-law No. 6978/09 which included how and when Development Charges are applicable and payable, including the following: "Section 17 Development charges are payable by cash or certified cheque at the rates in effect at the time of payment upon issuance or the building permit(s) or as otherwise may be approved by Council." Report CS 27-10 Date: June 14, 2010 Subject: Request by SR&R Bay Ridges Ltd. Page 3 134 to Defer Payment of Development Charges Many municipal Development Charge By- laws contain such a provision to provide Councils with very limited discretionary powers in this regard. Limited so as to not be taken lightly or abused but a provision nonetheless so that Councils could exercise some discretion when it was in the municipality's interest to do so. Typically, a Council will consider a request to defer the payment of Development Charges when it is in the broader community interest to do so. A deferral might be sought on the basis of serving a particular community goal or objective. The only other recent request for a deferral was from Options for Homes to assist the development company in providing affordable housing. The Council felt that it was in the community's broader interest to provide limited support and agreed to the deferral. In the specific request before us, the Company has requested a deferral to assist them in matching their financial obligations with their funding sources. Construction of a condominium building involves large upfront costs associated with underground parking and building structure, which differs significantly from a low rise residential project. In a condominium tower, funds flow in from purchasers much later in the development process. At the same time, the developer is required to pay DCs to the City, Region and School Board at the time of building permit issuance. SR&R are requesting deferral to the earlier of six months after the commencement of foundation construction or when above grade work commences. The amount requested to be deferred is $1,069,361, being the City's charges only. The Company will have to make separate deferral requests to the Region and the School Board. Total Development Charges payable to the City, Region and School Boards is $3,108,975. From a financial perspective it is. not whether or not such a deferral would cost the City, but rather is it a good business practice to grant this request. SR&R advises that its initial develop interest on this property was for all townhouses. The City, as part of its, and the Province's, intensification goals convinced the developer to provide a mix of townhomes and apartment towers. It is that change in the original development plans that give rise to the developer's request to defer payment of DCs to a time closer to his inflow of funds from the purchasers. We understand that there is also a strong desire on the part of the City to see this development continue towards a successful build out as soon as possible. This typically occurs after above ground construction commences. As a conditional building permit will be issued for the parking garage, the City will retain control on the payment of the deferred DCs through the issuance of the full permit. As for engineering fees in the amount of $51,793, SR&R had not mentioned them at the beginning of discussions on the reconstruction of Wharf, Douglas and Front Streets. However, these costs were incurred in association with the City's portion of the work. At 20% of the total cost of the work they could be considered high, the norm is in the 10- 15% range, however, after extensive review the Region of Durham agreed to pay its share at this rate. The City has paid the $175,000 as approved by Council and additional construction costs incurred by SR&R on the City portion of the work due to Report CS 27-10 Date: June 14, 2010 Subject: Request by SR&R Bay Ridges Ltd. Page 4 to Defer Payment of Development Charges 35 poor soil, conditions and generally poor state of the existing curbs and gutters. Payment of engineering fees associated with these works appears to be appropriate. The Company has assured the CAO and the Treasurer that they anticipate construction commencing within 30 days of Council's approval. They also assured that Parkland dedications will no longer be contested and that there are no other outstanding financial matters. Council's approval of the Recommendations should provide part of the impetus to assist in moving this project forward. Council's approval of the Recommendations is not to be taken as an indication of a new practice or direction of the City regarding these matters. This is a very specific one-time example whereby the City can assist, at no real cost, to moving a development ahead. Any other similar requests will be dealt with on their own merits. It is anticipated that a report will be presented to the new Council in 2011 respecting the introduction of a potential development incentive program. While it is too early to determine if this particular development would meet any yet to be established criteria there does not appear to be any compelling reasons to delay this report until the aforementioned report is presented to Council in early 2011. Attachments: 1. Letter dated March 17, 2010 from SR&R Bay Ridges Ltd. Prepared By: Approved / Endorsed By: Gillis A. Paterson Gillis A. Paterson Director, Corporate Services & Treasurer Director, Corporate Services & Treasurer Copy: Chief Administrative Officer Recommended for the consideration of Pickering Ci Counc' , Tony a ed'al, P. Eng. Chief Administrative Officer 1 36. S R & R Bay Ridges U ORIGINAL 45 7 . To: ATTACHMENT #J.TO REPORT #ZIM- W COPY CORRR City of Pickering March 17, Pickering Civic Centre \ One the Esplanade v +0 Report' J Pickering, Ontario a S Canada L1V 6K7 Attention: Mr. Thomas J. Quinn Chief Administrative Officer Dear Sirs Re: San Francisco by the Bay - Deferral of Development Levies. We are proceeding with development of our San Francisco by the Bay 16 storey residential condominium tower, and have recently filed our building permit application with the City. The project involves substantial underground construction. We are requesting that the City defer the payment of its development charges until six months after the commencement of foundation construction, or until we commence work above grade. This will assist us in proceeding with this important project. City staff has advised that the City's development charges by-law requires payment prior to issuing our foundation permit, unless Council approves otherwise and advises staff accordingly. Please accept this letter as my request, pursuant to section 17 of by-law 6978/09, that Council approve the deferral of the City development charges applicable to our 16 storey tower project. We would request that the charges be payable the earlier of six months after the commencement of foundation construction, or when we commence work above grade, instead of prior to underground construction. Thank you for your consideration of this matter. I would be pleased to provide anything further to assist in Council's approval of this request, as necessary. Yours Truly SR & R Bay Ridges Ltd. Per: Steven Warsh 150 Ferrand Drive, Suite 801, Toronto, ON M3C 3E5 Tnl• d1R_RdQ_Ad7n Fnv• d1E,..d97_ma