HomeMy WebLinkAboutFIN 14-23 Report to
Executive Committee
Report Number: FIN 14-23
Date: September 5, 2023
From: Stan Karwowski
Director, Finance & Treasurer
Subject: Bill 23, More Homes Built Faster Act, 2022
- Development Charge Revenue Loss as of July 31, 2023
- File: F-1000-001
Recommendation:
That Report FIN 14-23 regarding an updated financial assessment related to Bill 23 be
received for information.
Executive Summary: Bill 23, More Homes Built Faster Act, 2022, which received royal
assent on November 28, 2022 will have significant implications on the role, function, capacity
and fiscal health of municipalities, conservation authorities, and on the planning and
development process in Ontario. The purpose of the legislation is to help address the
Province’s plan of building 1.5 million homes over the next ten years by increasing the supply
of housing. One of tools introduced in the legislation is the reduction of Development Charge
(DC) fees over a five year period. This legislation also exempted affordable and non-profit
developments from the payment of DC fees.
Further to Report FIN 05-23, which provided the estimated financial impact of Bill 23 for the
City, this report provides an update on the actual DC revenues that have been lost due to Bill
23 and it’s phase-in requirement for the first seven months of this year.
Financial Implications: As of July 31, 2023, the City has lost $1,881,639 of DC revenues
due to the mandatory phase-in of DC fees as a result of Bill 23. The City was required to
reduce its DC fee set in our by-law passed in July 2022 to 80 percent of the maximum rate. As
of July 12, 2023 the City will now be able to charge 85 percent of the maximum DC fee. The
City will be allowed to charge the maximum DC fee in July 2026.
The graph below illustrates the monthly loss this year due to Bill 23:
FIN 14-23 September 5, 2023
Subject: Bill 23, More Homes Built Faster Act, 2022 Page 2
– Development Charge Revenue Loss as of July 31, 2023
Chart One
DC Revenue Loss by Month
Discussion: The majority of the DC revenue loss for the first seven months of 2023 are
from the Seaton area, contributing to $1,825,266 of the total loss of $1,881,639, or 97 percent
of the total loss. The spike in revenue loss for the month of June may be due to the
introduction of the new higher Durham Region DC fee rate effective July 1, 2023 and the
development community trying to avoid the increase . In addition, the City’s DC phase-in rate
was being increased in early July and the development community may have also wanted to
avoid this increase.
Chart Two below presents the revenue losses by Development Charge area (City-wide and
Seaton) and by dwelling type.
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Jan Feb Mar Apr May Jun Jul
Seaton Rest of Pickering
FIN 14-23 September 5, 2023
Subject: Bill 23, More Homes Built Faster Act, 2022 Page 3
– Development Charge Revenue Loss as of July 31, 2023
Chart Two
Revenue Loss by Area and Dwelling Type
Table One: DC Loss by Area and Dwelling Type
Area/Type Loss ($) Units
Single/Semi Detached (Seaton) $1,069,520 290
Other Multiples (Seaton) 755,706 266
Single/Semi Detached (Citywide) 56,413 9
Total $1,881,639 565
The phrase “Other Multiples” refers to housing structures such as triplex, quadplex and row
housing.
In terms of the DC categories, the Parks & Recreation category has seen the largest financial
loss in terms of lost revenue. For the first seven months of 2023, this category has lost
$1,337,393 of DC revenues due to Bill 23, which equates to 71 percent of the total loss.
Chart Three below illustrates the loss by DC categories:
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Single/Semi Detached
(Seaton)
Other Multiples (Seaton)Single/Semi Detached
(Citywide)
FIN 14-23 September 5, 2023
Subject: Bill 23, More Homes Built Faster Act, 2022 Page 4
– Development Charge Revenue Loss as of July 31, 2023
Chart Three
Loss by DC Category
It is important to note that development in Seaton is exempt from paying the transportation
component of the DC fee. This is due to the fact that Seaton Landowner’s Group (SLG)
Financial Impact Agreement (FIA) stipulates that the SLG will be constructing the
transportation needs in Seaton.
2024 Estimated Budget Provision
The 2023 budget estimated that the Bill 23 DC shortfall for the year would be $3.5 million.
Based on the 7 months of actual data up to July 31st, the estimated full year DC “reduced fee”
loss for 2023 is approximately $3.2 million. This projection excludes the additional fee losses
associated with affordable and non-profit housing. As part of the 2023 accounting year end
process, accounting staff will transfer funds from the casino reserve to the various DC
components to address or “fix” the Bill 23 DC funding hole.
At this time, the preliminary estimate for the 2024 DC loss is approximately $2.5 million due to
the reduced “DC “haircut” fee. However, it should be noted, that affordable housing
developments are 100 percent exempt from the Region and City DC fees. If the City receives
any affordable housing application, the financial estimate for the DC fee revenue loss will have
to be revised for the remainder of the year.
The City is currently in a high growth phase, and will continue to be in this phase over the next
10 to 15 years, and the City is expected to hit a population target of 138,000 by 2032. With
$75,118
$118,374
$1,337,393
$246,416
$23,622
$46,380 $23,804 $10,532
Other Services Related to a Highway Fire Protection Services
Parks & Recreation Services Library Services
Growth-Related Studies Storm Water Management
Transportation By-Law Enforcement Services
FIN 14-23 September 5, 2023
Subject: Bill 23, More Homes Built Faster Act, 2022 Page 5
– Development Charge Revenue Loss as of July 31, 2023
high population growth, comes higher demand for City “Growth Related” infrastructure. The
City has a very aggressive and correspondingly expensive capital forecast plan and requires
every DC dollar to fund these growth projects. The City continues to hope that the Province wil l
make us “whole” and assist the City in funding this critical revenue loss.
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Jason Bekramchand, CPA Stan Karwowski, CPA, CMA, MBA
Senior Financial Analyst – Capital & Director, Finance & Treasurer
Debt Management
Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Chief Administrative Officer