HomeMy WebLinkAboutFIN 02-24Report to
Executive Committee
Report Number: FIN 02-24 Date: February 5, 2024
From: Stan Karwowski Director, Finance & Treasurer
Subject: Bill 23 – Development Charge Revenue Loss for 2023
-File: F-1000-001
Recommendation:
1.That Report FIN 02-24 regarding an updated financial assessment related to Bill 23 be received;
2.That Council authorize the Director, Finance & Treasurer to fund the Bill 23 Development Charge revenue loss for 2023 in the amount of the $3,738,095.00 from the Casino
Reserve to the following Development Charge categories, as approved in the 2023
Budget recommendations, as follows:
a)The amount of $150,112.00 to be transferred to the DC – Other Services Related to a Highway Reserve Fund;
b)The amount of $236,351.00 to be transferred to the DC – Fire Protection Services
Reserve Fund;
c)The amount of $2,642,651.00 to be transferred to the DC – Parks & Recreation Services Reserve Fund;
d)The amount of $486,844.00 to be transferred to the DC – Library Services Reserve Fund;
e)The amount of $46,985.00 to be transferred to the DC – Growth Studies Reserve
Fund;
f)The amount of $92,559.00 to be transferred to the DC – Stormwater Management Reserve Fund;
g)The amount of $61,522.00 to be transferred to the DC – Transportation Reserve
Fund;
h)The amount of $21,071.00 to be transferred to the DC – By-Law Enforcement
Reserve Fund; and,
3.That the appropriate City of Pickering officials be authorized to take the necessary
actions as indicated in this report.
FIN 02-24 February 5, 2024
Subject: Bill 23 – Development Charge Revenue Loss for 2023 Page 2
Executive Summary: Staff provided Council with a mid-year update on the financial loss
due to Bill 23, More Homes Built Faster Act, 2022 through Report FIN 14-23. This report in
September highlighted that, up to July 31, 2023, the City had lost $1,881,639 in Development Charge (DC) revenues in the first seven months of 2023 due to the mandatory phase-in of DC fees.
This report will be providing an update on the revenue loss for the full year of 2023.
Relationship to the Pickering Strategic Plan: The recommendations in this report respond to the Pickering Strategic Plan Corporate Key, Good Governance objective of Be Financially
Sustainable.
Financial Implications: For the full year of 2023, the City has lost $3,738,095 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 anniversary date of our DC by-law, the City was able increase the phase-in from 80 percent to 85 percent of the maximum DC fee. The City will be authorized to charge the maximum DC fee in July of 2026, due to Bill 23.
The graph below provides an update to the monthly loss this year due to Bill 23:
Chart One DC Revenue Loss by Month
$50,000
$150,000
$250,000
$350,000
$450,000
$550,000
$650,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Seaton Rest of Pickering
FIN 02-24 February 5, 2024
Subject: Bill 23 – Development Charge Revenue Loss for 2023 Page 3
Discussion: Similar to what was presented in Report FIN 14-23, the majority of the DC
revenue loss continues to be realized from the Seaton area, contributing to $3,614,828 of the
total loss of $3,738,095, or 97 percent of the total loss. This is expected, as Seaton continues to be the prime area for development in Pickering at this time.
Chart Two below presents the revenue losses by Development Charge area (City-wide and Seaton) and by dwelling type.
Chart Two Revenue Loss by Area and Dwelling Type
Table One: DC Loss by Area and Dwelling Type
Area/Type Loss ($) Units
Single/Semi Detached (Seaton) $2,443,615 718
Other Multiples (Seaton) 1,171,211 422
Single/Semi Detached (Citywide) 83,280 14
Non-Residential (Citywide) 39,989 1
Total $3,738,095 1,155
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Single/Semi Detached(Seaton)Other Multiples (Seaton)Single/Semi Detached(Citywide)Non-Residential(Citywide)
FIN 02-24 February 5, 2024
Subject: Bill 23 – Development Charge Revenue Loss for 2023 Page 4
The phrase “Other Multiples” refers to housing structures such as triplex, quadplex and row
housing.
The Parks & Recreation category continues to experience the largest financial loss in terms of lost revenue. For the year 2023, this category has lost $2,642,651 of DC revenues due to Bill 23, which equates to 71 percent of the total loss revenue loss.
Chart Three below provides an update on the revenue loss by DC categories:
Chart Three Loss by DC Category
Seaton is exempt from paying the transportation component of the DC fee because the Seaton
Landowner’s Group (SLG) Financial Impact Agreement (FIA) stipulates that the SLG will be constructing the transportation needs in Seaton. 2024 Budget Provision
The 2023 Budget estimated that the Bill 23 DC shortfall for the year would be $3.5 million, and
the City ended up realizing a loss of $3.7 million, slightly higher than originally anticipated. This revenue loss was solely due to the phase-in of the City’s new DC by-law that was put into effect in July of 2022; the City did not realize any DC fee losses associated with affordable and non-profit housing for 2023. As mentioned in the report recommendation, Finance staff is
recommending the transfer of funds from the casino reserve to the various DC components to
address or “fix” the Bill 23 DC funding hole.
$150,112
$236,351
$2,642,651
$486,844
$46,985
$92,559
$61,522 $21,071
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 02-24 February 5, 2024
Subject: Bill 23 – Development Charge Revenue Loss for 2023 Page 5
At this time, the preliminary estimate for the 2024 DC loss is approximately $2.5 million due to
Bill 23. However, it should be noted, that affordable housing developments are 100 percent
exempt from the Regional and City DC fees. If the City receives any affordable housing applications in 2024, the financial estimate for the DC fee revenue loss will be greater.
Moving Forward
On December 13, 2023, the Ministry of Municipal Affairs and Housing issued a news release to municipalities regarding Bill 23. In this release, it was mentioned that phase-in of DC fees is
being considered to be removed by the Province. This would provide a great benefit to the City, as we have already incurred a $3.7 million shortfall in 2023. The City is also hoping the Province will still consider making the City “whole”, by either funding the $3.7 million DC fee shortfall in 2023 directly to the City or allowing the City to carry this revenue shortfall in the DC
Reserve Fund balance (into the next DC Study), rather than using vital Casino Reserve dollars
to make-up the revenue shortfall. These Casino dollars can be used to fund other critical capital projects. Preliminary funding strategies for other municipalities is to introduce a special levy to fund Bill 23 costs.
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
high population growth, comes higher demand for City “Growth Related” infrastructure. The City has a very aggressive and correspondingly very expensive capital forecast plan and requires every DC single dollar it can obtain to fund these capital growth projects.
Attachment: None.
Prepared By:
Jason Bekramchand, CPA Senior Financial Analyst – Capital & Debt Management
Approved/Endorsed By:
Stan Karwowski, CPA, CMA, MBA Director, Finance & Treasurer
Recommended for the consideration of Pickering City Council
Marisa Carpino, M.A.
Chief Administrative Officer
Original Signed By:Original Signed By:
Original Signed By: