HomeMy WebLinkAboutCS 22-10
Cis, Report To
Executive Meeting
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P1CKERIN Report Number: CS. 22-10
Date: June 14, 2010) 05
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: Development Charges - Annual Indexing
Recommendation:
1. That Report CS 22-10 of the Director, Corporate Services & Treasurer be
received;
2. That effective July 1, 2010 as provided for in Section 16 of By-law 6978/09, the
Development Charges referred to in Sections 6 and 11 of that By-law be
decreased by 2.4 percent being the reduction in the construction price statistics
for the Non-residential Building Construction Price Index as reported by Statistics
Canada for the year ended March 31, 2010; and,
3. That the appropriate officials of the City of Pickering be given authority to give
effect thereto.
Executive Summary: The Development Charges Act 1997 and Ontario Regulation
82198 and By-law 6978/09 provided for an annual'adjustment to keep development
charges revenues current with construction costs, normally an increase based on the
Non-residential Building Construction Price Index (NRB CPI). However, the annual NRB
CPI for the current indexing year was decreased by 2.4% resulting to a reduction in
development charges rates if adopted. To be consistent with the annual application of
indexing, the current decreased in NRB CPI should be reflected in the City's
development charges rates as well. Adoption of the recommendations of this report will
.put into eff ect the lower rates for the period July 1, 2010 to June 30, 2011.
Financial Implications: Normally, increasing the development charges based.on an
increase in construction price index (CPI) will assist in keeping the revenues generated
in line with current costs. The current decrease in CPI was mainly a result of
competitive pricing and continued weakness in the non-residential building construction
market. The residential development charges for single and semi detached units will
decrease by approximately $233, other residential charges will decrease similarly and
the commercial/industrial charge will decrease by approximately $0.09 per square foot
or $1.00 per square metre.
Report CS 22-10 Date: June 14, 2010
Subject: Development Charges- Annual Indexing Page 2
106
Sustainability Implications: This decrease is necessary to reflect the competitive
pricing and continued weakness in the building construction market and to ensure that
Pickering remains attractive to the development industry.
Background: As provided for in the Ontario Reg. 82198 and in the City's By-law
6978/09, each year the development charges charged by the City for all types of
development may be indexed without amending the By-law. In the past, indexing has
always been an increase in the development charges to assist in keeping our revenues
in line with the costs that development charges go towards. Due to competitive pricing
and the continued weakness in the building construction market, adoption of the
recommendations will ensure that Pickering remain attractive to the development
industry. Also, should the construction price index increase significantly in our next
indexing year, we are able to justify the full increase seeing that we have been
consistent with the adoption of indexing and reduction based on Non-residential Building
Construction Price Index posted by Statistics Canada. Adoption of the
recommendations contained in this report will allow that decrease to take effect July 1,
2010.
Statistics Canada indicates the decrease in the construction price statistics for the most
recently available annual period ending March 31, 2010 of 2.4 percent for Non-
residential Building Construction Price Index (an indicator of our costs of construction)
for the Toronto area. The change is reflected in the table attached.
The 2009 Development Charges (DC) Background Study as approved under Report to
Council CS26-09, By-Law 6978/09 Section 11 (1) (b) provided for a phase-in of the non-
residential rates for the Roads & Related service category. This rate is to be changed
from $2.86 to $2.97 starting from July 1, 2009 based on the Study. With the phase-in,
the rate is to be $2.90 effective July 1, 2010 in conjunction with the annual indexing.
There was no phase-in of the Stormwater Management service category. Annual
indexing is indicated under section 16 (1) of the same By-Law. With the current
decrease in NRB CPI, a 2.4% reduction will be calculated on the non-residential rates.
The table below provides a comparison between the proposed rates.to be effective July
1, 2010 based on By-Law 6978/09 and the reduction thereafter due to a decrease in
NRB CPI:
Report CS 22-10 Date: June 14, 2010
Subject: Development Charges- Annual Indexing Page 3
107
Non Residential-Service By-Law 6978/09 Section By-Law 6978109 Section
Category 11 (1) (b). To be effective 16 (1). Indexing
July 1, 2010 (reduction) to be
effective Jul 1, 2010
Per S q. Foot Per S q. Foot
Related $2.97 $2.90
Roads &
.Stormwater Management 0.90 0.88
Total Per S q. Foot $3.87 $3.78
Per S q. Metre Per S q. Metre
Roads & Related $31.97 $31.20
Stormwater Management 9.68 9.45
Total Per S q. Metre $41.65 $40.65
The City's obligations under Recommendation 9 contained in the same report CS 26-09
(2009 DC Background Study) to Council in the form of contribution to the non-
development charge share of the costs (Development Charges - City's Share Reserve)
should continue to be increased despite the current decrease in CPI for prudent
financial planning. The 2010 Budget contained $480,000 of contribution for this purpose
and a budgeted draw of $568,947 thus, decreasing the 2009 year-end balance to
$1,857,269. Significant contributions in 2011 and after are necessary in order to bring
the fund balance to an acceptable level. The Commercial/Industrial Development
Charge remains at the Council approved level of approximately 85 percent of the
justified cost recovery amount, meaning the City has to contribute to the balance.
At this juncture, the Regional Municipality of Durham (Region) has not finalized the
annual indexing of the development charges the City collects on their behalf. The City
will continue to use rates prescribed as effective from July 1, 2009 until further notice
from the Region. The Education Development Charges will remain unchanged for the
current year.
The main changes are to update the amounts to reflect recommendations contained in
this report. Upon receiving the final figures from the Region for the portion of the
development charges the City collects on their behalf in mid June, the brochure will be
revised and distributed. The brochure will be posted on the City's website and made
available at various counters throughout the Civic Complex.
Attachments:
1. Current and Proposed Development Charges 2010/2011
Report CS 22-10 Date: June 14, 2010
Subject: Development Charges- Annual Indexing Page 4
108
Prepared By: Approved / Endorsed By:
Caryn Kong Gillis A. Paterson
Senior Financial Analyst- Director, Corporate Services & Treasurer
Capital & Debt Management
GAP:ckk
Copy: Chief Administrative Officer
Chief Building Official
Recommended for the consideration
of Pickering City Council
I V~Olz
Tony P vedel, P. ng.
Chief Administrative Officer
ATTACHMENT#_L_TO REPORT #_('Ss2a-10
CITY OF PICKERING
109
CURRENT RESIDENTIAL DEVELOPMENT CHARGES
Effective August 1, 2009
PER DWELLING UNIT
Service Single & Apt. Two Other
Category Semi Apt. One Bdrm Dwelling
Detached Bdrm & Larger Units
& Smaller
$
Growth Studies $87 $35 $47 $62
Fire Protection 259 103 140 186
Transportation-
Roads & Related 4,516 1,793 2,445 3,241
Operations 278 110 150 200
Stormwater Management 1,365 542 739 980
Parks & Recreation-
Parkland Dev & Trails 424 168 229 304
Recreation Facilities 2,249 893 1,217 1,614
Library 516 205 279 370
TOTAL $9,694 $3,849 $5,246 $6,957
CURRENT NON-RESIDENTIAL DEVELOPMENT CHARGES
Effective August 1, 2009
Service Per Sq. Foot Per Sq. Metre
Category
Transportation-Roads &
Related $2.86 $30.78
Stormwater Management 0.90 9.69
Total $3.76 $40.47
110
PROPOSED RESIDENTIAL DEVELOPMENT CHARGES
Effective July 1, 2010
PER DWELLING UNIT
Service Single & Apt. Two Other
Category Semi Apt. One Bdrm Dwelling
Detached Bdrm & Larger Units
& Smaller
Growth Studies $85 34 46 61
Fire Protection 253 101 137 182
Transportation-
Roads & Related 4,407 1,750 2,386 3,163
Operations 271 107 146 195
Stormwater Management 1,332 529 721 956
Parks & Recreation-
Parkland Dev & Trails 414 164 224 297
Recreation Facilities 2,195 872 1,188 1,575
Libra 504 200 272 361
TOTAL $9,461 $3,757 $5,120 $6,790
PROPOSED NON-RESIDENTIAL DEVELOPMENT CHARGES
Effective July 1, 2010
Service Per Sq. Foot Per Sq. Metre
Category
Transportation-Roads & $2.90 $31.20
Related
Stormwater Management 0.88 9.45
Total $3.78 $40.65