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Home My WebLink AboutFIN 12-19(C: ,L DICKERING Report to Executive Committee Report Number: FIN 12-19 Date: June 17, 2019 From: Stan Karwowski Director, Finance & Treasurer Subject: Universal City One Developments Inc. - Request to Defer Payment of Development Charges Recommendation: 1. That Report FIN 12-19 of the Director, Finance & Treasurer be received; 2. That, pursuant to By-law 7595/17: a) the request by Universal City One Developments Inc. to defer the payment of the City's share of Development Charges in the amount of approximately $1,739,400 to the earlier of: (i) six months after the commencement of foundation construction at 1474 Bayly Street, Pickering or (ii) when above grade construction at the said address is commenced, be approved; b) that the requirements of Section 14(2) of By-law 7595/17 be waived accordingly and that the date of issuance of the final building permit will determine the applicable Development Charge rate and, if the final building permit is issued before July 1, 2019, that the payment of Development Charges will be based on the current rate plus interest, be approved; c) that Universal City One Developments Inc., be required to enter into a Development Charge Deferral Agreement with the City on terms satisfactory to the Director, Finance & Treasurer and the Director, Corporate Services & City Solicitor; and That the appropriate officials of the City of Pickering be authorized to give effect thereto. Executive Summary: Universal City One Developments Inc. or (UnCity) wants to proceed with construction of its first tower on lands located at 1474 Bayly Street, Pickering. Pursuant to the City's Development Charges By-law 7595/17 (the "DC By- law"), the City share of development charges is payable at the time a building permit is issued. The project involves substantial underground construction requiring substantial investment of funds and that is why UnCity has requested a deferral of up to six months of its obligation to pay development charges to the City. City staff recommend approval of the deferral because it will speed up the process of construction of this condominium development. Construction and occupancy of this building will also increase the City's property tax revenues. FIN 12-19 June 17, 2019 Subject: Universal City One Developments Inc. - Request to Page 2 Defer Payment of Development Charges The deferral will not result in any reduction in the amount of the development charges paid to the City by developer. Financial Implications: Deferral of the payment of development charges will not result in any loss of DC revenue for the City. There will be no requirements to secure the deferral. The above grade permit will not issued until the developer makes the full payment to satisfy the remaining DC obligations. The deferral of development charges delays the receipts of revenue and impacts the cash flow position of the DC reserve funds. In fact, the City may receive higher DC revenues if UnCity's final building permit is issued after June 30th due to the fact DC rates are scheduled to increased effective July 1st. The economic benefit to Pickering t is the earlier receipt of property taxes for this project. Once fully occupied, this building is expected to generate approximately $370,000 of property tax revenue annually for the City. Discussion: The Council of the City of Pickering adopted the Report FIN 28-17 of the Director, Finance & Treasurer on the 2017 Development Charges Study and enacted By-law No. 7595/17 of, the City's current DC By-law. The DC By-law requires payment of development charges prior to issuance of a building permit. Typically, a municipality will consider a request to defer the payment of development charges when it is in the broader community interest to do so. It should be noted that Council approved DC deferrals for SR&R's three condominium tower project. The SR&R developer has re -branded itself for its six tower project (Universal City). In the specific request before us, UnCity has requested a deferral to assist it in matching its financial obligations with its funding sources. Construction of a condominium building involves large upfront costs associated with underground works. Funds flow, whether from construction financing or units sales, well after underground work must begin. This benefits the City by bringing in new residents and has the potential of increasing the economic activity in the City core. Construction and occupancy of this building will also increase the City's property tax revenues. Once fully occupied, this building is expected to generate approximately $370,000 of property tax revenue annually for the City. UnCity is requesting deferral to the earlier of six months after the commencement of foundation construction or when its above grade work commences. The amount requested to be deferred is $1,739,400 being the City's development charges only. UnCity 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 FIN 12-19 June 17, 2019 Subject: Universal City One Developments Inc. - Request to Page 3 Defer Payment of Development Charges estimated to be $6,533,030. From a financial perspective it is not whether or not such a deferral would cost the City, but rather that is it a good business practice to grant this request. UnCity will be required to enter into a Development Charge Deferral Agreement pursuant to the Development Charges Act (Ontario). This Agreement will specify that the development charge amount shall, if unpaid, be added to UnCity's property tax bill and interest charged at 1.25 per cent per month. Attachments: 1. Universal City One Developments Inc. Deferral Request dated May 15, 2019 Prepared By: Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer Approved/Endorsed By: Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer Recommended for the consideration of Pickering City Council Tony Prevedel, P.Eng. Chief Administrative Officer ATTACHMENT #L.TO REPORT# Universal City One Developments Inc. City of Pickering Pickering Civic Complex One The Esplanade Pickering, Ontario L1V 6K7 May 152019 Attention: Mr. Mr. Tony Prevedel — Chief Administrative Officer Dear Sirs: Re: Universal City One - Request to Defer Payment of Development Charges We are proceeding with the development of the first phase of Universal City, Universal City One, a 17 storey residential condominium tower, and have recently filed our building permit application to 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 above grade work. This will assist us in proceeding with the next phase of this important project for the City of Pickering. 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 directs staff accordingly. As you know, resolutions were passed by the Executive Committee and Council to defer payment of development levies for Building's "A" and "B" of the San Francisco By The Bay development using the same construction triggers. Building "C" of San Francisco By The Bay was also granted a deferral. 150 Ferrand Drive Suite 801, Toronto, ON M3C 3E5 Tel: 416-649-4470 Fax: 416-497-3809 Universal City One Developments Inc. Please accept this letter as our request, pursuant to Section 17 of By-law 6978/09, that Council approve the deferral of the city development charges applicable to our 17 storey tower project. We request that the charges be payable the earlier of six months after the commencement of foundation construction, or upon the commencement of above grade work, instead of prior to the underground building permit being provided by the City. Thank you for your consideration of this matter. I would be please to provide anything further to assist in Council's approval of this request, as necessary. Yours Truly Unive al City One Dove • pments Inc. Pe Steven Warsh 150 Ferrand Drive Suite 801, Toronto, ON M3C 3E5 Tel: 416-649-4470 Fax: 416-497-3809