The URL can be used to link to this page

Home My WebLink AboutCS 22-10 Cis, Report To Executive Meeting ~T1~T 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