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Home My WebLink AboutFIN-10-081 - 2009 Development Charges Reserve FundREPORT REPORT TO: Councillor Berry Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee DATE OF MEETING: June 21, 2010 SUBMITTED BY: Dan Chapman, General Manager of Financial Services and City Treasurer PREPARED BY: Ruth-Anne Goetz, Senior Financial Analyst WARD(S) INVOLVED: All DATE OF REPORT: May 31, 2010 REPORT NO.: FIN-10-081 SUBJECT: 2009 DEVELOPMENT CHARGES RESERVE FUND RECOMMENDATION: For information. BACKGROUND: The Development Charges Act (1997) requires that the Treasurer submit to Council an annual statement of the Development Charge (DC) Reserve Fund. REPORT: Categories of Service Development charges are collected to fund growth-related capital costs for services as allowed by legislation. Services are grouped into two categories – discounted services and non- discounted services. The Development Charges Act requires that a discount of 10% be applied to the growth-related capital costs for “soft services” when calculating development charge rates. Discounted services are for various Studies, Parking, Indoor Recreation, Outdoor Recreation, Library and Fleet services. Non-discounted services refer to services for which the legislation does not require a reduction. Non-discounted services are for Roads, Sanitary Sewers, Water, Storm Sewers, Intensification . A summary of the DC Reserve Fund by Category of Allowance, Engineering Studies and Fire Service is at Table A. Opening balance reserve adjustments were made in order to keep the service categories consistent with how they are shown in the 2009 background study. Opening reserves were adjusted to coincide with the ratio of future population and employment growth under the ×Ú ï ó ï assumption that, if the existing DC reserve split was not consistent with future splits, then the opening reserve was adjusted to reflect the future splits. Rates The 2009 DC rates are set out in Table B. The rates are adjusted January 1 each year in accordance with the index prescribed by Provincial legislation. As the City of Kitchener passed a new Development Charges By-Law on June 22, 2009, Table B includes the rates that were charged for the first half of the year, as well as the new rates that came into effect on July 1. Revenue DC collections in 2009 total $7.6M, a decrease from 2008 collections of $7.9M. Of the total revenue, $6.8M was attributable to residential development and $0.8M was for non-residential development. When the new by-law was passed, it was decided that the non-residential rate increase would be phased in, to become fully effective on January 1, 2010. It was determined at that time, that the Economic Development Investment Fund (EDIF) would fund this difference, along with the downtown exemption amount. In 2009, EDIF provided $1.2M for the non-residential rate phase in. Expenses DC expenses to December 31, 2009 total $11.9M. DC expenses incurred during 2008 Detailed lists are included in the DC Reserve Fund Transactions in amounted to $14.7M. Tables C, D and E. Since 2004, the City charges different rates for the Central Neighbourhoods as compared to the Suburban Areas of the City (as defined in the DC by-law). Related revenues and expenses broken down by service are shown for both of these areas in Table E. Exemptions DC exemptions in 2009 total $1.0M compared to $0.9M in 2008. Of the total exemptions, $0.3M was attributable to residential development and $0.7M was for non-residential development. Major exemptions are the additional dwelling units in existing residential exemption, downtown core exemption, redevelopment allowance and exemptions for municipal, Federal and school A summary of major exemptions is included in Table F. use as well as hospital additions. Debt No debt is outstanding in regards to any DC funded projects. Service-in-Lieu Credits The City may, by agreement, permit a developer to provide services for development of land in lieu of payment of the development charge. At December 31, 2009, credits of $3.5M were Table G for more details. outstanding compared to $4.6M at the end of 2008. Refer to Deferral Agreements At December 31, 2009, there were no deferral agreements outstanding. Reserve Fund Balances The DC Reserve Fund at December 31, 2009 was $3.8M compared to $6.7M at the end of 2008. ×Ú ï ó î By-law A new DC by-law came into effect July 1, 2009 for a term of no longer than five years. FINANCIAL IMPLICATIONS: None. COMMUNICATIONS: A copy of this report will be provided to the Waterloo Region Home Builders’ Association and to the Minister of Municipal Affairs and Housing. ACKNOWLEDGED BY: Dan Chapman, General Manager of Financial Services and City Treasurer ×Ú ï ó í ×Ú ï ó ì TABLE B DEVELOPMENT CHARGE RATES (effective from January 1 to June 30) CentralSuburban Residential DevelopmentNeighbourhoodsAreas Single detached or semi-detached dwelling$6,069$10,051/ dwelling unit Townhouse or street townhouse dwelling$5,859$9,704/ dwelling unit Multiple or duplex dwelling$3,975$6,585/ dwelling unit Lodging House$2,093$3,466/ dwelling unit Non-Residential Development Gross floor area of building$15.84$16.97/ square metre $1.46$1.58/ square foot DEVELOPMENT CHARGE RATES (effective from July 1 to December 31) CentralSuburban NeighbourhoodsAreas Residential Development Single detached or semi-detached dwelling$5,852$9,887/ dwelling unit Townhouse or street townhouse dwelling$4,042$6,830/ dwelling unit Multiple or duplex dwelling$3,316$5,603/ dwelling unit Lodging House$1,755$2,966/ dwelling unit Non-Residential Development Gross floor area of building$15.84$16.97/ square metre $1.46$1.58/ square foot ×Ú ï ó ë TABLE C CITY OF KITCHENER SUBURBAN AREA DEVELOPMENT CHARGES 7012002 2009 TRANSACTIONS Balance December 31, 2008 9,190,488 Opening balance transfers (1,924,013) Revenues DC Act Revenue7,226,607 Transfer from Economic Development Investment Fund 1,179,287 Investment Income 322,693 Total Revenues 8,728,587 Expenditures City Share of Subdivisions 273,641 Engineering Studies 164,224 DC Study 91,500 Planning Studies 25,620 Freeport Pumping Station Upgrade (100,000) Homer Watson Pumping Station Upgrade 600,000 Victoria St N Pumping Station (542,048) Old Mill Pumping Station (91,500) Borden Greenway Trunk Sewer (253,490) Strasburg Rd1,755,195 Blockline Rd 800,000 Wabanaki Rd3,218,874 Huron Rd3,767,584 Gateway Park additional cost 19,070 Laurel Creek Rehab (20,000) Henry Sturm Greenway (500,000) New Watermains 255,973 Fire Station #7 (490,000) Bridgeport Community Centre 7,320 Kingsdale Community Centre 402,600 Victoria Hills Community Centre (78,464) Community Trails 36,600 General Park Development 62,220 Major Park Development 123,525 McLennan Park 607,011 Fleet Acquisitions 296,126 Consolidated Maintenance Facility1,071,510 Total Expenditures 11,503,091 Balance December 31, 2009 4,491,971 ×Ú ï ó ê TABLE C CITY OF KITCHENER CENTRAL NEIGHBOURHOODS DEVELOPMENT CHARGES 7012006 2009 TRANSACTIONS Balance December 31, 2008(2,470,456) Opening balance transfers1,924,013 Revenues DC Act Revenue366,093 Transfer from Economic Development Investment Fund 8,055 Investment Income(70,041) Total Revenues304,106 Expenditures DC Study8,500 Planning Studies2,380 Intensification Allowance291,910 Bridgeport Community Centre680 Kingsdale Community Centre37,400 Victoria Hills Community Centre(11,724) Community Trails3,400 General Park Development5,780 Major Park Development11,475 McLennan Park56,389 Total Expenditures406,189 Balance December 31, 2009(648,526) ×Ú ï ó é TABLE D CITY OF KITCHENER DEVELOPMENT CHARGES RESERVE 2009 EXPENSES Funded fromFunded from SuburbanCentral AreaNeighbourhoodsOther DC ReserveDC ReserveFunding City Share of Subdivisions273,641 - Engineering Studies164,224 - DC Study91,500 8,500 - Planning Studies25,620 2,380 (12,000) Intensification Allowance291,910 - Freeport Pumping Station Upgrade(100,000) - Homer Watson Pumping Station Upgrade600,000 - Victoria St N Pumping Station(542,048) 322,216 Old Mill Pumping Station(91,500) - Borden Greenway Trunk Sewer(253,490) (108,639) Strasburg Rd1,755,195 - Blockline Rd800,000 205,409 Wabanaki Rd3,218,874 1,545,202 Huron Rd3,767,584 - Gateway Park additional cost19,070 - Laurel Creek Rehab(20,000) (180,000) Henry Sturm Greenway(500,000) - New Watermains255,973 64,749 Fire Station #7(490,000) (60,000) Bridgeport Community Centre7,320 680 388,273 Kingsdale Community Centre402,600 37,400 2,850,500 Victoria Hills Community Centre(78,464) (11,724) (151,809) Community Trails36,600 3,400 223,541 General Park Development62,220 5,780 122,135 Major Park Development123,525 11,475 193,926 McLennan Park607,011 56,389 625,667 Fleet Acquisitions296,126 377,931 Consolidated Maintenance Facility1,071,510 7,959,170 11,503,091406,18914,366,271 ×Ú ï ó è ×Ú ï ó ç ×Ú ï ó ïð ×Ú ï ó ïï TABLE F DEVELOPMENT CHARGES 2009 EXEMPTIONS 50% Industrial Enlargement52,060 Accessory Building 5,562 Additional Dwelling Unit(s) in Existing 201,406 Downtown Exemption 282,979 Local Board 4,207 Municipal Use 116,252 Provincial Use 224 Public Hospital Addition 13,057 Public School Board 53,257 Redevelopment Allowance 202,046 Separate School Board 82,260 1,013,311 ×Ú ï ó ïî ×Ú ï ó ïí ×Ú ï ó ïì