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HomeMy WebLinkAboutFIN-10-126 - Allocation of Parking Development ChargesREPORT REPORT TO: Councillor Berry Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee DATE OF MEETING: August 23, 2010 SUBMITTED BY: Dan Chapman, General Manager of Financial Services PREPARED BY: Saleh Saleh, Senior Financial Analyst WARD(S) INVOLVED: ALL DATE OF REPORT: July 9, 2010 REPORT NO.: FIN-10-126 SUBJECT: ALLOCATION OF PARKING DEVELOPMENT CHARGES RECOMMENDATION: THAT parking development charge funding of $6,000,000, be allocated to the Charles and Benton Garage project in 2010, and THAT the Charles and Benton Garage debenture, already approved to be issued in 2010, be reduced from $9,525,000 to $3,525,000 as a result of the allocation of parking development charges to the project, and THAT Council consider the allocation of the balance of development charge funding for the Civic District Garage, the Centre Block Garage and the Charles/Water Garage as part of 2011 Budget deliberations; and further THAT City Council express its intent to recover any excess capacity arising out of the Charles and Benton Garage, Civic District Garage, Centre Block Garage and Charles/Water Garage, and available to service growth, through future development charges BACKGROUND: As part of the 2009 Development Charges (DC) background study, provision was made to fund a portion of the parking garages currently identified in the City’s Capital forecast using development charges. No allocation of parking development charges was made in the 2010 capital budget process, as this portion of the charge was included in an appeal which has recently been withdrawn. On June 14, 2010, City Council approved an amendment to the DC by-law to reduce the parking development charge based on refined calculations related to the development cost of the existing parking inventory. The purpose of this report is to provide a recommendation on how the projected parking development charge revenues should be applied to the Charles and Benton Garage project in 2010. This matter must be addressed prior to the 2011 budget process, as Council has previously approved the issuance of a debenture for the Charles and Benton Garage later this fall which, if unadjusted, will have a levy impact in 2011. ïê ó ï REPORT: It is estimated that the total DC funding available to be allocated to parking projects is $11,535,883 based on the most recent DC amendment background study increased by inflation. The revised parking calculations from the background study are shown in Appendix A. Staff are recommending that $6,000,000 be allocated to the Charles and Benton Garage project and that Council consider the allocation of the remaining funds of $5,535,883 during the 2011 Budget deliberations. Charles and Benton Garage The Charles and Benton parking garage is scheduled to open in 2010 with an expected levy impact of 0.39% on the tax base in 2011. This includes the cost of servicing a debenture in the amount of $9,525,000 to be issued in the fall of 2010 as previously approved by Council. Staff recommends that parking development charges in the amount of $6 million be allocated to the Charles and Benton Project to eliminate the tax levy impact and also reduce the projected debt load of the City. Although a DC allocation to this project was anticipated in the DC Background Study, the budget included authorization to debenture the maximum amount of project funding required in the event the DC appeal was not resolved in the City’s favour by the time the funding was required. This approach will reduce the City’s projected debt load and bring the project into compliance with the City’s capital investment philosophy which “ provides for debt financing for projects which have a business plan showing revenues generated over a reasonable pay back period covering the capital cost and interest of the project”. Allocation of Remaining Funds After the initial allocation of $6,000,000 to the Charles and Benton project, an additional $5,535,883 of unallocated parking related DC funds are anticipated to be received based on the DC Background Study. Staff recommend that the allocation of the remaining funds be considered during 2011 budget deliberations. The following issues will need to be considered as part of the allocation decision: 1. The Charles and Water Garage project identified in the DC background study for 2015 is currently unfunded. 2. The Civic District Garage is forecasting a modest debt requirement and levy impact as of 2011. 3. The financial impact to EDIF associated with funding the non-residential DC rate phase- in (2009) and the downtown exemption (2009-2014) as approved through the most recent background study should be mitigated through allocation of parking development charges to the Centre Block Garage project. 4. The up-front timing of the parking projects in the ten-year capital program will create cash flow challenges within the DC Reserve Fund and will necessitate deferral of growth-related projects or debt within the DC Reserve Fund if the projects are to proceed as planned and be funded through the DC Reserve Fund. A detailed projection of the DC reserve fund is shown in Appendix B. 5. As part of the first phase of the long-term financial plan (currently underway) staff will bring forward new debt and reserve fund policies forward for Council’s consideration. ïê ó î This will allow Council to allocate the balance of parking DC funds in the context of a current debt policy. FINANCIAL IMPLICATIONS: Development Charge funding of $6,000,000 will be allocated to the Charles and Benton Garage in 2010 to reduce the City’s projected debt load the eliminate a levy impact for this project in 2011. The Development Charge Reserve Fund is anticipated to be in a deficit as of 2011. Allocating $6 million to the Charles and Benton Garage in advance of the receipt of parking development charge revenues will necessitate deferral of other growth-related projects through the 2011 budget process. Allocation of the additional development charge parking funding of $5,535,883 will be considered during the 2011 Budget deliberations. ACKNOWLEDGED BY: Dan Chapman, General Manager of Financial Services and City Treasurer ïê ó í ïê ó ì ïê ó ë ïê ó ê ïê ó é ïê ó è ïê ó ç ïê ó ïð ïê ó ïï ïê ó ïî