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Home My WebLink AboutFCS-13-055 - 2012 Development Charge Reserve Fund REPORT TO: Finance and Corporate Services Committee DATE OF MEETING: May 27, 2013 SUBMITTED BY: Dan Chapman, Deputy CAO and City Treasurer PREPARED BY: Ruth-Anne Goetz, Senior Financial Analyst WARD(S) INVOLVED: All DATE OF REPORT: April 8, 2013 REPORT NO.: FCS-13-055 SUBJECT: 2012Development Charge 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 Reserve Fund. REPORT: Summary of Development Charges Legislation: imposition and collection of development charges. are collected to fund growth-related capital costs for services as allowed by provincial legislation. Services are grouped into two categories discounted services and non-discounted services. The Act requires that a discount of 10% be applied to the growth-related capital costs for discounted services when calculating development charge rates. Non-discounted services refer to services for which the legislation does not require a reduction. The following table shows which services within the City of Kitchener fit into the discounted and non-discounted categories: Discounted Services General Government Studies Parking Indoor Recreation Outdoor Recreation Cemeteries IF1 - 1 Library Public Works Non-Discounted Roads and Related Services Sanitary Servicing Watermains Storm/Watercourse Intensification Allowance Engineering Studies Fire A summary of the DC Reserve Fund by Category of Service is at Table A. Determination of Development Charges: A Development Charges Background Study is required to be completed when updating a Development Charges by-law. The by-law is then valid for a period of up to 5 years. The latest background study completed by the City was passed by Council on June 22, 2009, to establish development charges for the City of Kitchener. Amendments have since been made in 2010 to include Cemeteries as a new service category, and to adjust the Parking service category. The by-law stipulates that the DC rates shall be indexed, effective January 1 of each year that the by-law remains in effect, based on the non-residential construction price index, as The 2012DC rates are set out in Table B. provided by Statistics Canada. Revenue DC collections in 2012 total $7.1M, a decrease from 2011 collections of $10.4M. Of the total revenue, $6.2M was attributable to residential development and $0.9M was for non-residential development. When the 2009 by-law was passed, it was determined that the Economic Development Investment Fund (EDIF) would fund the cost of any downtown exemptions provided during the year, as well as the 2009 non-residential rate phase in. In 2012, EDIF provided $0.01M for the downtown exemption, a decrease from 2011 when EDIF provided $0.4M for the downtown exemption. Expenses DC expenses to December 31, 2012 total $9.3M. DC expenses incurred during 2011 amounted Detailed lists are included in the DC Reserve Fund Transactions in Tables C, D and to $12.7M. 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. Expenses are allocated to either the Central Neighbourhood or the Suburban Area based on whether the service is considered to be city wide, or related only to a specific area. If a service is considered city wide, the expense is allocated based on estimated population growth in each area as provided in the 2009 background study. IF1 - 2 Exemptions DC exemptions in 2012 total $2.8M compared to $3.4M in 2011. Of the total exemptions, $1.1M was attributable to residential development and $1.7M was for non-residential development. Major exemptions are the additional dwelling units in existing residential exemption, redevelopment allowance, downtown exemption and exemptions for municipal and public A summary of major exemptions is included in Table F. school board use. 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, 2012, credits of $1.7M were Table G for more details. outstanding compared to $2.0M at the end of 2011. Refer to Reserve Fund Balances The DC Reserve Fund at December 31, 2012 was in a deficit position of $6.7M compared to a deficit position of $4.3M at the end of 2011. The overall reserve balance is broken out into further detail in Table E. The detail provided shows the balances in the Suburban Areas and the Central Neighbourhoods, which is then divided into Residential and Non-Residential services. These services are further divided into the Discounted and Non-Discounted categories, and then split into balances by service. Some services may reflect a deficit while others reflect a surplus. When a new background study is completed, the reserve balances in each service are included in the development charge rate calculation, therefore over time, it is anticipated that the deficits will be recovered and the surpluses utilized. By-law A new DC by-law came into effect July 1, 2009 for a term of no longer than five years. Work will commence on the new background study this summer. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Community Priority: Development with a view to the critical elements of a healthy community. FINANCIAL IMPLICATIONS: Financial implications are discussed above and detailed in the attached appendices. COMMUNITY ENGAGEMENT: A copy of this report will be the Minister of Municipal Affairs and Housing. IF1 - 3 ATTACHMENTS: Table A: Development Charges Reserve Fund Summary by Category of Services Table B: Development Charge Rates Table C: 2012 Transactions Table D: 2012 Expenses Table E: Reserve Fund Transactions by Service Table F: 2012 Exemptions Table G: Service-in-Lieu Credits ACKNOWLEDGED BY: Dan Chapman, Deputy CAO and City Treasurer, Finance and Corporate Services IF1 - 4 IF1 - 5 TABLE B DEVELOPMENT CHARGE RATES CentralSuburban Residential DevelopmentNeighbourhoodsAreas Single detached or semi-detached dwelling$5,412$9,435/ dwelling unit Townhouse or street townhouse dwelling$3,737$6,517/ dwelling unit Multiple or duplex dwelling$3,066$5,347/ dwelling unit Lodging House$1,622$2,830/ dwelling unit Non-Residential Development Gross floor area of building$17.94$46.09/ square metre $1.67$4.28/ square foot IF1 - 6 TABLE C CITY OF KITCHENER SUBURBAN AREA DEVELOPMENT CHARGE RESERVE 7012002 2012 TRANSACTIONS Surplus (Deficit) Balance December 31, 2011(3,557,818) Revenues DC Act Revenue6,502,778 Transfer from Economic Development Investment Fund - Interest Income (Expense)(237,739) Total Revenues 6,265,039 Expenditures Block Line Road4,000,000 Huron Road3,792,316 Freeport Pumping Station Upgrade500,000 Schneider Creek Channel(375,000) Engineering Studies159,181 Monitor Upper Blair Creek106,121 Southwest Kitchener Transportation Study(153,000) Planning Studies141,825 Trail Crossings31,293 Community Trails42,055 General Park Development281,820 Major Park Development287,310 Kitchener Operations Facility380,250 Total Expenditures9,194,171 Surplus (Deficit) Balance December 31, 2012(6,486,950) IF1 - 7 TABLE C CITY OF KITCHENER CENTRAL NEIGHBOURHOODS DEVELOPMENT CHARGE RESERVE 7012006 2012 TRANSACTIONS Surplus (Deficit) Balance December 31, 2011(786,443) Revenues DC Act Revenue556,080 Transfer from Economic Development Investment Fund 98,679 Interest Income (Expense)(22,653) Total Revenues632,106 Expenditures Planning Studies13,175 Trail Crossings2,907 Community Trails3,907 General Park Development26,180 Major Park Development26,690 Total Expenditures72,859 Surplus (Deficit) Balance December 31, 2012(227,196) IF1 - 8 TABLE D CITY OF KITCHENER DEVELOPMENT CHARGE RESERVE 2012 EXPENSES Funded fromFunded from SuburbanCentral AreaNeighbourhoodsOther DC ReserveDC ReserveFunding Block Line Road4,000,000- Huron Road3,792,316- Freeport Pumping Station Upgrade500,0001,250,000 Schneider Creek Channel(375,000)57,000 Engineering Studies159,181- Monitor Upper Blair Creek106,121- Southwest Kitchener Transportation Study(153,000)- Planning Studies141,82513,17517,222 Trail Crossings31,2932,9073,800 Community Trails42,0553,907749,558 General Park Development281,82026,180184,617 Major Park Development287,31026,69036,114 Kitchener Operations Facility380,2505,182,266 9,194,17172,8597,480,577 IF1 - 9 IF1 - 10 IF1 - 11 IF1 - 12 TABLE F DEVELOPMENT CHARGE 2012 EXEMPTIONS 50% Industrial Enlargement73,295 Accessory Building43,549 Additional Dwelling Unit(s) in Existing631,786 Downtown Exemption98,679 Municipal Use566,842 Public School Board442,454 Redevelopment Allowance844,087 Separate School Board49,569 2,750,261 IF1 - 13 IF1 - 14