HomeMy WebLinkAboutFCS-12-043 - 2011 Development Charge Reserve Fund Staff Report
I r finance and Corporate Services Department wvwuukitchenerra
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: May 28, 2012
SUBMITTED BY: Dan Chapman, Deputy CAO and City Treasurer
519-741-2347
PREPARED BY: Ruth-Anne Goetz, Senior Financial Analyst
519-741-2335
WARD(S) INVOLVED: All
DATE OF REPORT: April 20, 2012
REPORT NO.: FCS-12-043
SUBJECT: 2011 Development 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:
The Development Charges Act, 1997 (the "Act") provides the authority and process for the
imposition and collection of development charges.
Development charges ("DC's") are generally paid as a part of the building permit process, and
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
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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
provided by Statistics Canada. The 2011 DC rates are set out in Table B.
Revenue
DC collections in 2011 total $10.4M, a decrease from 2010 collections of $11.6M. Of the total
revenue, $9.5M 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 2011, EDIF provided $0.4M for the
downtown exemption, an increase from 2010 when EDIF provided $0.02M for the downtown
exemption.
Expenses
DC expenses to December 31, 2011 total $12.7M. DC expenses incurred during 2010
amounted to $17.8M. Detailed lists are included in the DC Reserve Fund Transactions in
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.
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 2011 total $3.4M compared to $2.8M in 2010. Of the total exemptions, $1.3M
was attributable to residential development and $2.1 M 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 provincial
use. A summary of major exemptions is included in Table F.
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, 2011, credits of $2.OM were
outstanding compared to $2.4M at the end of 2010. Refer to Table G for more details.
Reserve Fund Balances
The DC Reserve Fund at December 31, 2011 was in a deficit position of $4.3M compared to a
deficit position of$2.4M at the end of 2010.
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 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.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Community Priority: Development
Strategic Direction: Manage growth and development relative to the Province's "Places to
Grow", the "Regional Growth Management Strategy" and the "City of Kitchener's Official Plan"
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 provided to the Waterloo Region Home Builders' Association and to
the Minister of Municipal Affairs and Housing.
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ATTACHMENTS:
Table A: Development Charges Reserve Fund Summary by Category of Services
Table B: Development Charge Rates
Table C: 2011 Transactions
Table D: 2011 Expenses
Table E: Reserve Fund Transactions by Service
Table F: 2011 Exemptions
Table G: Service-in-Lieu Credits
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO and City Treasurer, Finance and Corporate
Services
IF 1 - 4
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TABLE B
DEVELOPMENT CHARGE RATES
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $5,209 $9,081 /dwelling unit
Townhouse or street townhouse dwelling $3,597 $6,272 /dwelling unit
Multiple or duplex dwelling $2,951 $5,146 /dwelling unit
Lodging House $1,561 $2,724 /dwelling unit
Non-Residential Development
Gross floor area of building $17.27 $44.36 /square metre
$1.61 $4.12 /square foot
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TABLE C
CITY OF KITCHENER
SUBURBAN AREA
DEVELOPMENT CHARGE RESERVE 7012002
2011 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2010 (1,251,571)
Revenues
DC Act Revenue 10,309,534
Transfer from Economic Development
Investment Fund -
Investment Income (9,324)
Total Revenues 10,300,210
Expenditures
Strasburg Road 524,000
Huron Road 4,257,000
Intersection Improvement-Strasburg & Huron 494,398
Intersection Improvement-Tulane (1,029)
Shirley Dr/Lackner Blvd (93,706)
Homer Watson Pumping Station Upgrade 3,167,500
Old Mill Rd Pumping Station 272,000
Freeport Pumping Station Upgrade 450,000
East Side Flow Monitoring &SCADA 83,232
Forwell Pumping Station (72,364)
Bridgeport N Pumping Station (31,325)
New Watermains (1,195,387)
Victoria Park Lake Rehabilitation 1,744,000
Schneider Creek Channel 620,000
Doon Creek Limited Culverts 241,373
Kolb Drain/Smetana at Rothsay 48,153
Laurel Creek Rehabilitation (6,119)
Laurel Creek Slope Stabilization 15
Engineering Studies 156,060
Monitor Upper Blair Creek 104,040
Waste &Wastewater Servicing Study (306,000)
Fire Station#7 (21,572)
Planning Studies 205,624
Heritage Impact Assessments 12,810
DC Study (discounted) 8,568
Project Management Initiative 22,875
Bridgeport Community Centre Addition (42,738)
Community Trails 41,230
General Park Development 276,330
Major Park Development 280,905
Fleet Acquisitions 308,999
Kitchener Operations Facility 1,057,585
Total Expenditures 12,606,457
Surplus (Deficit) Balance December 31, 2011 (3,557,818)
IF1 - 7
TABLE C
CITY OF KITCHENER
CENTRAL NEIGHBOURHOODS
DEVELOPMENT CHARGE RESERVE 7012006
2011 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2010 (1,192,669)
Revenues
DC Act Revenue 100,677
Transfer from Economic Development
Investment Fund 419,986
Investment Income (39,599)
Total Revenues 481,064
Expenditures
Planning Studies 19,102
Heritage Impact Assessments 1,190
DC Study(discounted) 796
Project Management Initiative 2,125
Bridgeport Community Centre Addition (3,970)
Community Trails 3,830
General Park Development 25,670
Major Park Development 26,095
Total Expenditures 74,838
Surplus (Deficit) Balance December 31, 2011 (786,443)
IF 1 - 8
TABLE D
CITY OF KITCHENER
DEVELOPMENT CHARGE RESERVE
2011 EXPENSES
Funded from Funded from
Suburban Central
Area Neighbourhoods Other
DC Reserve DC Reserve Funding
Strasburg Road 524,000 -
Huron Road 4,257,000 913,619
Intersection Improvement-Strasburg & Huron 494,398 -
Intersection Improvement-Tulane (1,029) (2,567)
Shirley Dr/Lackner Blvd (93,706) (16,536)
Homer Watson Pumping Station Upgrade 3,167,500 1,357,500
Old Mill Rd Pumping Station 272,000 -
Freeport Pumping Station Upgrade 450,000 150,850
East Side Flow Monitoring &SCADA 83,232 124,848
Forwell Pumping Station (72,364) -
Bridgeport N Pumping Station (31,325)
New Watermains (1,195,387) (187,718)
Victoria Park Lake Rehabilitation 1,744,000 4,952,928
Schneider Creek Channel 620,000 620,000
Doon Creek Limited Culverts 241,373 -
Kolb Drain/Smetana at Rothsay 48,153 416,550
Laurel Creek Rehabilitation (6,119) (116,268)
Laurel Creek Slope Stabilization 15 133
Engineering Studies 156,060 -
Monitor Upper Blair Creek 104,040 -
Waste &Wastewater Servicing Study (306,000) -
Fire Station #7 (21,572) (2,397)
Planning Studies 205,624 19,102 55,000
Heritage Impact Assessments 12,810 1,190 1,606
DC Study(discounted) 8,568 796 1,040
Project Management Initiative 22,875 2,125 50,000
Bridgeport Community Centre Addition (42,738) (3,970) 456,700
Community Trails 41,230 3,830 331,147
General Park Development 276,330 25,670 201,537
Major Park Development 280,905 26,095 460,102
Fleet Acquisitions 308,999 388,641
Kitchener Operations Facility 1,057,585 17,531,866
12,606,457 74,838 27,688,582
IF 1 - 9
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TABLE F
DEVELOPMENT CHARGE
2011 EXEMPTIONS
50% Industrial Enlargement 97,030
Accessory Building 18,285
Additional Dwelling Unit(s) in Existing 697,661
Downtown Exemption 419,986
Federal Use 1,140
Local Board 4,488
Municipal Use 381,521
Provincial Use 974,690
Public School Board 41,489
Redevelopment Allowance 674,390
Separate School Board 88,171
3,398,851
IF1 - 13
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