HomeMy WebLinkAboutFCS-14-069 - 2013 Development Charge Reserve Fund Staff Report
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REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: June 9, 2014
SUBMITTED BY: Dan Chapman, Deputy CAO and City Treasurer
519-741-2200 ext. 7347
PREPARED BY: Ruth-Anne Goetz, Senior Financial Analyst
519-741-2200 ext. 7335
WARD(S) INVOLVED: All
DATE OF REPORT: April 7, 2014
REPORT NO.: FCS-14-069
SUBJECT: 2013 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
Library
Public Works
IF1 - 1
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 2013 DC rates are set out in Table B.
Revenue
DC collections in 2013 total $6.6M, a decrease from 2012 collections of $7.1 M. Of the total
revenue, $5.9M was attributable to residential development and $0.7M 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 2013, EDIF provided $0.1M for the
downtown exemption, which is consistent with what was provided in 2012.
Expenses
DC expenses to December 31, 2013 total $6.9M. DC expenses incurred during 2012 amounted
to $9.3M. Detailed lists are included in the DC Reserve Fund Transactions in Tables C, D and
E. Since 2004, different rates are charged 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.
Exemptions
DC exemptions in 2013 total $3.7M compared to $2.8M in 2012. Of the total exemptions, $1.3M
was attributable to residential development and $2.4M was for non-residential development.
Major exemptions are the redevelopment allowance, additional dwelling units in existing
residential exemption, and exemptions for municipal and public school board use. A summary
of major exemptions is included in Table F.
IF1 - 2
Credit for Service Agreements
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, 2013, credits of $2.5M were
outstanding compared to $1.7M at the end of 2012. Refer to Table G for more details.
Reserve Fund Balances
The DC Reserve Fund at December 31, 2013 was in a deficit position of $7.1M compared to a
deficit position of$6.7M at the end of 2012.
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. The
2014 DC Background Study is in the final stages of completion and is expected to be passed by
Council and enacted by June 30, 2014 with the new by-law to take effect July 1, 2014.
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.
ATTACHMENTS:
Table A: Development Charges Reserve Fund Summary by Category of Services
Table B: Development Charge Rates
Table C: 2013 Transactions
Table D: 2013 Expenses
Table E: Reserve Fund Transactions by Service
Table F: 2013 Exemptions
Table G: Credit for Service Agreements
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO and City Treasurer
IF1 - 3
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TABLE B
DEVELOPMENT CHARGE RATES
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $5,542 $9,662 /dwelling unit
Townhouse or street townhouse dwelling $3,827 $6,673 /dwelling unit
Multiple or duplex dwelling $3,140 $5,475 /dwelling unit
Lodging House $1,661 $2,898 /dwelling unit
Non-Residential Development
Gross floor area of building $18.38 $47.20 /square metre
$1.71 $4.39 /square foot
IF1 - 5
TABLE C
CITY OF KITCHENER
SUBURBAN AREA
DEVELOPMENT CHARGE RESERVE 7012002
2013 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2012 (6,486,950)
Revenues
DC Act Revenue 6,503,676
Transfer from Economic Development
Investment Fund -
Interest Income (Expense) (184,152)
Total Revenues 6,319,524
Expenditures
Block Line Road (1,000,000)
Huron Road (1,200,000)
Wabanaki Drive 236,000
Strasburg Road 146,000
Block Line Road Widening 892,000
City Share of Subdivisions 262,652
Freeport Pumping Station Upgrade 2,450,000
Doon S Brigadoon Pumping Station (900,000)
Homer Watson Pumping Station Upgrade (210,000)
Lower Hidden Valley Pumping Station (43,058)
Old Mill Pumping Station (202,375)
Grand River Pumping Station 37
Henry Sturm Greenway (109,339)
Idlewood Creek (246,402)
Engineering Studies 162,365
Monitor Upper Blair Creek 108,243
Transportation Master Plan (166,273)
Planning Studies 141,826
DC Study 8,486
Central Library 2,966,430
Centre Block Parking Garage 1,830,013
Community Trails 42,897
General Park Development 287,709
Major Park Development 292,800
Kitchener Operations Facility 31,210
Total Expenditures 5,781,221
Surplus (Deficit) Balance December 31, 2013 (5,948,647)
IF1 - 6
TABLE C
CITY OF KITCHENER
CENTRAL NEIGHBOURHOODS
DEVELOPMENT CHARGE RESERVE 7012006
2013 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2012 (227,196)
Revenues
DC Act Revenue 141,495
Transfer from Economic Development
Investment Fund 93,488
Interest Income (Expense) (25,751)
Total Revenues 209,232
Expenditures
Intensification Allowance 630,730
Planning Studies 13,174
DC Study 1,256
Central Library 275,570
Centre Block Parking Garage 169,987
Community Trails 3,984
General Park Development 26,727
Major Park Development 27,200
Total Expenditures 1,148,628
Surplus (Deficit) Balance December 31, 2013 (1,166,592)
IF1 - 7
TABLE D
CITY OF KITCHENER
DEVELOPMENT CHARGE RESERVE
2013 EXPENSES
Funded from Funded from
Suburban Central
Area Neighbourhoods Other
DC Reserve DC Reserve Funding
Block Line Road (1,000,000) -
Huron Road (1,200,000) (107,146)
Wabanaki Drive 236,000 -
Strasburg Road 146,000 260,611
Block Line Road Widening 892,000 508,000
City Share of Subdivisions 262,652 -
Freeport Pumping Station Upgrade 2,450,000 1,450,000
Doon S Brigadoon Pumping Station (900,000) 1,149,804
Homer Watson Pumping Station Upgrade (210,000) (90,000)
Lower Hidden Valley Pumping Station (43,058) -
Old Mill Pumping Station (202,375) (669,625)
Grand River Pumping Station 37 -
Henry Sturm Greenway (109,339) -
Idlewood Creek (246,402) (1,318,601)
Engineering Studies 162,365 -
Monitor Upper Blair Creek 108,243 -
Transportation Master Plan (166,273) -
Intensification Allowance 630,730 -
Planning Studies 141,826 13,174 17,222
DC Study 8,486 1,256 1,082
Central Library 2,966,430 275,570 7,500,000
Centre Block Parking Garage 1,830,013 169,987 5,600,000
Community Trails 42,897 3,984 2,182,679
General Park Development 287,709 26,727 172,977
Major Park Development 292,800 27,200 40,281
Kitchener Operations Facility 31,210 620,000
5,781,221 1,148,628 17,317,284
IF1 - 8
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TABLE F
DEVELOPMENT CHARGE
2013 EXEMPTIONS
50% Industrial Enlargement 149,877
Accessory Building 25,264
Additional Dwelling Unit(s) in Existing 575,903
Downtown Exemption 93,488
Local Board 36,250
Municipal Use 564,154
Public School Board 461,939
Redevelopment Allowance 1,775,915
Separate School Board 32,107
3,714,897
IF1 - 12
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