HomeMy WebLinkAboutFCS-15-065 - 2014 Development Charge Reserve Fund Staff Report
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REPORT TO: Finance and Corporate Services
DATE OF MEETING: May 25, 2015
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 21, 2015
REPORT NO.: FCS-15-065
SUBJECT: 2014 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
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
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Non-Discounted Roads and Related
Services Sanitary Servicing
Watermains
Storm/Watercourse
Intensification Allowance
Engineering Studies
Public Works
Fire
A summary of the DC Reserve Fund by Category of Service is at Table A.
Determination of Development Charges:
The 2014 DC rates are set out in Table B. 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 Act stipulates that the DC rates may be indexed,
effective January 1 of each year that the by-law remains in effect. As such, the City of Kitchener
indexes the DC rates based on the non-residential construction price index, as provided by
Statistics Canada. As the City of Kitchener passed a new Development Charges By-Law on
May 26, 2014, Table B includes the rates that were charges for the first half of the year, as well
as the new rates that came into effect on July 1.
Revenue
DC collections in 2014 total $10.9M, an increase from 2013 collections of $6.6M. Of the total
revenue, $10.5M was attributable to residential development and $0.4M 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
life of the by-law, as well as the 2009 non-residential rate phase-in. In 2014, EDIF provided
$0.4M to the Central Neighbourhoods reserve for the downtown exemption for the first six
months of the year, until the 2014 by-law came into effect.
Expenses
Net DC expenses to December 31, 2014 total $1.5M. DC expenses incurred during 2013
amounted to $6.9M. Detailed lists are included in the DC Reserve Fund Transactions in Tables
C, D and E. Since 2004, different rates have been 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 background study.
Reserve Fund Balances
The DC Reserve Fund at December 31, 2014 was in a surplus position of$2.7M compared to a
deficit position of$7.1 M at the end of 2013.
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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 the new background study
was completed, the reserve balances in each service were included in the development charge
rate calculation, therefore over time, it is anticipated that the deficits will be recovered and the
surpluses utilized.
Exemptions
DC exemptions in 2014 total $2.9M compared to $3.7M in 2013. Of the total exemptions, $1.5M
was attributable to residential development and $1.4M was for non-residential development.
Major exemptions are the redevelopment allowance (if a redevelopment occurs and proof of
demolition is provided, the development charge applicable shall be reduced by an allowance
that equals the number and types of residential units and the non-residential gross floor area of
the former development, at the rates applicable at the time the first building permit for the re-
development is issued), downtown exemption, additional dwelling units in existing residential
exemption, and exemptions for public school board use. A summary of major exemptions is
included in Table F.
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, 2014, credits of $4.9M were
outstanding compared to $2.5M at the end of 2013. This is mainly due to the addition of a new
agreement during 2014. Refer to Table G for more details.
By-law
A new DC by-law came into effect July 1, 2014 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:
INFORM — This report has been posted to the City's website with the agenda in
advance of the council / committee meeting. In addition, a copy of this report will be
provided to the Waterloo Region Homebuilders' 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: 2014 Transactions
Table D: 2014 Expenses
Table E: Reserve Fund Transactions by Service
Table F: 2014 Exemptions
Table G: Credit for Service Agreements
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO and City Treasurer
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TABLE B
DEVELOPMENT CHARGE RATES
(effective from January 1 to June 30)
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $5,591 $9,748 /dwelling unit
Townhouse or street townhouse dwelling $3,861 $6,733 /dwelling unit
Multiple or duplex dwelling $3,168 $5,524 /dwelling unit
Lodging House $1,676 $2,924 /dwelling unit
Non-Residential Development
Gross floor area of building $18.54 $47.62 /square metre
$1.72 $4.43 /square foot
DEVELOPMENT CHARGE RATES
(effective from July 1 to December 31)
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $5,480 $10,518 /dwelling unit
Townhouse or street townhouse dwelling $3,883 $7,451 /dwelling unit
Multiple or duplex dwelling $3,024 $5,805 /dwelling unit
Lodging House $1,666 $3,199 /dwelling unit
Non-Residential Development"
Gross floor area of building $16.37 $54.17 /square metre
$1.52 $5.03 /square foot
"For the period of July 1, 2014 to March 1, 2019, Council approved a 50% reduction of the Non-Residential
rate for industrial development.
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TABLE C
CITY OF KITCHENER
SUBURBAN AREA
DEVELOPMENT CHARGE RESERVE 7012002
2014 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2013 (5,948,647)
Revenues
DC Act Revenue 10,193,179
Transfer from Economic Development
Investment Fund -
Interest Income (Expense) (25,432)
Total Revenues 10,167,747
Expenditures
City Share of Subdivisions 276,020
Huron Road (450,000)
Block Line Road (379,350)
Wabanaki Drive (26,916)
Stoke Drive Pumping Station (111,537)
Old Mill Forcemain (9,004)
Engineering Studies 165,612
Monitor Upper Blair Creek 110,408
Fire Radio System Upgrades 20,000
DC Study(non discounted) 75,000
DC Study(discounted) 58,792
Planning Studies 68,883
Central Library 245,220
Community Trails 43,753
Trail Crossings 31,293
General Park Development 293,463
Major Park Development 298,290
Total Expenditures 709,927
Surplus (Deficit) Balance December 31, 2014 3,509,173
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TABLE C
CITY OF KITCHENER
CENTRAL NEIGHBOURHOODS
DEVELOPMENT CHARGE RESERVE 7012006
2014 TRANSACTIONS
Surplus (Deficit) Balance December 31, 2013 (1,166,592)
Revenues
DC Act Revenue 737,554
Transfer from Economic Development
Investment Fund 411,442
Interest Income (Expense) (29,673)
Total Revenues 1,119,323
Expenditures
Intensification Allowance 643,224
DC Study(discounted) 8,708
Planning Studies 10,117
Central Library 22,780
Community Trails 4,065
Trail Crossings 2,907
General Park Development 27,262
Major Park Development 27,710
Total Expenditures 746,773
Surplus (Deficit) Balance December 31, 2014 (794,042)
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TABLE D
CITY OF KITCHENER
DEVELOPMENT CHARGE RESERVE
2014 EXPENSES
Funded from Funded from
Suburban Central
Area Neighbourhoods Other
DC Reserve DC Reserve Funding
City Share of Subdivisions 276,020 -
Huron Road (450,000) -
Block Line Road (379,350) (67,650)
Wabanaki Drive (26,916) -
Stoke Drive Pumping Station (111,537) -
Old Mill Forcemain (9,004) (54,925)
Engineering Studies 165,612 -
Monitor Upper Blair Creek 110,408 -
Fire Radio System Upgrades 20,000 80,000
Intensification Allowance 643,224 -
DC Study(non discounted) 75,000 -
DC Study(discounted) 58,792 8,708 7,500
Planning Studies 68,883 10,117 (1,778)
Central Library 245,220 22,780 676,904
Community Trails 43,753 4,065 677,182
Trail Crossings 31,293 2,907 3,800
General Park Development 293,463 27,262 146,832
Major Park Development 298,290 27,710 21,866
709,927 746,773 1,489,731
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TABLE F
DEVELOPMENT CHARGE
2014 EXEMPTIONS
50% Industrial Enlargement 38,463
Accessory Building 25,942
Additional Dwelling Unit(s) in Existing 370,753
Downtown Exemption 496,451
Local Board 94,952
Provincial Use 128,425
Public School Board 301,326
Redevelopment Allowance 1,431,560
2,887,872
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