HomeMy WebLinkAboutINS-17-009 - Strasburg Road - Credit/Refund Agreement
REPORT TO: Finance & Corporate Services Committee
DATE OF MEETING: February 13, 2017
SUBMITTED BY: Hans Gross, Director of Engineering, 741-2200 ext. 7410
PREPARED BY: Linda Cooper, Manager Development Engineering, 741-2200
ext. 7974
WARD(S) INVOLVED: Ward 5
DATE OF REPORT: January 3, 2017
REPORT NO.: INS-17-009
SUBJECT:Strasburg Road-Credit/Refund Agreement Request
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RECOMMENDATION: That Council authorize the Mayor and Clerk to execute a
development charges credit/refund agreement with the developers (Hallman
Construction Ltd., Primeland Developments Ltd, Freure Developments Ltd.,
Activa Holdings Inc., Sunvest Reid Ltd., and Becker Estates Inc.) in respect to the
developers payment for the costs of the engineering fees and construction of
Strasburg Road, in addition the agreement will contain provisions authorizing the
acceptance of lands from the developers by the municipality on which the three
projects will be constructed, to the satisfaction of the City Solicitor.
BACKGROUND:
The Transportation Planning and Engineering Study for the Huron Industrial
Development (1981) identified and established transportation infrastructure
requirements, with a focus on the development of a secondary arterial road network and
the provision of rail and public transit service to the area. The associated Huron
Business Park Secondary Plan (1983), and Transportation Planning and Engineering
study established the new Strasburg Road as a Secondary Arterial Road, and
confirmed the preferred alignment of Strasburg Road to a point approximately 500m
north of Reidel Drive.
In 1983, City Council approved the Strasburg Road Extension alignment from Huron
Road southerly to approximately 500 m north of Reidel Drive.
In 1989, City council adopted an amendment to the Official Plan with the purpose of
establishing a collector road network for the Brigadoon Community. The importance of
Strasburg Road and the collector road connections to Strasburg Rd was reaffirmed
through public process.
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Strasburg Road has been constructed from Bleams Road to Rush Meadow Drive. In
2004 the sanitary sewer, watermain and a culvert was constructed along Strasburg
creek in anticipation of the extension of the Strasburg Road.
In 2010, the City initiated the Strasburg Road Extension from Rush Meadow Drive to
New Dundee Road project in two phases. The first Phase of the project was the detail
design of Strasburg Road extension from Rush Meadow Street to Robert Ferrie Drive,
and the second phase of the project was the Class Environmental Assessment (EA)
study for the extension of Strasburg Road from north of Stauffer Drive southerly to New
Dundee Road. On September 2, 2014 the City received MOECC approval for the Class
EA part II orders.
Becker Estates Inc. made application to the City in November 2007 for a new residential
subdivision to be located on lands southeast of Fisher Hallman Road and Huron Road,
and bisected diagonally by Plains Road. The applications included a proposed Draft
Plan of Subdivision, a Zone Change and an Official Plan Amendment. Becker Estates
Subdivision is proposed to be a mixed-use subdivision that will ultimately contain a
range of residential, institutional and commercial uses together with parks and open
spaces. The proposed applications should facilitate the development of the lands with a
final density of approximately 60 residents and jobs per hectare and a range of low,
medium and higher density residential uses.
Primeland Developments (2003) Limited received Draft Approval for a residential
subdivision on lands south of Huron Road and west of the Strasburg Road extension in
2000. The subdivision has been partially constructed and at completion is expected to
include approximately 584 residential units and an elementary school, together with
parks and open space.
Hallman Construction Limited has applied for an Official Plan Amendment and Zone
Change for lands east of the Strasburg Road extension and west of Brigadoon
Woods. The proposal contemplates a multiple residential form of development with
approximately 200 residential units. The proposed Official Plan Amendment and Zone
Change have not yet been considered by Committee or Council.
Freure Developments Limited submitted applications for a Draft Plan of Subdivision,
Zone Change and Official Plan Amendment in 2016 seeking approval of a residential
plan of subdivision on a 27.5 hectare parcel of land. These lands are located west of
the Strasburg Road extension and south of 30T-98201. The proposed draft plan
contemplates approximately 470 residential units in a range of low, medium and high
density housing forms together with parks and open spaces. The subject applications
are in process and have not yet been considered by Committee or Council.
REPORT:
The developers group wishes to expedite the construction of these projects and thus on
September 8, 2015, the City received a development charges credit/refund application
request from the developers to advance the detailed design and construction of the
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infrastructure. The developers have had ongoing discussion with the City. Staff at this
time is in support of this application and to date the developer group has submitted all
required information to process their application.
A project team from various City departments was established to review the
credit/refund application. Project team members included Engineering, Planning,
Transportation, Operations, Legal, and Finance. All internal stakeholders and members
of the project team are in favour of the proposal. The project team has met with the
developers to draft the agreement.
In accordance with the Kitchener Growth Management Plan and the 2009/2014
Development Charge Background studies, the City of Kitchener is planning to construct
Strasburg Road North, Strasburg Road Sanitary Trunk Extension and the South
Strasburg Creek Sanitary Trunk Sewer. The 3 projects are illustrated on Figure 1.0.
Strasburg Road North will run from its current terminus to 880 m north of Stauffer Drive.
To date the City has completed the detailed design of this portion of the Strasburg Road
extension. This is a secondary collector road and will provide an alternate access to the
Brigadoon and Doon South area. The road project will include construction of a four
lane road with multi-use trail, a bridge, landscaping, signals, street lights and installation
of a noise wall, and a wildlife passage culvert.
The Strasburg Road Sanitary Trunk extension will be constructed along with the
Strasburg Road North extension. The Strasburg Road Sanitary Trunk sewer will be
tendered and constructed with the road. The City has full funding for the Strasburg
Road Sanitary Trunk sewer extension at this time.
The Strasburg Road Regional Watermain will be completed with the Strasburg Road
North project. The watermain extension is required to provide redundancy within the
system for the Doon South area. The watermain will follow the same limits of Strasburg
Road North and is 100% fully funded by the Region.
South Strasburg Creek Sanitary Trunk Sewer will be installed from the Strasburg Road
North extension to the western limit within the Becker subdivision, points B to J on
Figure 2.0. To date a portion of the South Strasburg trunk sewer has been installed
which is noted as points B to D on Figure 2.0. The remainder of the trunk sewer D to J
has to be detailed designed and constructed. This work will be completed as a
separate tender from the road works and the City has full funding available now for this
project.
All three projects are development charge projects and have the following timeline
associated to them in regards to budget:
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Total Project TimeframeTotalDC Study Reference
Estimated
Cost
1 Strasburg Sanitary 2015 - $3,061,000 $6,183,000 Hemson Consulting
Trunk Sewer 2016 - $3,122,000 Ltd., April 2014
Project SA13, p. 201
2. South Strasburg 2015 - $2,419,000 $4,887,000 Ibid.
Creek Sanitary Sewer 2016 - $2,468,000 Project SA12, p. 200
3. Strasburg Road North 2020 - $6,216,000 $19,024,000 Ibid.
2021 – 6,341,000 Project R6, p. 211
2022 - $6,467,000
Other Considerations:
As illustrated in Figure 1.0, all 6 parcels of land owned by the developers are dependent
on the City’s projects being completed. Of critical note both school sites as illustrated in
Figure 2.0 are dependent on the City’s projects moving forward. The Waterloo Region
District School Board made comments to the City stating they have no objections to the
continued processing of development applications within these areas; however the
board requested that no other plans be registered without first having the school sites
registered, serviced and under an agreement to purchase. The other schools in the
area are operating over capacity and cannot accommodate additional students from
these new development areas. The school sites are both dependent on the trunk sewer
and Strasburg Road.
Another dependent project to highlight is the City’s South Kitchener District Park
(SKDP). The SKDP is proposed to be serviced in 2018. The SKDP is dependent on
the road and trunk sewer. Based on the timing of the projects in the current budget, the
SKDP will be held up or further delayed until the City constructs the road and trunk
sewer.
Project Costs
The total preliminary cost estimate of the three projects is $27,305,829.00 in
accordance with the 2014 DC Background Study. This cost is exclusive of the Regional
watermain as that item is fully funded by the Region. The City has funding for both legs
of the Strasburg/South Strasburg Trunk Sanitary Sewer. The developer will be covering
the costs for Strasburg Road North and related works. The cost estimate includes the
following:
o Engineering Fees for all 3 projects ($2,496,152)
Consultant fees for detailed design, inspection and contract administration
Cost for City staff including project management, tender advertisement, permit
fees and administration
Consultant cost for geotechnical testing, hydrogeological investigation, pump
testing, material testing, etc.
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o Strasburg Road North ($16,559,586) including engineering services and the
mandatory 5 year environmental monitoring that is required by the Ministry of
Natural Resources
o Strasburg Trunk Sewer and related works ($6,002,493) including engineering
services
o South Strasburg Creek Sanitary trunk sewer and related works ($4,743,750)
including engineering services.
The developer will fund the project in two stages:
o Upon execution of the credit for service agreement the developers agree to deposit
an irrevocable letter of credit in the amount of $1,000,000. The letter of credit will
have an automatic renewal clause.
o Prior to the award of tenders, the amount of the letter of credit will be modified to
match the full amount of the contract price for the creditable works, so that all of the
City’s commitments in relation to the works are fully secured.
o If during construction any unforeseen issues arise and sufficient funds are not
available in the letter of credit to cover the costs, the developer is responsible to
provide the funds required to complete the project. The City will provide the
developer seven (7) days’ notice to provide the funds.
If, after the detailed design stage and tendering process, the total value for all project
works exceeds the amount agreed upon with the developers and defined in the credit
for service agreement, then the developers have the ability to terminate the agreement.
Operating and Maintenance Costs
According to The City of Kitchener’s approved 2017 Capital Forecast, Strasburg Road
North is to be constructed in 2020-2022.The developer group wishes to construct the
infrastructure earlier and have agreed to bear the additional operating and maintenance
th
costs as outlined below. On or before June 30 in every year commencing after the
completion of the construction of the Creditable Works and ending on December 31,
2022, the Developers shall make payments to the City as necessary to defray all of the
City’s costs for:
1) Maintenance of the works: maintenance costs shall include all repairs and
maintenance relating to Strasburg Road including, but not limited to, storm sewers
and appurtenant features, culvert, bridge, multi-use trail, noise wall, guide rails,
landscaping/plantings, management of new tree edge on both sides of road, base
road works and top coat works, curb and gutter, sidewalks, boulevards including
sod, trees, driveway ramps, traffic signs, and grass cutting.
2) Street lighting: street lighting along Strasburg Road North
3) Snow clearing: the developers will be responsible for the cost of snow clearing. The
City’s seasonal snow clearing costs will be divided by the total land kilometers for
which the City performs snow clearing for. The developer will be responsible for this
cost until June 30, 2022.
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ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Strategic Priority: Safe and Thriving Neighbourhoods
Strategy: #3.3 Manage growth, curb urban sprawl, and foster more mixed-use
development, ensuring new development is integrated with the diversity and character
of the surrounding community.
Strategic Action: # 51 Kitchener Growth Management Strategy 2015-2017
FINANCIAL IMPLICATIONS:
Capital Cost:
The capital costs for this project will be borne by the developer. In accordance with
Council Policy I-537 (Development Charges Credit/Refund Agreements), the City will
reimburse the developer through development charge credits and refunds for significant
growth related capital items that are advanced by the developer.
Policy I-537 allows developers to proceed with such projects and be reimbursed by the
City through crediting, in this case, the sanitary portion of the Development Charge
payable upon the issuance of the building permits.
Policy I-537 also allows for a refund of the balance on June 30 of the year it appears in
the City’s capital forecast, but only to the extent the City has met its projected
development charge revenue targets, City wide. This ensures that there are adequate
funds to cover the project in the future. For example, if the City has only reached 60%
of its anticipated Development Charge revenue, throughout the City, then the developer
is only entitled to 60% of the refund in that year. Every year subsequent to that, the
developer receives a refund calculated in the same manner. Based upon this policy, a
draft agreement has been prepared by Legal Services in cooperation with legal counsel
for the developer.
Operating Cost:
In addition to outlining the details of the repayment by the City for the capital cost of the
road and related works as described above, the agreement contains some new features
that are in addition to the strict requirements of Policy I-537. For example, in the
agreement, the developer will be reimbursing the City for all snow removal costs for
Strasburg Road North, until the date the items appears in the City’s capital
forecast. The developer has also agreed to maintain all other subdivision infrastructure
until the date it appears in the City’s capital forecast which includes the hydro cost for all
street lighting along the road. These operating costs are not eligible for credit/refund
from the City, unlike the road and trunk sewer construction and related works.
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COMMUNITY ENGAGEMENT:
INFORM – This report has been posted to the City’s website with the agenda in
advance of the council / committee meeting.
CONSULT – The City consulted with the Waterloo Regional District and Catholic School
Board on the application request in efforts to discuss timing and impacts to the school
block within the plan of subdivision. Both school boards are supportive on this proposal.
The public was previously consulted and involved in establishing a collector road
network for the Brigadoon Community. The Strasburg Road alignment was reaffirmed
and the collector road network was established through the public process. The first
public open house was on August 4, 1988 and the second on June 28, 1989.
PREVIOUS CONSIDERATION OF THIS MATTER:
On November 28, 1983 City council approved an amendment to the City’s Official Plan
to establish the alignment of Strasburg Road. Further to that the Brigadoon Community
Plan was adopted and revised by council on January 15, 1990 and April 15, 1991 and
approved by Regional Council on June 13, 1991.
May 27, 1994, a staff report was presented to City Council recommending a revised
alternative for the Doon South-Brigadoon Transportation Network. The report
recommended completing Phase 3, 4 and 5 of an Environmental Assessment to
determine the alignments including Strasburg Road from a point north of Stauffer Drive
to Reidel Drive. City council adopted the recommendations on June 27, 1994.
March 24, 1997, City council approved Community Plan for Doon South Area
designating Strasburg Road as a secondary arterial road with a right of way width of 26
meters. Further on April 14, 1997 amendment to the City’s Municipal Plan was
approved by City council. Amendment related to the Doon South area and established
a new collector and scenic road.
CONCLUSION:
The development group has had ongoing discussions with City staff from 2014 until
now. At this time, the developer group has submitted all the required information to
process their application and staff has had the opportunity to review the application in
detail. Said developers are proposing to fund the cost of Strasburg Road and related
appurtenances. Further they have also agreed to pay the maintenance cost of the
subdivision infrastructure until such time as it appears in the capital budget. As such,
staff recommends that the credit/refund agreement for the Strasburg Road be approved.
ACKNOWLEDGED BY: Justin Readman, Executive Director, Infrastructure Services.
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