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HomeMy WebLinkAboutFIN-2022-066 - 2022 Development Charges Study Initiation Financial Services Department www.kitchener.ca REPORT TO: Finance and Corporate Services Committee DATE OF MEETING: February 7, 2022 SUBMITTED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353 PREPARED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353 WARD(S) INVOLVED: All Wards DATE OF REPORT: October 26, 2021 REPORT NO.: FIN-2022-066 SUBJECT: 2022 Development Charges Study Initiation RECOMMENDATION: That staff be directed to publish a development charges background study and hold a required statutory public meeting prior to passing a bylaw to authorize the collection of development charges as required under section 12 of the Development Charges Act REPORT HIGHLIGHTS: The purpose of this report is to gain direction to publish a development charges (DC) background study and hold the required public meeting. Community engagement will include the mandatory public meeting, as well as meeting with industry experts such as the Kitchener Development Liaison Committee (KDLC). Passing of the updated DC bylaw is planned for May 2022. A review of whether the creation of a Community Benefits Charge (CBC) makes sense for Kitchener will be delayed until after other municipalities have proceeded with their CBC implementations in 2022. This report supports the delivery of core services. BACKGROUND: The Province of Ontario made a series of changes to development charges (DCs) legislation in 2019/2020. In the midst of these changes, Council approved the hiring of Hemson Consulting to navigate the new legislative landscape. was passed in 2019 and expires on June 30, 2024, but is being updated early due to the legislative changes. The changes have been covered by previous reports and presentations to Council and include: The removal of the mandatory 10% reduction for non-engineering services. For indoor and outdoor recreation projects, this change totals nearly $9M and means that once the bylaw is updated these costs will be borne by development instead of existing rate payers. The removal of some services from DC legislation (e.g. cemetery, parking), which comes into effect in September 2022. DC funds allocated for these services in the 2022 capital budget total just over $12M. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. The Development Charges Act (DCA) and its associated regulation allow municipalities to impose DCsto pay for growth-related capital costs to service new development. In order to do so, under the terms of the DCA, municipalities must prepare a development charge background study and pass a bylaw to determine the development charges, taking the following into account: A forecast of the amount, type and location of development anticipated in the municipality for which development charges can be imposed. The average capital service levels provided by the municipality in the 10-year period immediately preceding the preparation of the background study. A review of future capital projects, including analysis of gross expenditures, funding sources and net expenditures incurred or to be incurred by the municipality, to provide for the expected development. An examination of the long-term capital and operating costs for capital infrastructure for each service to which the development charges relate. In order to update the bylaw, a background study must be published, and at least one public meeting must be held. The purpose of this report is to seek formal Council authority to take the required steps to update the DC bylaw. As noted earlier, the City has retained Hemson Consulting to assist with the preparation of the DC background study and bylaw. In addition to the changes to DCs, the updated provincial legislation also includes the ability for a municipality to implement a Community Benefits Charge (CBC) which can be used to fund the capital costs of any public service associated with new growth, including parkland, if those costs are not already recovered from development charges and parkland provisions. Some municipalities are moving forward to implement CBCs in 2022. City of Kitchener staff, with advice from Hemson, believe it is prudent to observe the progress of these other implementations before deciding on a course of action for Kitchener. Hemson has been retained work on some of the CBC implementations happening in 2022 and will be able to advise Kitchener better once the first round of bylaws are published, passed and potentially appealed. Hemson will also have better availability to assist Kitchener once the first round of CBC implementations are completed. REPORT: City staff have been gathering the necessary information for the DC background study and are now at a point to seek direction from Council to publish the background study and hold a public meeting as required under section 12 of the Development Charges Act. The 2022 DC study will include an update of capital costs and will seek to maximize the DC charge, which is consistent with the direction provided by Council during the 2019 DC study. A summary schedule is provided below which outlines the relevant dates in the overall DC update timeline. It should also be noted that the approval of the DC bylaw on May 30 is the second last possible date before Council breaks for the summer. Proposed DC Meeting Timeline DateMeetingSubject Feb 7 Committee DC study initiation Mar 14 N/A DC background study and bylaw published on City website Apr 4 Committee Statutory public meeting May 30 Council Approval of DC background study and bylaw STRATEGIC PLAN ALIGNMENT: This report supports the delivery of core services. FINANCIAL IMPLICATIONS: There are no financial implications associated with this report. Impacts of updated DC rates will be included as part of future reports. COMMUNITY ENGAGEMENT: INFORM council / committee meeting. CONSULT As noted in the report, a public meeting relating to development charges is required by legislation. This meeting is tentatively planned to be held as part of a Committee meeting on April 4, 2022. In addition to the statutory public meeting required by the Development Charges Act, staff have already provided a brief DC update to the Kitchener Development Liaison Committee (KDLC) and committed to providing DC information to that group as it becomes available. Further, staff will be engaging a broad cross-section of industry stakeholders to solicit their feedback in advance of Council passing the DC bylaw. PREVIOUS REPORTS/AUTHORITIES: Development Charges Act APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services