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HomeMy WebLinkAboutFIN-2022-179 - Affordable Housing Development Charge (DC) Waiver Policy - REVISEDStaff Report Financial Services Department www.kitchener.ca REPORT TO: Committee of the Whole DATE OF MEETING: April 11, 2022 SUBMITTED BY: Ryan Hagey, Director of Financial Planning & Reporting, 519-741-2200 ext. 7353 PREPARED BY: Ryan Hagey, Director of Financial Planning & Reporting, 519-741-2200 ext. 7353 Andrew Ramsaroop, Social Planning & Affordable Housing Program Lead, 519-741-220 ext. 7242 WARD(S) INVOLVED: All Wards DATE OF REPORT: April 6, 2022 REPORT NO.: FIN -2022-179 SUBJECT: Affordable Housing Development Charge (DC) Waiver Policy - REVISED RECOMMENDATION: That financial policy FIN -PLA -XXX "Affordable Housing Development Charges Waiver" be approved (Attachment A to report FIN -2022-179); and That the terms of reference for the Affordable Housing Reserve be approved (Attachment B to report FIN -2022-179). REPORT HIGHLIGHTS: • The purpose of this report is to approve the revised Affordable Housing Development Charges Waiver policy and confirm the terms of reference for the Affordable Housing reserve. • One-time funding of $2M was set aside during the 2022 budget process for this purpose. Ongoing funding would need to be identified through a future budget. • Community engagement related to the Housing for All affordable housing strategy included multiple stakeholder groups and informed the report recommendations. • This report supports A Caring Community by creating an Affordable Housing Strategy. BACKGROUND: A proposed Affordable Housing Development Charge (DC) Waiver policy was presented to the Finance and Corporate Services Committee on April 4, 2022 as part of report FIN -2022-158 Affordable Housing Development Charge (DC) Waiver Policy. During the Committee discussion, some feedback was provided to staff about the policy and follow up information/amendments were requested. Additional information is provided in this report and an updated policy has been created for Council's review and approval. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. Page 9 of 25 REPORT: Five items were noted for additional information or policy amendments. Each of them is discussed below and reflected in the revised policy (where applicable). Any edits to the policy have been highlighted in red text to make them easier to find. 1) For developments that receive a DC waiver under the policy, should there be a requirement to remain "affordable" for a certain amount of time (staff to decide the appropriate timeframe)? The policy has been updated to include a clause to this effect (clause 1d). The wording and the timeframe in the clause 1 d is based off of wording in the DC Act section 26.1(9) that also deals with a change in use. Under the revised policy, non-profit developments need to remain that way for 20 years from the time of occupancy or repay any waiver that was provided. 2) How would the policy apply to organizations like Habitat for Humanity? Any development that meets the policy definition (which is consistent with the Provincial definition of a non-profit housing development) would qualify for the waiver. It is staff's understanding that Habitat for Humanity meets this definition and would be eligible for the waiver. As long as the property remained a non-profit housing development for at least 20 years, the waiver would not need to be paid back. 3) Should there be some sort of appeal process for developments that are not provided the DC waiver because they have received some other financial consideration (e.g. provided land by the City)? As mentioned during the Committee meeting, staff would not recommend an appeal process for properties who are disqualified from the waiver because they have received some other financial consideration from the City. Staff's intent is to use City resources to help incent as many "affordable" units as possible, and stacking up multiple significant benefits on a single project does not achieve that goal. This approach is consistent with several other policies when considering multiple avenues of attaining municipal financial support. To provide further clarity to the Committee discussion, staff have adjusted the wording of clause 1a in the policy to allow a DC waiver if a development has only received another incentive that is less than the waiver. That means a small loan or grant would not disqualify a development from getting a DC waiver, but something more significant (like a large loan, grant, or land donation) would be seen as the City's contribution to the project and the development would not qualify for the DC waiver. 4) If an apartment building was being built where most of the units would not qualify, but a portion of them would, could the qualifying units be provided the DC waiver? Yes, as long as the non-profit housing developer was a partner in the project at the time of occupancy (i.e. when DC payments would be due), their units would qualify for the DC waiver. The non-profit housing provider would need to have a signed agreement with the for-profit developer that clearly outlines the terms of the agreement and that those units would meet the Provincial definition and will be owned by the not-for-profit for a duration of at least 20 years. Wording regarding this has been added to the policy as clause 1e. Page 10 of 25 5) Can staff include an ongoing funding allocation to the Affordable Housing reserve as part of the 2023 budget discussion? Yes. This will either be built into the budget for 2023 or an issue paper for Council's direction. STRATEGIC PLAN ALIGNMENT: This report supports A Caring Community by creating an Affordable Housing Strategy. FINANCIAL IMPLICATIONS: As noted in the original Committee report, Council earmarked $2M of one-time seed funding for the Affordable Housing reserve. At current DC rates, this funding would provide a waiver for 190 to 280 qualifying units (depending on where they are built). None of the amendments in the revised policy impact the amount of funding available or how many units could benefit from the proposed waiver. COMMUNITY ENGAGEMENT: INFORM — This report has been posted to the City's website with the agenda in advance of the council / committee meeting. CONSULT — It is estimated that City staff engaged with close to 500 people in developing the Housing forA/l strategy by methods including: • Advisory Committee workshops and sub -committee meetings • Engage Kitchener surveys • One-on-one stakeholder interviews • Meetings with community groups • Kitchener Market • Social media posts PREVIOUS REPORTS/AUTHORITIES: DSD -20-214 Housing for All — City of Kitchener Housing Strategy FIN -2021-62 2022 Final Budget Day FIN -2022-158 Affordable Housing Development Charge (DC) Waiver Policy APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services. Justin Readman, General Manager, Development Services ATTACHMENTS: Attachment A — Affordable Housing Development Charges Waiver Policy Attachment B —Affordable Housing Reserve Information Sheet Page 11 of 25 1 Ki R POLICY Policy No: FIN -PLA -XXX Policy Title: AFFORDABLE HOUSING Approval Date: April 11, 2022 DEVELOPMENT CHARGES WAIVER POLICY Reviewed Date: April 2022 Next Review Date: April 2027 Policy Type: COUNCIL Category: Finance Amended: Click here to enter a date. Sub -Category: Financial Planning Author: Ryan Hagey, Director of Replaces: Click here to enter text. Financial Planning & Reporting Repealed: Click here to enter a date. Dept/Div: Financial Services Department Replaced by: Click here to enter text. /Financial Planning & Reporting Related Policies, Procedures and/or Guidelines: Development Charges Act &Related Regulations POLICY PURPOSE: The primary purpose of this policy is to help incent or remove barriers related to the development of non-profit housing development. The policy does this by establishing the parameters by which a waiver for development charges (DCs) would be provided to a qualifying development. 2. DEFINITIONS: City — City of Kitchener. DC/DCA — Development Charges/Development Charges Act. Non -Profit Housing Development — is defined by O. Reg. 454/19, s. 3 (1) and means development of a building or structure intended for use as residential premises by, (a) a corporation to which the Not -for -Profit Corporations Act, 2010 applies, that is in good standing under that Act and whose primary object is to provide housing; 1 of 3 Page 12 of 25 Policy No: FIN -PLA -XXX Policy Title: AFFORDABLE HOUSING DEVELOPMENT CHARGES WAIVER (b) a corporation without share capital to which the Canada Not-for-profit Corporations Act applies, that is in good standing under that Act and whose primary object is to provide housing; or (c) a non-profit housing co-operative that is in good standing under the Co- operative Corporations Act. 3. SCOPE: POLICY APPLIES TO THE FOLLOWING: ❑x All Employees ❑Management ❑Permanent Full -Time Employees ❑Permanent Full -Time Non Union ❑Permanent Full -Time C.U.P.E. 791 ❑Temporary ❑Part -Time Non -Union ❑Student El Permanent Full -Time Union ❑Continuous Part -Time Employees ❑Part -Time Employees ❑Continuous Part -Time Non -Union ❑Continuous Part -Time Union ❑Council E] Local Boards & Advisory Committees ❑Specified Positions Only: This policy applies to external customers who meet the definition of non-profit housing development included in this policy. The DC waivers mentioned in this policy do not apply to for-profit housing development. 4. POLICY CONTENT: The City's DC waiver policy provides the specifics of the City's policy without reiterating most aspects of the DCA itself. The City's policy is meant to be interpreted in accordance and in conjunction with the DCA and the Municipal Act. 1. Policy Application a) DC waivers will be available to non-profit housing development units that have not received significant financial considerations (where the considerations are larger than the amount of the DC waiver) from the City, for other site development costs, whether in-kind or cash (e.g. capital grants, outstanding loans, donations of property either by title transfer or long term leases at rates below market value). This will extend the benefit of limited City resources to more developments. 2 of 3 Page 13 of 25 Policy No: FIN -PLA -XXX Policy Title: AFFORDABLE HOUSING DEVELOPMENT CHARGES WAIVER b) The amount of the waiver will be equal to 100% of the City portion of DCs payable, as long as funds are available in the Affordable Housing reserve fund. c) DC waivers will be funded at the point of occupancy which is when the first instalment of DCs is to be made for non-profit housing developments under current Provincial legislation. This will result in a transfer from the Affordable Housing reserve fund to the Development Charges reserve fund. d) If any part of a development to which this policy applies is changed so that it no longer consists of a non-profit housing development within 20 years of initial occupancy, the waived development charge of the entire development is payable immediately. e) For developments that are a mixture of for-profit and non-profit housing, DC waivers will be available to non-profit housing development units where the non-profit housing provider is a partner in the project at the time of occupancy. The non-profit housing provider would need to have a signed agreement with the for-profit developer that clearly outlines the terms of the agreement and that those units would meet the Provincial definition and will be owned by the not-for-profit for a duration of at least 20 years. 2. Retroactivity a) Upon approval by Council, this policy shall take effect retroactive to January 1, 2020. Any qualifying developments from this timeframe will have their DCs waived (if they haven't paid) or refunded (if they have already paid). 5. HISTORY OF POLICY CHANGES Administrative Updates Formal Amendments 3 of 3 Page 14 of 25 Reserve Fund Information Sheet Name of Reserve/Reserve Fund Affordable Housing Category Reserve Fund Type Discretionary Classification Program Specific Purpose Provide funding to support affordable housing development Funding Source - One-time contribution when reserve was created. -Annual contributions approved by Council. - Interest income Appropriation of Funds - Grants to qualifying properties in the amount of City's portion of development charges Target Level Minimum: Closing balance should not drop below zero Rationale: All reserves should maintain a positive balance. Maximum: Closing balance should not exceed $2 million Rationale: closing balance should not exceed initial seed funding. Excess: Excess funding greater than the maximum transfers to the Tax Capital Reserve Fund Next Review: 2027 Reporting -annual report to FCSC Accountability Cost Centre 7022015 Divisional Ownership Equity, Anti -Racism & Indigenous Initiatives Ownership Lead Director of Equity, Anti -Racism & Indigenous Initiatives Interest Allocation Yes Other Previous Policy New Previous Title Not applicable Resolution Date Amendment Date(s): Repeal Date: Proposed start date End Date (if applicable) Not applicable Page 15 of 25