HomeMy WebLinkAboutDSD-2022-281 - Growth Related Funding Tools - Cumulative Impact Assessment
Development Services Department www.kitchener.ca
REPORT TO: Community and Infrastructure Services Committee
DATE OF MEETING: June 8, 2022
SUBMITTED BY: Rosa Bustamante, Director of Planning, 519-741-2200 ext. 7319
PREPARED BY: Tim Donegani, Senior Planner, 519-741-2200 ext. 7067
WARD(S) INVOLVED: ALL
DATE OF REPORT: May 27, 2022
REPORT NO.: DSD-2022-281
SUBJECT: Growth Related Funding Tools Cumulative Impact
Assessment
RECOMMENDATION:
That Report DSD-2022-281 regarding Growth Related Funding Tools Cumulative
Impact Assessment, be received.
REPORT HIGHLIGHTS:
The purpose of this report is to present Council with the findings of the Cumulative
Impact Assessment prepared by N. Barry Lyon Consultants (NBLC) to inform Coun
consideration of new or updated Development Charges, Park Dedication, Community
Benefits Charges, and Inclusionary Zoning.
Key findings:
o The NBLC report found that the funding tools in totality generally result in
manageable impacts to proformas in the strong Downtown residential market,
with more significant impacts on high-rise development in other locations in
Kitchener.
o The tools impact high rise and rental projects most significantly.
o A transition period for new fees or policies is critical to mitigating impacts.
o The recommended Development Charges and Parkland Dedication by-laws
incorporate recommendations to mitigate impact on
development proformas, risks to housing supply and associated upward
pressure on housing prices.
o In developing these tools, staff have sought to mitigate impacts on
development proformas while providing for the infrastructure, parks and city
services required to support vibrant complete communities.
Staff engaged members of the development industry in preparing this report
This report supports the delivery of core services.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
BACKGROUND:
The City is in the process of developing new or updated fees that support growth.
Development Charges (DCs), Community Benefits Charges (CBCs), ParkDedication and
Inclusionary Zoning (IZ) are all being considered in the next two years and have the
possibility of impacting development trends and housing affordability. A new Development
Charges By-law was considered by Council on May 30, 2022. Committee of Council will
consider and discuss component of Places and Spaces, a new parks and open
space strategy for Kitchener together with a new Park Dedication By-law on June 8.
Consideration of CBCs and IZ are in progress with updates to Council anticipated in 2023.
To better understand the financial implications of the above-mentioned fees on development
proformas, the City retained N. Barry Lyon Consultants (NBLC) Land Economists to analyse
their cumulative impacts.
REPORT:
The NBLC report (Attachment A) uses an industry standard residual land value (RLV)
approach to test likely impacts of fee and policy combinations on a set of prototypical
proformas that vary in location and housing form. This approach and methodology includes
the following important characteristics:
The costs of increased fees cannot easily be passed onto residents through higher
prices because developers are already pricing units as high as the market will bear.
The model used in the analysis assumes that developer profits cannot be
compressed. Without sufficient profit, developers will not be motivated to build, and
banks will not provide financing.
Based on the above, it is concluded that increased fees and charges will put
downward pressure on land value.
If land value is compressed too much, a residential redevelopment project cannot
displace the existing land use and will not proceed.
Reducing housing supply can put upward pressure on housing prices.
This analysis does not capture all possible developer motivations. Long-term
landowners or those that self-finance may continue to develop despite challenges to
the prototypical proformas.
Key findings of the report are:
The proposed DC rates will have a relatively small impact on project viability.
Although the City has yet to determine if it will implement CBCs, a 4% of land value
charge (the maximum permitted in legislation) would have relatively small impacts on
project viability.
Generally, high-rise apartments, rental projects, and areas outside of Downtown are
expected to be most impacted by the proposed fees.
The overall impact of the proposed Park Dedication By-Law could potentially push
down land values by 11% in the Downtown example and 35% in central
neighbourhoods. Impacts would be much more significant without the proposed
$11,862 per unit cap. This fee increase is a one-time adjustment to address a 12-
year park dedication value stagnation.
An example Inclusionary Zoning policy that requires 5% of units to be affordable could
further depress land values by 16% at the Downtown test site and by half in central
neighbourhoods.
The cumulative impacts of all new policies could impactland values by 25%-90%
depending on location and built form.
A transition period to the new fee/policy regime is crucialto mitigating impacts to
project viability.
Fees should be tailored to support higher density development in weaker market
areas.
Park dedication impacts could be mitigated through site specific appraisals, area-
specific rates, on and offsite land dedication, and a graduated park dedication cap.
The impact of inclusionary zoning could be mitigated through reduced affordability
requirements in weaker markets and offsets such as increases in height and density
permissions, reduced parking requirements, fee waivers and/or grants.
All fees and policies should be reviewed regularly to respond to market conditions.
Staff have reviewed and considered the NBLC report and provide the following additional
:
The proposed DC by-law shapes incentives to help support development in Central
Neighbourhoods.
The current draft Park Dedication By-Law responds to the recommendations by:
o Capping CIL of park dedication at a maximum of $11,862 per unit
o Providing a transition for existing development applications
o Providing for on and offsite land dedication and site specific appraisals
Reductions for rental buildings, and area-specific rates are not included in the draft
by-law (due to limited comparable data for high density sites outside Downtown)
Inclusionary Zoning (IZ) will have the greatest impact on proformas and will be the
last tool to be introduced, which will potentially be challenging to implement in all
areas except for Downtown in the short and medium term. However, it should be
noted that the City of Kitchener has used other policy support tools to advance
supportive and affordable housing in these areas.
Kitchener should have reasonable expectations regarding the amount of affordable
units that IZ can deliver. Continued investment by all levels of government in
affordable housing is required to achieve broad affordable housing objectives.
Many potential offsets to achieve IZ in weaker markets either have financial
implications to the tax base, or may not have significant value for developers.
The potential implications of new and updated growth-related fees on development,
including in Major Transit Station Areas east of Downtown, will be closely monitored
to understand whether additional mitigation measures are needed. Any mitigation
measures may require future Council direction. At this time it is unclear if impacts
forecasted will materialize and whether further mitigation measures are warranted.
Concerns remain with the premise that increased fees will put downward pressure
on land rather than upward pressure on unit prices and rents.
The NBLC report uses theoretical projects, based on prototypes, and the results are
very sensitive to a set of assumptions. It is therefore not a good predictor of actual
land transaction prices. It does however remain a valuable way to evaluate the
potential impact of new fees and policies.
The residual land values in the report are higher than observed actual transactions
and listings. This would imply a greater capacity for the development industry to
absorb additional fees than suggested by the NBLC report, especially Downtown.
There is less certainty regarding valuation of high-density development outside of
Downtown with limited comparable data to rely on.
Conclusion
Increasing hard costs and the potential for a slow down in unit production or decrease in
unit prices are expected to put pressure on development proformas in the near term. While
comparable with other municipalities, t
and medium density development, particularly outside of the Downtown market. This
requires a balanced consideration of DCs, CBCs, Cash-in-lieu of Parkland and IZ on one
hand, and development viability and the resultant housing supply and overall affordability
on the other. Higher taxes could provide some relief by shifting costs from developers to the
existing tax base and would go against the principle of growth paying for growth.
The proposed Park Dedication and Development Charges By-Laws have incorporated many
of the NBLC recommendations to mitigate impacts on developer proformas, while
providing services, infrastructure and parkland needed for thriving and complete
communities. Market realities will challenge the ability to achieve a significant number of
affordable units through Inclusionary Zoning in the medium term, especially outside of the
Downtown.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
There are no financial implications to this report. This report has been used to inform the
development of DC and, Park Dedication By-laws and will be used
to inform any Community Benefits Charges and IZ program in the future.
COMMUNITY ENGAGEMENT:
INFORM
the Council / Committee meeting.
CONSULT - Staff and NBLC presented the report findings to the Waterloo Region
developments in May 2022. Key comments from these groups are:
A transition period to the new fee regime is critical.
The vast majority of developers said that increased fees would be passed onto
consumers in the form of higher unit prices and rents.
Medium density development will be further challenged by the proposed fees.
Profits cannot be compressed. As such, any fee increase may be passed on, in whole
or in part to purchasers/renters.
Developers may respond by delaying projects, building smaller units in taller buildings
and/or seek lower architectural design.
The housing market has weakened in the last 30 days making the introduction of fees
more challenging,
More details of these meetings are included in Attachment B.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter
REVIEWED BY: Brian Bennett, Manager of Business Development
Danielle Sbeiti, Manager of Realty Services
Mark Parris, Landscape Architect, Parks & Cemeteries
Natalie Goss, Manager, Policy and Research
Niall Lobley, Director of Parks and Cemeteries
Ryan Hagey, Director of Financial Planning and Reporting
APPROVED BY: Justin Readman, General Manager Development Services
ATTACHMENTS:
Attachment A NBLC Report - Proposed Municipal Charges and Fees for Residential
Development Evaluation of Potential Impacts (May 2022)
Attachment B Development industry feedback on NBLC report
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City of Kitchener
Proposed Municipal Charges and Fees for
Residential Development
Evaluation of Potential Impacts
The conclusions contained in this report have been prepared based on both primary
Table of Contents and secondary data sources. NBLC makes every effort to ensure the data is correct
but cannot guarantee its accuracy. It is also important to note that it is not possible
to fully document all factors or account for all changes that may occur in the future
Executive Summary ................................................................................... i
and influence the viability of any development. NBLC, therefore, assumes no
1.0 Introduction ...................................................................................... 1
responsibility for losses sustained as a result of implementing any recommendation
provided in this report.
2.0 Residential Market Context .............................................................. 2
3.0 Land Economics Approach .............................................................. 9
This report has been prepared solely for the purposes outlined herein and is not to
be relied upon, or used for any other purposes, or by any other party without the prior
4.0 Methodology................................................................................... 12
written authorization from N. Barry Lyon Consultants Limited.
5.0 Impacts on High-Density Residential Development....................... 20
6.0 Conclusions .................................................................................... 31
7.0 Appendix A Model Inputs ........................................................... 32
8.0 Appendix B Impact Analysis Model Results ............................... 34
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts i
City of Kitchener
NBLC Docket 21-3553
Executive Summary
N. Barry Lyon Consultants has been retained by the City of Kitchener to unintended consequences affecting a range of municipal policy objectives
undertake an evaluation of impacts from potential policy changes that have and broader housing affordability. For some developers who already own
the potential to influence the financial viability of new residential land, severe impacts could make their projects infeasible in the near term.
development in the City. The policies considered in this analysis include:
Our approach in this study examines this relationship between policies
A new Community Benefits Charge (CBC) equivalent to four percent which increase the cost of development or reduce project revenue (in the
of land value, replacing the negotiated process commonly referred to case of IZ) and the residual land value supported by a residential
as a ; development. The modelling seeks to evaluate how much land values
would be impacted, and at which point the incentive to redevelop land
New City of Kitchener Development Charge rates (Region of Waterloo
might be discouraged.
Development Charges remain unchanged);
To do this, we examine ten prototypical developments across the City. We
A Cash-in-Lieu of parkland dedication policy (CIL) which has been
model these test sites under various policy scenarios to estimate the
updated to reflect a new city-wide appraisal of development land
maximum price a developer could pay for land (referred to as the residual
values and includes a capped payment for high-density built forms;
land value) if they are to achieve an acceptable profit. These land values
and,
are then compared to the value of competitive land uses in each market
A mandatory Inclusionary Zoning (IZ) policy which would require
location (e.g., retail, office, low-density housing, etc.). Where the policy
that five percent of development floor area be sold or rented at below
scenario supports a land value near or below that of the existing uses, we
market rates.
can conclude that the motivation to redevelop the site is diminished and
the proposed fees and charges would adversely impact reinvestment for
Key to the methodology used in this work is the understanding that housing
residential uses.
prices are established by the characteristics of supply and demand, with
developers charging what the market is willing and able to pay. If the cost
We also consider the interim impacts of potential fee increases reviewing
of producing a housing unit increases, developers cannot simply increase
the dynamics of recently launched development projects and considering
pricing if buyers are unwilling or unable to pay a higher price. Instead,
the special impacts that both purchasers and developers may face in
developers will discount the price they are willing to pay to acquire land
adjusting to the cost increase while moving through the development
as a means of compensating for these increased costs.
process.
However, if residential land values are depressed too much, the supply of
available residential land could be impacted. This could bring about
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts i
City of Kitchener
NBLC Docket 21-3553
The following are our central findings in this analysis: impact through the conveyance of land (either on-site or off-site), or
the use of site-specific appraisals reflect local market nuance.
The proposed development charge rates are unlikely to have a
The impact of the proposed Inclusionary Zoning policy is expected to
meaningful impact on the feasibility of development because the
be more significant in areas of weaker demand given theses areas
proposed rate increase is very small. The proposed rates would add
support lower residual land values that are more easily eroded by the
between $1,307 to $1,917 per unit, representing less than a one percent
loss of revenue that the IZ policy creates. In the Downtown High Rise
increase to the average cost of an apartment unit as tested in this
test site, we see residual land values eroded by about 16%, while the
analysis.
impact at the Central Neighbourhood test site would be in the order of
The proposed CBC would have a slightly greater but still relatively
50%.
insignificant impact on development viability. In the strongest market
The Inclusionary Zoning policy approach tested in this analysis creates
locations, our testing indicates that the charge would equate to $3,600
relatively blunt impacts to land value because it does not include a
per unit. However, the charge would be much smaller in weaker market
nuanced implementation strategy with offsetting measures. So.
areas as they support lower land values. Should the City seek to
developers who have not yet acquired land would need to reduce their
standardize the rate on a per unit basis by market area or product type,
bid price for land if they are to maintain their risk adjusted return.
the City should consider the cumulative impact of other policies on
However, it is not clear whether landowners will adjust their asking
land values when setting the rate to ensure it is appropriately calibrated,
price in the near term to accommodate this policy. Further, developers
lest developers may appeal the charge and create an administrative
who have already purchased land will seek to entitle their properties in
burden and unnecessary cost for the City.
advance of the policy to circumvent it. In either case the testing
The proposed CIL of parkland rates reflect a new city-wide appraisal
highlights potential issues with the effectiveness of a blunt policy and
of development land values. These land values are significantly greater
highlights the need for offsetting measures to mitigate against
than those used in the current policy and so the proposed policy
unintended consequences.
includes a per unit cap of $12,000 to attenuate some of this added cost
While the impacts of individual policies range from inconsequential to
burden. If not for the cap the viability of high-density development
significant, various combinations of the above policies will invariably
forms would be significantly impacted. We find that with the cap
magnify the financial impact of these tools. The cumulative impact of
applied, the policy would erode residual land values by 11% to 35% in
the policies considered will be most acute for high-density projects in
the Downtown and Central Neighbourhood High Rise Residential test
weaker market areas. In this analysis, we consider the Downtown
sites respectively, with greater impacts on high density test cases within
market area to have the most demand and subsequently highest pricing
weaker submarkets. However, the development context in these
for condominium apartments. This pricing equates to higher residual
weaker submarkets and other provisions in the design of the policy
land values which provide some buffer against new development costs.
suggest developers will have greater opportunity to alleviate this
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts ii
City of Kitchener
NBLC Docket 21-3553
However, the weaker market areas where we tested high-density policies in a manner that helps encourage rental housing if that is a
apartments Central Neighbourhood, Fairway MTSA, and Southwest policy priority.
Kitchener do not support prices which drive high land values. To the
Overall, the pressure to increase the municipal fees facing new residential
extent that the policies add costs or reduce revenues, and are not
development projects comes at a time when the industry is also facing
accompanied by offsetting measures, there is less buffer before a
significant increases in hard construction costs. In addition, rising interest
developer can no longer compete to acquire land, or before the project
rates and inflationary pressures have the potential to undermine demand
is made financially unviable. This market nuance suggests that the City
and pricing. The testing in this analysis illustrates that the cumulative
should take the latitude afforded to it in legislation to design the IZ,
impact of the proposed municipal fees has the potential to dampen
CBC, and CIL of parkland policies to mitigate the adverse impacts that
development interest in high-density residential development across the
one-size-fits-all policies can have on diverse submarkets.
City. The effects, however, will vary depending on the market and specific
Throughout this study, we assume that developers are more likely to land economics associated with a particular site. For these reasons, the
deliver ownership housing as it provides greater financial returns than municipality should consider approaches to mitigate the significant
rental, at least with a forward-looking perspective and the investment impacts that these policy changes might have. This could include a phase-
horizon considered herein. We have however prepared one iteration of in period that could adjust to reflect economic conditions, such as interest
the model under rental tenure to illustrate how the policies can impact rates, as well as offsetting measures for inclusionary zoning.
the economics of this tenure. Using the strongest market location with
the highest achievable rents, we find that the base case scenario would
be challenged financially from an income capitalization approach
before new policies are applied. Subsequent scenarios where we add
the cost of new policies serve only to worsen the results. These results
reflect the challenging dynamics facing the delivery of purpose-built
rental housing. In simple terms, the achievable revenue for ownership
housing exceeds that of rental. The City could consider structuring new
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts iii
City of Kitchener
NBLC Docket 21-3553
1.0 Introduction
The purpose of this study is to examine the possible impacts that these
esidential development that policy changes and fee increases could have on high-density residential
may result from a range of proposed policy changes and fee increases that development. We address these issues by evaluating how the policy
are currently under consideration. changes and fee increases would impact the feasibility of ten prototypical
high-density residential developments throughout various submarkets in
The City is currently in the process updating its Development Charges
Kitchener. Through an understanding of the subtleties between various
(DCs) in accordance with recent changes made to the enabling legislation.
markets in the city, as well as an understanding of the economics of
Concurrently, the City is evaluating the introduction of a Community
development, we examine how these changes could impact project
-in-Lieu of Parkland
viability not just at the ten representative test sites, but across the broader
-law, also following recent changes to provincial
Kitchener marketplace.
legislation. Each of these initiatives are intended to support an increase in
municipal revenue to support infrastructure investments, but they also
represent an increase to the production costs of housing. The City of
Kitchener, in conjunction with the Region of Waterloo, is also considering
an Inclusionary Zoning by-law which would similarly impact the
production cost of housing, albeit through a loss of development revenue.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 1
City of Kitchener
NBLC Docket 21-3553
2.0 Residential Market Context
The following section provides a review of Kitchener approximately 23,700 persons between 2016 and 2021, compared to only
context, focusing specifically on the high-density market. This 14,100 persons during the previous five-year period.
commentary has been informed by Statistics Canada and CMHC data.
Driving this accelerating population growth has been an increased number
NBLC has also completed primary surveys of the new high-rise
of new immigrants settling in KCW, with this level having almost tripled
marketplace and the resale condominium apartment marketplace. The full
in the past five years (Figure 1). Increased federal immigration targets will
results from these surveys have been attached in the Appendix.
only further bolster the level of growth due to immigration in the coming
years for Kitchener. Similarly, non-permanent residents (e.g., international
Population Growth Driving Residential Demand
students)
Key to steady
the past five years, and while this component of population growth
population growth over the past decade. Between 2011 and 2021, the City
declined dramatically during the COVID-19 pandemic, this trend is
of Kitchener grew by 17% (+37,732 persons) accounting for nearly half
expected to be entirely temporary as many parts of the world emerge from
1
(47%) of the net population growth in KCW.
pandemic-induced travel restrictions.
pace of population growth has accelerated in recent years, adding
Table 1
Population Growth by Municipality
Kitchener-Cambridge-Waterloo CMA, 2011 to 2021
1
Year Kitchener Waterloo Cambridge Rural Municipalities CMA
2011 219,153 98,780 126,748 51,702 496,383
2016 233,222 104,986 129,920 55,766 523,894
2021 256,885 121,436 138,479 59,047 575,847
Total Growth (2011 to 2021) 37,732 22,656 11,731 7,345 79,464
% Growth (2011 to 2021) 17% 23% 9% 14% 16%
Share of Growth (2011 to 2021) 47% 29% 15% 9% 100%
1=Consists of Wilmot, Woolwich, and North Dumfries Township
Source: Statistics Canada
1
KCW consists of the Kitchener-Cambridge-Waterloo Census Metropolitan Area as
defined by Statistics Canada
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 2
City of Kitchener
NBLC Docket 21-3553
Figure 1 Components of Population Change, Kitchener-Cambridge-Waterloo CMA
Source: Statistics Canada
Affordability Underpins Growth in High-Density Demand
Like much of southwestern Ontario, Kitchener has seen a surge in low-rise As local incomes have grown at a much more modest pace, this low-rise
pricing in recent years as new home supply has not been able to keep pace pricing growth has shifted residential demand towards more affordable
with the growing demand. The average absorbed price of a new housing typologies, specifically apartments. Over the past five years,
single/semi-detached home in Kitchener reached $792,700 in 2021, up apartment units have accounted for otal housing
68% from just five years earlier. Our research suggests that this price has starts. This contrasts with the previous five years where apartments only
only continued to escalate in 2022, with the average price for an available accounted for 43% of total housing starts and in even more stark contrast
single/semi-detached home reaching approximately $940,000 as of March to 2001 to 2011 when apartments only accounted for 17% of total housing
2
2022. starts.
2
Altus Data Studio
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 3
City of Kitchener
NBLC Docket 21-3553
Figure 2 Average Absorbed Single/Semi-Detached Price, Kitchener
Rental Demand Continues to Grow
In recent years, the City of Kitchener has seen a surge in rental housing
demand driven by two key factors:
Deteriorating affordability of ownership housing; and,
-secondary institutions,
specifically international student enrolment.
Owing to this growth in demand, there has been a surge in rental apartment
development. Over the past five years, there has been an average of 519
rental apartment starts in Kitchener annually. This is up 65% from the
previous five-year period. Even more, this is triple the average annual rate
from a decade ago. This development has been scattered throughout the
City, although the largest concentration is located in Kitchener-Central and
Source: CMHC
Kitchener South-East which respectively account for 36% and 28% of the
Figure 3 Average Annual Apartment Starts by Tenure, City of Kitchener
Notwithstanding the above-noted increase, this supply of new purpose-
built rental apartment units has still been inadequate to meet the growing
level of rental housing demand. Instead, condominium apartments units
purchased by investors have become an important rental apartment product
in KCW. As of October 2021, CMHC reported that 33% of condominium
apartment units in KCW were being used as rental units on the secondary
rental market, up from just 23% six years earlier. Moreover, Table 2 shows
that the supply of condominium rental units has seen larger net growth
over the past six years than owner-occupied condominium units. This
aligns with trends from recent condominium project launches in KCW,
where investors make up an ever-increasing share of purchasers.
Source: CMHC
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 4
City of Kitchener
NBLC Docket 21-3553
Table 2
March 2022, had an average opening index price of $1,163 psf. This was
Condominium Apartments by Use
the first project in the region to surpass the $1,000 psf threshold. The
KCW, 2015 to 2021
significantly higher pricing appears to be aligned to market demand as this
Condominium Units
% of Units as
project sold 455 units in its first month of sales alone.
Year
Rental
Rental Non-Rental
2015 2,053 6,772 23%
This pricing appreciation is also evident in the resale apartment market, as
2016 2,599 6,964 27%
shown in Table 3. Over the past year alone, resale pricing has increased
2017 3,092 7,108 30%
between 25% and 36%, depending on the submarket. Given prevailing
2018 3,101 7,481 29%
market conditions, this growth is not at all surprising and we expect pricing
2019 3,610 8,453 30%
levels to continue to appreciate over the short-term, although at a more
2020 3,902 8,456 32%
2021 4,372 8,947 33% modest pace than what has occurred in the past year.
Total Increase: 2,319 2,175 -
Table 3
Avg. Annual: 387 363 -
Benchmark Apartment Resale Pricing
Source: CMHC
KCW, 2012 to 2022
Finally, these rental market conditions have led to higher market rents
Kitchener Kitchener Waterloo Waterloo
Date
East West East West
across the entire KCW region. Over the past five years, average CMHC
March 2012 $156,200 $151,200 $190,600 $207,300
rents in new purpose-built rental apartments (i.e., buildings completed
March 2013 $162,800 $158,100 $203,400 $221,800
from 2000 onward) have increased by 5.4% annually across the entire
March 2014 $149,900 $149,100 $195,900 $220,700
March 2015 $173,900 $169,600 $214,300 $226,400
region. Additionally, average rents in privately leased condominium
March 2016 $176,000 $171,000 $216,900 $239,500
apartment units have increased by 8.3% annually. This growth is likely to
March 2017 $204,400 $201,200 $241,200 $265,200
continue given the prevailing rental market trends in the region (i.e.,
March 2018 $238,500 $236,600 $276,900 $310,500
surging rental demand and limited supply).
March 2019 $256,400 $264,900 $296,600 $341,400
March 2020 $331,000 $331,000 $335,300 $356,200
March 2021 $357,700 $394,900 $378,100 $400,100
Condominium Apartment Pricing Has Seen Substantial Growth
March 2022 $487,800 $531,800 $515,000 $501,000
With residential demand shifting towards high-density housing,
1-Year
36% 35% 36% 25%
Growth
condominium apartment pricing in KCW has grown over the past five
3-Year
90% 101% 74% 47%
years. As shown in Figure 4, new high-rise pricing growth remained
Growth
modest until about 2020, at which time it began to record sizable gains.
Source: Kitchener-Waterloo Realtors Association
Most notably, TEK Towers, which opened in Downtown Kitchener in
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 5
City of Kitchener
NBLC Docket 21-3553
Figure 4 Average Opening High-Rise Index Price by Opening Date, KCW (Bubble size represents the number of units)
Source: Altus Data Studio
Table 4
Land Values Have Also Seen Sizable Pricing Growth
High-Density Residential Land Sales
With increased demand and pricing, high-density residential land values
KCW, 2016 to 2021
Price per Unit
have also increased significantly in recent years. Table 4 provides
Year Transactions
Buildable
summary data regarding high-density residential land sales from KCW.
2016 21 $16,600
On a per unit basis, land values over the past two years are up significantly
2017 31 $11,800
from previous years, reaching approximately $30,000 per unit. As recently
2018 26 $12,800
2019 26 $16,100
as 2019, land sales were transacting for approximately $16,000. As project
2020 21 $34,200
statistics can change throughout the pre-development stage of a project,
2021 42 $29,600
this data should be considered order-of-magnitude and primarily reflective
Note: Price per unit buildable is based only on those transactions with an associated
of broader trends in the land market. development application. Non-market sales have been excluded
Source: Altus Data Studio
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 6
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Construction Costs Are Escalating Rapidly
Disruptions to global supply chains and a shortage of
skilled labour have both impacted residential
Figure 5 High-Density Residential Construction Cost Growth, GTA
construction costs, causing significant levels of inflation.
While accurate time-series construction cost data is not
readily available specifically for the KCW marketplace,
it is our understanding that costing trends have largely
followed those seen in the Greater Toronto Area
for the GTA shows that between
Q1-2020 and Q4-2022, residential construction costs
increased by 22% for high-rise apartments (five-or-more
storeys) and by 38% for low-rise apartments (less than
five-storeys). Moreover, much of this growth has come
in the past year alone +18% and +28%, respectively.
Before this period of rapid escalation, construction costs
typically were more modest, growing by about 3% to 5%
annually.
Source: Statistics Canada Building Construction Price Index
Historically, developers have been able to absorb
increased construction costs as pricing was growing at a
more substantial margin. However, given the recent pace
of construction cost escalation, this buffer may be
eroding. If this trend continues, it could put significant
pressure on the development industry, substantially
for error.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 7
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Figure 6 BoC Target Overnight Rate
Threats on the Horizon
Since 2001, the KCW housing market has experienced a sustained period
of price growth. Driven largely by low interest rates, strong immigration
and municipal investment in public infrastructure, the City has become an
appealing destination in which to both live and work. However, the pace
of cost inflation has been substantial since the beginning of the pandemic.
As supply chain interference has impacted the availability and price of
most consumer goods, it has also increased the cost of construction and
access to skilled labour. These costs have risen dramatically over the past
24 months, as noted above, and are predicted to continue throughout 2022
and possibly beyond.
At the same time, the Bank of Canada has recently increased its benchmark
Source: Bank of Canada
interest rate and has signalled its intention to raise this rate several more
times throughout 2022, should inflation not subside. This should drive
These forecasted construction cost increases combined with increasing
commercial lending rates higher which will in turn increase construction
cost of borrowing could conspire to erode the feasibility of development
financing costs. Additionally, a higher cost of borrowing is very likely to
in some areas of the City due to a limited ability for housing prices to offset
mean new limits on consumer access to money, affecting demand and
rising development costs.
the ability for developers to increase residential pricing in in the future.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 8
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Therefore it is common practice for developers and landowners to seek an
3.0 Land Economics Approach
opinion with respect to the quality of the soil (and other matters throughout
due diligence) prior to purchasing land. If there is evidence of a
It is a common misconception that the cost of constructing new housing
soil/environmental issue, the developer will discount the value of the
determines the price at which that housing can be sold and that any new or
parcel by the cost of remedying the problem. The same principle applies
increased costs including those incurred due to government policies
to development fees. A purchaser would not pay more for a home simply
because costs have increased. Rather, the development industry evaluates
rates. Though interrelated, the market dynamics which determine the cost
conditions of competitive supply and demand to set sales pricing.
of construction, and the sale price of housing is far more nuanced and
complex. This understanding informs the approach in which impacts are
An exception to this is where a developer has already presold units but has
measured in this analysis.
not obtained building permits prior to development fees being increased.
In these situations (subject to purchase and sale terms) the burden of the
Pricing is Driven by Market Supply / Demand
increased fees (or a portion of them) can be incurred by the homebuyer, in
In an efficient market with strong competition, developers and/or
landowners will charge purchasers or renters the maximum price that the
a common approach to be
market will bear at any given time. Competitive markets establish pricing
discussed later in this report the increase in fees is shared with the
by the characteristics of supply and demand, underpinned by the principle
developer. Where some or all of this cost increase is absorbed by the
This price is irrespective of the production
developer, it would erode the developer's profit margin.
cost of housing. In any real estate market, it is demand from consumers
Increased Housing Production Costs Primarily Impact Land Value
relative to the supply of housing which determines the price of housing.
Understanding that market pricing is largely set independently from costs,
For example, if two identical high-density projects were situated adjacent
developers must seek to transfer any increase in costs elsewhere.
to one another, buyers would view these homes as substitutes. In this
Developers are unlikely to accept reduced profit expectations as they are
situation, buyers would value both projects equally and pricing would be
investing their skill and equity with the expectation of a return. In a
comparable at each project. However, if one of these projects was situated
competitive market, developers must compete for land, capital, labour, and
on a parcel of land that required expensive environmental remediation, the
purchasers or renters. The effect of this competition is to place downward
developer could not increase sale prices equivalent to the cost of
pressure on profit margins to the minimum amount feasible, lest the
remediation, as buyers would simply choose the identical and lower priced
developer will be outbid for these scarce resources. The minimum risk
project adjacent to it. To the buyer, there is no added value to justify
adjusted return is set in large part by global capital markets and is largely
additional costs for a similar quality unit and the developer could not
beyond the control of any individual developer. If an acceptable profit
charge more for the unit.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 9
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Figure 7 The Impact of Increased Development Fees on Land Values
level can not be achieved, developers and financiers will choose to invest
their capital elsewhere, be that a real estate development in another
community or another investment vehicle altogether.
In a market that shows steady demand and pricing growth, such as KCW,
it is possible that increased costs can be offset by price appreciation
without impacting the viability of new development. However, in more
stable markets, with return expectations and costs relatively fixed, the
impact of any cost increase is largely compensated for with a reduction in
land value. Figure 7 illustrates this, showing that if the total project
revenue remains stable (as set by supply and demand conditions), any
increase in soft costs (i.e. development fees) must be compensated for by
margin are both considered fixed.
Figure 8 The Impact of Inclusionary Zoning on Land Values
Inclusionary Zoning Impacts Land Values
Like increased development costs, inclusionary zoning also impacts land
values, although the mechanism is slightly different. Inclusionary zoning
is not a direct cost of development, as it is not an additional fee imposed
on a project. Instead,
revenue as a set number of units are no longer able to be priced at full
market value. Meanwhile, the hard and soft costs associated with the
pectations. In
this scenario, where the costs and profit expectations remain fixed, land
values must be reduced in order to compensate for the reduced revenue.
This scenario is illustrated in Figure 8. Note, inclusionary zoning policies
typically include offsetting measures to mitigate this impact as it could
reduce the effectiveness of the policy and create unintended consequences.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 10
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The Impact on Affordability
As discussed, the impact of these additional charges and fees does not
linearly translate to increased costs for consumers. Instead, the cumulative
impact of rising housing production costs will put downward pressure on
land prices. However, if significant, this reduction in land prices can
impact the supply of available and developable land, which in turn could
impact housing prices by shifting supply and demand conditions. If the
downward pressure on land values leads to a decline in land available for
development, the supply of new housing will be reduced, which in turn
could lead to increased pricing for both new and existing housing.
Downward pressure on land value can impact the supply of developable
land in several ways:
Existing landowners may be less likely to sell or redevelop a property,
as the existing land use may provide equal or even greater value;
Project viability can be impacted as the costs of development may
exceed local market pricing; and,
Other competitive uses such as office and retail uses may now be able
to compete for properties.
Any of these potential outcomes could discourage reinvestment, reducing
the supply of new housing and putting upward pressure on housing prices
to the extent that the market will allow ultimately reducing
affordability. As supply is constrained, the market is either forced to pay
more for housing or make other housing choices. This may be especially
true in low-growth areas where financial margins are already very thin, but
opportunities for lower cost housing are the greatest. These areas also
benefit significantly from new investment in terms of community
improvements.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 11
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4.0 Methodology
The following section summarizes the methodology employed to consider be impacted under
the potential impacts of new municipal fees and policy changes. various policy/fee environments.
These land values are then compared to the value of alternative land uses
Land Value as a Measure of Feasibility
that are prevalent in each local area. This includes uses such as retail,
To evaluate the impact of new policies on real estate development, we
office, and lower-density residential uses. If the land value of the
examine the financial viability of different residential typologies in a range
redevelopment scenario approaches or falls below the alternative use
of markets across the city before and after the new policies are introduced.
values, we assume that the viability of the project is in question. In other
We
words, an owner of a property would not be motivated to sell or redevelop
steps:
the site, thereby reducing the supply of developable land.
Develop a market rationale for the site that supports a certain form of
Based on this analysis, we can understand the market areas or building
development based on the local characteristics of supply and demand.
forms that show evidence of weak viability under the various policy/fee
This includes unit sizing, types, pricing, parking sales, and project sales
environments. These will be areas where we would expect to see
pace. This analysis considers current conditions and future market
development interest weaken or be delayed until the market can support
factors.
higher sales pricing or rents. Further, this analysis allows us to assess the
magnitude of land value change that would result in the instance of policy
Calculate the revenues that might accrue for the project given the
change. Significant changes to land value could impact the availability of
defined market parameters.
land for redevelopment, the production of housing, and other negative
Subtract from the revenues an estimate of all the costs associated with
externalities or unintended consequences.
the development both hard and soft costs.
Figure 9
The rem
pay for the land and achieve the profit they require to undertake the
development.
This model is repeated for each of the test sites using the appropriate local
market inputs. The outputs of the model are then used to examine how a
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 12
City of Kitchener
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Establishing Comparative Land Values viability of new residential development generally. The reality is that
conditions for development and the motivations of landowners and
To establish the benchmark where landowners become less motivated to
developers will vary within submarkets and across the city and region
redevelop their property for higher density housing, we estimate the value
more generally.
market areas to approximate
how much a developer would need to pay to acquire a property for
For example, a recent trend is for shopping centre owners to intensify their
development. Where a developer would assemble multiple residential
sites with new rental housing. For many long-term owners, the initial
properties, we consider the price and site area of recent comparable
acquisition cost has been capitalized through the existing retail use. This
transactions to determine the number of properties the developer would
allows the developer to input little to no land cost, improving the
need to acquire and the value of those properties under as-is, where-is
economics of the project and affording the developer greater latitude to
conditions. We then add a 30 percent premium to acknowledge that
rationalize the investment.
incumbent homeowners would need to be incentivized to sell their
Similarly, a developer who may have purchased land in a high-demand
property for redevelopment.
market several years ago and is only now moving forward with
For income producing properties, we use an income capitalization method
development may have a buffer against higher construction costs
to approximate the value of the property under as-is, where is conditions.
(including municipal fees) as they have purchas
We then add a ten percent premium to this market value to again
values much lower than current market values.
acknowledge that the landowner requires an incentive to sell the property
Conversely, developers who have recently purchased land at market
if it is to be developed to its highest and best use. In both instances, this
values, particularly those without prior knowledge of the magnitude of
value inclusive of the premium
costs increases through inflation or new government policies, will have
these representative land uses that must be exceed by the
little financial buffer to maintain project viability. These developers may
land value if it is to be considered financially viable.
cancel or delay development until the sales prices or rents increase enough
This study is positioned from the perspective of a developer who will
to offset the cost of the policies. In general, we can expect the financial
purchase land at market values and develop within a reasonable time
viability of projects to be negatively impacted whenever development
frame. The analysis can not capture the motivations of every landowner or
costs increase at a greater pace than revenues, potential to the extent that
developer when choosing whether to redevelop a given parcel and it is not
the investment in delayed or abandoned completely.
an exhaustive comparison to the value of every potential development site
in a market area. The comparison of residual land values to the acquisition
price of representative properties is simply a high-level benchmarking
exercise to help illustrate where there may be a risk to the economic
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 13
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4.1 Site Selection & Market Assumptions NBLC has undertaken market research to establish revenue and other
market inputs in the model. The market inputs in addition to all other site-
This analysis seeks to evaluate how different types of residential
specific model inputs are shown in Appendix A Model Inputs.
development across different market areas may be impacted by the
proposed policies. As such, we have modelled ten prototypical
4.2 Proposed Policy and Fee Changes
development concepts across four market areas, herein referred to as test
The following section provides a summary of the proposed policies that
sites. These test sites were developed collaboratively with City staff and
have been evaluated in our analysis.
are intended to be representative of typical development conditions in each
of the market areas. They capture a range of residential projects that are
Community Benefits Charge
currently occurring or are anticipated to occur in the city.
Section 37 of the Ontario Planning Act permits municipalities to exchange
The four market areas consist of Downtown, Central Neighbourhoods, Old
the increased height and density sought in rezoning applications for
Suburban Neighbourhoods, and Greenfield Development in Southwest
community benefits, delivered through in-kind contributions or cash
Kitchener. Note that the Greenfield Development market area does not
payments. Up until 2020, this was negotiated exaction commonly referred
include a comparison of residual land values to the acquisition price of
to as a Section 37 agreement.
properties under existing uses as the greenfield sites are properties which
In 2020, the provincial government amended the Planning Act replacing
have not yet been intensively developed. These properties are typically
the former Section 37 density bonusing approach with a new Community
natural areas or agricultural properties, both of which command very low
-tier and lower-tier municipalities
prices relative to most any other land use.
are now able to impose a CBC on new development to pay for the capital
The development typologies evaluated include high-density residential
costs of facilities, services, and other matters required to support new
apartments, four-storey residential apartments, and stacked townhouses.
development. Most importantly, unlike the previous Section 37
Single-detached, semi-detached, and traditional townhomes were not
agreements which were only triggered by zoning amendments and minor
evaluated in this analysis as their pricing characteristics are highly
variances, CBCs are triggered under almost all planning applications
dependent on the unique attributes of each property (quality of finishes, lot
including plans of subdivision, plans of condominium, and building
area and adjacencies, school catchment area, etc.). This variation makes it
permits for buildings five storeys or greater. Further, the value of a CBC
exceedingly difficult to discern the impact individual policies may have on
is calculated as a percentage of the value of the land, capped at 4% of land
the financial viability of these product types. Moreover, three of the four
value the day before building permit issuance.
policies tested in this analysis (IZ, CBCs, and CIL of Parkland) would not
For our analysis, we have tested each of the hypothetical projects under
apply in the context of low-density development.
the existing Section 37 framework and the proposed CBC framework.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 14
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Section 37 Under the existing Section 37 framework, it is assumed changes to Region of Waterloo DCs as the regional DC by-law is not being
that the City receives no payment from the hypothetical developments, updated at this time.
Following the one-time rate increase shown below, it is assumed the
proposed DCs will inflate at an annual rate equivalent to the Statistic
CBC Under the proposed CBC policy framework, it is assumed that
Canada Building Construction Price Index for Non-Residential Buildings
the city receives a payment equal to 4% of the land value for each of
in the Toronto Area (Table 18-10-0135-01), per City policy. For this
the hypothetical developments, granted it is greater than five storeys
analysis, we have used the average inflation rate over the past five years,
tall and contains more than 10 units (per s.37(4) of the Planning Act.
equating to 5.1% per year.
For clarity, the CBC would not apply to the stacked townhouse and
four-storey apartment projects modelled in this analysis. The basis for
Figure 10 Current and Proposed Development Charges
the CBC calculation is the residual land value supported by the
development concept under the policy scenario. As such, the CBC is
variable across sites and between policy scenarios. This calculation
methodology can be contrasted with an approach that uses a
standardized land value or per unit rate which is held constant across
policy scenarios. That is, an approach which does not adjust to reflect
the cost of other policies, market strength, or built form among other
factors which are used to establish a residual land value.
Development Charges
Parkland Conveyance (Cash-in-Lieu)
The Development Charges Act permits municipalities in Ontario to enact
by-laws that impose levies on new developments to pay for growth-related
Section 42 and Section 51.1 of the Planning Act permits municipalities to
capital expenses for municipal services such as roads, water, recreation,
require new developments to dedicate a portion of the site for parkland or
and public works. A municipality must complete a development charge
collect a payment of cash-in-lieu (CIL).
background study prior to passing a development charge by-law, with this
dedication policy is as follows:
study setting the
Residential projects which provide land for parks must do so at a rate
The current and proposed draft DCs are shown in Figure 10. This analysis
of 1 hectare per 300 units or a maximum of 5% of site area, whichever
considers changes to both the residential DCs and non-residential DCs in
is greater.
the case of mixed-use buildings. The analysis does not consider any
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 15
City of Kitchener
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For residential projects which provide cash-in-lieu of parkland, the than those in the current policy reflects the fact that the parkland dedication
dedication rate is1 hectare per 500 units or a maximum of 5% of site policy and the appraised land values which underpin it have not been
area, whichever is greater. updated in over ten years. As discussed in Section 2.0, Kitchener has
experienced significant demand for housing over this period, particularly
The non-residential dedication rate is 2% of site area or a cash-in-lieu
in centrally located areas around the ION LRT. This demand for housing
payment of equivalent value.
has outstripped supply and placed upward pressure on prices and rents. To
specifies the benchmark land values to be used for the
the extent that prices have escalated faster than costs, developers have been
purposes of calculating the cash-in-lieu payment, with different per hectare
able to bid up the price of land which is suitable for redevelopment. This
values for various built forms. The key policy changes measured in the
has created a mismatch between the ten-year-old land values used in the
analysis include an update to these outdated benchmark land values and
current CIL policy, ,
the introduction of a cap on the CIL payment for high-density built forms.
eroding purchasing power for parkland in these high demand
areas. In short, the policy no longer reflects the demand for parks and the
In this analysis, we consider a CIL rate of 1 hectare per 500 units with a
cost to provide them in Kitcheneringly urban central areas.
per-unit fee cap of $12,000 per unit. A per-unit cap on parkland fees is a
common feature of alternative dedication rates for high-density
In updating these policies, City staff have the opportunity to recalibrate the
development contexts. Absent a cap or similar feature in the alternative
policy to reflect current and emerging parkland needs, and balance those
dedication rate, projects with residential densities greater than
needs against other goals related to building transit-oriented and complete
3
approximately 3.5 to 4.5 FSI would be required to dedicate more land (or
communities. We note however that this work is ongoing, and that the
cash equivalent) for parks than is being developed for housing. This is
capped dedication rate considered herein may be subject to change.
typically not financially feasible nor practical in the context of provincial
policies which promote intensification and the efficient use of land. Inclusionary Zoning
The flexibility afforded to municipalities in the Planning Act to collect CIL The Region of Waterloo and its three constituent municipalities continue
of parkland and to set an alternative dedication rate exists to accommodate to explore an Inclusionary Zoning by-law and at this time, the policy has
infill urban development conditions, with the Planning Act maximums not been firmly defined. As such, the potential economic impacts an
more closely aligned to low-density suburban development contexts. inclusionary zoning by-law as modelled herein should be considered
cursory and subject to change as the policy becomes more clearly defined.
Figure 11 illustrates the difference between the CIL payment expected
under the current and proposed policy, before and after the per unit
payment cap is applied. That the land value figures are significantly greater
3
Assuming an average net unit size of 650 to 850 sq. ft. and a net-to-gross efficiency
ratio of 83%.
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The hypothetical policy modelled in this analysis has the following IZ units in ownership tenure would have an initial index price of
parameters: $350 per square foot and it is assumed that the any requirement to
restrict the resale price of units in the future would not impact the
The policy would be mandatory for any project greater than 10 units
development pro forma.
which falls within a PMTSA geography.
The policy does not include financial and regulatory measures to offset
The set-aside requirement would be 5% of total gross floor area and
the cost of the policy. The primary impact of the policy is therefore a
the suite mix for affordable units would align with that of the market
loss of revenue and subsequently a reduced budget for land acquisition
component.
as illustrated in Figure 8. To the extent that land has already been
The tenure of below-market units could be ownership, rented
. It is
condominiums, or purpose-built rental.
important to reiterate that it is uncommon for an inclusionary zoning
policy to be enacted without offsetting measures. These measures are
IZ units provided in rental tenure would have rents set at 100% of
used to mitigate the negative impact the loss of revenue would have on
CMHC Average Market Rent (AMR) for the Kitchener-Waterloo-
the feasibility of development. Development feasibility must be
Cambridge Census Metropolitan Area (CMA). Below-market rents
maintained if the policy is to be effective that is, if the policy is to
would need to be maintained in perpetuity.
deliver affordable units.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 17
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Figure 11 Parkland Dedication Policy
Parkland Dedication Policy - Cash-in-Lieu
Park Area
Current Policy: 1ha/500 units, no capProposed Policy: 1ha/500 units, no capCap at $12,000 per unit
Required at
Current Land Proposed Proposed CIL
Test SiteUnits
Current CIL Proposed CIL
1ha/500 units
ValuePer UnitLand ValuePayment - No Per UnitDifference ($)Difference (%)Difference ($)Difference (%)
PaymentPayment
(sq. ft.)
Per HectarePer HectareCap
Downtown - High Rise Residential37580,729$1,359,000$1,019,000$2,717$43,243,000$32,432,000$86,000$31,413,0003083%$4,500,000$3,481,000342%
Central Neighbourhood - High Rise
30064,583$1,359,000$815,000$2,717$19,768,000$11,861,000$40,000$11,046,0001355%$3,600,000$2,785,000342%
Residential
Central Neighbourhood - 4-Storey
316,678$1,359,000$84,000$2,708$5,931,000$368,000$12,000$284,000338%
Apartment
Central Neighbourhood - Stacked
91,975$1,359,000$25,000$2,725$3,830,000$70,000$8,000$45,000180%
Townhouse
Fairway MTSA - High Rise Residential25053,820$1,359,000$680,000$2,720$19,768,000$9,884,000$40,000$9,204,0001354%$3,000,000$2,320,000341%
Fairway MTSA - Stacked Townhouse91,953$1,359,000$25,000$2,756$3,830,000$69,000$8,000$44,000176%
Old Suburban Neighbourhood -
8818,890$1,359,000$239,000$2,724$3,830,000$672,000$8,000$433,000181%
Stacked Townhouse
Greenfield Southwest Kitchener - High
25053,820$1,359,000$680,000$2,720$19,768,000$9,884,000$40,000$9,204,0001354%$3,000,000$2,320,000341%
Rise Residential
Greenfield Southwest Kitchener - 4-
337,137$1,359,000$90,000$2,715$5,931,000$393,000$12,000$303,000337%
Storey Apartment
Greenfield Southwest Kitchener -
8818,890$1,359,000$239,000$2,724$3,830,000$672,000$8,000$433,000181%
Stacked Townhouse
$ figures rounded to nearest thousand
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 18
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recommended policy direction. The policy combinations evaluated in this
4.3 Policy Scenarios
analysis are shown in Figure 12.
The analysis seeks to evaluate the impact of new policies on the feasibility
All policy options tested in this analysis include the new CBC charge
of residential development through a comparison of residual land values
except for the base case/ current policy scenario. This was done to limit
before and after new policies are introduced. The analysis evaluates the
the number of iterations with the understanding that the fee would
impact of the policies in isolation, followed by various combinations of
constitute a very small amount relative to the entire development budget,
the policies, to develop a body of evidence which will
and therefore have very limited impact on financial viability.
Figure 12
Policy Scenarios
IZ Set Aside
PolicySection 37Development ChargesCIL of Parkland DedicationTenure of IZ Units
Requirement
Policy Current S. 37 or Proposed Current DC Rate or Current CIL of Parkland Rate or No IZ, Ownership, Rented
No IZ, 5%
OptionsCBCProposed DC RateProposed CIL of Parkland RateCondo
1 Current S. 37Current DC RateCurrent CIL of Parkland RateNo IZNo IZ
2 Proposed CBCCurrent DC RateCurrent CIL of Parkland RateNo IZNo IZ
3 Proposed CBCProposed DC RateCurrent CIL of Parkland RateNo IZNo IZ
4 Proposed CBCCurrent DC RateProposed CIL of Parkland RateNo IZNo IZ
5 Proposed CBCCurrent DC RateCurrent CIL of Parkland RateCondominium5%
6 Proposed CBCCurrent DC RateCurrent CIL of Parkland RateRented Condominium5%
7 Proposed CBCProposed DC RateProposed CIL of Parkland RateNo IZNo IZ
8 Proposed CBCProposed DC RateCurrent CIL of Parkland RateCondominium5%
9 Proposed CBCProposed DC RateCurrent CIL of Parkland RateRented Condominium5%
10 Proposed CBCCurrent DC RateProposed CIL of Parkland RateCondominium5%
11 Proposed CBCCurrent DC RateProposed CIL of Parkland RateRented Condominium5%
12 Proposed CBCProposed DC RateProposed CIL of Parkland RateCondominium5%
13 Proposed CBCProposed DC RateProposed CIL of Parkland RateRented Condominium5%
Coloured cells indicate policy change from status quo. Purpose-built rental tested in the downtown market area for illustration purposes only.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 19
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sites support lower land value residuals and therefore would be subject to
5.0 Impacts on High-Density Residential
a lower CBC. For example, the next greatest RLV is supported by the
Development
Central Neighbourhood High-Rise Residential test site. This test site
would have a CBC of roughly $1,000 per unit.
Detailed results of the financial analysis are found in Appendix B Impact
It is a core assumption of this work that the CBC is calculated on the land
Analysis Model Results. The results show impacts to the residual land
value residual supported by the actual development under consideration.
value supported by new residential development across each of the test
This is contrasted with a schedule-based approach which seeks to
sites under the thirteen fee/policy scenarios. Further detail for each of the
standardize the rate and apply it in a uniform fashion to all developments
of a particular type, scale, and/or location. A schedule-based approach,
acquisition under each of the policy scenarios and how these values
while easy to administer and communicate, must be updated regularly to
compare to the value of representative land uses are provided in individual
reflect the financial impact of other policy changes and evolving market
site summary results (Figure 17 to Figure 27). The following section
conditions, lest it invite appeals from developers who can illustrate clearly
provides a discussion of our results.
whether the rate is calibrated to the economics of the day. This would
particularly be the case following the incidence of policy changes which
5.1 Proposed DCs and CBCs Have Minimal Impact on
create significant market impacts such as the proposed IZ and Parkland
Development Economics
Dedication policies considered herein.
As shown in Figure 10, the proposed DC rates will increase the cost of
development by roughly $1,307 to $1,917 per unit. This is such a small
5.2 Impact of Parkland Policy is Significant but Attenuated
increase to development costs that its impact on the economics of new
by Capped Approach
residential development will be immaterial. For context, the average
The relatively minimal impact created by the proposed DC and CBC
construction cost for a high-density condominium apartment unit in this
policies can be contrasted with the more significant impacts of the CIL of
analysis is approximately $650,000 including developer profit but
Parkland policy on the economics of high-density development. Policy
excluding land. The proposed DC rate therefore represents less than half
Scenario 4, for example, introduces new parkland fees in addition to the
of a percent increase in construction costs.
proposed CBC changes. In this scenario, we show that residual land values
The proposed CBC will have a slightly greater but still relatively
would be lower by 11% in the Downtown High Rise test site and 35% at
insignificant impact on development viability. As modelled in this
the Central Neighbourhood High Rise test site. These two test sites would
analysis, the Downtown High Rise test site supports the greatest residual
be subject to the highest parkland dedication rate at $12,000 per unit,
land value and therefore has the greatest CBC charge. However, in this
understanding the rate and subsequent impacts could be much higher if it
analysis this equates to a cost of roughly $3,600 per unit. All other test
were not capped. The impacts are less significant for lower-density product
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 20
City of Kitchener
NBLC Docket 21-3553
types because the city-wide appraisal attributes a lower per unit land value Further, despite this evidence of potential impacts, it is also possible that
to these built forms, resulting in a smaller cash-in-lieu payment. many projects in areas of weaker market demand may not be subject to the
full cost of the proposed cash-in-lieu policy.
The relatively significant impact on residual land values in these markets
recommendations prioritize the dedication of physical parkland which in
is not unexpected given the policy has not been updated in
emerging high-density nodes is likely more achievable given large lot sizes
ten years. In our view, the per unit cap plays an important role in
and contiguous parcel fabric. Future planning processes at future nodes of
transitioning to this more costly policy.
high-density development such as the Fairway, Blockline, and
Sportsworld MTSAs are likely to reinforce this intent. Therefore, while the
As the City and its consultants have worked to prepare a new appraisal for
appraised values within the proposed CIL calculations are significantly
CIL calculations, we understand that there were an insufficient number of
higher, the ability to dedicate and receive credit for on-site or off-site
transactions of high-density development parcels in areas of weak market
parkland may alleviate near term impacts to development viability in these
demand to support a more granular, area-rated appraisal of land values
emerging markets.
which might generate a lower, less impactful cash-in-lieu payment in these
areas.
In the emerging policy environment, developers will weigh the
opportunity cost associated with foregoing a developable parcel and
We also understand from conversation with local developers that it is
instead conveying it for parks purpose, versus paying CIL of parkland.
common practice to assemble properties through agreements where land
When faced with the alternative of paying a more costly cash-in-lieu fee,
does not transact until the development process is well underway and
some developers with existing landholdings may be able to mitigate the
entitlements have been established, further eroding the visibility of these
financial impact through the conveyance of land.
transactions and the ability to benchmark the policy to local market
dynamics.
-in-lieu policy also includes a
provision for site--relief
Our testing supports this commentary as we find that the feasibility of
should the new policy be too burdensome in certain market areas
high-density development outside of the downtown market is significantly
or following significant changes to market conditions. As these areas build
more marginal than in core areas. Therefore we would not expect to see a
out and it becomes increasingly difficult to deliver meaningful physical
substantial number of development proposals come forward to support an
park space as part of a development parcel, the City will likely have more
appraisal calibrated to local submarkets.
land transactions upon which to recalibrate the cash-in-lieu policy and
It will take time for the impacts of policy change to be reflected in future
potentially support area-rated charges which offer greater balance between
land transaction data such that the policy can be recalibrated. Capping the
the cost to provide land or cash-in-lieu.
parkland fee is therefore a prudent, interim measure to limit near-term
market impacts.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 21
City of Kitchener
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The results of this review illustrate that the City should continue to 5.3 Inclusionary Zoning Creates the Greatest Impact
advance provisions in its policies which would allow off-site land to be
Our analysis indicates that the IZ policy considered in this analysis would
conveyed for parks purposes. Granted the parks are proximate to the
have the most significant impact on development economics and this
development such that they serve the needs of new residents, this would
impact is largely a function of the . Crucially, the policy
provide developers with increased flexibility to mitigate the cost of the
does not consider any measures to offset the loss of development revenue
policy. Some developers may elect to front-end parkland provisions for
and so developers must instead lower their bid price for acquisition sites if
multiple phases of development and/or collaborate with neighbouring
they have not yet acquired one and/ or may not achieve their risk adjusted
landowners to create larger contiguous parks.
return if they already own the development site.
Another important consideration will be the calibration of rates for
In the strongest market location, Downtown Kitchener, we find the policy
physical land dedication and CIL so that they become more equivalent or
could negatively impact residual land values by 15 to 17% depending on
in fact prioritize the dedication of land. The cash-in-lieu policy considered
the tenure of the units. The developer at this location would be required to
herein uses a dedication rate of 1 hectare per 500 units, with a per unit cap
forego approximately $25,000 to $30,000 of revenue on a total per unit
of $12,000 per unit. However, should a developer choose to covey land,
basis, or $550,000 to $590,000 per below market unit specifically. That
the dedication rate is 1 hectare per 300 units, with no cap on the amount of
the impact to land values is not severe as it reflects the relatively high
parkland. Absent an adjustment to the rate or the method for valuing land,
residual land values in this market area. We find impacts to stacked
a developer who is required to convey land would be providing more land
townhome land values would be less than 10% for the same reason that
per unit, than they would pay in a cash equivalent. Addressing this
disincentive will be important to ensure desired planning outcomes are
budget due to market strength for this product type.
achieved. For instance, when developing an approach for the dedication
of off-site parkland, the City could consider an approach where the capped
By contrast, weaker submarkets would see much more substantial impacts
CIL rate is used to estimate the total amount of land that is required, with
to land value on a percentage basis when faced with a proportionally
off-site lands credited towards the CIL calculation.
similar loss of revenue per unit. In the Central Neighbourhood market area,
we see IZ policy would erode residual land values by 47 to 53% depending
Going forward, the per unit cap and other features of the parkland policy
on the tenure.
should be revisited periodically to maintain relevancy to the economic and
policy context of the day and provide certainty for the market. In our view,
It is important to note that the IZ policy direction has not been finalized at
many of the unintended consequences of policies which levy new costs on
the local or regional level. So these findings, while useful for analyzing
development can be mitigated through advance notice, appropriate
the current policy direction, are subject to change should the actual policy
transition and a clear schedule of fees.
differ in any substantive way. The results suggest that the City and Region
should consider transition and offsetting measures to mitigate against
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 22
City of Kitchener
NBLC Docket 21-3553
unintended consequences and ultimately improve the effectiveness of the are less severe (e.g. market areas where IZ does not apply). Another
policy. Unlike the growth funding tools considered in this analysis, the potential unintended outcome is upward pressure on housing prices due to
City has broad latitude to design the policy to mitigate against negative fewer homes being brought to market.
market impacts, something that will be particularly important when faced
These findings indicate that the City must consider a sensitive approach to
with the cumulative impact of the other policies under consideration.
the design of the policy (e.g. capped or graduated rates for parkland,
offsetting measures for inclusionary zoning) and implementation of the
5.4 Cumulative Impacts of Policy Changes on Land Value
policy (transition and phase-in for both).
can be Significant
The cumulative impacts of multiple policy changes are likely to be 5.5 Cumulative Impacts Vary Widely by Location and Form
significant where the policy combination includes the new parkland
Impacts resulting from increases to growth funding tools can vary
policy, inclusionary zoning policy, or both. In scenarios 10 and 11 both
significantly based on built form and market geography. For instance, the
policies are tested as well as the proposed CBC. The analysis estimates
cumulative impacts experienced in stacked townhome forms are
that the combined impact of policies could erode residual land values by
significantly less than the impacts demonstrated in tall apartment building
23% to 92%, depending on the tenure of the units. This would represent a
forms. There are several dynamics affecting these outcomes:
substantial shock to the market and would be unsustainable in the short
term.
Variation in market pricing There are substantial differences in
achievable market revenue across submarkets and development forms.
The reality is that the land market is not so efficient that land vendors
This is particularly true for apartments which see strong demand and
would immediately adjust their pricing expectations by such significant
pricing in the transit-adjacent central core, but weaker demand and
amount, including long-term landowners who may have a larger buffer
pricing in outlying submarkets.
against such declining land values.
Variation in building typology and costs The cost to construct tall
More likely, in instances where a high degree of impact is projected,
concrete apartment buildings in central urban areas is substantially
impacts could cause some land vendors to retract from the market, opting
greater than lower-density wood frame apartments or stacked
either to wait until pricing has recovered or instead utilizing their land for
townhomes in greenfield locations. Key design variables such as
an alternative land use that supports higher values. In either case, the
building scale, parking solutions (i.e., surface, underground,
impact would be a net loss in the supply of land that could be used for
structured, or combinations thereof), and site size will all influence the
residential development.
financial performance of the project and its ability to maintain viability
following the policy changes.
A potential unintended consequence of this shock to the land market is the
redistribution of investment activity to locations where financial impacts
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 23
City of Kitchener
NBLC Docket 21-3553
Applicability of policy tools Our analysis tests up to 13 policy 5.7 Strongest Market Areas are Better Capable of Sustaining
permutations for each building prototype. However, the potential the Impact of Increased Charges
policy changes do not apply uniform fashion across the city or across
All else being equal, stronger submarkets are generally able to withstand a
all project typologies. For instance, the Planning Act excludes exempts
higher increase in costs. These stronger submarkets can achieve higher
buildings with fewer than five storeys from the Community Benefits
project revenues and so residual land values tend to be greater than would
Charge, while the application of Inclusionary Zoning policies is
be found in weaker market locations under the same development cost
geographically limited to Protected Major Transit Station Areas
conditions. Where this residual land value is significantly greater than the
(PMTSAs). In general, we find that projects in locations where more
value of a development parcel under its current use, the land value provides
intensive forms of development are achievable, particularly transit-
some buffer against increased costs. Conversely, weaker submarkets have
oriented locations, will be subject to more policies and therefore
lower underlying land values due to lower achievable project revenues. In
exhibit greater impacts overall.
this case, higher costs can have a more significant impact on these residual
Market demand for housing and the cost to produce different types of
land values. In some scenarios, higher costs can impact the supply of
housing varies widely across Kitchener. As a result, the impact of new
developable land for new residential development as competing land uses
policies individually, but particularly in combination, will be
will produce higher valuations, thereby disincentivizing redevelopment.
geographically uneven.
For example, the Downtown High Density test site represents the most
mature market location for high density apartment development in the City
5.6 Increased Construction Costs Exacerbate Development
Kitchener. In this submarket, the full implantation of new fees and policy
Challenges
changes would reduce thresidual land value by 24% to 26%
As noted in previous sections, high-density residential construction costs
depending on the tenure of the units, from the existing status quo scenario.
have increased at an unprecedented pace over the past two years.
While this is significant, it is anticipated that
Previously, revenue grew at an equal or faster pace than costs. With this
remain competitive relative to some representative land uses in this market
relationship eroding in the near-term, the viability of many projects is
area (Figure 17). the
becoming increasingly challenging prior to the introduction of new
residual land value would remain above the value of properties as income
policies. Further, the recent and projected interest rate increases in the
producing assets, suggesting developers will continue to be able to acquire
short-term will continue to erode consumer purchasing power and thereby
sites for development after the policies have been introduced,
weaken residential demand. This puts particular onus on the City to
notwithstanding the initial shock and subsequent repricing of development
introduce new fees and charges in a sensitive manner, through appropriate
parcels.
transition and where possible, offsetting measures to recognize the
challenges real estate development is facing at the moment.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 24
City of Kitchener
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This may not be the case in weaker market areas as exhibited in the 5.8 Recent Land Purchasers Generally Have Thinner
Central Neighbourhood High Density Residential test site. As this Margins
market area is less developed and offers fewer amenities
Residential land values in the Kitchener-Waterloo region have seen
downtown, there is a lower level of high-density demand which can limit
considerable growth in recent years. This suggests that the highest and best
a project revenues. As shown in
use for many sites, particularly those located in strong market areas, may
be the development of medium- to high-density residential uses. To the
extent that landowners have made historical acquisitions of properties,
these higher residual land values can provide some cushion against rising
costs, particularly where land has been owned for many years in advance
of the proposed cost increases.
Figure 18, the implementation of the full range of proposed policies and
The challenging financial results demonstrated in testing for the Fairway
fees would decrease this 85% to 91% depending
and Southwest Kitchener emphasize this dynamic in the Kitchener-
on the tenure of the units, from the status quo. This decrease would make
Waterloo marketplace. In these nascent high-density market areas, there
are several examples of new high density redevelopment investment, often
price of some representative land uses in that submarket. This means that
being led by dedicated rental developers in the local market where
these existing land uses could outcompete high-density residential land
historical land acquisition and other economies of scale support the
values, eroding an incentive to redevelop these sites, thereby reducing the
production of new housing investment.
supply of developable land.
The opposite is true of recently acquired development sites. Developers
Moreover, in all but two of the proposed policy scenarios at the Central
have likely purchased these properties at the maximum price supported by
Neighbourhood test sitefor land acquisitions falls
their pro forma given the current policy environment. This is particularly
below the acquisition price of some local alternative lands uses (i.e. low-
the case where these has been little forewarning that the policy
rise retail). This suggests that in softer market areas, there is much less
environment will change substantially, and the policies do not include
room to increase fees without negatively impacting the new development
provisions to mitigate near-term impacts to in-process developments. In
sector. In weaker market areas such as these, the City should consider
these scenarios, developers will have limited latitude to discount their land
offsetting the cost of the more impactful policies such as IZ and CIL of
value to achieve an acceptable return on their investment. This could result
Parkland if it wishes to support intensification of this scale. However, even
in the developer needing to hold the property until market revenues have
with some policies offset, market demand to live in these locations will
increased enough to reinstate an acceptable return. This would of course
remain the most important determinant as to whether projects become
economically viable.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 25
City of Kitchener
NBLC Docket 21-3553
depending on the tenure of the units, as compared to the current policy
result in a reduction of developable land supply and potentially a reduction
environment (Figure 15 and
in the supply of housing that would otherwise be brough to market.
Understanding the impact that cost increases can have on recent land
Figure 16). If residential values were suppressed by this magnitude across
purchasers and therefore housing supply more broadly underscores the
the municipality, some landowners may view this as a loss even if the RLV
importance of properly signalling the upcoming changes to the
continues to exceed the value of the site under its current use. In this
development industry. In addition, it highlights the need to move forward
scenario, long-term landowners may opt to hold onto their land with the
with a degree of caution. The City should consider phasing in significant
hope that future revenue increases will restore the RLV to its value prior
policy changes in digestible increments, so as to allow the market time to
to the policy change. This outcome is less likely in policy scenarios where
adjust to the new policy environment and associated costs.
the impact on land values is more modest.
5.9 Long-Term Landowners May Also Hold Back Supply
As noted earlier, these impacts on land values vary by submarket, with
weaker submarkets seeing more substantial impacts. Long-term
Significant fee increases could also impact the actions of long-term
landowners in these weaker market areas, such as Kitchener Southwest,
landowners, despite the theoretical buffer that could absorb some degree
could be more likely to delay investment decisions in the face of even
small policy change, in large part because some fees such as DCs or
rapid escalation in fees that substantially reduce residual land values could
Parkland are standardized across the City and therefore have a greater
lead many long-term landowners to delay vending their land for
impact where land values are lower.
development. They would instead choose to hold their property while
revenues increase, even if the residual land value would provide them with
5.10 Rental Housing Would be Significantly Impacted
a sufficient buffer to absorb these increased fees and yield an economically
viable project.
Notwithstanding the recent surge in rental demand, condominium uses
almost universally produce higher land values than rental uses in the local
Eight of the ten hypothetical sites tested produced financially viable
market. There are several reasons that put rental housing at this
results. The two sites which did not produce financially viable results were
high rise residential apartment typologies at the Fairway MTSA and
disadvantage in Ontario:
Greenfield Southwest locations where market pricing is weaker than other
areas. Across the eight hypothetical test sites which produced viable
Financing For condominium projects, financing can be supported
development conditions, the full adoption of policy changes and fee
with less equity due to the pre-sale process which provides lenders with
increases shows a negative impact on residual land values by 2% to 91%
development is complete. The equity requirements for rental buildings
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 26
City of Kitchener
NBLC Docket 21-3553
can therefore be as high as 50% of the total costs, compared to practice, developers will have unique investment criteria which may still
condominium projects where the requirement is typically 25%. warrant the investment, understanding that the initial yield on their
investment may be less than would be achieved through acquisition of a
Revenue Rental projects require developers to go many years into
stabilized asset
the development process without any revenue. Further, even once the
the long term is what justifies the investment. This dynamic is not atypical
building is constructed, it can take months for the building to become
for rental housing, particularly for vertically integrated developers,
owners, and asset managers of rental housing as they can leverage their
form an inexpensive source of financing, subject to obtaining deposit
existing portfolio and find organizational efficiencies to achieve the
insurance. When the development can be occupied, developers can
returns they require. This is more common where land has been held for a
immediately charge all purchasers interim occupancy rents until the
long time and largely capitalized through an existing use. It is much less
project registers and the purchasers complete their sale agreements.
likely that the City will see upstart developers acquiring land at condo land
Market and Risk For many developers, the market opportunity for
prices to develop new purpose-built rental.
condominium development offers much less risk and relatively quick
returns compared to rental development. The analysis evaluates the
5.11 Stacked Townhomes Fair Well In New Policy
feasibility of one prototypical high-density rental apartment building
Environment
in downtown Kitchener (see
Stacked townhomes can fill an important gap in the housing market
between traditional low-rise uses and high-rise apartment buildings.
Further, as pricing for traditional low-rise homes continues to climb in the
local marketplace, this product type can play a role in the ownership
Figure 27). The analysis is constructed from the view of a merchant
market in the near future, filling a market gap.
builder using an income capitalization approach to drive a land value
residual. While in practice, it is rare for developers to build and then
Our analysis looked at four individual stacked townhome test sites in
sell brand new rental buildings, this approach to feasibility analysis is
Kitchener. Each generated positive residual land values that could
employed by developers when evaluating whether to undertake a
compete with existing uses in the market area. In general, we find the
development (commonly referred to as a ). This
proposed policy changes, individually or in combination, are likely to have
analysis includes a 50 basis point premium over current market
minimal impact on the feasibility of these built forms. The CBC would not
apply to these built forms as they are less than five storeys and while two
the development.
of the stacked townhouse projects would be subject to the IZ policy as they
exceed 10 units, the built form supports strong enough land value results
The findings of this analysis indicate that a developer would not achieve
to absorb the loss of revenue and remain competitive.
the desired return as evidenced by the negative land value residual. In
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 27
City of Kitchener
NBLC Docket 21-3553
5.12 Passing Increased Fees on to Purchasers These extra costs come at a time when many buyers, especially those first
entering the housing market, will have very little excess cash. It is possible
Any increases to development levies (i.e. DCs or other municipal fees) that
mortgage at closing, however, each lending institution takes a different
usually paid is usually shared between the developer and the purchaser at
view on this practice, and the increased mortgage payments would be
closing. In the condominium market, it is common for purchase and sale
unforeseen by many purchasers. While this additional cost may create
agreements to include a cap on future fee increases. This is typically
hardship for some purchasers, our study suggests that the risk is generally
offered as an incentive by most developers. In instances where the
low for most purchasers. For many, appreciation in the value of the unit
developer has not offered a cap, it is also common for purchasers to
over the pre-development timeline could soften the concern.
negotiate a cap individually. If these fees were not capped within the
purchase and sale agreement, purchasers would be responsible for the full It is also possible that depending on what policies are adopted, developers
fee increase upon closing of their purchase agreement. may adjust their strategy in the future, either increasing the caps or
possibly seeking to eliminate them all together. Again, such a scenario
To understand the nature of this practice of capping development levy
would have negative implications for purchasers.
increases, NBLC surveyed Kitchener condominium apartment projects
that are in the pre-construction stage. In total, we identified 16 projects, all
5.12.2 Impact on Developers
but one of which offered a capped development charge structure to
Conversely, developers are responsible for any increases over and above
purchasers.
the negotiated cap. Should the increases be substantial enough, this will
likely come as an additional cost to developers. For developers yet to
Table 5 summarizes this research, showing that reported caps ranged from
acquire land, these added costs would be reflected in a lower bid price for
$1,500 to $10,900, although most were under $8,000.
land. However, for many developers who have already purchased land, this
cost may not have been anticipated, as noted earlier. This is particularly
5.12.1 Impact on Purchasers
true for developers whose projects have been seen delays in obtaining
Based on the above research, most purchasers in the market today are
development approvals, as well as projects in weaker market areas that
likely to have some protection against the proposed development levy
have seen a slower presale period. For these developers, the additional
increases. However, even with capped fees, increases will be unwelcome
costs would have to be absorbed in the profit margin of the development.
news to these purchasers at the time of closing, with some purchasers
needing to fund increases upwards of $10,000 at closing, subject to the While some of the fee changes being considered in Kitchener are relatively
terms and definitions within agreement of purchase and modest, there is nevertheless risk that the cost increases could erode a
sale. It should be noted, however, that the majority of purchasers would profit margin. If profit margins are impacted significantly, the
have lower capped rates. vulnerability of a project increases. In severe instances, this can mean that
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 28
City of Kitchener
NBLC Docket 21-3553
project may become financially infeasible and could be cancelled. This that developers would be required to return. In this instance, these
scenario would be most burdensome for purchasers, particularly first-time purchasers may end up being priced out of the new home market, at no
homebuyers, as new home pricing has grown beyond the down payments fault of their own.
Table 5
Capped Development Fee Incentives - Actively Marketing & Sold Out Pre-Construction Projects, City of Kitchener
Project First Occupancy Capped Fees (Y/N) Studio One-Bed Two-Bed Three-Bed
TEK Tower Sep-26 Yes $6,900 $6,900 $8,900 $10,900
Elevate Condos at 1333 Weber St - Tower B May-24 Yes $2,500 $2,500 $2,500 $2,500
Garment Street Condos May-22 Yes N/A
Young Condos at City Centre May-22 Yes $1,500 $1,500 $1,500 $1,500
Otis May-22 No - - - -
Elevate Condos at 1333 Weber St - Tower C May-25 Yes $2,500 $2,500 $2,500 $2,500
DTK Condos May-22 Yes - $0 $0 -
Wynstone at Lackner Ridge May-24 Yes - $5,000 $7,500 -
Hillcrest at Lackner Ridge May-24 Yes - $5,000 $7,500 -
Elevate Condos at 1333 Weber St Aug-23 Yes $2,500 $2,500 $2,500 $2,500
Westvale at Lackner Ridge May-23 Yes - $5,000 $7,500 -
Sonterra at Lackner Ridge Sep-22 Yes - $5,000 $7,500 -
Cityview at Lackner Ridge Sep-22 Yes - $5,000 $7,500 -
Bright Building May-23 Yes $5,000 $5,000 $5,000 -
Station Park - Union Towers - Tower 001/002 Jun-22 Yes N/A
Average: $3,483 $3,825 $5,033 $3,980
Source: Altus Data Studio / Project Marketing Materials
statements regarding the feasibility of all real estate development
5.13 Limitations of this Analysis
throughout the city.
This analysis is intended to provide the City with a body of evidence
The selection of the ten test sites and typologies, while largely reflective
concerning the viability of residential real estate development following
of the most prominent types of medium- and high-density residential
the incidence of multiple policy changes. The findings should be
development in Kitchener, cannot articulate the full nuance of impact on
considered general indicators of economic outcomes, not definitive
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 29
City of Kitchener
NBLC Docket 21-3553
any specific project given the sheer variability of project-specific design, This analysis cannot capture certain nuances arising from the nature of a
development scale, site and market characteristics. For instance, it is noted historical land purchase or the former capitalization of land costs through
that particular features of the development prototypes (e.g. the delivery of the operation of an income-generating use in the interim. Nor can it
parking in various combinations of underground, structured above grade, contemplate the acquisition of land at values which may not fully account
and surface parking stalls) do shape the findings of the analysis. To the for the risks posed by a changing market or policy conditions. Moreover,
extent that the characteristics of a specific development project differ there will be instances throughout the City where land vendors, developers
substantially from the prototypes tested, the City could see different or operators have operating assumptions that differ from those in this
impacts and outcomes from the policy changes. In general, however, the report. For this reason, it is possible that development may or may not
prototypes are believed to be reasonable representations of common forms occur in practice which might be contrary to the results of this work.
of development in Kitchener.
This is a forward-looking analysis and so the findings, particularly the land
A major factor which is affecting the findings in this analysis is the rapidly value residuals as supported by the prototypes, may not yet be reflected in
changing cost of construction. As noted in previous sections, we have seen comparable market activity. This is not an uncommon discrepancy,
the hard construction costs of high-density housing increase rapidly over particularly in nascent high-density market locations such as Kitchener
the past two years, creating uncertainty in current development pro forma where there is an abundance of developable land and growing demand for
models. While we have developed high-level hard cost assumptions using high-density living.
up-to-date industry information, it is important to recognize the actual
Lastly, the impacts we find in this analysis are very much a product of the
costing of any given project will vary due to unique features of the project
policies as currently conceived. We recognize that the policies (IZ and
and site. Further, costs change over time and our models do include
revised parkland fees in particular) are still under development. Each
contingencies in addition to cost and revenue escalation factors to capture
policy is unique in its design and application and impacts can vary
some of this variability. However, it is impossible to predict at what pace
significantly based on the nuance of each policy. As the approach to
cost could inflate or deflate over a project timeline and different developers
implementing these policies are finalized, updated market and financial
are likely to assess and react to these risks in myriad ways.
analysis could be warranted.
Also related is the nature of development or redevelopment potential
throughout some areas of the City. This analysis isolates evaluation to one
single development phase. However, in some locations, the nature of
redeveloping areas is such that large lot areas will result in multi-phase
developments. This analysis pro rates the valuation of existing land uses
to the area required to support a single phase of redevelopment.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 30
City of Kitchener
NBLC Docket 21-3553
development finances to absorb all the policy changes being contemplated
6.0 Conclusions
at one time. The effects, however, vary depending on market strength and
development typology, contextual features which require careful
As demonstrated by our analysis, the increased costs and reduced revenues
consideration in policy design and implementation.
resulting from the proposed policy changes and fee increases would be
absorbed by reducing residential land values. In some instances, this
For these reasons, the municipality should consider approaches to mitigate
reduction in residential land values may improve the ability of other non-
the significant impacts that these policy changes can have as they
residential land uses, such as retail, to compete for land in prime locations.
accumulate in a pro forma. This could include a phase in period that adjusts
It may also cause land vendors to delay investment decisions, choosing
over time to reflect economic conditions (such as interest rates), or
instead to wait until market pricing returns to a more favourable level.
dedicated measures built into the policies themselves to mitigate or wholly
offset the financial impact.
It is possible in some instances that the magnitude of change projected
through the cumulative scenarios in this review could undermine the
supply of land that is available for residential development. The impacts
providing clarity to the development industry and time for markets to
of this reduction in residential land values and the corresponding reduction
adjust with the adoption of major proposed policy and fee changes. The
in residential land supply should not be understated.
municipality should continue to act in a deliberate manner that seeks to
prioritize the implementation of municipal policy objectives. A predictable
As shown in our analysis, high density projects in weaker submarkets are
implementation approach should be designed in a manner that allows for
economically challenged and while the cumulative impact of some
market adjustments to occur, mitigating the risk of unintended
policies could affect development viability and/or delay the important
consequences to housing market and planned outcomes more
investment activity, these market locations are still maturing and do not
generally.
currently support high density development at scale. Careful transition
and implementation policies should accompany planned fee changes and
IZ policies in an effort to mitigate unintended consequences, the most
critical being an increase to residential pricing due to a delay in emerging
investment activity, exacerbating the constrained supply of housing.
The pressures to address housing affordability and increase municipal fees
facing new residential development come at a time when the industry is
facing significant increases to hard construction costs. In addition, the
threat of rising interest rates has the potential to undermine demand and
pricing. The testing in this analysis illustrates the limited capacity for
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 31
City of Kitchener
NBLC Docket 21-3553
7.0 Appendix A Model Inputs
Figure 13
Site Specific Model Inputs
Greenfield Greenfield Greenfield
Central Central Central Old Suburban
Downtown Fairway MTSAFairway MTSA Southwest Southwest Southwest
Neighbourhood NeighbourhoodNeighbourhood Neighbourhood
High Rise High Rise Stacked Kitchener Kitchener Kitchener
High Rise 4-Storey Stacked Stacked
ResidentialResidentialTownhouseHigh Rise 4-Storey Stacked
ResidentialApartmentTownhouseTownhouse
ResidentialApartmentTownhouse
Building Statistics
Site Area sq. ft.
26,91053,82026,91010,76453,82010,764107,63953,82026,910107,639
Building Height storeys
30254425441844
Total Gross Floor Area sq. ft.
322,917257,34926,9108,073232,2748,07380,729219,84926,91080,729
Residential Gross Floor Area sq. ft.
315,417249,84926,9108,073224,7748,07380,729212,34926,91080,729
Retail GrossFloor Area sq. ft.
7,5007,500007,500007,50000
Total Parking Area sq. ft.
65,19499,41611,1683,67082,9173,62842,12078,33311,16842,120
Below Grade Parking Area sq. ft.
37,67475,3470075,3470075,34700
Efficiency Ratio (Residential)of GFA
83%83%83%100%83%100%100%83%83%100%
Efficiency Ratio (Retail)of GFA
90%90%90%90%90%90%90%90%90%90%
Suite Mix
Studio% total units
5%5%0%0%0%0%0%0%0%0%
1 Bedroom% total units
50%50%45%15%45%10%0%45%45%0%
2 Bedroom% total units
40%40%50%55%50%60%65%50%50%65%
3 Bedroom% total units
5%5%5%30%5%30%35%5%5%35%
Average Unit Size
sq. ft.643668720880720890920720720920
Total Residential Units units
4073113192599882453188
Residential Inputs
Index Sale Price$ per sq. ft.
$1,043$921$909$918$846$918$916$846$846$891
Residential Parking Ratio stalls per unit
0.400.800.901.000.801.001.200.800.901.20
stalls per unit
Visitor Parking Ratio0.100.100.100.100.100.100.100.100.100.10
Parking Sale Price$ per stall
$55,000$40,000$40,000$0$30,000$0$0$30,000$30,000$0
Sales Absorption Rate sales per month
50.040.030.08.040.08.08.025.020.08.0
Retail Inputs
Retail Lease Rate
per sq. ft. NNN$30$25$25$25$25$25$20$20$20$20
Cash-in-Lieu of Parkland Payments
Current CIL of Parkland Payment total value$1,113,000$856,000$84,000$25,000$715,000$25,000$239,000$676,000$84,000$239,000
Proposed CIL of Parkland Payment total value$4,909,000$3,766,000$368,000$70,000$3,148,000$69,000$672,000$2,976,000$368,000$672,000
Hard Costs
Above Grade Construction$ per sq. ft.
$315$315$268$213$315$213$213$315$268$213
Site Servicing total
$1,019,000$777,000$372,000$110,000$648,000$109,000$1,053,000$612,000$372,000$1,053,000
Constrained Sites Cost Premium% hard costs
10%0%0%0%0%0%0%0%0%0%
Construction Period years 3.53.02.01.53.02.02.03.02.02.0
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 32
City of Kitchener
NBLC Docket 21-3553
Figure 14
General Model Inputs
Development StatisticsMunicipal Fees
per year
Market Residential Revenue Inflator3.0%Official Plan Amendment$21,559 base fee
per year
Below-Market Resdiential Revenue Inflator2.0%Zoning By-Law Amendment$13,000 base fee
Below Grade and Structured Parking Area sq. ft. per stall
400Site Plan Application$5,743 base fee
Development Rates & Timing Plan of Subdivision $15,771 base fee
Profit Margin 15.0%% of revenue Residential Building Permit Fee$1.07 per sq. ft.
Discount Rate7.0%per year Retail Building Permit Fee$1.23 per sq. ft.
Time to Prior to Sales Start2.0 years Community Benefit Charge4.0%% of land value
Occupancy Period Prior to Registration0.5 years Other Soft Costs
Hard Costs Consultants, PM, Legal, Insurance, Marketing14.5%hard costs
Below Grade Construction$230 per sq. ft. below grade area Property Tax Rate0.3%year
Above Grade Structured Parking Cost$150 per sq. ft. above grade area Provincial and Municipal Land Transfer Tax 2.0%% of land value
Surface Parking Cost$20 per sq. ft. surface parking area Residential Sales Commissions3.0%% of revenue
Demolition & Site Prep$15 per sq. ft. site area Commercial Sales Commission4.0%% of revenue
Landscaping & Hardscaping$1,000 per unit HRCA Regulatory Oversight Fee$145 unit
Contingency Factor10%% of hard costs Lender's Administrative Fee 0.8%total costs
Cost Inflator2.0%year Construction Loan Interest Rate5.0%term
2021 to 2022 YoY Cost Increase0.0%of hard costs HST Rate13.0%year
Development Charges HST Rebate $24,000 unit
Apartments - Central Kitchener $7,092 per unit Retai Inputs
Apartments - Suburban Kitchener $10,588 per unit Retail Vacancy Rate5.00%
Non-Residential - Central Kitchener$2.16 per sq. ft. GFA Retail Cap Rate5.50%
per year
Non-Residential - Suburban Kitchener$5.99 per sq. ft. GFA Retail Revenue Inflator2.00%
Apartments - Waterloo Region$15,278per unit Presale & Pricing Inflation Assumptions
Non-Residential - Waterloo Region $16.07 per sq. ft. GFA Initial and Final Deposit20%% of unit price
Waterloo Regional Education - Residential$4,401 per unit Price Increase at Start and End of Construction 2%%
Waterloo Regional Education - Non-Residential$2.33 per sq. ft. GFA Sold During Pre-Constuction / Presales70%% of units
2022 Residential DC Increase - Central18.4%Sold During Construction 20%% of units
2022 Residential DC Increase - Suburban18.1%Sold at Completion 10%% of units
2022 Non-Residential DC Increase - Central7.9%Inclusionary Zoning Inputs
Below Market Index Price$ per sq. ft.
2022 Non-Residential DC Increase - Suburban17.5%$350
Set Aside Rate% of total units
Development Charge Inflator5.1%per year 5%
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 33
City of Kitchener
NBLC Docket 21-3553
8.0 Appendix B Impact Analysis Model Results
Figure 15
Impact Analysis Results Summary
All Test Sites - Page 1 of 2
Policy Scenarios12345678910111213
Principle Tenure of Building
CondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37
Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development Charges
Current DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed
DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ Units
No IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside Requirement
No IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Land Value Comparison12345678910111213
Downtown - High Rise Residential
Site Area26,910 sq. ft.Total Land Value$ 3 2,300,000$ 3 1,309,000$ 3 0,917,000$ 2 8,846,000$ 2 7,305,000$ 2 6,694,000$
2 8,455,000$ 2 6,913,000$ 2 6,302,000$ 2 4,838,000$ 2 4,227,000$ 2 4,446,000$ 2 3,835,000
Unit Count407 unitsPer Unit
$ 7 9,000$ 7 7,000$ 7 6,000$ 7 1,000$ 6 7,000$ 6 6,000$
7 0,000$ 6 6,000$ 6 5,000$ 6 1,000$ 5 9,000$ 6 0,000$ 6 0,000
GFA322,917 sq. ft.Per sq. ft GFA
$ 1 00$ 9 7$ 9 6$ 8 9$ 8 5$
8 3$ 8 8$ 8 3$ 8 1$ 7 7$ 7 5$
7 6$ 7 6
$ Change vs. Scenario 1
-$ ( 991,000)$ (1,383,000)$ (3,454,000)$ (4,995,000)$ (5,606,000)$ (3,845,000)$ (5,387,000)$
(5,998,000)$ (7,462,000)$ (8,073,000)$ (7,854,000)$ (8,465,000)
% Change vs. Scenario 1
--3%-4%-11%-15%-17%-12%-17%-19%-23%-25%-24%-26%
Central Neighbourhood - High Rise Residential
Site Area53,820 sq. ft.Total Land Value$ 6 ,173,000$ 5 ,978,000$ 5 ,671,000$ 4 ,037,000$ 3 ,258,000$ 2 ,892,000$
3 ,729,000$ 2 ,951,000$ 2 ,585,000$ 1 ,248,000$ 8 59,000$ 9 22,000$ 5 32,000
Unit Count311 unitsPer Unit
$ 2 0,000$ 1 9,000$ 1 8,000$ 1 3,000$ 1 0,000$ 9 ,000$
1 2,000$ 9 ,000$ 8 ,000$ 4 ,000$ 3 ,000$ 3 ,000$
3 ,000
GFA257,349 sq. ft.Per sq. ft GFA
$ 2 4$ 2 3$ 2 2$ 1 6$ 1 3$
1 1$ 1 4$ 1 1$ 1 0$ 5 $ 3 $
4 $ 4
$ Change vs. Scenario 1
-$ ( 195,000)$ ( 502,000)$ (2,136,000)$ (2,915,000)$ (3,281,000)$ (2,444,000)$ (3,222,000)$
(3,588,000)$ (4,925,000)$ (5,314,000)$ (5,251,000)$ (5,641,000)
% Change vs. Scenario 1
--3%-8%-35%-47%-53%-40%-52%-58%-80%-86%-85%-91%
Central Neighbourhood - 4-Storey Apartment
Site Area26,910 sq. ft.Total Land Value$ 3 ,439,000$ 3 ,439,000$ 3 ,406,000$ 3 ,227,000$ 3 ,113,000$ 3 ,043,000$
3 ,194,000$ 3 ,079,000$ 3 ,009,000$ 2 ,901,000$ 2 ,831,000$ 2 ,867,000$ 2 ,797,000
Unit Count31 unitsPer Unit
$ 1 11,000$ 1 11,000$ 1 10,000$ 1 04,000$ 1 00,000$ 9 8,000$ 1 03,000$
9 9,000$ 9 7,000$ 9 4,000$ 9 1,000$ 9 2,000$ 9 2,000
GFA26,910 sq. ft.Per sq. ft GFA
$ 1 28$ 1 28$ 1 27$ 1 20$ 1 16$
1 13$ 1 19$ 1 14$ 1 12$ 1 08$ 1 05$
1 07$ 1 07
$ Change vs. Scenario 1
-$ - $ (33,000)$ ( 212,000)$ ( 326,000)$ ( 396,000)$ ( 245,000)$
( 360,000)$ ( 430,000)$ ( 538,000)$ ( 608,000)$ ( 572,000)$ ( 642,000)
% Change vs. Scenario 1
-0%-1%-6%-9%-12%-7%-10%-13%-16%-18%-17%-19%
Central Neighbourhood - Stacked Townhouse
Site Area10,764 sq. ft.Total Land Value$ 1 ,980,000$ 1 ,980,000$ 1 ,969,000$ 1 ,945,000$ 1 ,980,000$ 1 ,980,000$
1 ,935,000$ 1 ,969,000$ 1 ,969,000$ 1 ,945,000$ 1 ,945,000$ 1 ,935,000$ 1 ,935,000
Unit Count9 unitsPer Unit
$ 2 16,000$ 2 16,000$ 2 15,000$ 2 12,000$ 2 16,000$ 2 16,000$ 2 11,000$
2 15,000$ 2 15,000$ 2 12,000$ 2 12,000$ 2 11,000$ 2 11,000
GFA8,073 sq. ft.Per sq. ft GFA
$ 2 45$ 2 45$ 2 44$ 2 41$ 2 45$
2 45$ 2 40$ 2 44$ 2 44$ 2 41$ 2 41$
2 40$ 2 40
$ Change vs. Scenario 1
-$ - $ (11,000)$ (35,000)$ - $ - $
(45,000)$ (11,000)$ (11,000)$ (35,000)$ (35,000)$ (45,000)$ (45,000)
% Change vs. Scenario 1
-0%-1%-2%0%0%-2%-1%-1%-2%-2%-2%-2%
Fairway MTSA - High Rise Residential
Site Area53,820 sq. ft.Total Land Value$ ( 7,138,000)$ ( 7,285,000)$ ( 8,181,000)$ ( 11,123,000)$ ( 12,274,000)$ ( 13,517,000)$
( 12,019,000)$ ( 13,168,000)$ ( 14,412,000)$ ( 16,108,000)$ ( 17,351,000)$ ( 17,002,000)$ ( 18,293,000)
Unit Count259 unitsPer Unit
$ ( 28,000)$ ( 28,000)$ ( 32,000)$ ( 43,000)$ ( 47,000)$ ( 52,000)$
( 46,000)$ ( 51,000)$ ( 56,000)$ ( 62,000)$ ( 67,000)$ ( 66,000)$ ( 66,000)
GFA232,274 sq. ft.Per sq. ft GFA
$ ( 31)$ ( 31)$ ( 35)$ ( 48)$ ( 53)$
( 58)$ ( 52)$ ( 57)$ ( 62)$ ( 69)$ ( 75)$
( 73)$ ( 73)
$ Change vs. Scenario 1
-$ ( 147,000)$ (1,043,000)$ (3,985,000)$ (5,136,000)$ (6,379,000)$ (4,881,000)$ (6,030,000)$
(7,274,000)$ (8,970,000)$ ( 10,213,000)$ (9,864,000)$ ( 11,155,000)
% Change vs. Scenario 1
--2%-15%-56%-72%-89%-68%-84%-102%-126%-143%-138%-156%
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 34
City of Kitchener
NBLC Docket 21-3553
Figure 16
Impact Analysis Results Summary
All Test Sites - Page 2 of 2
Policy Scenarios12345678910111213
Principle Tenure of Building
CondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37
Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development Charges
Current DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed
DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ Units
No IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside Requirement
No IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Land Value Comparison12345678910111213
Fairway MTSA - Stacked Townhouse
Site Area10,764 sq. ft.Total Land Value$ 1 ,872,000$ 1 ,872,000$ 1 ,857,000$ 1 ,838,000$ 1 ,872,000$ 1 ,872,000$
1 ,824,000$ 1 ,857,000$ 1 ,857,000$ 1 ,838,000$ 1 ,838,000$ 1 ,824,000$ 1 ,824,000
Unit Count9 unitsPer Unit
$ 2 06,000$ 2 06,000$ 2 05,000$ 2 03,000$ 2 06,000$ 2 06,000$ 2 01,000$
2 05,000$ 2 05,000$ 2 03,000$ 2 03,000$ 2 01,000$ 2 01,000
GFA8,073 sq. ft.Per sq. ft GFA
$ 2 32$ 2 32$ 2 30$ 2 28$ 2 32$
2 32$ 2 26$ 2 30$ 2 30$ 2 28$ 2 28$
2 26$ 2 26
$ Change vs. Scenario 1
-$ - $ (15,000)$ (34,000)$ - $ - $
(48,000)$ (15,000)$ (15,000)$ (34,000)$ (34,000)$ (48,000)$ (48,000)
% Change vs. Scenario 1
-0%-1%-2%0%0%-3%-1%-1%-2%-2%-3%-3%
Old Suburban Neighbourhood - Stacked Townhouse
Site Area107,639 sq. ft.Total Land Value$ 1 8,281,000$ 1 8,281,000$ 1 8,144,000$ 1 7,970,000$ 1 7,126,000$ 1 6,823,000$
1 7,832,000$ 1 6,989,000$ 1 6,685,000$ 1 6,814,000$ 1 6,511,000$ 1 6,676,000$ 1 6,373,000
Unit Count88 unitsPer Unit
$ 2 08,000$ 2 08,000$ 2 07,000$ 2 05,000$ 1 95,000$ 1 92,000$ 2 03,000$
1 94,000$ 1 90,000$ 1 92,000$ 1 88,000$ 1 90,000$ 1 90,000
GFA80,729 sq. ft.Per sq. ft GFA
$ 2 26$ 2 26$ 2 25$ 2 23$ 2 12$
2 08$ 2 21$ 2 10$ 2 07$ 2 08$ 2 05$
2 07$ 2 07
$ Change vs. Scenario 1
-$ - $ ( 137,000)$ ( 311,000)$ (1,155,000)$ (1,458,000)$ ( 449,000)$ (1,292,000)$
(1,596,000)$ (1,467,000)$ (1,770,000)$ (1,605,000)$ (1,908,000)
% Change vs. Scenario 1
-0%-1%-2%-6%-8%-2%-7%-9%-8%-10%-9%-10%
Greenfield Southwest Kitchener - High Rise Residential
Site Area53,820 sq. ft.Total Land Value$ ( 9,264,000)$ ( 9,405,000)$ ( 10,272,000)$ ( 13,081,000)$ ( 14,150,000)$ ( 15,218,000)$
( 13,948,000)$ ( 15,014,000)$ ( 16,083,000)$ ( 17,819,000)$ ( 19,055,000)$ ( 18,683,000)$ ( 20,031,000)
Unit Count245 unitsPer Unit
$ ( 38,000)$ ( 38,000)$ ( 42,000)$ ( 53,000)$ ( 58,000)$ ( 62,000)$
( 57,000)$ ( 61,000)$ ( 66,000)$ ( 73,000)$ ( 78,000)$ ( 76,000)$ ( 76,000)
GFA219,849 sq. ft.Per sq. ft GFA
$ ( 42)$ ( 43)$ ( 47)$ ( 60)$ ( 64)$
( 69)$ ( 63)$ ( 68)$ ( 73)$ ( 81)$ ( 87)$
( 85)$ ( 85)
$ Change vs. Scenario 1
-$ ( 141,000)$ (1,008,000)$ (3,817,000)$ (4,886,000)$ (5,954,000)$ (4,684,000)$ (5,750,000)$
(6,819,000)$ (8,555,000)$ (9,791,000)$ (9,419,000)$ ( 10,767,000)
% Change vs. Scenario 1
--2%-11%-41%-53%-64%-51%-62%-74%-92%-106%-102%-116%
Greenfield Southwest Kitchener - 4-Storey Apartment
Site Area26,910 sq. ft.Total Land Value$ 2 ,435,000$ 2 ,435,000$ 2 ,386,000$ 2 ,223,000$ 2 ,146,000$ 2 ,115,000$
2 ,174,000$ 2 ,096,000$ 2 ,065,000$ 1 ,934,000$ 1 ,903,000$ 1 ,885,000$ 1 ,854,000
Unit Count31 unitsPer Unit
$ 7 8,000$ 7 8,000$ 7 7,000$ 7 2,000$ 6 9,000$ 6 8,000$
7 0,000$ 6 8,000$ 6 7,000$ 6 2,000$ 6 1,000$ 6 1,000$ 6 1,000
GFA26,910 sq. ft.Per sq. ft GFA
$ 9 0$ 9 0$ 8 9$ 8 3$ 8 0$
7 9$ 8 1$ 7 8$ 7 7$ 7 2$ 7 1$
7 0$ 7 0
$ Change vs. Scenario 1
-$ - $ (49,000)$ ( 212,000)$ ( 289,000)$ ( 320,000)$ ( 261,000)$
( 339,000)$ ( 370,000)$ ( 501,000)$ ( 532,000)$ ( 550,000)$ ( 581,000)
% Change vs. Scenario 1
-0%-2%-9%-12%-13%-11%-14%-15%-21%-22%-23%-24%
Greenfield Southwest Kitchener - Stacked Townhouse
Site Area107,639 sq. ft.Total Land Value$ 1 7,227,000$ 1 7,227,000$ 1 7,089,000$ 1 6,915,000$ 1 6,123,000$ 1 5,951,000$
1 6,778,000$ 1 5,985,000$ 1 5,813,000$ 1 5,811,000$ 1 5,639,000$ 1 5,673,000$ 1 5,501,000
Unit Count88 unitsPer Unit
$ 1 96,000$ 1 96,000$ 1 95,000$ 1 93,000$ 1 84,000$ 1 82,000$ 1 91,000$
1 82,000$ 1 80,000$ 1 80,000$ 1 78,000$ 1 79,000$ 1 79,000
GFA80,729 sq. ft.Per sq. ft GFA
$ 2 13$ 2 13$ 2 12$ 2 10$ 2 00$
1 98$ 2 08$ 1 98$ 1 96$ 1 96$ 1 94$
1 94$ 1 94
$ Change vs. Scenario 1
-$ - $ ( 138,000)$ ( 312,000)$ (1,104,000)$ (1,276,000)$ ( 449,000)$ (1,242,000)$
(1,414,000)$ (1,416,000)$ (1,588,000)$ (1,554,000)$ (1,726,000)
% Change vs. Scenario 1
-0%-1%-2%-6%-7%-3%-7%-8%-8%-9%-9%-10%
Negative land values suggest infeasible development conditions. Feasibility could be improved through reduced costs, increased revenues, adjustments to profit, or combination thereof.
Residual land values must be compared to the value of potential acquisition sites.
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 35
City of Kitchener
NBLC Docket 21-3553
Figure 17
Impact Analysis Results Summary
Downtown - High Rise Residential
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area26,910 sq. ft.Condo Index Price$1,043 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height30 storeys Retail Rent$30 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,190 per unit per month
Floor Space Index12.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units407 units Profit Margin15%of revenue IZ Units20 units
Residential GFA315,417 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA7,500 sq. ft.Above Grade Hard Costs$315 per sq. ft GCA
Total GFA322,917 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$312.9$312.9$312.9$312.9$303.0$301.1$312.9$303.0$301.1$303.0$301.1$303.0$301.1
- Hard Costs (FV)$134.4$134.4$134.4$134.4$134.3$134.3$134.4$134.3$134.3$134.3$134.3$134.3$134.3
- Soft Costs (FV)$81.5$83.0$83.6$86.8$80.9$80.3$87.5$81.6$80.9$84.8$84.1$85.4$84.8
- Profit (FV)$46.9$46.9$46.9$46.9$45.4$45.2$46.9$45.4$45.2$45.4$45.2$45.4$45.2
Budget for Land Acquisition (FV)$50.1$48.5$47.9$44.7$42.2$41.3$44.1$41.6$40.7$38.4$37.5$37.8$36.9
Budget for Land Acquisition (PV)$32.3$31.3$30.9$28.8$27.3$26.7$28.5$26.9$26.3$24.8$24.2$24.4$23.8
Impact of Policies on Budget for Land Acquisition-$1.0-$1.4-$3.5-$5.0-$5.6-$3.8-$5.4-$6.0-$7.5-$8.1-$7.9-$8.5
% Change-3%-4%-11%-15%-17%-12%-17%-19%-23%-25%-24%-26%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$35.0
$30.0
$25.0
$20.0
Budget for Land Acquisition (PV)
Urban Streetfront Retail
$15.0
3-Storey Class B Office
$10.0
Single Detached Homes
$5.0
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 36
City of Kitchener
NBLC Docket 21-3553
Figure 18
Impact Analysis Results Summary
Central Neighbourhood - High Rise Residential
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area53,820 sq. ft.Condo Index Price$921 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height25 storeys Retail Rent$25 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,190 per unit per month
Floor Space Index5.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units311 units Profit Margin15%of revenue IZ Units16 units
Residential GFA249,849 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA7,500 sq. ft.Above Grade Hard Costs$315 per sq. ft GCA
Total GFA257,349 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$223.7$223.7$223.7$223.7$217.2$216.0$223.7$217.2$216.0$217.2$216.0$217.2$216.0
- Hard Costs (FV)$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2$119.2
- Soft Costs (FV)$61.7$62.0$62.5$64.9$60.6$60.1$65.4$61.0$60.6$63.6$63.1$64.1$63.6
- Profit (FV)$33.6$33.6$33.6$33.6$32.6$32.4$33.6$32.6$32.4$32.6$32.4$32.6$32.4
Budget for Land Acquisition (FV)$9.2$8.9$8.5$6.0$4.9$4.3$5.6$4.4$3.9$1.9$1.3$1.4$0.8
Budget for Land Acquisition (PV)$6.2$6.0$5.7$4.0$3.3$2.9$3.7$3.0$2.6$1.2$0.9$0.9$0.5
Impact of Policies on Budget for Land Acquisition-$0.2-$0.5-$2.1-$2.9-$3.3-$2.4-$3.2-$3.6-$4.9-$5.3-$5.3-$5.6
% Change-3%-8%-35%-47%-53%-40%-52%-58%-80%-86%-85%-91%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$18.0
$16.0
$14.0
$12.0
Budget for Land Acquisition (PV)
$10.0
Strip Retail
$8.0
Semi-Detached Homes
$6.0
Single Detached Homes
$4.0
$2.0
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 37
City of Kitchener
NBLC Docket 21-3553
Figure 19
Impact Analysis Results Summary
Central Neighbourhood - 4-Storey Apartment
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area26,910 sq. ft.Condo Index Price$909 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$25 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,220 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units31 units Profit Margin15%of revenue IZ Units2 units
Residential GFA26,910 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$268 per sq. ft GCA
Total GFA26,910 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$23.4$23.4$23.4$23.4$22.7$22.5$23.4$22.7$22.5$22.7$22.5$22.7$22.5
- Hard Costs (FV)$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4
- Soft Costs (FV)$5.8$5.8$5.8$6.1$5.6$5.6$6.1$5.7$5.6$5.9$5.9$6.0$5.9
- Profit (FV)$3.5$3.5$3.5$3.5$3.4$3.4$3.5$3.4$3.4$3.4$3.4$3.4$3.4
Budget for Land Acquisition (FV)$4.7$4.7$4.6$4.4$4.2$4.1$4.3$4.2$4.1$3.9$3.9$3.9$3.8
Budget for Land Acquisition (PV)$3.4$3.4$3.4$3.2$3.1$3.0$3.2$3.1$3.0$2.9$2.8$2.9$2.8
Impact of Policies on Budget for Land Acquisition$0.0$0.0-$0.2-$0.3-$0.4-$0.2-$0.4-$0.4-$0.5-$0.6-$0.6-$0.6
% Change0%-1%-6%-10%-12%-7%-10%-13%-16%-18%-17%-19%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$18.0
$16.0
$14.0
$12.0
Budget for Land Acquisition (PV)
$10.0
Strip Retail
$8.0
Semi-Detached Homes
$6.0
Single Detached Homes
$4.0
$2.0
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 38
City of Kitchener
NBLC Docket 21-3553
Figure 20
Impact Analysis Results Summary
Central Neighbourhood - Stacked Townhouse
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area10,764 sq. ft.Condo Index Price$918 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$25 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,334 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units9 units Profit Margin15%of revenue IZ Units0 units
Residential GFA8,073 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$213 per sq. ft GCA
Total GFA8,073 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0
- Hard Costs (FV)$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4
- Soft Costs (FV)$1.8$1.8$1.9$1.9$1.8$1.8$1.9$1.9$1.9$1.9$1.9$1.9$1.9
- Profit (FV)$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2
Budget for Land Acquisition (FV)$2.6$2.6$2.6$2.6$2.6$2.6$2.5$2.6$2.6$2.6$2.6$2.5$2.5
Budget for Land Acquisition (PV)$2.0$2.0$2.0$1.9$2.0$2.0$1.9$2.0$2.0$1.9$1.9$1.9$1.9
Impact of Policies on Budget for Land Acquisition$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0
% Change0%-1%-2%0%0%-2%-1%-1%-2%-2%-2%-2%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$3.5
$3.0
$2.5
$2.0
Budget for Land Acquisition (PV)
Strip Retail
$1.5
Semi-Detached Homes
$1.0
Single Detached Homes
$0.5
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 39
City of Kitchener
NBLC Docket 21-3553
Figure 21
Impact Analysis Results Summary
Fairway MTSA - High Rise Residential
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area53,820 sq. ft.Condo Index Price$846 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height25 storeys Retail Rent$25 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,220 per unit per month
Floor Space Index4.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units259 units Profit Margin15%of revenue IZ Units13 units
Residential GFA224,774 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA7,500 sq. ft.Above Grade Hard Costs$315 per sq. ft GCA
Total GFA232,274 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$183.3$183.3$183.3$183.3$178.2$176.8$183.3$178.2$176.8$178.2$176.8$178.2$176.8
- Hard Costs (FV)$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0$107.0
- Soft Costs (FV)$53.6$53.7$54.3$56.2$52.8$52.4$56.9$53.4$53.0$55.3$54.9$55.9$55.6
- Profit (FV)$27.5$27.5$27.5$27.5$26.7$26.5$27.5$26.7$26.5$26.7$26.5$26.7$26.5
Budget for Land Acquisition (FV)-$4.8-$4.9-$5.5-$7.5-$8.3-$9.1-$8.1-$8.9-$9.7-$10.8-$11.7-$11.4-$12.3
Budget for Land Acquisition (PV)-$7.1-$7.3-$8.2-$11.1-$12.3-$13.5-$12.0-$13.2-$14.4-$16.1-$17.4-$17.0-$18.3
Impact of Policies on Budget for Land Acquisition-$0.1-$1.0-$4.0-$5.1-$6.4-$4.9-$6.0-$7.3-$9.0-$10.2-$9.9-$11.2
% Change-2%-15%-56%-72%-89%-68%-84%-102%-126%-143%-138%-156%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$15.0
$10.0
$5.0
$0.0
Budget for Land Acquisition (PV)
12345678910111213
Power Centre
-$5.0
Semi-Detached Homes
-$10.0
Industrial
-$15.0
-$20.0
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 40
City of Kitchener
NBLC Docket 21-3553
Figure 22
Impact Analysis Results Summary
Fairway MTSA - Stacked Townhouse
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area10,764 sq. ft.Condo Index Price$918 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$25 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,344 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units9 units Profit Margin15%of revenue IZ Units0 units
Residential GFA8,073 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$213 per sq. ft GCA
Total GFA8,073 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0$8.0
- Hard Costs (FV)$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4$2.4
- Soft Costs (FV)$1.9$1.9$1.9$2.0$1.9$1.9$2.0$1.9$1.9$2.0$2.0$2.0$2.0
- Profit (FV)$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2$1.2
Budget for Land Acquisition (FV)$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5$2.5
Budget for Land Acquisition (PV)$1.9$1.9$1.9$1.8$1.9$1.9$1.8$1.9$1.9$1.8$1.8$1.8$1.8
Impact of Policies on Budget for Land Acquisition$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0
% Change0%-1%-2%0%0%-3%-1%-1%-2%-2%-3%-3%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$2.5
$2.0
$1.5
Budget for Land Acquisition (PV)
Strip Retail
$1.0
Semi-Detached Homes
Industrial
$0.5
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 41
City of Kitchener
NBLC Docket 21-3553
Figure 23
Impact Analysis Results Summary
Old Suburban Neighbourhood - Stacked Townhouse
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area107,639 sq. ft.Condo Index Price$916 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$20 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,376 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units88 units Profit Margin15%of revenue IZ Units4 units
Residential GFA80,729 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$213 per sq. ft GCA
Total GFA80,729 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$80.6$80.6$80.6$80.6$78.0$77.3$80.6$78.0$77.3$78.0$77.3$78.0$77.3
- Hard Costs (FV)$24.1$24.1$24.1$24.1$24.0$24.0$24.1$24.0$24.0$24.0$24.0$24.0$24.0
- Soft Costs (FV)$18.6$18.6$18.8$19.0$18.1$17.9$19.2$18.3$18.1$18.5$18.4$18.7$18.6
- Profit (FV)$12.1$12.1$12.1$12.1$11.7$11.6$12.1$11.7$11.6$11.7$11.6$11.7$11.6
Budget for Land Acquisition (FV)$25.9$25.9$25.7$25.4$24.2$23.8$25.2$24.0$23.6$23.8$23.3$23.6$23.1
Budget for Land Acquisition (PV)$18.3$18.3$18.1$18.0$17.1$16.8$17.8$17.0$16.7$16.8$16.5$16.7$16.4
Impact of Policies on Budget for Land Acquisition$0.0-$0.1-$0.3-$1.2-$1.5-$0.4-$1.3-$1.6-$1.5-$1.8-$1.6-$1.9
% Change0%-1%-2%-6%-8%-2%-7%-9%-8%-10%-9%-10%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$35.0
$30.0
$25.0
$20.0
Budget for Land Acquisition (PV)
Semi-Detached Homes
$15.0
Single Detached Homes
$10.0
Strip Retail
$5.0
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 42
City of Kitchener
NBLC Docket 21-3553
Figure 24
Impact Analysis Results Summary
Greenfield Southwest Kitchener - High Rise Residential
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area53,820 sq. ft.Condo Index Price$846 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height18 storeys Retail Rent$20 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,220 per unit per month
Floor Space Index4.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units245 units Profit Margin15%of revenue IZ Units12 units
Residential GFA212,349 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA7,500 sq. ft.Above Grade Hard Costs$315 per sq. ft GCA
Total GFA219,849 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$173.0$173.0$173.0$173.0$168.2$166.9$173.0$168.2$166.9$168.2$166.9$168.2$166.9
- Hard Costs (FV)$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2$102.2
- Soft Costs (FV)$51.0$51.0$51.6$53.5$50.2$49.8$54.1$50.7$50.4$52.6$52.3$53.2$53.0
- Profit (FV)$25.9$25.9$25.9$25.9$25.2$25.0$25.9$25.2$25.0$25.2$25.0$25.2$25.0
Budget for Land Acquisition (FV)-$6.1-$6.2-$6.8-$8.7-$9.4-$10.1-$9.2-$10.0-$10.7-$11.8-$12.7-$12.4-$13.3
Budget for Land Acquisition (PV)-$9.3-$9.4-$10.3-$13.1-$14.2-$15.2-$13.9-$15.0-$16.1-$17.8-$19.1-$18.7-$20.0
Impact of Policies on Budget for Land Acquisition-$0.1-$1.0-$3.8-$4.9-$6.0-$4.7-$5.7-$6.8-$8.6-$9.8-$9.4-$10.8
% Change-2%-11%-41%-53%-64%-51%-62%-74%-92%-106%-102%-116%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$0.0
12345678910111213
-$5.0
-$10.0
Budget for Land Acquisition (PV)
-$15.0
-$20.0
-$25.0
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 43
City of Kitchener
NBLC Docket 21-3553
Figure 25
Impact Analysis Results Summary
Greenfield Southwest Kitchener - 4-Storey Apartment
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area26,910 sq. ft.Condo Index Price$846 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$20 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,220 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units31 units Profit Margin15%of revenue IZ Units2 units
Residential GFA26,910 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$268 per sq. ft GCA
Total GFA26,910 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$21.6$21.6$21.6$21.6$21.0$20.9$21.6$21.0$20.9$21.0$20.9$21.0$20.9
- Hard Costs (FV)$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4$9.4
- Soft Costs (FV)$5.6$5.6$5.7$5.9$5.5$5.4$6.0$5.6$5.5$5.8$5.7$5.8$5.8
- Profit (FV)$3.2$3.2$3.2$3.2$3.1$3.1$3.2$3.1$3.1$3.1$3.1$3.1$3.1
Budget for Land Acquisition (FV)$3.3$3.3$3.3$3.0$2.9$2.9$3.0$2.9$2.8$2.6$2.6$2.6$2.5
Budget for Land Acquisition (PV)$2.4$2.4$2.4$2.2$2.1$2.1$2.2$2.1$2.1$1.9$1.9$1.9$1.9
Impact of Policies on Budget for Land Acquisition$0.0$0.0-$0.2-$0.3-$0.3-$0.3-$0.3-$0.4-$0.5-$0.5-$0.6-$0.6
% Change0%-2%-9%-12%-13%-11%-14%-15%-21%-22%-23%-24%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$3.0
$2.5
$2.0
$1.5
Budget for Land Acquisition (PV)
$1.0
$0.5
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 44
City of Kitchener
NBLC Docket 21-3553
Figure 26
Impact Analysis Results Summary
Greenfield Southwest Kitchener - Stacked Townhouse
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area107,639 sq. ft.Condo Index Price$891 per sq. ft.IZ Ownership Index Price$350 per sq. ft
Building Height4 storeys Retail Rent$20 per sq. ft. NNN IZ Affordable Rent (Rented Condo)$1,376 per unit per month
Floor Space Index1.0 FSI Retail Cap Rate5.5%IZ Set Aside Requirement5%of total units
Residential Units88 units Profit Margin15%of revenue IZ Units4 units
Residential GFA80,729 sq. ft.Discount Rate7%per year Key Cost Inputs
Retail GFA0 sq. ft.Above Grade Hard Costs$213 per sq. ft GCA
Total GFA80,729 sq. ft.Below Grade Hard Costs$230 per sq. ft. below grade area
Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios12345678910111213
Principle Tenure of BuildingCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominiumCondominium
Section 37Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development ChargesCurrent DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateProposed DC RateCurrent DC RateCurrent DC
RateProposed DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Current CIL of Proposed CIL of Proposed CIL of Proposed CIL
of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Rented Rented Rented Rented
Tenure of IZ UnitsNo IZNo IZNo IZNo IZCondominiumNo IZCondominiumCondominiumCondominium
CondominiumCondominiumCondominiumCondominium
IZ Set Aside RequirementNo IZNo IZNo IZNo IZ5%5%No IZ5%5%5%5%5%5%
Development Budget ($ millions)12345678910111213
Revenue (FV)$78.4$78.4$78.4$78.4$76.0$75.5$78.4$76.0$75.5$76.0$75.5$76.0$75.5
- Hard Costs (FV)$24.1$24.1$24.1$24.1$24.0$24.0$24.1$24.0$24.0$24.0$24.0$24.0$24.0
- Soft Costs (FV)$18.2$18.2$18.4$18.6$17.8$17.6$18.8$18.0$17.8$18.2$18.0$18.4$18.2
- Profit (FV)$11.8$11.8$11.8$11.8$11.4$11.3$11.8$11.4$11.3$11.4$11.3$11.4$11.3
Budget for Land Acquisition (FV)$24.4$24.4$24.2$24.0$22.8$22.5$23.8$22.6$22.3$22.3$22.1$22.1$21.9
Budget for Land Acquisition (PV)$17.2$17.2$17.1$16.9$16.1$16.0$16.8$16.0$15.8$15.8$15.6$15.7$15.5
Impact of Policies on Budget for Land Acquisition$0.0-$0.1-$0.3-$1.1-$1.3-$0.4-$1.2-$1.4-$1.4-$1.6-$1.6-$1.7
% Change0%-1%-2%-6%-7%-3%-7%-8%-8%-9%-9%-10%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$20.0
$18.0
$16.0
$14.0
$12.0
$10.0
Budget for Land Acquisition (PV)
$8.0
$6.0
$4.0
$2.0
$0.0
12345678910111213
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 45
City of Kitchener
NBLC Docket 21-3553
Figure 27
Impact Analysis - Rental Model Results
Downtown - High Rise Residential
Building StatisticsKey Revenue InputsIZ Policy Parameters
Site Area53,820 sq. ft.Avg. Rent at Stabilization$2,501 per unit per month IZ Affordable Rent$1,190 per unit per month
Building Height25 storeys Operating Expense Ratio36%of GEI IZ Set Aside Requirement5%of total units
Floor Space Index5.0 FSI Residential Capitalization Rate3.9%IZ Units16 units
Residential Units311 units Retail Rent$25 per sq. ft. NNN Key Cost Inputs
Residential GFA249,849 sq. ft.Retail Cap Rate5.5%Above Grade Hard Costs$315 per sq. ft GCA
Retail GFA7,500 sq. ft.Profit Margin50 bps over cap rate Below Grade Hard Costs$230 per sq. ft. below grade area
Total GFA257,349 sq. ft.Discount Rate7%per year Above Grade Structured Parking Costs$150 per sq. ft. structured parking area
Policy Scenarios
123456789
Principle Tenure of Building
RentalRentalRentalRentalRentalRentalRentalRentalRental
Section 37
Current S. 37Proposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBCProposed CBC
Development Charges
Current DC RateCurrent DC RateProposed DC RateCurrent DC RateCurrent DC RateProposed DC RateProposed DC RateCurrent DC RateProposed DC Rate
Current CIL of Current CIL of Current CIL of Proposed CIL of Current CIL of Proposed CIL of Current CIL of Proposed CIL of Proposed CIL of
CIL of Parkland Dedication
Parkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland RateParkland Rate
Tenure of IZ Units
No IZNo IZNo IZNo IZRentalNo IZRentalRentalRental
IZ Set Aside Requirement
No IZNo IZNo IZNo IZ5%No IZ5%5%5%
Development Budget ($ millions)
123456789
Revenue (FV)$180.3$180.3$180.3$180.3$174.3$180.3$174.3$174.3$174.3
- Hard Costs (FV)$134.4$134.4$134.4$134.4$134.3$134.4$134.3$134.3$134.3
- Soft Costs (FV)$58.7$58.9$59.6$63.5$58.8$64.2$59.6$63.4$64.1
- Profit (FV) - Included in Revenue$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0
Budget for Land Acquisition (FV)-$12.9-$13.0-$13.7-$17.6-$18.9-$18.3-$19.6-$23.4-$24.2
Budget for Land Acquisition (PV)-$19.9-$20.2-$21.3-$27.3-$29.2-$28.4-$30.3-$36.3-$37.4
Impact of Policies on Budget for Land Acquisition-$0.2-$1.4-$7.3-$9.3-$8.5-$10.4-$16.4-$17.5
% Change-1%-7%-37%-47%-43%-52%-82%-88%
Budget for Land Acquisition vs Acquisition Price of Representative Land Uses
$20.0
$10.0
$0.0
123456789
-$10.0
Budget for Land Acquisition (PV)
Urban Streetfront Retail
-$20.0
3-Storey Class B Office
-$30.0
Single Detached Homes
-$40.0
-$50.0
Policy Scenario
Proposed Municipal Charges and Fees for Residential Development Evaluation of Potential Impacts 46
City of Kitchener
NBLC Docket 21-3553
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Building LeBreton Economic Impact Study 47
The National Capital Commission
NBLC Docket 19-3296
Attachment B - Development industry feedback on NBLC report
The findings of the NBLC Report were presented to the Waterloo Region
Kitchener Development Liaison Committee (KDLC) on April 13. Highlights of their
feedback are:
Capping Cash-in-lieu of parkland at the medium density land value could
discourage medium density development and incent developers to skip over
medium density development in favour of high rise and challenge missing middle
housing in general.
o Staff Commentary: a cap to high density developments is required as land
values approach and exceed $10M per hectare. Uncapped per unit rates
would range between $39,000 up to $86,000 per unit, far exceeding any
comparator municipalities and severely impacting development. The cap
counteracts distortions caused by the legislated parkland dedication rate.
There was agreement with the principle that developer profits cannot be
compressed, but that there are few instances where land value can be reduced in
the real world with strong competition for development sites. Developers may
respond by passing on costs via increasing unit prices and rents, forgoing or
delaying projects, building smaller units and/or seeking rezoning for increased
density.
A transition period to the new fees are critical for on-going and planned
developments. Increases can be accommodated in proforma modelling provided
adequate notice and timing is in place.
o Staff Commentary: transitions in park dedication have been adjusted based
on developer feedback, with the intent to allow developments that are
financially committed to continue under the previous park dedication regime
(downtown exemption and current rates) with a 12-month sunset clause to
encourage site activity.
Ability to deliver larger family-sized units in high rise apartments will be further
compromised
Reductions in land values can have wide-ranging implications. For example, it can
compromise the ability of long-term landholders to leverage lands to finance other
projects.
It is important to consider the impacts to project finances arising from delays in
development approvals
The findings of the NBLC Report were presented to IN8 developments on May 17.
Highlights of feedback are:
That the cumulative impact of fees could generally be absorbed in mid-market
buildings Downtown through a combination of decreased competition for land and
increased price leading to slower pre-sales and absorption of new supply
The findings of the NBLC Report were presented to Momentum Developments on May
18. Highlights of feedback are:
Recent softening of housing markets makes this a challenging time to add fees
A housing slowdown is anticipated, its duration is unclear
Inclusionary zoning impacts on proformas is significant
Landowners may hold back sites rather than accepting lower land values. Gradual,
long-term consistent application of this policy will be required see sites transact at
lower prices
Developers may respond to increased soft costs but compressing hard costs (e.g.
more precast concrete, sacrificing architectural excellence)
Paying cash-in-lieu of parkland at building permit rather than final site plan could
help with cash flow