HomeMy WebLinkAboutFIN-2024-192 - 2023 Development Charge Reserve Fund ReportStaff Report
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Financial Services Department www.kitchener.ca
REPORT TO: Committee of the Whole
DATE OF MEETING: June 24, 2024
SUBMITTED BY: Katie Fischer, Director of Financial Reporting & ERP Solutions, 519-741-
2200 ext. 4630
PREPARED BY: Mark Gallas, Investment and Treasury Analyst, 519-741-2200 ext. 7340
WARD(S) INVOLVED: All Wards
DATE OF REPORT: June 14, 2024
REPORT NO.: FIN -2024-192
SUBJECT: 2023 Development Charge Reserve Fund Report
RECOMMENDATION:
For Information
REPORT HIGHLIGHTS:
The purpose of this report is to provide a summary of development charges that have
been received and spent in 2023.
The key finding of this report shows an ending balance in the development charge
reserve funds of -$3.3M. After factoring in funds committed within existing capital
projects, the total development charge funds held by the City as at December 31, 2023
was $56.OM.
• This report supports the delivery of core services.
BACKGROUND:
Section 43 of the Development Charges Act, 1997 (the "Act") requires that the Treasurer submit
to Council an annual statement of the development charge reserve funds.
REPORT:
Summary of Development Charges Legislation:
The Act provides the authority and process for the imposition and collection of development
charges (DCs). DCs are generally paid as a part of the building permit process and are
collected to fund capital costs for services as allowed by provincial legislation.
A summary of the DC Reserve Fund by Category of Service is found in Table A.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 129 of 198
As part of Bill 108, More Homes, More Choice Act, 2019, parking services and cemetery
services are no longer eligible services under the Development Charges Act. The funds
collected to date are now deemed under the Act to be a general capital reserve fund for the
same purposes for which it was originally collected. The Parking and Cemetery funds are
reported in the 2023 development charges statement for transparency.
Determination of DCs:
A DC Background Study is required to be completed when updating a DC by-law, which was
completed with the passage of by-law 2022-071 effective July 1, 2022. The by-law is valid for a
period of up to 5 years. The Act stipulates that the DC rates may be indexed each year that the
by-law remains in effect. As such, the City of Kitchener indexes the DC rates based on the
non-residential construction price index, as provided by Statistics Canada, on December 1 of
each year. In 2023, there were two different DC rate periods in effect, as set out in Table D.
The rates shown incorporate the mandatory phasing -in discount as a result of Bill 23, More
Homes Built Faster Act, 2022. With these changes to the Act, only 80% of the calculated DC
rate can be charged in year one after a by-law is enacted, increasing to 85% in year two. The
phase-in results in an effective discount of 20% for the period December 1, 2022 to November
31, 2023, and an effective discount of 15% for the period since December 1, 2023.
Note that Bill 185, Cutting Red Tape to Build More Homes Act, 2024, removed the mandatory
phase-in discount for new applications effective June 6, 2024.
DC Reserve Funds
DC revenues in 2023 total $30.5M, which is an increase from the 2022 revenues of $26.OM.
DC expenses in 2023 total $48.8M, an increase from 2022 expenses of $29.1 M. Detailed lists
of the DC Expenses are included Transactions in Attachment B.
The DC reserve funds at December 31, 2023 had an total balance of $-3.3M compared to
$14.01VI at the end of 2022. After factoring in funds committed within existing capital projects,
the total development charge funds held by the City as at December 31, 2023 was $56.OM.
The overall reserve balance is broken out Table A.
Some services may reflect a negative or overdrawn position while others reflect a positive
balance. Development charge reserve funds can experience an overdrawn position due to the
timing of the emplacement of infrastructure ahead of complete funding being available. This
overdrawn position is recovered through future funds to be received from developers. When
the background study was completed, the reserve balances in each service were included in
the DC rate calculation, therefore over time, it is anticipated that the deficits will be recovered,
and the positive balances utilized.
Page 130 of 198
Exemptions and Discounts
DC exemptions and discounts in 2023 total $19.5M. A summary of major exemptions and
discounts is included in Table F.
Credit/Refund Agreements
The City may, by agreement, permit a developer to provide services for development of land in
lieu of payment of the DC. At December 31, 2023, credits of $10.7M were outstanding
compared to $21.5M at the end of 2022. Refer to Table C.
Deferral Agreements
The DC Act allows for the deferral of payment of DCs until occupancy for rental housing and
institutional developments. The City has entered into 40 deferral agreements by the end of
2023, with a total receivable balance of $15.3M, compared to 24 agreements with a total
receivable balance of $10.7M at the end of 2022. Refer to Table E for more details.
By-law
The City's DC by-law, 2022-071, came into effect July 1, 2022 for a term of no longer than five
years.
For all services with the exception of Stormwater, the City expects to, at minimum, incur over
the life of the by-law (from 2022 to 2027) the same amount of capital costs that were estimated
for the same time period in the background study. For the Stormwater service, projected
capital costs have shifted to future years beyond the expiry of the City's by-law in 2027. The
background study calculating these rates had utilized a 14 -year planning horizon, from 2022 to
2036. Overall, the capital costs projected over the entire 14 -year horizon remain relevant.
There were no services for which a development charge was collected during the year but no
money was spent.
No Additional levies
The City of Kitchener has not imposed, directly or indirectly, a charge related to a development
or a requirement to construct a service related to a development, except as permitted by the
Act or another Act.
Page 131 of 198
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Financial implications are discussed above and detailed in the attached appendices.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
• FIN -2022-280 2022 Development Charges (DC) — Bylaw Passage
• By -Law Number 2022-071
• Development Charges Act, 1997
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services
ATTACHMENTS:
Attachment A
— Table A Summary by Service
Attachment B
— Table B Development Charge Expenses
Attachment C
— Table C Credit For Service
Attachment D
— Table D Development Charge Rates
Attachment E
— Table E Deferral Agreements
Attachment F —
Table F Exemptions and Discounts
Page 132 of 198
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Table C
Credit for Service
Balance Balance
Client Service 31 -Dec -22 New Agreement Credits Used Refund Given 31 -Dec -23
Peter Dietrich Kruse Lower Hidden Valley 6,003 6,003
Activa Holdings Inc.
Strasburg Creek
2,403
2,403
Activa Holdings Inc.
Laurentian
295,772
295,772
Activa Holdings Inc.
Blair Creek Drive
257,749
257,749
-
Activa Holdings Inc.
Ottawa Trussler Pumping
6,800,000
6,800,000
-
Various
Mid Strasburg Trunk
4,026,646
55,248
3,585,616
385,782
Activa Holdings Inc.
Dodge Dr Sanitary Sewer
10,103,720
121,732
9,981,988
Deer Ridge Heights Inc.
Community Trail
49,701
44,515
5,186
Tota l
21, 541,994
221,495
10, 643, 365
10, 677,134
Page 136 of 198
Table D
Development Charge Rates
(effective from December 1, 2022 to November 30, 2023)
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $14,419 $21,468 / dwelling unit
Townhouse or street townhouse dwelling $10,127 $15,077 / dwelling unit
Multiple or duplex dwelling $7,290 $10,854 / dwelling unit
Lodging House $4,096 $6,099 /dwelling unit
Non -Residential Development"
Gross floor area of building $21.77 $65.75 / square metre
$2.02 $6.11 /square foot
(effective from December 1, 2023 to November 30, 2024)
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling
Townhouse or street townhouse dwelling
Multiple or duplex dwelling
Lodging House
Non -Residential Development"
Gross floor area of building
$16,561
$24,658 /dwelling unit
$11,631
$17,317 /dwelling unit
$8,373
$12,467 /dwelling unit
$4,705
$7,006 /dwelling unit
$25.00 $75.52 / square metre
$2.32 $7.02 /square foot
Page 137 of 198
Table E
Deferral Agreements
Address
Balance Dec 31, 2022
New deferrals
Payments
Balance Dec 31, 2023
Year Permit Issued
18 Guelph St
58,945
23,578
35,367
2020
1430 Highland Rd W
535,618
107,124
428,494
2020
414 Prospect Ave Bldg A
80,024
32,010
48,015
2020
695 Block Line Rd
511,469
511,469
0
2020
169 Borden Ave N
844,801
140,800
704,001
2021
528 Lancaster St W
1,023,127
204,625
818,501
2021
80 Mcgee Ave
76,206
15,241
60,965
2021
595 Strasburg Rd
1,025,274
170,879
854,395
2021
270 Spadina Rd E
592,650
592,650
2021
659 Stirling Ave S
12,869
2,574
10,295
2021
30 Duke St W
21,206
4,241
16,965
2021
293 King St E
39,510
39,510
2021
51 David St
13,170
2,195
10,975
2021
221 Victoria St N
566,730
566,730
2021
64 Margaret Ave
98,775
98,775
2021
50 Eighth Ave
589,860
98,310
491,550
2021
80 Sydney St N Building A
128,360
128,360
0
2021
80 Sydney St N Building B
96,678
96,678
0
2021
525 New Dundee Rd
1,749,918
1,749,918
0
2021
695 Block Line Rd
329,408
329,408
0
2022
236 Margaret Ave
32,522
32,522
2022
301 Westmount Rd W
899,980
899,980
2022
1438 Highland Rd W
1,344,676
224,113
1,120,563
2022
900 King St W
1,264,371
1,264,371
2023
118 Gravel Ridge Trail
120,740
120,740
2023
152 Shanley St
819,217
819,217
2023
245 Wellington St N
6,197
6,197
2023
55 Franklin St S
339,523
339,523
2023
369 Frederick St
162,378
162,378
2023
132 Woolwich St
258,055
258,055
2023
3241 King St E
2,463,420
2,463,420
2023
118 Gravel Ridge Trail Bldg D
120,740
120,740
2023
118 Gravel Ridge Trail Bldg E
120,740
120,740
2023
118 Gravel Ridge Trail Bldg F
206,244
206,244
2023
118 Gravel Ridge Trail Bldg B
206,244
206,244
2023
118 Gravel Ridge Trail Bldg C
206,244
206,244
2023
1442 Highland Rd W
1,952,695
1,952,695
2023
118 Gravel Ridge Trail Bldg G
206,244
206,244
2023
78 Weber St W
6,197
6,197
2023
10,671,776
81459,249
3,841,523
15,289,502
Page 138 of 198
Table F
2023 Exemptions and Discounts
Exemption and Discount Type
Amount
50% Industrial Enlargement
$ 267,168
Additional Dwelling Unit(s) in Existing
6,877,335
Detached Accessory Dwelling Unit
246,726
Municipal Use
79,693
Public School Board
501
Redevelopment Allowance
1,772,403
Redevelopment Allowance and 50% Industrial Enlargement
311,084
Non -Profit Housing
1,072,085
Purpose Built Rental Discount
1,876,162
Phase-in Discount*
7,008,698
Total
$ 19,511,855
*Note that Bill 185, Cutting Red Tape to Build More Homes Act, 2024, removed the
mandatory phase-in discount for new applications effective June 6, 2024.
Page 139 of 198