HomeMy WebLinkAboutFIN-2024-279 - Development Charges Exemption for Affordable Housing
Financial Services Department www.kitchener.ca
REPORT TO: Committee of the Whole
DATE OF MEETING: June 24, 2024
SUBMITTED BY: Jonathan Lautenbach, Chief Financial Officer, 519-741-2600 ext. 7334
PREPARED BY: Katie Fischer, Director of Financial Reporting & ERP Solutions, 519-741-
2600 ext. 4630
WARD(S) INVOLVED: All Wards
DATE OF REPORT: June 3, 2024
REPORT NO.: FIN-2024-279
SUBJECT: Development Charges Exemption for Affordable Housing
RECOMMENDATION:
That delegated authority to approve and execute agreements required under section 4.1
of the Development Charges Act, 1997, be granted to the Chief Financial Officer /
Treasurer or designate, with said agreements being to the satisfaction of the City
Solicitor.
REPORT HIGHLIGHTS:
The purpose of this report is to put into place an efficient process for the exemption of
affordable and attainable residential units under the Development Charges Act (DC Act).
The key finding of this report is that the DC exemption of affordable residential units came
into effect on June 1, 2024. The DC Act requires that the developer and the City enter into
an agreement to keep the units affordable for 25 years.
The definition of affordability is prescribed in the DC Act as set out in the body of the report
below.
The financial implications are that this mandatory exemption is anticipated to reduce the
ojects in the future. Staff will continue to monitor and assess the
Community engagement included posting this report to
in advance of the council / committee meeting.
This report supports Building a Connected City Together: Focuses on
neighbourhoods; housing and ensuring secure, affordable homes; getting around
easily, sustainably and safely to the places and spaces that matter.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
BACKGROUND:
As part of Bill 23,theMore Homes Built Faster Act, 2022, the Province introduced a new section
Development Charges Act,
1997
The section was further refined in 2023 under Bill 134, the Affordable Homes and Good Jobs
Act, 2023 to update the calculation of determining what is an affordable residential unit so that it
included an income-based threshold in addition to a market-based threshold.
This section is now in force as of June 1, 2024. The following is a brief overview of what this
mandatory exemption entails:
the following criteria:
o For rental units, the rent is the lesser of the income-based affordable rent
calculation and the average market rent. For the City of Kitchener, the Province
has determined this threshold to be:
Bachelor units: $1,117
1-bedroom units: $1,322
2-bedroom units: $1,594
3 or more-bedroom units: $1,779
o For ownership units, the purchase price is the lesser of the income-based
affordable purchase price and 90% of the average purchase price in the market.
For the City of Kitchener, the Province has determined this threshold to be
$370,100 for all unit and building types.
The affordability calculation is anticipated to be updated annually by the Province on June
st
1.
The DC Act requires that the developer and the municipality enter into an agreement that
requires the residential unit to remain affordable for 25 years. It does not specify how the
municipality will monitor and enforce this, and staff continue to review in consultation with
other municipal partners and our DC consultants, Hemson Consulting Ltd.
development or class of developments that would meet this definition; therefore this has no
impact at present time.
REPORT:
As part of the affordable residential units exemption, the DC Act requires that the developer and
the local municipality enter into an agreement that requires the residential unit to remain
affordable for 25 years. The DC Act also requires an agreement in the case of an attainable
residential unit exemption.
To minimize administrative burden and support the timely development approvals for affordable
and attainable housing, staff recommend that authority for signing agreements under section 4.1
of the DC Act be delegated to the Chief Financial Officer / Treasurer or designate, to the
satisfaction of the City Solicitor. In absence of this delegated authority, each agreement
authorizing the exemption of DCs for affordable and attainable residential units would require a
report to Council and Council resolution, which may delay developments.
STRATEGIC PLAN ALIGNMENT:
This report supports Building a Connected City Together: Focuses on neighbourhoods;
housing and ensuring secure, affordable homes; getting around easily, sustainably and
safely to the places and spaces that matter.
FINANCIAL IMPLICATIONS:
Capital Budget The recommendation has no direct impact on the Capital Budget. The
affordable and attainable
the future, however it is not possible to estimate the amount at this time given uncertainty
surrounding how many developments will meet the exemption criteria. This could impact the
a
to monitor and assess the impacts the DC exemptions and changes to the DC Act have on the
Operating Budget The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
Development Charges Act, 1997
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer
ATTACHMENTS: Not Applicable