HomeMy WebLinkAboutFIN-2025-290 - 2024 Development Charge Reserve FundStaff Report
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Financial Services Department www.kitchener.ca
REPORT TO: Council Meeting
DATE OF MEETING: June 23, 2025
SUBMITTED BY: Katie Fischer, Director of Financial Reporting & ERP Solutions,
519-904-9354
PREPARED BY: Christine Furtado, Investment & Treasury Analyst, 519-783-8604
WARD(S) INVOLVED: All
DATE OF REPORT: June 13, 2025
REPORT NO.: FIN -2025-290
SUBJECT: 2024 Development Charge Reserve Fund
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 2024.
• The key finding of this report shows an ending balance in the development charge reserve
funds of -$46.9M. After factoring in funds committed within existing capital projects, the
total development charge funds held by the City as at December 31, 2024 was $53.5M,
a small decrease over the 2023 balance of $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.
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
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 39 of 64
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 2024 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 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.
Earlier in 2024, from January to June 6t", the DC rates incorporated a "phase-in discount" whereby
the City's DC rates were reduced to 85% of the calculated rate from the DC background study, in
accordance with the Act under Bill 23, More Homes Built Faster Act, 2022. On June 6, 2024, Bill 185
the Cutting Red Tape to Build More Homes Act, 2024, received royal assent which eliminated the
previously legislated "phase-in discount" that had originally been in place since 2022.
The City's DC rates in effect as of December 31, 2024 are included for information within Table D.
DC Reserve Funds
DC revenues in 2024 total $19.6M, which is a decrease from the 2023 collections of $30.5M.
DC expenses in 2024 total $63.1 M, an increase from 2023 expenses of $48.8M. Detailed lists of the
DC Expenses are included in Table B.
The City issued DC -supported debt in the amount of $27.6M in 2024, as approved through the 2024
Budget, of which $19.1 M was for the Sanitary Sewer service, $6.71VI for Roads, and $1.81VI for Water.
The DC reserve funds as at December 31, 2024 had an total balance of $46.91VI compared to -$3.3M
at the end of 2023. After factoring in funds committed within existing capital projects, the total
development charge funds held by the City as at December 31, 2024 was $53.5M, a small decrease
over the 2023 balance of $56.01VI.
The overall reserve balance is detailed by service buckets in 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.
Exemptions and Discounts
DC exemptions and discounts in 2024 total $19.3M compared to $19.5M in 2023. A summary of major
exemptions is included in Table F.
Page 40 of 64
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, 2024, credits of $10.2M were outstanding compared
to $10.7M at the end of 2023. 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 35 deferral agreements outstanding at the end of 2024,
with a total receivable balance of $13AM, compared to 35 agreements with a total receivable
balance of $15.3M at the end of 2023. Five developments opted to early pay their deferral
balances in full in 2024. 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.
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
Page 41 of 64
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 42 of 64
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Table C
Credit for Service
Total 10,677,134 122,814 385,782 10,168,539
Page 46 of 64
Balance
Balance
Client
Service
31 -Dec -23 New Agreement Credits Used Refund Given
31 -Dec -24
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
-
-
Activa Holdings Inc.
Ottawa Trussler Pumping
-
-
Various
Mid Strasburg Trunk
385,782 385,782
0
Activa Holdings Inc.
Dodge Dr Sanitary Sewer
9,981,988 117,628
9,864,360
Deer Ridge Heights Inc.
Community Trail
5,186 5,186
0
Total 10,677,134 122,814 385,782 10,168,539
Page 46 of 64
Table D
Development Charge Rates as of December 31, 2024
Central Suburban
Residential Development Neighbourhoods Areas
Single detached or semi-detached dwelling $20,419 $30,401 / dwelling unit
Townhouse or street townhouse dwelling $14,341 $21,351 / dwelling unit
Multiple or duplex dwelling $10,324 $15,371 /dwelling unit
Lodging House $5,801 $8,638 /dwelling unit
Non -Residential Development**
Gross floor area of building $30.82 $93.11 /square metre
$2.86 $8.65 /square foot
Page 47 of 64
Table E
Deferral Agreements
Address
Balance Dec 31,
2023
New deferrals /
Adjustments
Payments
Balance Dec 31,
2024
Year Permit Issued
18 Guelph St
35,367
11,789
23,578
2020
1430 Highland Rd W
408,832
102,208
306,624
2020
414 Prospect Ave Bldg A
48,015
48,015
2020
169 Borden Ave N
704,001
704,001
0
2021
528 Lancaster St W
818,501
818,501
0
2021
80 Mcgee Ave
60,965
15,241
45,724
2021
595 Strasburg Rd
854,395
854,395
0
2021
270 Spadina Rd E
592,650
592,650
2021
659 Stirling Ave S
10,295
2,574
7,722
2021
30 Duke St W
16,965
16,965
0
2021
293 King St E
39,510
39,510
2021
51 David St
10,975
2,195
8,780
2021
221 Victoria St N
566,730
94,455
472,275
2021
1430 Highland Rd W
19,662
4,916
14,747
2021
64 Margaret Ave
98,775
16,463
82,313
2021
50 Eighth Ave
491,550
98,310
393,240
2021
236 Margaret Ave
32,522
-14,184
3,056
15,282
2022
301 Westmount Rd W
899,980
899,980
0
2022
1438 Highland Rd W
1,120,563
224,113
896,450
2022
900 King St W
1,264,371
1,264,371
2023
118 Gravel Ridge Trail
120,740
20,123
100,617
2023
152 Shanley St
819,217
819,217
2023
245 Wellington St N
6,197
1,033
5,164
2023
55 Franklin St S
339,523
56,587
282,936
2023
369 Frederick St
162,378
162,378
2023
132 Woolwich St
258,055
43,932
214,123
2023
3241 King St E
2,463,420
2,463,420
2023
118 Gravel Ridge Trail Bldg D
120,740
20,123
100,617
2023
118 Gravel Ridge Trail Bldg E
120,740
20,123
100,617
2023
118 Gravel Ridge Trail Bldg F
206,244
206,244
2023
118 Gravel Ridge Trail Bldg B
206,244
-24,176
182,068
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
1,033
5,164
2023
43 Maurice St
8,373
8,373
2024
15 Cedar St N
64,056
64,056
2024
1001 King St E
1,518,800
1,518,800
2024
54 Eighth Ave
509,746
509,746
2024
40 College St
89,552
89,552
2024
$ 15,289,502
$ 2,152,167
$ 4,032,116
$ 13,409,553
Page 48 of 64
Table F
2024 Exemptions and Discounts
Exemption and Discount Type
Amount
50% Industrial Enlargement
$ 286,098
Additional Dwelling Units
8,809,844
School Boards
2,592,422
Municipal Use
1,564,877
Provincial Use
1,052,734
Redevelopment Allowance
633,343
Phase-in Discount*
1,360,718
Rental Discount
1,819,139
Non -Profit Housing Development
1,189,364
Total
$ 19,308,540
*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 49 of 64