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HomeMy WebLinkAboutPSI Agenda - 2020-09-28 Planning & Strategic Initiatives Committee Agenda Monday, September 28, 2020 4:30 p.m. 5:30 p.m. Office of the City Clerk 7:00 p.m. 7:30 p.m. Kitchener City Hall nd 200 King St. W. - 2 Floor Electronic Meeting Kitchener ON N2G 4G7 Page 1 Chair - Councillor S. Marsh Vice-Chair - Councillor P. Singh Due to COVID-19 and recommendations by Waterloo Region Public Health to exercise physical distancing, City Hall is open for select services. Members of public are invited to participate in this meeting electronically by accessing the meeting live-stream video at kitchener.ca/watchnow. While in-person delegation requests are not feasible at this time, members of the public are invited to submit written comments or participate electronically in the meeting by contacting Sarah Goldrup, Committee Administrator at sarah.goldrup@kitchener.ca. Delegates must register by 2:30 p.m. on September 28, 2020, in order to participate electronically. Written comments will be circulated prior to the meeting and will form part of the public record. PART ONE - 4:30 p.m. Delegations Pursuant to s Procedural By-law, delegations are permitted to address the Committee for a maximum of five (5) minutes. None at this time. Discussion Items 1. DSD-20-151 - District Energy Phase 2 Study (15 min) (Staff will provide a 5-minute presentation on this matter.) 2. DSD-20-150 - Inclusionary Zoning for Affordable Housing (45 min) (Staff will provide a 10-minute presentation on this matter.) PART TWO - 7:00 p.m. Delegations Pursuant to s Procedural By-law, delegations are permitted to address the Committee for a maximum of five (5) minutes. None at this time. Public Hearing Matters under the Planning Act (7:00 p.m. advertised start time) This is a formal public meeting to consider applications under the Planning Act. If a person or public body that would otherwise have an ability to appeal a decision of the City of Kitchener to the Local Planning Appeal Tribunal, but the person or public body does not make oral submissions at the public meeting or make written submissions to the City of Kitchener before the by-law is passed, the person or public body is not entitled to appeal the decision. ** Accessible formats and communication supports are available upon request. If you require assistance to take part in a city meeting or event, please call 519-741-2345 or TTY 1-866-969-9994 ** Planning &Strategic Initiatives Committee Agenda Page 2 September 28, 2020 3. DSD-20-106 - ZBA/19/013/S/KA (30 min) - 290 Sheldon Avenue - Thresholds Homes and Supports (Staff will provide a 5-minute presentation on this matter.) Information Items None Sarah Goldrup Committee Administrator ** Accessible formats and communication supports are available upon request. If you require assistance to take part in a city meeting or event, please call 519-741-2345 or TTY 1-866-969-9994 ** REPORT TO:Planning & Strategic Initiatives Committee DATE OF MEETING:September 28, 2020 SUBMITTED BY:Justin Readman,General Manager,Development Services 519-741-2200 ext. 7646 Denise McGoldrick, General Manager,Infrastructure Services 519-741-2200 ext.4657 PREPARED BY:Tim Donegani, Senior Planner 519-741-2200 ext. 7067 WARD(S) INVOLVED:9 & 10 DATE OF REPORT:September 168,2020 REPORT NO.:DSD-20-151 SUBJECT:DowntownDistrict Energy Pre-FeasibilityStudy and Business Case RECOMMENDATION: THAT staff be directed to develop a business case for a Downtown district energy system; and further THAT staff be directed to submit aGreen Municipal Fund Feasibility Study grant applicationto helpfund the Downtown district energy business case development. BACKGROUND: In 2018, the Regionof Waterloo, area municipalities and local energy service providers approved the Community Energy Investment Strategy (CEIS). Its goal isto improve the targeted energy investments. It seeks to integrate economic and environmental thinking, to transform the energy system of the region;and reduce energy use and greenhouse gas emissions (GHGs)by 80% by 2050. The CEIS Governance Committee identified district energy as one of three priority actions for the first three years. Consideringthe impacts of climate change,andnational, regional and City commitments to action,Council declared a Climate emergency in 2019 and directed continued support of corporate and community climate initiatives to reduce greenhouse gas emission by 80% by 2050. Further, in March 2019throughreport DSD-19-047, council resolved: *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 1 - 1 That the results of the FCM/GMF Feasibility Study: Municipal Tools for Catalyzing Net-Zero Energy Development be used to conduct specific business cases, establish targets and engage with landowners for one or more pilot projects for: -Areas undergoing significant redevelopment, such as the King/Victoria area -The planning of new communities or neighbourhoods District energy (DE) is aprovenandsimple technology. Heat and cold is generated at a centralized plant and then circulated to customers through piped hot and cold water. District Energy systems existinmany large to mid-size municipalities including Windsor, London, Hamilton, Markham andToronto.While there are many economic development, cost and energy security benefits. Itprovidesa flexible thermal energy backbone that enablesgreen solutions that are not available to individual building-level HVAC systems. Ground source heat pumps, also called geothermal energy, use electricity (from the -carbon electrical grid) and steady ground temperatures to efficiently produce heating and cooling for buildings. When paired withaDEsystem, itproduces far fewer GHGs than conventional HVAC systems.Geothermal systems are only successful under certain underground conditions, including those found under downtown Kitchener. REPORT: The CEIS governance committee and its administering organization, Waterloo Region Community Energy,hired a consultant (FVB)to study the feasibility of a district energy pilot projectcentred around the King/Victoria intersection.That Phase 1 Pre-feasibility study is included as AppendixA. Phase 1 Pre-feasibility Study Findings 2 The study found that 450,000 m(4.5millionsquarefeet)of forecasted new floor space is sufficient to support a DE system. Sixenergy centre concepts were evaluatedas shown in Table 1: Table 1 Downtown District Energy Prefeasibility study highlights hƦƷźƚƓ /ğƦźƷğƌ ЋЎΏǤĻğƩ bĻƷ tƩĻƭĻƓƷ DID ǝƭ LƓǝĻƭƷƒĻƓƷ LƓƷĻƩƓğƌ ğƌǒĻ θЍі .ǒƭźƓĻƭƭ ğƭ Λυ ƒźƌƌźƚƓƭΜ wğƷĻ ƚŅ ΛυƒźƌƌźƚƓƭΜ ƭǒğƌ wĻƷǒƩƓ ΛƷƚƓƓĻƭΉǤƩΜ 1 - Conventional Gas Fired Boilers/Electric 37.6 8.9% 20.7 692 Chillers 1A - Option 1 Plus Combined Heat and 39.4 8.9% 21.2 -195 Power 2 - 46.9 5.3% 5.8 5,115 2 1 - 2 2B - Option 2 Plus Combined Heat and 48.7 5.4% 6.4 4,228 Power 3 - 51.8 4.3% 1.5 5,115 3C - Option 3 Plus Combined Heat and 53.6 4.4% 2.0 4,228 Power Staff recommend further study of Option 2-Adistrict energy system paired with an open loop Ground Source Heat Pump (GSHP) that reduces GHGs by 53% (5,000 tonnes annually)andhas an internal rateof return of 5.3%.Construction of option 2 requires a $47mcapital investmentover time-$20m in the first phase.Financial estimates are class D indicative (+/-50%) and need to be refined. Load assumptions in this study are conservative;most forecasted load is on publicly owned landthat is slated for future development.Additional customerscould be connected including private development and retrofits of existing buildings (e.g. City Hall). This would yield additional financial, economic development and environmental returns. The Opportunity Environmental The Study shows that GHGswould be half of business as usualemissions.As the district energy system grows, it enables more renewables, thermal storageand waste heat recovery to advance climate objectives.According to FVB president and CEO, Richard Damecour,you cannot meet your climate targets without district energy. Furthermore, district energy systemscan be used to meltsnow onnearby roads, sidewalksand trails. This can reduce salt application,improvewater qualityandprovide active transportation benefits. Economic Development District energy brings the potential for broad and important economic development benefits including: Local construction and operationaljobs Keeps more energy dollars localThe CEIS found that $1.8B energy dollars leave the region every year. Tailored heating and coolingsolutions such as server cooling for tech firms or heating for biotech sectorscan help attractthese firmsto collocate near DE systems Less upfront HVAC cost and ongoing liability for building ownersand operators Eliminating HVAC equipment can free up building space for other usessuch as parking or rooftop patiosand allow for a flexible floor plate for incubators and accelerators A district energy system can help attract and catalyse green economy firms 3 1 - 3 Recent growth has put significant strain on the electricaldistribution system Downtown.The efficiency and thermal energy storage possibilities of a DE system canhelp delayor avoid therequired hydroelectric transmission investment. Adaptation and Resilience System uptime and avoided interruptions-District energy systems are extremely reliableandcan continue to provide service during electrical orgas system outages. District energy enables fuel switching (e.g. from natural gas to renewables)in response to environmental of financial pressures. Prepareforthe uncertainfutureof natural gas andcoming legislationaimed at lowering the carbon emissions of industry. It is important to move quickly on this opportunity because of the pace of Downtown development. The more time that passes beforeimplementing a DE system can mean that morepotential customers willbe missed and benefits foregone. Phase 2 Business Case Study Staff are seeking direction to pursue a phase 2 business case.This would: Confirm phasing, customers, conceptual system design and cost estimates(+/-10%) Determine how the systems will be financed.The positive rate of return, environmental, resilience and economic development benefits make this project interesting to potential investors including: o Green Municipal Fund loan up to ~$10m (15% forgivable) o Private investors including impact investors o City, Kitchener Utilities, Kitchener-Wilmot Hydro, Waterloo Region and the Province Confirmthe owner/operator model and establish asuitable governancestructure Set strategy,timing, pricing, marketingand contractconcepts. This will help articulate the service offeringnecessaryto attract and secure customers Include a cost/benefit analysis to quantify qualitative benefitswhere possible Include further hydrogeologic assessment to support an open loop ground source heat pump Provide policy recommendations Engage with stakeholders including city,regional,Kitchener-Wilmot Hydro staff and developers Analyse risk including lessons learned from other district energy systems including Ontario examples Outlinethe implications of a Downtown DE system for a city-scale DE strategy Staff areseeking direction to apply for an FCM grant to assist with study costs. Kitchener Utilities and City Role The Cityand/or Kitchener Utilities is emerging as strong potential candidate to lead the Phase 2 study and an eventual business.experience in building and operating a 4 1 - 4 piped infrastructure network, customer management and enterprise business model are allbeneficial.Consistent medium-term leadership is needed to bring aproject to construction. KU is a trusted consistent institution that stakeholdersexpect to continue in the long term. alow carbon economy. ADE system could help KU transitionsuccessfully to a low-carbon energy future.In 2022, KUwill need to address the Federal Clean Fuel Standard which is proposing offset credits for natural gas distributors.DE mayposition KU to purchasefewer carbon creditsand transition to a lower-carbon operation. A DE system is aligned with the climate and economic development objectives. and mission is 20+ years old and needs to be updated. A 10-year business strategy for KU is underwayand should be completed in early 2021. Staff expect a DE system to align with and inform this new strategy. Adding a district energy system to Kitchener Utilitiesportfolio would provide a significant opportunity to diversify the utility toward a more sustainable local energy provider. Nevertheless,project leadership, business structure and appropriate governancewill be consideredthrough the phase 2 study.Planning, Economic Development and Regional staff all need to be involvedas well. Next Steps Oct 2020 Green Municipal Fund Grant Application Jan-June2021 Phase 2 Business Case Development June2021Kitchener Council business decisionto proceed July-Sept 2021Secure customer commitment Q3 2021-Q3 2022Detailed Design Q3 2022-Q1 2024Construction and Implementation ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Strategic Plan Goal: Environmental Leadership-Achieve a healthy and livable community by proactively mitigating and adapting to climatechange and by conserving natural resources. Strategic Plan Action: This work supports the Community Climate Action Plan schedule for late 2020. Vibrant Economy -Build a vibrant city by making strategic investments to support job creation, economic prosperity, thriving arts and culture, and great places to live. Strategic Plan Action This work will inform the Bramm Yards Master planand Comprehensive Review of City-ownedproperties. 5 1 - 5 FINANCIAL IMPLICATIONS: The Phase 2 study isanticipated to cost $150,000to $200,000. $50,000 has been earmarked in 2021 toward the Phase 2 study in the DC funded planning studies account. Staff propose to allocate $40,000 from the Kitchener Demand Side Management capital budget. Staff are seeking direction to apply for a 50% matching grant from FCM. Ifthe application is successful, the above noted funding sources are sufficient to cover the study cost. If the grant application is unsuccessful, an additional$60,000-$110,000 will be required to fund the study.That source is currently undetermined. COMMUNITY ENGAGEMENT: INFORM This report has been pagenda in advance of the council/city meeting PREVIOUS CONSIDERATION OF THIS MATTER: None REVIEWED BY:Claire Bennett,CorporateSustainability Officer Greg St. Louis,Director, Gas and Water Utilities Michele Kamphuis, Business Development and Conservation Strategist Ruth-Anne Goetz, Senior Financial Analyst Jonathan Lautenbach, Director of Financial Services Matthew Day, Community Energy Program Manager, Waterloo Region Community Energy ACKNOWLEDGED BY: Justin Readman, General Manager, Development Services Denise McGoldrick, General Manager, Infrastructure Services APPENDICES: AppendixA: Kitchener Innovation District Community Energy System Pre-FeasibilityStudy prepared by FVB 6 1 - 6 KitchenerInnovationDistrict CommunityEnergySystem PreFeasibilityStudy DRAFTΑDecember20,2019 FINALΑJanuary31,2020 Submittedto: CommunityEnergyInvestmentStrategy Submitte dby: 1 - 7 Informationcontainedhereinisconfidentialandmaynotbereleasedtoanythirdparty. 1 - 8 Disclaimer ThisreporthasbeenpreparedbyFVBEnergyInc.TheinformationanddatacontainedhereinrepresentC.͸ƭbestprofessional judgmentinlightoftheknowledgeandinformationavailableatthetimeofpreparation.FVBdeniesanyliabilitywhatsoeverto otherparties,whomayobtainaccesstothisreportforanyinjury,lossordamagesufferedbysuchpartiesarisingfromtheiruse of,orrelianceupon,thisreportoranyofitscontentswithouttheexpresswrittenconsentofFVBEnergyInc. Thecostestimatesandanyestimatesofratesofproductivityprovidedaspartofthestudyaresubjecttochangeandare contingentuponfactorsoverwhichFVBEnergyInc.havenocontrol.FVBEnergyInc.doesnotguaranteetheaccuracyofsuch estimatesandcannotbeheldliableforanydifferencesbetweensuchestimateandultimateresults. 1 - 9 #®­³¤­³² 1.ExecutiveSummary...............................................................................................................................7 2.ReportGlossary.....................................................................................................................................8 3.Introduction........................................................................................................................................10 Background.................................................................................................................................10 CommunityEnergySystems........................................................................................................10 4.Technical:EnergyProfiles...................................................................................................................12 KitchenerInnovationDistrict+....................................................................................................12 PeakHeating/CoolingDemandandEnergyProfiles...........................................................16 5.Technical:DistrictEnergyConcept.....................................................................................................20 EnergyTransferStations.............................................................................................................20 DistributionPipingSystem..........................................................................................................21 EnergyCentres............................................................................................................................22 CentralEnergyCentre:Location&SpaceRequirements...................................................23 PhasingApproach...............................................................................................................23 CentralEnergyCentreConcept:Conventional...................................................................24 CentralEnergyCentreConcept:GroundSourceHeatPump(GSHP).................................25 CombinedHeatandPower.................................................................................................28 OtherConsiderations..................................................................................................................29 EnergyConstraints&Security.............................................................................................29 ThermalStorage..................................................................................................................29 6.Financial..............................................................................................................................................30 CapitalCostEstimate..................................................................................................................30 AnnualOperatingandMaintenanceEstimate............................................................................32 7.BusinessCase......................................................................................................................................32 Glossary.......................................................................................................................................32 KeyFinancialTerms.............................................................................................................32 BusinessAsUsual(BAU)Costs...................................................................................................32 Revenue......................................................................................................................................36 FinancialResults..........................................................................................................................37 SensitivityAnalysis......................................................................................................................38 FinancialModelExcelModelincludingSensitivity....................................................................40 1 - 10 8.EnvironmentalBenefit........................................................................................................................40 GreenhouseGasEmissionSavings..............................................................................................40 OtherEnvironmentalBenefits,Synergies,andConsiderations..................................................41 OwnershipModels......................................................................................................................42 Overview.............................................................................................................................42 100%PublicOwnership......................................................................................................44 100%PrivateOwnership.....................................................................................................44 Hybrid..................................................................................................................................44 9.NextSteps:DESImplementationStrategy..........................................................................................46 Task1DevelopDESBusinessConcept......................................................................................46 Task2ΑDESMarketing...............................................................................................................47 Task3RefinetheTechnicalConceptFurther..........................................................................48 Task4ProjectReview...............................................................................................................48 Task5DevelopProjectTechnicalDefinition.............................................................................48 Task6ObtainCustomerCommitment.....................................................................................49 Task7FinalizeProjectDefinition..............................................................................................49 Task8DistrictEnergyReadyInfrastructure..............................................................................49 ‘ŷğƷ͸ƭinItforDevelopers?‘ŷğƷ͸ƭinItfortheCity/Region?..................................................50 ResiliencyandReliability.....................................................................................................50 EnvironmentalandEnergyEfficiency.................................................................................50 FlexibleBuildingDesign......................................................................................................50 ReducedCosts.....................................................................................................................50 LocalEconomyBoost..........................................................................................................50 ConsumerandPublicSafety...............................................................................................50 10.Evaluation/Recommendation.......................................................................................................52 11.AppendixA......................................................................................................................................54 1 - 11 ListofTables Table1:CEISKitchenerDESPotentialCustomerBuildings........................................................................14 Table2:CEISKitchenerDESDevelopmentLoadandEnergyEstimates.....................................................17 Table3:CEISKitchenerDESEnergyCentrePhasing...................................................................................24 Table4:CEISKitchenerDESCapitalCosts(2019$).....................................................................................31 Table5:CEISKitchenerDESOperationandMaintenanceCosts................................................................32 Table6:TypicalHeatingSelfGenerationCosts..........................................................................................34 Table7:TypicalCoolingSelfGenerationCosts..........................................................................................35 Table8:DistrictEnergyRateSummaryΑHeatingandCoolingEnergy......................................................36 Table9:KitchenerDESFinancialResultSummaryofCapital,ExpensesandRevenue..............................38 Table10:KitchenerDESFitSummarywithCarbonCosts.....................................................38 nancialResul Table11:RapidDevelopmentTimeline......................................................................................................39 Table12:KitchenerDESFinancialResultSummarywithDECapitalIncreasedby10%.............................39 Table13:KitchenerDESFinancialResultSummarywithDECapitalDecreasedby10%............................40 Table14:EvaluationGuideline...................................................................................................................52 ListofFigures th Figure1:DistrictEnergy4Generation......................................................................................................11 Figure2:WhatisDistrictEnergy?...............................................................................................................12 Figure3CityofKitchenerUrbanGrowthCentre(Downtown)................................................................13 Figure4:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve...............................18 Figure5:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve...............................18 Figure6:KitchenerInnovastimatedDESHeatingLoadDurationCurve...............................19 tionDistrictE Figure7:TypicalEnergyTransferStationInstallation................................................................................20 Figure8:ExampleofaFourPipeDistributionPipingInstallation..............................................................22 Figure9:SelfGenerationCostsvs.DERateStructure................................................................................36 Figure10:AnnualGreenhouseGasEmissionSavings................................................................................40 Figure11:OwnershipModelsΑSWOTAnalysis.........................................................................................43 Figure12:PublicOwner/OperatorModels................................................................................................44 Figure13:PrivateOwner/OperatorModels...............................................................................................44 Figure14:HybridOwner/OperatorModels...............................................................................................45 Figure16:SummaryofBenefitstoKeyStakeholdersfromaDES..............................................................51 1 - 12 Page|7 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 1.ExecutiveSummary TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityordistrict energysystemtomeettheƩĻŭźƚƓ͸ƭenergyplanobjectiveofenhancinglocalenergygenerationand security. FVBperformedaprefeasibilityondevelopingaDistrictEnergySystem(DES)toservicetheKitchener 2 InnovationDistrict+indowntownKitchener.Theareahasanexistingbuildingstockof~450,000m 222 )withover400,000m(4,000,000ft)ofanticipatednewbuildingdevelopmentexpected (~4,500,000ft overthenext15years. FVBdevelopedaDESconceptcenteredonsix(6)newdevelopmentsforecastedtobeconstructedwithin thenext15years.Thebuildingsareestimatedtohaveatotalheatingandcoolingrequirementsasshown inTableA. TableA:KitchenerInnovationDistrictDESLoads&Energy AnnualAnnual KitchenerInnovationDistrictHeatingCoolingHeatingCoolingEnergy DESLoads&EnergyGFA(ft2)GFA(m2)Load(kW)Load(Tons)Energy(MWh)(MWh) Phase1+21,746,000162,3008,7002,60016,40011,500 Phase1+2+33,485,000323,90015,4004,20032,20021,450 Phase1+2+3+4(TOTAL)4,485,000416,80019,2005,10040,90027,500 DIVERSIFIEDTOTALLOAD(0.85Heating/0.9Cooling)16,3004,600 TheenergycentretoservetheDESisproposedtobelocatedorembeddedwithintheMultiModalHub developmentduetoitssizeandthatitispubliclycontrolledland.Accordingtotheforecastedtimeline thereisaninitialdevelopmentoftheMultiModalHubslatedfor2022whichisenteringthedesignphase in2019andacombined1,000,000sq.ftofdevelopmentanticipatedinfuturephases. Adistributionpipingnetworkwouldbeimplementedtoserveallidentifieddevelopments.The constructionofthedistributionpipingnetworkposesthelargesttechnicalchallengetotheDES developmentduetoexistingLRTinfrastructure,narrowroadways,andcongestedburiedutilities;thishas beenthecaseinmanydowntowncoressuchasWindsor,Toronto,Hamilton,Sudburyetc.buthasnot beeninsurmountable.Noothertechnicalissueswereidentifiedatthistime. Three(3)scenarioswerereviewedinthestudy: 1.ConventionalDESΑwithgasfiredboilersandelectricalcentrifugalchillerstotaling20.5MWand 4,600tons.Plus,anoptionthatincludes550kWeofCHPcapacity. 2.OpenLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithanopenloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. 1 - 13 Page|8 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 3.ClosedLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithaclosedloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. Highlightsofthefinancialresultsoftheprefeasibilityaresummarized inTableB. TableB:KitchenerInnovationDistrictDESPrefeasibilityHighlights DESPREFEASIBILITYHIGHLIGHTS($CDN2019)Financial(Unescalated)Financial(Escalated) TotalReducedGHG ExpensesRevenueIRR,25(4%)('000k Investmentvs.BAU ('000k$)('000k$)Years(%)$) ScenarioDescription ('000k$)(tonnes) ConventionalGasFiredBoilers/Electric $37,628$2,456$6,7418.9%20,730$692 1 ChillersDES Scenario1:PlusCHP$39,438$2,120$6,7418.9%21,263$(195) 1A GroundSourceHeatPump(GSHP) 5.3%5,876$5,115 $46,978$2,596$6,372 OpenLoop1,000tons 2 Scenario2:PlusCHP$48,788$2,261$6,3725.4%6,409$4,228 2B GroundSourceHeatPump(GSHP) $51,838$2,606$6,3724.3%1,546$5,115 ClosedLoop1,000tons 3 Scenario3:PlusCHP$53,648$2,271$6,3724.4%2,079$4,228 3C ThedevelopmentoftheKitchenerDESwouldrequireacapitalinvestmentintherangeof$39M+(Class D,indicative+/50%)withanestimated8.9%InternalRateofReturn(IRR)over25yearsforScenario1. Thisiscomparabletoothercitiesandwouldbeconsideredagoodinvestmentwith100%equity. TheresultsalsoshowthatalthoughCHPadditiontotheDESincreasessystemresilience,ithasanegligible impactonthefinancialperformance,andreducestheGHGbenefitwithoutconsiderationtotimeofday usage. Scenarios2and3requiredalargercapitalinvestment,butgreaterGHGreductionbenefit. DistrictEnergySystemsaregloballyrecognizedaspartofthesolutiontoreducinggreenhousegas emissions.DESareknowntoincreaseenergyefficiencyforbuildingheatingandcooling,enabletheuptake ofwasteandalternativeenergysourcesandprovideflexibilitywithrespecttotechnologyandfuel sources.Thoughthebusinesscaseisfairlyneutral,FVBrecommendstheCEISproceedwithapproval towardestablishingaDESunderScenario2tomovetheKitchenerInnovationDistricttowardsitsenergy andsustainabilitygoals.Thebusinesscaseisstrengthenedonthefactthat4of6theforecasted developmentsinthestudyarepubliclycontrolledcoupledwithfinancialfeasibility,GHGemissions reduction,communitybenefitandenergyresilience,aDESfordowntownKitchenerisfeasible. ThenextstepstoestablishingaDESfortheKitchenerInnovationDistrictareprimarilysocial,economic andpoliticalinnature.CEISmustdevelopaDESBusinessPlanincludingdecisionsonownership,financing, operationsandmanagementstrategy,stakeholderengagement,identifyingpolicydriversaswellas solidifyingpotentialenergycentersites,identifyingsynergieswithothermunicipalprojectstoenablethe 1 - 14 Page|9 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 developmentofaDES.Areasonabletimelineforthisworkisestimatedtobe~12monthsarriveatago nogodecision.A12monthtimelinewouldbereservedfordetaildesignwithapprox.1218monthsfor implementation.Temporarystrategiescanbeutilizedifneedtosatisfyinitialcustomersshouldth eDES developlagbehindthefirstcustomerconnection. 2.ReportGlossary Belowaretypicaldistrictenergyacronymswhichmaybereferencedthroughoutthisreport. BusinessasUsual BAU CESCommunityEnergySystemalsoreferredtoasaDistrictEnergySystem CHPCombinedHeat&Poweristhegenerationofbothelectricityandusefulheatfromasingle source.CHPisalsoknownasCogeneration. COPCoefficientofperformanceistheratiooftherateofheatremovaltotherateofenergyinput,in consistentunits,foracompleterefrigeratingsystemorsomespecificportionofthatsystem underdesignatedoperatingconditions. DistrictEnergySystem DES DistributionPipingSystem DPS EnergyCentre EC EnergyTransferStation ETS FVBEnergyInc. FVB GroundSourceHeatPump GSHP Gigajoule,isanenergymeasurementunit. GJ HEXHeatExchanger KilowattElectrical,ameasureofinstantaneouselectricaldemand. kWe KilowattThermal,ameasureofinstantaneousthermaldemand. kW t ALoadDurationCurve(LDC)isacurverepresentingthermalloadofasystemoverthenumber LDC ofhoursperyear. LowerHeatingValue LHV MemorandaofUnderstanding MOU MegawattHourElectrical,isanenergymeasurementunit. MWh e MegawattHourThermal,isanenergymeasurementunit. MWh t MegawattThermal,ameasureofinstantaneousheatingdemand. MW t OperationandMaintenance O&M OutdoorAirTemperature OAT Trenchmeters;ameasureoftrenchdistance(asopposedtopipedistance).Fordistribution TM piping,pipedistanceisdoubletrenchdistance. TonnesofRefrigeration,ameasureofinstantaneouscoolingdemand. TR TemperatureDifferential(deltaT) T VariableFrequencyDrive VFD 1 - 15 Page|10 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 3.Introduction ͻƚźƒƦƩƚǝĻğƓķƭǒƭƷğźƓ‘ğƷĻƩƌƚƚwĻŭźƚƓ͸ƭĻĭƚƓƚƒźĭĭƚƒƦĻƷźƷźǝĻƓĻƭƭğƓķƨǒğƌźƷǤƚŅ ƌźŅĻƷŷƩƚǒŭŷƷŷĻĭƚƚƩķźƓğƷźƚƓƚŅƷğƩŭĻƷĻķĻƓĻƩŭǤźƓǝĻƭƷƒĻƓƷƭΑĻƓŷğƓĭźƓŭƌƚĭğƌ ĻƓĻƩŭǤŭĻƓĻƩğƷźƚƓğƓķƭĻĭǒƩźƷǤ͵ͼ Background TheCEISidentifiedtheKitchenerInnovationDistrict+asapotentialsitetodevelopacommunityenergy systemtomeettheƩĻŭźƚƓ͸ƭcommunityenergyplanobjectiveofenhancinglocalenergygenerationand security.Secondaryprioritiesofthisstudyinclude: 1.ͻ ƦķğƷźƓŭexistingprocessestobetterintegrateenergyconsiderationsintothereviewandapproval processfordevelopmentğƦƦƌźĭğƷźƚƓƭͼͲand Ћ͵ͻ5ĻǝĻƌƚƦanenergyliteracycampaignformunicipal,commercialandinstitutionaldecisionƒğƉĻƩƭ͵ͼ Inaddition,thecommunityenergysystemstudyistofocusontheuseofconventionalboilerandchiller planttechnologiesandthepotentialforintegrationofclosedoropenloopGroundSourceHeatPumps (GSHP)duetothebedrockaquiferslocatedthroughouttheregion.CurrentlyinOntario,lessthan10%of theelectricityisgeneratedbyfossilfuels,sotheuseofGHSPtechnologyinacommunityenergysystem offersCO2reductionpotential. CommunityEnergySystems Theconceptbehindcommunityenergysystems,otherwiseknownasͻķźƭƷƩźĭƷͼenergyissimpleyet powerful.DistrictEnergySystems(DES)connectmultiplethermalenergyusers(buildings)througha pipingdistributionnetworktoacentralizedheatingandcoolingsource. InDistrictEnergysystems,ratherthanhavingaboilerandchillerineachbuilding,acentralenergyfacility providesheatingandcooling,andinsomecasesdomestichotwater,totheconnectedbuildings.Dueto economiesofscaleandonsiteoperatingengineers,centralizedenergysystemscanimplementinnovative lowcarbonalternativesandoperatemoreefficientlyresultinginareductionofGHGandrelianceonfossil fuels.DESisrecognizedbytheUNEnvironmentProgramme(UNEP)asplayinganinstrumentalrolein reducingGHGemissionsanduptakeofrenewableenergysourcesincommunities. Theconceptofdistrictenergyisnotnew;historypointstotheRomansastheearliestusers.Thesepiped heatingsystemswereusedtoheatdwellingsaswellasbaths.InCanada,thefirstdistrictenergysystem wasestablishedin1880inLondon,Ontario,toservetheuniversity,hospitalandgovernmentbuilding.In 1911theUniversityofTorontolauncheditsowndistrictheatinginitiative,followedin1924bythefirst commercialsystemestablishedintheCityofWinnipeg. Traditionally,inNorthAmerica,themostcommonapplicationofdistrictheatingandcoolingisin university,military,governmentandlargeindustrialcampuses;since1990,therehasbeenasignificant growthincommerciallyutilityoperatedsystems,includingToronto,Montreal,Ottawa,Markhamand Vancouver. th Therefore,thesystemismatureandwelldevelopedΑcurrentlyweareinthe4generationofdistrict heatinginCanada: 1 - 16 Page|11 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 st 1Generation:SteamBasedSystems(1880Α1930) nd 2Generation:PressurizedSuperHeatedWaterabove100°C(1930Α1980) rd 3Generation:PressurizedWaterattemperaturetypicallybelow100°C(1980Α2020) th 4Generation:PressurizedWaterattemperaturestypicallybetween50Α70°C(2020+) th Figure1:DistrictEnergy4Generation Districtenergysystemshavethreemaincomponents: 1.EnergyCentre(s)(EC)isthethermalenergysource.Theytypicallyinclude: a.Baseloadcapacity(i.e.cogeneration,heatpumps,biomassboilers,condensingboilers) thatofferkeyadvantagesandutilizeasecure,low(er)costfuelsource.Generallyhighest efficiencyandhighercapitalcostequipment. b.Peakingboilersthattypicallyutilizeamoreconventionalfuelsource. c.Standbyboilersaretypicallyidenticaltothepeakingboilersbutareincludedtoprovidea levelofredundancyandincreasedthermalenergyreliability. 2.DistributionPipingSystem(DPS)istheinsulatedpipingnetworkthattransfersheatingand coolingmediumfromtheenergysourcetothecustomers. 3.EnergyTransferStations(ETS)includeheatexchangerinterfacesbetweenthedistrictenergy systemandcustomerĬǒźƌķźƓŭ͸ƭheatingandcoolingsystems.Havingcommunitysharedheating andcoolingsourceseliminatestheneedforindividualboilers,chillersandcoolingtowersateach building. 1 - 17 Page|12 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure2illustratestheconceptofdistrictenergy;athermalenergygridthatconnectsenergyproducers andusers. Figure2:WhatisDistrictEnergy? 4.Technical:EnergyProfiles KitchenerInnovationDistrict+ TheCityofKitchenerInnovationDistrict+(KID)wasselectedasastudyareaforacommunityenergy system.TheInnovationDistrict+isanareaofrapiddensification,attheheartofthecity,centeredatthe intersectionofKingSt.NandVictoriaSt.S;seeFigure3.Inthenext15years,itisforecasttoseeupwards 22 of~450,000m(4,500,000ft)ofmixeduseresidentialandcommercialdevelopmentwithina600m radius. 1 - 18 13 | Page 219309 Study (Downtown) Centre Feasibility Pre Growth DES Urban District Kitchener of Innovation City 3 Kitchener Figure 1 - 19 Page|14 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 AsmanyoftheKitchenerInnovationDistrictopportunitiesmayhavepassed,duetodevelopmentsbeing inthedesign/constructionprojectphase,thestudyareawasevolvedtoincludetheMidtownareaand publiclyownedlandsintheCityCentreDistrict.Alistofpotentialnewandexistingcustomerbuildings wasdevelopedbytheCEISandFVBteamandaresummarizedinTable1.Thebuildingsincludedseveral developmentscurrentlyintheplanningorconstructionphases,sixforecastednewdowntown developmentsandseveralexistingbuildingsincludingtheGrandRiverHospitalandCityHall.Thepotential 2) customerstoaDESsysteminthedowntowncorerepresent~90,000m2(~9,000,000ftofbuilding developmenteitherplannedorexistingbuildingstock.Locationsofpotentialcustomersareasshownon drawingSK9309100attachedinAppendixA. Table1:CEISKitchenerDESPotentialCustomerBuildings BuildingPublic/PrivateDevelopmentEstimated AddressDescriptionStatus No.DevelopmentYearGFA NewDevelopments(20232034) A55BrammBrammWorksYardsPublicNew2029 E510KingStMultiModalHubPublicNew2029 F607KingSt.StationParkPrivateNew2023 L154WaterStSHallslaneparkinglotPrivateNew2024 L244GaukelSt44GaukelParkingLotPublicNew2029 N15CharlesStWGaukelStBusDepotPublicNew2025 SUBTOTAL1NEWDEVELOPMENTS4,544,656 ExistingPublicBuildings O835KingStWGrandRiverHospitalPublicExisting662,538 P200KingStWCityHallPublicExisting225,000 SUBTOTAL2EXISTINGPUBLICDEVELOPMENTS887,538 FuturePotentialDevelopments(Built/Future) BuiltDevelopments G51Breithaupt"Google"/Breithauptphase1and2Completed2019 H28BreithauptBreithauptBlockphase3UnderConstruction IPedestrianBridgePedestrianBridgeUnderConstruction B1100VictoriaSt.SOneHundredUnderConstruction2019/2021 B2112VictoriaSt.SGarmentSt.CondosUnderConstruction2022 R120VictoriaSt.SGloveBoxUnderConstruction2022 FutureDevelopments Q130VictoriaSt.SMacIntoshDryCleanersRedevelopmentPlanning JMetrolinkPlatformMetroLinksPlatformPlanning CActiveTransportationActiveTransportationPathNew D10VictoriaSt.HealthSciencesCampusFuturePhaseNew K70VictoriaSt.N"CakeBox"New L354WaterStSManulifeParkingLotNew S30WaterStNSanderson(duke+water)New T417KingStWZiggy'sNew UFrancis/WaterParkingLotNew M77WellingtonSt.OSCSeedsCONFIDENTIAL SUBTOTAL3FUTURENEW/EXISTINGDEVELOPMENTS3,626,400 TOTAL1+2+39,058,594 Theexistingbuildingstockwasdeemedincompatiblewithagroundsourcebasedsystemdueto historicallyhigherhotwatertemperaturedesigns;traditionallyhotwaterheatingsystemweredesigned 1 - 20 Page|15 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 tousean82.2°Csupplytemperatureand71.1°Creturntemperature(180°F/160°Fheatingwatersupply andreturntemperature).Heatrecoverychillerorgroundsourceheatpumptechnologyislimitedtoa maximum65°C(149°F)hotwatersupplytemperature.Correspondingdesignreturnwatertemperatures wouldberequiredintherangeof30°C(86°F)whichisnotpossiblewithmostexistingbuildingHVAC systemdesigns.However,existingsystemswouldbecompatiblewithaconventionalsystemorasystem withpeakingboilers.Themarketpenetrationforexistingbuildingswouldbeconsideredlowfor connectiontoaDESbecausetherearefewdriversforthebuildingtomoveawayfromtheirstatusquo. ExistingbuildingswereconsideredasfuturepotentialcustomerstoanestablishedDESsystem,especially buildingswithaginginfrastructureandinneedofrenewal.Existingbuildingsalsotendtobemorecostly andchallengingtoconnect. existingpublicbuildingsidentifiedwithinthestudyarea:theGrandRiverHospitaland Thereweretwo KitchenerCityHall.Theexistinghospitalhasrecentlycompletedseveralmajorrenovationstoitsheating andcoolingsystem,whichincludedtheinstallationofnewcondensingboilers.Forthisreason,the potentialforconnectiontoaDESwasdeemerandnotevaluatedfurtherasapotentialcandidate dlowe intheinitialstudy.Thehospitalshouldbeconsideredasafuturepotentialcustomerorenergysourceto anestablishedDESsystem.TheKitchenerCityHallhasastrongpotentialforconnectiontoadistrictenergy system;ithasahydronicheatingandcoplacementsoon.Aspublic olingsystemandlikelydueforcapitalre buildings,boththeGrandRiverHospitalandtheKitchenerCityHallwouldbeencouragedtoleadby exampleinanefforttogrowenergysharingopportunitiesanddevelopmentofdistrictenergyinthe region,ifnotattheinitialstartoftheDES,theyshouldbeconsideredforconnectioninfuturephases. Buildingdevelopmentsidentifiedwithlittleinformationorlowconfidenceinprogressingandwere excludedfromthestudy. Sixnewdevelopmentsforecastedtobeconstructionbetween2023Α2034wereidentifiedasideal buildingconnectionstosupportanewDESindowntownKitchenerduetoacombinationoffactors: 1.Timing:Thedevelopmentsareinearlydevelopment/planningstagesandcanbedesignedwith connectiontoaDESinmind. 2.Newvs.Existing:Newbuildingdevelopmentsprovidegreateropportunityforusingalow temperaturestrategyenablingimplementationofalternativeand/orwasteheatsourcessuchas GSHP,heatrecoverychillers,etc.ExistingbuildingsaregenerallymorecostlytoconnecttoaDES astheyinitiallyrequiresomeretrofitandmodification. 3.Ownership:Fourofthesix(6)developmentsarepubliclyowned:theMultiModalHub,Bramm WorksYards,the44GaukelParkingLot,andtheGaukelStreetBusDepot. 4.HighDensity:Developmentsspreadoverasmallarea(withina600mradius). 2 5.Size:Theplannedbuildingdevelopmentsaregenerallyover300,000ft. 22 Thesixdevelopmentsrepresentover416,000m(4,485,000ft)ofnewbuildinggrossfloorarea comprisedof~65%highdensitymultiunitresidentialspaceand~35%retail,office,andculturalspacein thedowntowncoreofKitchener. 1 - 21 Page|16 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 BuildingA:BrammWorkYards BuildingE:TheMultiModalHub BuildingF:StationPark BuildingL1:HallsLaneParkingLotRedevelopment BuildingL2:44GaukelStreet BuildingN:GaukelStreetBusDepot PeakHeating/CoolingDemandandEnergyProfiles Ananalysiswascompletedtodeterminewhatfuturethermaldemand(orload)andannualenergythat wouldbeservedbytheKitchenerInnovationDistrictDES.Thethermaldemandrepresentstheamountof heatingandcoolingcapacityabuildingrequirestomaintainacomfortablebuildingenvironment.The demanddeterminesthesizingofthebuźƌķźƓŭƭ͸businessasusualstandaloneboilerorchillerplant capacity,energycentreanddistributionpipingsystem.Theenergyistheusageorconsumptionovera periodoftime;annualenergyistheamountofenergyusedoveraoneyearperiod. EachĬǒźƌķźƓŭ͸ƭpeakloadandannualenergyrequirementswerederivedusingintensitiesfromactual metereddataofoperationalDESswithsimilarbuildingarchetypes.Theenergyintensitiesusedassume thattheproposedbuildingswillmeetenergyefficiencytargetsbetterthanthecurrentbuildstandards, i.e.tolatestASHRAE90.1,OntarioBuildingCodeand/orTorontoGreenStandardsenergyefficiency targets. Thenewdevelopmentsrepresentapotentialconnectedundiversifiedpeakloadof19,230kWheating t and5,100tons(17,900kW)cooling.DiversifiedLoadisthemaximumexpectedloadatanygiventime. Sincenotallbuildingswillrequirefulldemandatthesametime,thisenablestheenergycentrecapacity tobelowerthanthesummationofallthebuildingloads,therebyloweringinfrastructurecosts.A diversificationfactorof0.85hasbeenassumedforheatingand0.90forcooling. ThebuildoutoftheDESwasphasedaccordinganticipateddevelopmenttimelines.Table2showsthe estimatedpeakheatingandcoolingdemandandforecastedannualthermalenergyusagebyPhase. 1 - 22 Page|17 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table2:CEISKitchenerDESDevelopmentLoadandEnergyEstimates HeatingCoolingAnnual BuildingAnnualCooling PhaseDescriptionGFA(ft2)GFA(m2)DemandDemandHeating No.Energy(MWh) (kW)(tons)Energy(MWh) Phase1:2023 1 FStationsPark640,00059,4802,5005006,7003200 1 L1HallsLaneParkingLot81,7767,600300100800500 SubtotalPhase1721,77667,0802,8006007,5003700 Phase2:2025 kWTons 2 NGaukelSt.BusDepot1,024,35295,2005,9002,0008,9007800 SubtotalPhase21,024,35295,2005,9002,0008,9007800 Phase3:2029 kWTons 3 ABrammWorksYards500,00046,4681,9505504,1003300 3 EMultiModalHub500,00046,4681,8504204,6002750 3 FStationPark330,00030,6691,3002003,4001600 3 L1HallsLaneParkingLot81,7767,600300100800500 3 L244GaukelSt327,10430,4001,3003002,9001800 SubtotalPhase31,738,880161,6066,7001,57015,8009950 Phase4:2034 kWTons 4 ABrammWorksYards500,00046,4681,9505504,1003300 4 EMultiModalHub500,00046,4681,8504204,6002750 SubtotalPhase41,000,00092,9373,8009708,7006050 Phase1+21,746,128162,2808,7002,60016,40011500 Phase1+2+33,485,008323,88615,4004,17032,20021450 Phase1+2+3+4(TOTAL)4,485,008416,82219,2005,14040,90027500 DIVERSIFIEDTOTALLOAD(0.85Heating/0.9Cooling)16,3204,626 AbuildingloadprofilewasdevelopedforeachbuildingandcompiledintoapredictedDESfullbuildout loaddurationcurve.Thepurposeoftheloaddurationcurvesistovisuallyrepresenttheheatingand coolingdemandsandenergydeliveredthroughoutafullyearofoperation.Thesecurvesareutilizedin equipmentsizingandconceptdevelopmentforboilers,chillersandcogenerationunits.Figure4and Figure5illustratetheloaddurationcurvesfortheproposedDESforheatingandcooling. Theseasonalheatingandcoolingloadprofileswerealsooverlaidtoidentifycoincidentheatingand coolingloads;seeFigure5. 1 - 23 Page|18 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure4:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve Figure5:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve 1 - 24 Page|19 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Figure6:KitchenerInnovationDistrictEstimatedDESHeatingLoadDurationCurve 1 - 25 Page|20 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 5.Technical:DistrictEnergyConcept EnergyTransferStations EachbuildingwillbeconnectedtothedistributionsystemindirectlythroughanEnergyTransferStation (ETS).ThepurposeoftheETSistotransfertheenergytransportedfromtheEnergyCentrethroughthe distributionpipingnetworktotheendcustomerviaheatexchangerstosatisfytheĬǒźƌķźƓŭ͸ƭheating needs. Anenergytransferstation(ETS)typicallyconsistsofaspaceheating,domestichotwaterandspacecooling heatexchanger,isolationvalves,strainers,acontrolpackageincludingcontroller,controlvalve(s), temperaturesensors,andenergymeteringpackage. TheETSisphysicallylocatedineachbuildingandreplacestheuseofthermalenergygeneratingequipment inthebuildingsuchasboilers,chillers,andheatpumps.TheETSwillbedesigned,installedandownedby theDES.Itwillutilizebrazedplateheatexchangertechnologyaswellasgasketplateandframeunitsfor DHWandcooling(doublewalledunits).AllcoststoconnectthebuildingwillbebornebytheDES;no capitalcostsareincurredbythebuildingowner.ADESconnectiontoexistingbuildingsmayrequire additionalcapitaltoretrofittheĬǒźƌķźƓŭ͸ƭsystems;thiscouldincludetheconstructionofriserstoconnect totheexistingpenthousemechanicalrooms. Figure7:TypicalEnergyTransferStationInstallation 1 - 26 Page|21 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 DistributionPipingSystem Thedistributionpipingsystemisthephysicallinkbetweenenergysinks(customers)andsources(plants). Theconceptisbasedonabelowgrounddirectburiedhotwaterandchilledwaterdistributionnetwork withsupplyandreturnpipinginaclosedcircuit(4pipesystem).Boththeheatingandcoolingpipingwould generallybeinstalledinthesametrenchinaparallelconfiguration.Stackedconfiguration(e.g.,hotwater pipesonthetopofthecoolingpipes)wouldbeconsideredwherestreetspaceistoocongestedfora parallelconfigurationΑthisoptionisnotpreferredasitiscostandtimeintensiveandaswellasmore challengingtoaccessandmaintain. Apreliminarydistributionpipingconceptwasdeveloped,includingroutingandsizingtoprovidedistrict heatingandcoolingservicestothetargetedbuildingdevelopments.Thelayoutofthedistributionpiping b.TheproposedDPSroute, networkisbasedontheCentralEnergyCentrelocationattheMultiModalHu CEC,andcustomerlocationsareshownonthepipelayoutdrawingSK9309101inAppendixA. TheDPSconstructionisgenerallyimplementedinopentrenchconstructionandadvantageoustobe performedinsynergywithotheranyburiedmunicipalorutilityserviceupgradesorroadway ts.Itispossibletoutilizetrenchlessandorboringtechnologiesforareasthataresensitiveto improvemen opentrenchconstructionsuchashighways,railways,andtransitlinesetc.Trenchlessconstructionisvery expensive,upwardsofdoubletheopentrenchconstructioncosts,andthereforeisgenerallybeenlimited toͻĭƩƚƭƭźƓŭƭͼperpendiculartoroadwaysandnotconsideredforparallelroadconstruction. Theproposedpiperoutinghasbeenselectedtominimizethelengthofdistributionpipingandminimize conflictwiththeLRTrouteonCharlesStreet,KingStreet,andVictoriaStreet.TheMetrolinx/CNRrail corridoralsopassesthroughdowntownKitchenerandpresentschallengesforburiedinfrastructurework. ItisalsonotedthattheroadwaysindowntownKitchenerareparticularlynarrowandcongestedwith existingutilities;thiswillnecessitatecarefulplanningwithrespecttotrafficmanagement,investigation, examination,andcoordinationwithlocalutilities. DESplanningrequiresextensivecooperationwithlocalutilities,municipalworks,androadconstruction. ThegroupsneedtobeawarethatthereisplanningaroundDEinfrastructureinthedowntowncoreinthe next15years.ThismaynecessitateworktobedeferreduntiladecisionismadeonwhethertheDESwill proceed.Forexample,GaukelStreet,betweenbusdepotandCityHall,ispotentiallybeingredeveloped aspedestrianfriendlywalkway.Theconstructionofthepedestrianwalkwaymaytriggertheidealtimeto connecttheKitchenerCityHalltotheDES,installingthedistributionpipingbeneaththewalkwayand possiblyasnowmeltsystem.Asnowmeltsystemwouldincreaseaccessibilityinthewinterbetweenthe busdepotandCityHallandreducesaltingandsnowclearingefforts. ThedistrictheatingpipingsystemassumestheuseofpreinsulatedsteelinstalledinaccordancewithANSI B31.1andCSAB51designedfor1,100kPa(160psig)atmaximum100°C(212°F)designtemperature.The districtcoolingpipingassumesweldedsteelwithepoxycoating. Thepipesizingfortheselectedroutewillbegovernedbythefollowingfourkeyfactors: Supplyandreturntemperaturedifferentials,referredtoasT(deltaT); Maximumallowablefluidvelocity; 1 - 27 Page|22 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Distributionnetworkpressureatthedesignloadconditions;and Differentialpressurerequirementstoservicethemostremotecustomer. Figure8:ExampleofaFourPipeDistributionPipingInstallation Distributionpipesizesarebasedonadifferentialtemperatureof30Cforheatingand8Cforcooling withamaximumflowvelocityof2.0m/s.Thetemperatureofthedistrictsystemwillbedictatedbythe customerbuildings;thedesignofeachĬǒźƌķźƓŭ͸ƭinternalheatingsystemwillneedtobecoordinatedin ordertoachievethedistrictsidereturntemperatures. Itisassumedthatthedistricthotwatersuppliedtoeachbuildingwouldbe70°Cwiththecapabilityof delivering90°Cmaximuminthewinterandanassociateddistrictreturntemperatureof40°Cand60°C respectively.Adistrictheatingsupplytemperatureresetschedulewouldbeemployed. Itisassumedthatthedistrictsidechilledwatersuppliedtoeachbuildingwouldbe4°Cminimuminthe summer,withanassociateddistrictreturntemperatureof12°C.Adistrictcoolingsupplytemperature resetschedulewouldalsobeemployed. Themainpipesareestimatedtobe300mmforheating,capableofdelivering19.6MWofheating,and 500mmforcooling,capableofdelivery5,500tonsofcooling.Thisallowsforapossibleexpansionofthe DESby20%.Thetrenchwidthis~2500mmwide.Branchsizesrangeaccordingtoassumedbuilding connectionloadfrom100mmto150mmontheheatingpipingand150mmto400mmonthecooling piping. EnergyCentres Three(3)EnergyCentrescenarioswerereviewed: 4.ConventionalDESΑwithgasfiredboilersandelectricalcentrifugalchillerstotaling20.5MWand 4,600tons.Plus,anoptionthatincludes550kWeofCHPcapacity. 1 - 28 Page|23 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 5.OpenLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithanopenloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. 6.ClosedLoopGroundSourceHeatPumps+ConventionalDESΑwith1,000tonheatrecoverychiller coupledwithaclosedloopgroundsourceand16.5MWgasfiredboilersand4,100tonselectrical centrifugalchillerscapacity.Plus,anoptionthatincludes550kWeofCHPcapacity. CentralEnergyCentre:Location&SpaceRequirements TheCentralEnergyCentre(CEC),toservetheKitchenerInnovationDistrictDES,willhousetheheating, coolingandelectricitygenerationequipment.Thethermalenergygeneratedwillbesuppliedtocustomer buildingsconnectedtothesystemforspaceheating,spacecoolinganddomestichotwaterheating. ThisconceptproposeslocatingtheenergycentreintheMultiModalHubdevelopmentareaeitherasa standalonebuildingorembeddedwithinathebasementofthebuilding.Rooftopspacewouldberequired forwetcoolingtowers. Itisestimatedthatatfullbuildoutthefollowingfootprintisrequired: 2 HotwaterboilersΑ~500m 2 ElectricchillersΑ~1000m 2 CoolingtowersΑ~400m(assumedrooftopinstallation) 2 CHPengines~75m BoreholeFieldΑvariesbeneathMultiModalHub PhasingApproach Thephasedapproachedattemptstodefertheoutlayofcapitaluntilthereistheloadandcorresponding revenuestreamtosupportthatcapital.Thechallengewiththephasingapproachistofindtheright balancebetweentheeconomiesofscale,designandconstructioneffort,andtheinitialcapitalrequired toprovidetheplantinfrastructuretosupportthefuturephases. TheDESCECplantinfrastructurerequiredforthefullbuildoutwouldbeinstalledduringthefirstphase withonlytheheatingandcoolingequipmentrequiredforthefirstphasedemandinstalledwithinthe plant.Althoughitrequiresmorecapitaltobeexpendedatthebeginningoftheproject,thisisthemost practicalmethodthatavoidsremovingandupsizingequipmentfromphasetophase.Overall,theplant 1 hasbeenphasedsothereisN+1heatingcapacityandNchillercapacityatfullbuildout.Theproposed phasingoftheDESplantissummarizedinTable3fortheconventionalDESscenario. Thegroundsourceconceptswillbephasedinasimilarfashiontotheconventionalconceptbutwithheat recoverychillersandgeoexchangefieldcapacityinstalledduringthefirstphaseoftheDESdevelopment. 1 N+1Capacityrepresentsthetotalinstalledcapacityminusthelargestboiler.Thisisthemaximumloadthesystem canmeetwithanyoneboilernonoperational. 1 - 29 Page|24 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table3:CEISKitchenerDESEnergyCentrePhasing ConventionalDESPlant SystemSummaryPhaseIPhaseIIPhaseIIIPhaseIVFullBuildOut YearofConnection20232025202920342034 SystemConfiguration Plant Boilers22217 Chillers12115 DistributionSystem HotWaterTrenchMetres6203303101260 ChilledWaterTrenchMetres6203303101260 Heating&CoolingPeakLoads Heating(kW)Cumulative2,8008,70015,40019,20085% DiversifiedLoad(0.85)7,40013,10016,300 16,320 Cooling(tons)Cumulative5402,5004,1005,10090% DiversifiedLoad(0.90)2,3003,7004,600 4,590 PlantCapacity Boiler(kW)(N+1)3,00010,00017,00020,50020,500 Chiller(tons)(N)6002,6003,6004,6004,600 yphase) AnnualEnergy(b Heating(MWh)7,40016,30032,10040,80040,800 Cooling(tonh)1,028,4003,246,2006,070,5007,790,7007,790,700 CentralEnergyCentreConcept:Conventional Thehotwaterboilerplantinstallationiscomprisedoftwo(2)1,500kWtandfive(5)3,500kWtboilers. 2 redundancyinthe ThisallowsforthebaseloadtobemetbysmallerboilersandfortheretobeN+1 overallboilercapacityatfullbuildout. Naturalgasfiredhotwaterboilershavebeenassumedforthisconcept.Thelarger3,500kWtboilerswill becommercialgrade,packagedwatertubeboilerswithlowNOxburners,upgradedburnercontroland condensingeconomizers,whereapplicable.Thesmaller1,500kWtboilerswillbehighefficiency,low emissionsgascondensingboilerwithstainlesssteelheatexchanger.Theseasonalboilerefficiencyis assumedat85%fortheseboilers. 2 N+1describesalevelofredundancy,wherethereisduplicationofacomponentintheeventofafailure.Nwould representthebasenumberofcomponentsorequipmentrequiredtosatisfythesystemandthe+#wouldindicate thelevelofbackupintheeventofafailureintheNcomponent.Forexample,inaheatingsystemwhere3boilers, eachat500kW,arerequiredtosatisfytheheatload,anN+1redundancydesignwouldhave4x500kWboilerssuch thatintheeventofafailure,thelevelͻbͼcanstillbemaintained.Typically,theͻњϔͼwillrefertothelossofthe largestsizeunit. 1 - 30 Page|25 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TheCECalsoincludescentralizedcoolingequipmentthatproduceschilledwater.One(1)600tonandfour (4)1,000tonelectric,watercooledcentrifugalchillersareassumedforthisconcept.Thisallowsfor turndowninlowloadscenarios.ACOPof5.0kWt/kWeisassumedforthecoolingplantsystem.These chillersalsoproducealargeamountoflowgradewasteheatthatisrejectedthroughwetcoolingtowers. Thesetowersrequirealargefootprintandaccesstolargevolumeofairinthecoolingprocessandare generallylocatedontherooftopoftheenergycentre. AschematicillustratingtheconventionalconceptcanbefoundinAppendixAinSK9309001. CentralEnergyCentreConcept:GroundSourceHeatPump(GSHP) 5.3.4.1.General Agroundsourceorgeoexchangesystemisanelectricallypoweredheatingandcoolingsystemthatutilizes theearth(orseaorlake)forbothaheatsourceandaheatsink.Agroundsourceheatpumpsystemalso knownasͻŭĻƚĻǣĭŷğƓŭĻͼsystemusestherelativelyconstanttemperatureoftheearthasaheatsource inwinterandaheatsinkinsummer.Componentsofthissystemincludeheatpumps,hydronicpumps,a groundheatexchanger(ubendedpipesinboreholes),andadistributionsubsystem.Mostgeoexchange systemsutilizepolyethylenepipingintheearthfortheheatexchanger.Thegeoexchangeheatpump rejectsheatintotheearthduringthecoolingmodeandtakesheatoutoftheearthwhileintheheating mode. GSHPsystemsarecategorizedintotwotypes:openloopandclosedloop.Openloopsystemspump groundwaterfromthegroundtothesurface.Thegroundwaterispassedthroughaheattransfersystem, beforebeingreturnedbyinjectionbackintotheground,atadifferenttemperaturethanbefore;warmer whenthesystemisusedforcooling,orcolderwhenthesystemisusedforheating. Closedloopsystemsdonotutilizegroundwater,butinsteadcirculateafluidthroughaloopofborehole heatexchangepipesburiedintheground.Acirculatingfluid,typicallyglycol,passesthroughaheat transfersystematthesurfacebeforebeingrecirculatedbackthroughtheburiedgroundlooptoexchange heatwiththesurroundingsoilorrock.Thelengthofthegroundloopisdeterminedbythecapacity requiredforheatingorcooling.Theborefieldcanbehorizontalorverticalinconfigurationdependingon theavailablearea;verticalholesrequiremuchlesslandareabutrequiretheexpenseofdrillingboreholes. Boreholespacingiscriticaltotheefficientoperationandcosteffectiveconstructionofthegeoexchange system.Asboreholesareplacedclosertogethertherewillbeanincreaseinthermalinterference, decreasingtheenergyloadcapacityofthegeoexchangesystem,andrequiringmoregeoexchangetobe installedtoovercomethepenalty.Minimumrecommendedboreholespacingforaclosedloop applicationis6.0m(20ft).Belowthisspacingthermalinterferencemaysignificantlyadverselyaffectthe geoexchange. Closedloopboreholesaretypicallydrilledtodepthsof120260m(400Α850ft). Heatpu mpperformanceCOP'sareusuallyprovidedassumingaconstantenteringwatertemperature (EWT)of10°C.Ageoexchangesystemdesignedtoreturnwatertotheheatpumpsatthemeanground 1 - 31 Page|26 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 temperaturewouldbemoreefficientbutwouldneedtobeextremelylongandisthereforenotpractical. Inreality,theEWTwillvarythroughouttheyeardependingupontheweatherconditions,andtheextent anddurationofthegeoexchangesystemusage,amongstothervariables.Whendesigningageoexchange system,thedesignerwillsetminimumandmaximumEWTs.Theloopwillthenbesizedtomeetthese limits.TheseEWTsarecommonlysettobe4°C(40°F)minimumforwinterheatingand32°C(90°F) maximumforsummercooling.Insomecases,thesevaluescanbealteredtomeetannualefficiency targets,howevermostcommonlyitisassumedthattheactualruntimesattheseEWTvaluesareminimal. Geoexchangesystemsprovidenumerousadvantagescomparedtoconventionalheatingandcooling systems,including: Allcomponentsarelocatedbelowground(asopposedtocoolingtowersandboilers) Reducedequipmentspacerequired(e.g.Αforcoolingtowers) Reducedcoolingtowerenergyuse Reducedlongtermmaintenancecosts Reducedgreenhousegasemissions Eliminationofwaterconsumptionforcooling 5.3.4.2.OpenLoopWellSystem 5.3.4.2.1.GeologicalSetting TheoverburdenwithintheKitchenerInnovationDistrictconsistsofacomplexmixofglacialtillsand outwashsandandgravel.Thetotaloverburdenthicknessintheareaisapproximately55m.Thesandand graveldepositsrangefrom5to10minthicknessandareusuallyfoundnearthebottomoftheoverburden sequence. ThebedrockbeneaththeKitchenerInnovationDistrictconsistsofmultipleformationsofsedimentary rock.Nobedrockwellsareknowntoexistwithinthedistrict,howeveropenloopgeothermalwellsare locatedabout200mtothewest(seeBeattyFigure1inAppendixA).Thewellsaredrilledabout55minto thebedrockandarestillinuseattheAirBossplant(formerlyUniroyalRubberplant). BasedontheķƩźƌƌĻƩƭ͸logofthetwoAirBosswells,thesedimentaryformationsatthesiteinclude: o SalinaFormationshale, o GuelphFormationfractureddolostone, o Vinemountshale,and o GasportandGoatIslandFormationsdolostone Aschematiccrosssectionthroughthetwowells(plusanoldRMOWobservationwell)isshownonBeatty Figure2inAppendixA. 5.3.4.2.2.GroundwaterAquifers Thesandandgraveldepositinthelowerpartoftheoverburdenispartofamajoraquiferwhichisfound westoftheInnovationDistrict.TheRMOWoperatesfivehighcapacitywellsinthisaquifer,whicharepart oftheStrangeStreetWellfield. 1 - 32 Page|27 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TwoofthebedrocksedimentaryformationsbeneaththeInnovationDistrictarealsoconsideredtobe majoraquifersthroughoutKitchener,WaterlooandCambridge.TheyaretheGuelphandGasportaquifer systems,asshownon.ĻğƷƷǤ͸ƭFigure2.TheRMOWhasneverpumpedwaterfromthebedrockinthe vicinityofcentralKitchener,duetothebetterqualityoftheStrangeStreetsandandgravelaquifer. ThetwoAirBosswellsweretestedat53to56L/s(840to900USgpm)whentheyweredrilledin1968 and1974.Thewellshavebeeninusefor46to51years.BasedonthecapacityoftheAirBosswells,and .ĻğƷƷǤ͸ƭexperienceattheevolv1andHUBbuildings,itshouldbefeasibletoobtainupto30L/s(500US gpm)frommultipleopenloopsupplywellsthroughouttheKitchenerInnovationDistrict. Modernopenloopsystemssustaintheaquiferproductioncapacitybyreinjectingallthesupplyflowback intotheaquifer.Asaresult,theavailableaquifersupplycanbesustainedforlongtermgeothermal heatingandcoolingofbuildingsinthedistrict. 5.3.4.2.3.ConceptualOpenLoopSystemDesign Ourconceptualopenloopsystemdesignconsistsofacluster3supplywellsand3injectionwells.Both thesupplyandinjectionwellswithineachclusterarespaced60m(200ft)apart.Theclusterofsupply wellsislocated150m(500ft)fromtheclusterofinjectionwells.Eachsupplywellisassumedtohavea maximumcapacityof30L/s(500USgpm). Basedontheconceptualtotalflowfromthe3supplywells,thesystemwoulddeliverapeakheatingand coolingloadof3,500kW.Asummaryoftheconceptualsystemdesignandassumptionsareshownin .ĻğƷƷǤ͸ƭTable1inAppendixA.Thistablealsoprovidesahighlevelconstructionbudgettoconstructthe system. 5.3.4.3.ConceptualClosedLoopSystemDesign BasedonthegeologicsettingdescribedinSection5.3.4.2.1,itisexpectedthatclosedloopborehole drillingwouldbefeasible,providingtheboreholescanbedrilledeconomicallyinthefracturedbedrockat thesite. Ourconceptualclosedloopsystemdesignconsistsof250geothermalboreholes,eachdrilledtoadepth of200m(650ft).Theboreholeswouldbelaidoutina6mby6mgrid,andwouldbeconnectedbya networkofsupplyandreturnheaderpiping. Basedonthegeologicsettingandthe250boreholegeothermalfield,thesystemwoulddeliverapeak heatingandpeakcoolingcapacityof3,500kW.Asummaryoftheconceptualsystemdesignand assumptionsareshowninTable2inAppendixA.Thistablealsoprovidesahighlevelconstructionbudget toconstructthesystem. 5.3.4.4.GSHPSystemCapacityandTemperatures Forboththeopenandclosedloopdesigns,thedistricthotwatersuppliedtoeachbuildingwouldbe65°C maximuminthewinter,withanassociateddistrictreturntemperatureof35°C.Thedistrictchilledwater 1 - 33 Page|28 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 suppliedtoeachbuildingwouldbe4°Cmaximuminthesummer,withanassociateddistrictreturn temperatureof12°C. Thesizeoftheopenloopsystemislimitedbythespacerequiredbetweentheextractionandinjection wells.Itisrecommendedthattheextractionandinjectionwellsbespacedapproximately120210m apart.Additionally,theextractionandinjectionwellsshouldbeclusterednocloserthanapproximately 60mtoeachother.SincetheDESistobeinstalledinadenseurbansetting,itiscostprohibitivetoinstall morethanthreepairsofwells,astheywillneedtobepipedtogetherandroutedtotheEnergyCentre. Threepairsofwellswillprovideapproximately1,000tonsofcoolingcapacity.Theremainingloadwillbe managedbyelectricchillerswithheatrejectiontocoolingtowers. Tocomparethetwogeoexchangeoptions,theclosedloopwillbedesignedwiththesameborefield capacityastheopenloop.Foraclosedloopdesign,aborefieldcontaining250boreholeswillrequire 2 approximately7,500mofareafootprint.Athermalenergybalanceiscriticalintheborefield;therefore, theheatrecoverychillerswillbeoperatedtomaintainthisbalance.Theadditionalcoolingloadwillbe managedbyelectricchillerswithheatrejectiontocoolingtowers. Similartotheopenloopconcept,therequiredareafortheclosedloopconceptisalsoveryclosetothe areaavailableattheMultiModalHubsite.Ifadditionalclosedloopborefieldcapacityweretobeadded tothesystem,itwouldneedtobelocatedatanothersiteandpipedtoandfromtheEnergyCentre.This optionwasnotevaluatedinthisstudy. Inbothcases,naturalgasfiredboilerswillberequiredtomeetthepeakheatingdemand. ConceptualschematicsfortheopenandclosedloopscanfoundinAppendixAasSK9309002andSK 9309003,respectively. SizeofGSHPinfrastructureandcostscanbereducedoroptimizedbybalancingsimultaneous,coincident heatingandcoolingdemand.Thisrequiresfurtherinvestigationduringthetechnicaldevelopment includinghourlymodellingofheatingandcoolingdemandandreviewingopportunitiestoutilize mechanicalcoolinginlieuofambientcooling. CombinedHeatandPower CombinedHeatandPower(CHP),otherwiseknownasͻĭƚŭĻƓĻƩğƷźƚƓͼͲisthesimultaneousproductionof electricityandthermalenergyfromonesource.Someexamplesofacogenerationsourcearea reciprocatingengine,gasturbineorsteamturbine.Thecombinedheatandpower(CHP)efficiencyfora properlysizedcogenerationsystemusinggasfiredreciprocatingenginescanachieve90%. ThekeytoachievingthislevelofefficiencyistheaggregationofbuildingspaceheatingandDomesticHot Water(DHW)loadstoalevelwheremostoftheheatgeneratedfromcogenerationcanbeutilized.This goalmustbebalancedwiththeeconomicbenefitofinstallingthelargestgeneratorsorCHPunitsas possibletoachieveeconomiesofscale. 1 - 34 Page|29 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 ADESisagoodcandidateforacombinedheatandpower(CHP)plantbecauseofasteadybasethermal heatingload.ACHPplantcouldbeinstalledwithintheEnergyCentretosupplyelectricalloadtotheplant withtheaddedbenefitofheatrecoveryfromtheCHPtobeinje ctedintothedistrictheatingsystem. ACHPplantfortheKitchenerDESwouldbegasfiredgeneratorsthatproducehotwater.Foreveryunit ofgasconsumedapproximately0.4unitsofelectricityand0.4unitsofthermalenergyareproduced.Even thoughthereissomeoffsettingofnaturalgasconsumptionbythethermalenergyproducedintheCHP, similartotheCESboilers,therewouldbeanetincreaseofnaturalgasflowtothearea,butitwillbeallto oneaddress,attheCEC.However,therewillalsobeanetreductioninelectricityconsumptiontothe areaandthecapabilityofsupplyinghotwaterorchilledwaterintheeventofapoweroutage.Thisisa significantadvantagetothebuildingsservedbytheDES. FeedbackfromKitchenerUtilitieswasobtainedandnaturalgasisavailable.However,thecapacity needstobedeterminedbasedontheselectedscenarioandtheprojectedsizeofthesystem. Asingle275kWeenginewillbeinstalledatPhase2andanadditional275kWeenginewillbeinstalled atPhase3.Theywillbeoperatedprimarilytooffsetthebaseelectricalloadwithintheplant.Any additionalheatrecoveryabovewhichisrecoveredbytheCHPengineswillbeprovidedbytheheat recoverychillers. OtherConsiderations EnergyConstraints&Security ThekeyenergysourcesthatareimpactedbytheDESarenaturalgasandelectricity.Thesesameenergy sourcesareneededforthedevelopmentofnewbuildingsinthearea.Thenaturalgasconsumedbythe CESboilerswillbeoffsetbyareductioninnaturalgasconsumptioninthebuildingsservedbytheCES. Thesameistruewithelectricityloadgeneratedbythecoolingplantsinthedistrictenergycentres.The electricityconsumedbytheelectricchillersisoffsetbythereductioninelectricalloadinthebuildings servedbytheCES.Therewillbeanetreductioninelectricitybecausethechillersinthedistrictenergy plantaremoreefficientthanthebuildingcoolingequipment. Electricallosses,andfailurerates,inthedistributionsystemarereducedduetolesspeakpowerflowto mostofthebuildings(exceptonecontainingthechillerplant)duringthehottestsummerdays.Thisis trueevenaftersubtractingtheadditionalpowerrequiredtopumpchilledwatertothevariousbuildings. Insummary,therewillbeanetreductioningasandelectricityconsumptionduetotheCESboilerand chillerplantswhichwillimprovetheenergyreliabilityandsecurityforthearea. ThermalStorage Athermalenergystorage(TES)systemcouldbeinstalledforeitherthehotwaterorchilledwatersystems. ATESisintendedtobeusedtoprovidepeakingcapacityforthedistrictheatingandcoolingsystems.The conceptisthatthestoragesystemwouldbefilledduringtimeperiodswheretheenergyrequiredto 1 - 35 Page|30 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 providethehotorchilledwaterisatalowcostandwhenthesystemdemandislow.TheTESsystem wouldbedesignedforspecificdischargeperiod. Thebenefitsfromhotwaterthermalstoragecouldbethefollowing: MaximizethegenerationofhotwaterfromtheCHPunits. Provideadditionalcapacitytosupplypeakheating Improvehotwaterheatingsystemreliabilitybyhavingahotwaterreserveavailableincaseof emergencies. Theadvantagesofthechilledwaterthermalstoragearethefollowing: ReduceonpeakelectricalloadsbygeneratingchilledwaterduringoffpeaktochargeTE Sand dischargeduringonpeakperiods. Provideadditionalcapacitytosupplypeakcoolingloads. Improvechilledwatersystemreliabilityhavingachilledwaterreserveavailableincaseof emergencies. 6.Financial Thekeyinputstothefinancialmodelare: 1.Projectphasing,loadandcapitalestimates,whichvaryfromprojecttoprojectandfordifferent phaseswithinprojects,i.e.contractedcapacity(inkWtortons)andcapital(in$millions). 2.CapacitychargesthathavebeendeterminedthroughaBAUcostanalysistobecompetitivefor thesubjectscenario(i.e.$percontracttonpermonthor$percontractkWtpermonth). 3.Operatingassumptionsusingtypicaldefaultvaluesandratiosforoperatingcostsperunitof energyorunitofinstalledcapacity,whicharelargelythesamebetweenallprojects,being adjustedfromtimetotimeasenergypriceschangeorexperienceleadstotherecommendation ofdifferentratios. CapitalCostEstimate Thepreliminarycapitalcostestimatesforeachphaseoftheproposeddistrictenergysystemdevelopment hasbeenestimatedbasedonC.͸ƭcostingtemplatesandestablishedunitcosts,vendorandcontractor estimates.ClassestimatesareconsideredClassD,indicative+/30%.hǞƓĻƩ͸ƭcontingency,softcosts,and legalandeasementfeesarenotincluded. AsummaryofthecapitalcostsforeachproposedDEScanbefoundinTable4below. 1 - 36 31 | Page 219309 Study (2019$) Feasibility Pre Costs DES Capital DES District Kitchener Innovation CEIS 4: Kitchener Table 1 - 37 Page|32 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 AnnualOperatingandMaintenanceEstimate Theannualcosttooperatethedistrictenergysystemsandmaintaintheequipmentplaysasignificantrole intheviabilityofadistrictenergyproject.Thefollowingtablesummarizestheestimatedannualcostsfor eachproposedDESatfullbuildout. Table5:CEISKitchenerDESOperationandMaintenanceCosts 7.BusinessCase Glossary KeyFinancialTerms NPV(NetPresentValue)isthedifferencebetweenthepresentvalueofthebenefitsofa projectanditscosts. IRR(InternalRateofReturn)isdefinedastheinterestratethatsetstheNPVofthecashflows ofaprojecttozero. WACC(WeightedAverageCostofCapital)istheaveragecostofcapitalanentitymustpayto allitsinvestors,bothdebtandequityholders. TVM(TimeValueofMoney)istheconceptthatthevalueofcashtodaywillbeworthmore . thaninthefutureduetotheearningpotentialofpresentdaycash BusinessAsUsual(BAU)Costs CustomerĬǒźƌķźƓŭƭ͸BAUcosts,otherwisereferredtoasstandaloneorselfgenerationcosts,includethe totalcostsofowning,operatingandmaintainingheatingand/orcoolinginbuildingsystemsifitwerenot connectedtotheDES. TheBAUcostcanbeconceptualizedasbeingcomprisedoftwocomponents: 1 - 38 Page|33 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 1.AnnualOperatingandMaintenance(O&M)Costs.Thisincludesfuel,electricity,other consumables,onsitestafftimeandmaintenance. 2.CapitalCosts Fornewbuildingstherearetwocomponents: Theupfrontcapitalcostavoidedinhavingtobuildthespaceandinitialcosttoinstallthe heatingandcoolingequipment;and Theavoidedfuturereplacement/sinkingfundforequipmentreplacement. nd Forexistingbuildingsthereisonlythe2portionoftheavoidedcapital(future replacement/sinkingfundforequipmentreplacement). TheBAUcostswereestimatedforthepotentialcustomerbuildings.Basedonthestandalonecosts, otherwisereferredtoasselfgenerationcosts,marketbaseddistrictenergyratesaredevelopedtobe costcompetitivewithabusinessasusualscenario. 1 - 39 34 | Page 219309 Study Feasibility Costs Pre DES Generation Self District Heating Innovation Typical 6: Kitchener Table 1 - 40 35 | Page 219309 Study Feasibility Costs Pre DES Generation Self District Cooling Innovation Typical 7: Kitchener Table 1 - 41 Page|36 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Revenue DistrictenergyratesarethechargesthecustomerĬǒźƌķźƓŭ͸ƭpayfortheDESservice.Theyaredeveloped basedonavirtualplantmodelasifthebuildingwerenotconnectedtothedistrictenergysystem.It analysesthecapitalcostsandoperationandmaintenancecostforastandalonebuildingsystemto generatethebuildinŭ͸ƭspaceheating,spacecoolingand/ordomestichotwater(DHW)needs. Thedistrictenergyratesarecomprisedoftwocomponents: 1.theEnergyChargeTheannualenergychargesarebasedontheannualenergyconsumption,current utilityratesandtheequipmentefficiencyexpectedtobeachievedintheselfgenerationscenario. 2.theCapacityChargeTheCapacityChargesarebasedonthestandardratesapplicableto theloadforheatingandcooling. ThefollowingfigureshowstherelationshipbetweentheSelfGenerationanddistrictenergyrate structures.DistrictEnergyRateStructure1involvesanenergychargeandcapacitycharge.District EnergyRateStructure2involvesaonetimeconnectionfeetocovercapitalcosts,reducingongoing rates. Figure9:SelfGenerationCostsvs.DERateStructure Theratestructureisassumedtoutilizeafixedcapacitychargeandavariableenergychargestructure (RateStructure1showninFigure9above).Theratesassumedinthecalculationoftherevenueinthe financialmodelarebasedontheweightedaverageoftheproposedratesdeterminedfromtheBAU costs.TheyaresummarizedinTable8. Table8:DistrictEnergyRateSummaryΑHeatingandCoolingEnergy DESRates HeatingCooling CAD/MWh Energy31.72$$0.12CAD/tonh t CAD/kW Capacity53.15$$620.29CAD/ton t 1 - 42 Page|37 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Thecapacitychargeratesaresettobecompetitiveagainsttheannualizedfixedcostofconventional heatingand/orcooling.Acapacitychargeof$53.15kW/yearforheatingand$620.29perton/yearfor t coolingisassumedandshouldbeadjustedtobecompetitiveforKitchenerDESandbusinessessuchthat buildingownerscanexpecttheirannualizedfixedcoststobeequalorlowerwhenconnectingtoaDES comparedtoconventionalselfgeneration. FinancialResults InC.͸ƭexperiencewiththedistrictenergybusinesscasedevelopmentinCanada,a65%/35%debtto equityratioisaconservativefinancialleverageforamunicipallyowneddistrictenergysystem.The InfrastructureOntariolendingrateforͻaǒƓźĭźƦğƌCorporationsΑDistrictEnergyhƦĻƩğƷƚƩƭͼis~4.0%for 25years.ByexaminingtheWeightedAverageCostofCapital(WACC)assumingaborrowingrateof4% andequityvalueof10%,theWACC=0.65x4%+0.35x10%=6.1%.Therefore,anInternalRateofReturn (IRR),basedon100%equityassumedinthefinancialanalysis,aboveWACCwouldbeconsidereda financiallyviableproject.Forexample,theROIforScenario2is7.9%andisabovetheWACCandtherefore agoodproject. ThefinancialresultsincludingprojectIRRandNPVforeachscenarioaresummarizedinTable9. ghestIRRof Scenario1a,theconventionalgasfiredboilers/electricchillersscenariowithCHPhasthehi 8.9%andNPVof$21.4million.However,theGHGemissionsreductionfromtheBAUcaseistheworst.In fact,theemissionsincreasecomparedtotheBAU.EvenforScenario1,withoutCHP,theGHGreduction isonly7%. Scenario2,thegroundsourceheatpump(GSHP)ΑOpenLoophasanIRRof5.3%andNPVof$5.9million. TheGHGemissionsreductionis53%comparedtotheBAUcase.Scenario2a,withCHP,hasaslightly betterfinancialcase(i.e.IRRandNPV)buttheGHGreductionreducesto44%fromtheBAU. Scenario3,theGSHPΑClosedLoophasthehighestestimatedfullbuildoutcapitalof$51.8million,the lowestIRRof4.3%aswellastheanegativeNPVof$1.6million.TheGHGemissionsreductionfiguresare similartotheOpenLoopscenario. MostoftheriskassociatedwiththedevelopmentofDESiswiththebuildoutandconnectionoffuture development.Thewaytomitigateriskthatfuturebuildingsgetbuiltlaterthanplannedistoaggressively phasethecapitaloftheprojectandspendcapitalasbuildingsareconfirmed.ForScenarios2&3,they faceaveryhighupfrontcapitalcost,buttheircorrespondingrevenuedoesnotcomeonlinefullyuntil 2034underthecurrentplan.Thishasadramaticnegativeimpactontheirfinancialviability. InC.͸ƭopinion,Scenario1ahasapositivebusinesscaseandrepresentsthebestopportunitytodevelop abasedistrictenergysystemforKitchener.However,thisispurelyonafinancialbasis.WhenGHG emissionsandotherfactorssuchasenergysecurityareconsidered,thenScenario2representsasolid businesscasewithsignificantreductionofGHGemissions. 1 - 43 Page|38 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Scenario2/2aand3/3awouldbenefitgreatlyfromamorerapidbuildoutandconnectionofplanned customers,andtheimplementationofacarboncost,whetheritbesolelyforthepurposesofmodeling orimplemented. Table9:KitchenerDESFinancialResultSummaryofCapital,ExpensesandRevenue SensitivityAnalysis Theresultsofthisanalysisareimpactedinanotablemannerbyamultitudeofsensitivitiesthatare accessibleintheprovidedfinancialmodel.Foremostamongthesesensitivitiesisthepresenceofacost ofcarbon,developmenttimingandcapitalcosts. TheFederalGovernmenthaslaidaframeworkthatdelineatesa$20/tonnecostofcarbonstartingin 2019andrisingto$50/tonnein2022.Ifthecostofcarbonisincludedinthefinancialmodeling,andthe savingsinreducedcarboncostsareincorporatedasreducedexpensestothedistrictenergyscenarios, thisincreasesthefinancialvalueofdistrictenergy.Thisanalysisanditsresultsca nbeseeninTable10. Table10:KitchenerDESFinancialResultSummarywithCarbonCosts BusinessCaseFinancial(Escalated) ProjectedIRR,2525YearNPV(4%)('000k Years(%)$) ScenarioDescription Conventional Gas Fired Boilers/Electric Chillers 9.2%21,763$ 1 DES Scenario 1: Plus CHP9.1%22,038$ 1a Ground-Source Heat Pump (GSHP) - Open 6.1%9,507$ 2Loop - 1,000 tons Scenario 2: Plus CHP6.1%9,782$ 2a Ground-Source Heat Pump (GSHP) - Closed 5.1%5,177$ 3 Loop - 1,000 tons Scenario 3: Plus CHP5.1%5,452$ 3a 1 - 44 Page|39 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 TheextensivetimelineofthebuildoutoftheDESindicatesthatagreatdealofcapitalwillneedtobespent upfront,withcustomersandtheirassociatedrevenuecomingonlinelater.Fortheoreticalpurposes, Table11belowdemonstratestheeffectofimmediateconstructionandacquisitionofcustomers (constructionrevenuecommencingin2 019). Table11:RapidDevelopmentTimeline BusinessCaseFinancial(Escalated) ProjectedIRR,2525YearNPV(4%)('000k Years(%)$) ScenarioDescription Conventional Gas Fired Boilers/Electric Chillers 14.5%51,946$ 1DES Scenario 1: Plus CHP14.7%54,689$ 1a Ground-Source Heat Pump (GSHP) - Open 9.5%31,876$ 2Loop - 1,000 tons Scenario 2: Plus CHP9.8%$ 34,618 2a Ground-Source Heat Pump (GSHP) - Closed 8.3%$ 26,854 3Loop - 1,000 tons Scenario 3: Plus CHP8.6%$ 29,597 3a Capitalcostsalsohaveasubstantialinfluenceonthefinancialresults,andifcapitalcostsforthedistrict energyscenariosincreaseordecreaseby10%alikelihoodwhichisfarfromimprobableΑthefollowing resultsareshowninTables12andTable13. Table12:KitchenerDESFinancialResultSummarywithDECapitalIncreasedby10% BusinessCaseFinancialFinancial(Unescalated)(Escalated) TotalInvestment ExpensesRevenueProjectedIRR,25YearNPV ('000k$in2019 ('000k$)('000k$)25Years(%)(4%)('000k$) ScenarioDescription Dollars) Conventional Gas Fired Boilers/Electric $ 2,45641,391$ 6,741$ 7.9%17,238$ 1Chillers DES Scenario 1: Plus CHP43,382$ 2,120$ 6,741$ 7.8%17,608$ 1a Ground-Source Heat Pump (GSHP) - Open $ 2,59651,676$ 6,372$ 4.3%1,544$ 2Loop - 1,000 tons Scenario 2: Plus CHP53,667$ 2,261$ 6,372$ 4.4%1,915$ 2a Ground-Source Heat Pump (GSHP) - $ 2,60657,022$ 6,372$ 3.4%$ (3,219) 3Closed Loop - 1,000 tons Scenario 3: Plus CHP59,013$ 2,271$ 6,372$ 3.4%$ (2,848) 3a 1 - 45 Page|40 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table13:KitchenerDESFinancialResultSummarywithDECapitalDecreasedby10% BusinessCaseFinancialFinancial(Unescalated)(Escalated) TotalInvestment ExpensesRevenueProjectedIRR,25YearNPV ('000k$in2019 ('000k$)('000k$)25Years(%)(4%)('000k$) ScenarioDescription Dollars) Conventional Gas Fired Boilers/Electric $ 2,45633,865$ 6,741$ 10.1%24,222$ 1Chillers DES Scenario 1: Plus CHP35,494$ 2,120$ 6,741$ 10.1%24,917$ 1a Ground-Source Heat Pump (GSHP) - Open $ 2,59642,280$ 6,372$ 6.4%10,208$ 2Loop - 1,000 tons Scenario 2: Plus CHP43,909$ 2,261$ 6,372$ 6.5%10,903$ 2a Ground-Source Heat Pump (GSHP) - $ 2,60646,654$ 6,372$ 5.4%6,311$ 3Closed Loop - 1,000 tons Scenario 3: Plus CHP48,283$ 2,271$ 6,372$ 5.6%7,006$ 3a FinancialModelExcelModelincludingSensitivity Providedasaseparateattachment. 8.EnvironmentalBenefit GreenhouseGasEmissionSavings Akeyconsiderationtothissystemisthegreenhousegasemissionsascomparedtobuildingasusual,as summarizedinthefollowingtable: Figure10:AnnualGreenhouseGasEmissionSavings 1 - 46 Page|41 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 GreenhouseGasReductionFullBuildout BuildingasUsual TotalBAUEquivalentElectricityConsumption ЏААЋa‘ŷ Ļ TotalBAUNaturalGasConsumption 183,800GJ AnnualBuildingasUsualGHGEmissions9,662tonnes DistrictEnergySystem Scenario1ΑAnnualDistrictEnergySystemGHGEmissions8,971tonnes Scenario1aΑAnnualDistrictEnergySystemGHGEmissions9,858tonnes Scenario2&3ΑAnnualDistrictEnergySystemGHGEmissions4,547tonnes Scenario2a&3aΑAnnualDistrictEnergySystemGHGEmissions5,434tonnes NetAnnualGHGReduction,%ReductionoverBuildingasUsual Scenario1692tonnes,7% Scenario1a(195)tonnes,2% Scenario2&35,115tonnes,53% Scenario2a&3a4,228tonnes,44% Thedistrictenergysystemisexpectedtohavealowerelectricityconsumptionandnaturalgas consumptionovertheBuildingasUsualscenariowhenCHPisnotconsidered.Notably,duetolowcarbon emissionsoftheelectricitysuppliedtoKitchener,theconstructionofCHPcapacityandtheresulting increaseinnaturalgascoisestheGHGemissionsofScenario1.Duetotheincorporationof nsumptionra GSHPsinScenarios2&3,theGHGemissionsofthesescenariosremainlowerevenwiththeadditionof CHPcapacity. Thisassumesthefollowingemissionfactors: OntarioblendedElectricityGeneratingemissionintensity:31.0kgCO/MWhfromGuidelinefor 2ee Quantification,Reporting&VerificationofGreenhouseGasEmissionsApril2019(Note:thisfigure representsanaveragevalueandwouldbedifferentiftimeofdayfiguresareused,whichwould beconductedduringamoredetailedstudy.) Naturalgasemissionintensity(combustiononly):49.3kgCO/GJfromAClearerViewon 2e hƓƷğƩźƚ͸ƭEmissionsJune2019 OtherEnvironmentalBenefits,Synergies,andConsiderations 1.Opportunitiesandheatavailableforsnowmeltoperations:sidewalks,parkinglots,busdepotand transportationhubscanbenefitfromreductioninsaltingandsnowclearingefforts,improved accessibilityandpublicsafety. 1 - 47 Page|42 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 2.Roofspaceformostbuildingswouldbemorecongenialwithoutstacksandcoolingtowers.The roofmighttherebybeusedascommonareasfortheenjoymentofbuildingoccupants,greenroof, implementation,solarPV/solarthermal,rainwaterharvesting. 3.Provideopportunitiestoutilizewasteheatproducers. 4.Increaseenergyliteracystartingwithdemandsidereductionsandimprovingsupplyside efficiency. 5.Supportssmalllocalpowergeneration/cogenerationandmicrogridstrategiesforbackuppower. OwnershipModels Overview Variantsofthreeownershipmodelshavebeenusedby59{͸ƭworldwideandinNorthAmerica: 1.PublicΑtheCitymaintainsownership 2.PrivateΑconcessionsoroutrightownershipbyprivateentity 3.HybridΑincludingjointventure(JV)orsplitownership,acombinationoftheabovemodels InCanada,approximatebreakdownofDESbyownershipmodelisroughly: 30%Institutions 20%PubliclyOwned 20%PrivatelyOwned 30%OtherΑCrown/FirstNations/Cooperative/Hybrid Determinationofthepreferred,viableOwner/Operatormodelandgovernanceisaprerequisiteto developingaDES.Theremustbeanentitywithaclearlydefinedstructurethatwillberesponsibleforthe project,raisefinancingandenterserviceagreementswithcustomers,whetheritistheCity/Regionitself, anagencyorcorporationoftheCity/Region,aJointVenture(JV)oratotallyprivatecompany. AnidentifiedandcredibleDESOwnerisessentialforeffectivemarketing.Prospectivecustomerswillwant toknowtheDEShǞƓĻƩ͸ƭpreciseplanforownershipandoperatingstructure,oratleastthemostlikely option,ifitisnotfirmlyestablishedatthetimemarketingactivitycommences.Thisisbecausecustomers areexpectedtosignlongtermserviceagreementsnaturallyneedtounderstandexactlywhotheir counterpartywouldbeandwhotheycanrelyontodeliverthisessentialservice. Thesuitabilityofeachofthethreeownershipmodelsdependsonthefollowingfactors: ManagementcapacityandDEexperienceistheCitywillingtoallocateinternalmanagement staffandisitinterestedinenteringtheDEutilitybusiness? Risk/Reward(degreeofcomfortwithriskorriskaversion) AccesstocapitalorCostofcapitalistherewillingnesstoraisealloranypartofthenecessary capital?Involvementofprivatecapitaltendstobemorecostly.Publicownershipmayhave accesstogovernmentgrantsandincentivesthathelptoimprovethebusinesscaseandreturn oninvestment 1 - 48 Page|43 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 StrengthsandweaknessesoftheotheroptionsarehighlightedbyaSWOTanalysisinFigure10. Figure11:OwnershipModelsΑSWOTAnalysis 100%PublicHybrid100%Private ΘAccesstolowcostfinancing.ΘCombinesprivateDEexperienceΘPrivatesectorassumesallrisk,is Strengths ΘLongtermagreement,stable&capitalwithCityadvantages,mostmotivated,minimizes partner.suchasaccesstoseniorgovernmentinterference ΘAccesstoGovernmentGrants.governmentgrants ΘAlignmentwithotherCity Departmentsandlevelsof government ΘAvailablecapitalforlargeΘJVcomplexitywithresultantΘCESprojectsmaynotmeetprivate Weaknesses infrastructureproject.demandsonmanagementtime.return/riskcurvewithout Managementcapacity(internalΘSplitownershipfoundtoinhibitgovernmentassistance resources)andgrowthinWindsorexample ΘNoDESexperience ΘMeetsothergoalsandΘMonetizeCityadvantages;selloutΘCreateenvironmentfortheCESto Opportunities objectivesinadditiontowhenCESestablished,usingcashsucceed businesscasesuchastoseedanotherCESproject,ΘRealizesocioeconomicand sustainability,economicmaximizingsocioeconomicandenvironmentalvalueswithoutusing development,resilience.environmentalvalues/źƷǤ͸ƭownlimitedfinancial ΘLeadershipΘLeverageindustryexperienceresources Synergywithothermunicipal projectsandobjectives ΘRisks:costoverruns,ΘDisputesduetodifferentgoalsΘConcessionsinhibitmotivationto Threats performanceissuesassociatedΘRelationshipandRFPprocessexpandorspendmaintenance withconstruction,scrutinizedforfairnessdollars commissioningandO&Mcosts. ΘMarketpenetration ΘNuisancecomplaints 1 - 49 Page|44 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 100%PublicOwnership ManysuccessfulDESsystemstartupshavebegunwith100%PublicOwnership. Figure12:PublicOwner/OperatorModels ModelDescriptionExamples Θ100%municipalownershipandoperationdirectlyΘSoutheastFalseCreek(SEFC)NEU; 1 (throughtheengineeringservicesdepartment)ΘStrathconaCounty ΘCityofSurrey ΘPrinceGeorge ΘCityofNorthVancouver Θ100%municipalownershipandoperation,throughΘMarkhamDistrictEnergy; 2 asubsidiarycorporationorexistingpublicutilityΘHamiltonCommunityEnergy; ΘCity/ğƌŭğƩǤ͸ƭEnmax; ΘCityofRichmondAlexandraDEU; ΘLonsdaleEnergyCorp. ΘLuluIslandEnergyCompany Θ100%municipalownershipwithprivatesectorΘRevelstokeCommunityEnergy 3 operationΘRegentParkEnergyInc. 100%PrivateOwnership 3 PrivateDEsystemshavebeenproventoworkinCanadawiththelargestdistrictenergyutilitiesbeing entirelyprivatelyowned.Someofthe59{͸ƭmayhavebegunaspubliclyownedorjointventureowned systemsandtransitionedtoprivateownership. Figure13:PrivateOwner/OperatorModels ModelDescriptionExamples Θ100%privateownershipandoperationΑΘEnwave(Toronto,London,Charlottetown,Windsor, 4 commercialutilitymodelChicago,LosAngeles,Houston,NewOrleans,Seattle,Las Vegas,Portland) ΘCreativeEnergy(FormerlyCentralHeat) ΘCorix(University,Dockside) ΘSudburyDistrictEnergy(Toromont) ΘCornwallDistrictEnergy ΘEnergirUrbanHeatingandCooling(VeoliaNorthAmerica ΑMontreal) ΘRiverDistrictEnergy Θ100%privateownershipΑcampussystemsbyrealΘMirvishVillage,TorontoΑWestBank+CreativeEnergyin 5 estatedevelopersToronto ΘDrakeLandingSolarCommunity,Okotoks ΘLaCiteVerte,QuebecCityΑSSQ+ Hybrid Thereareseveralexamplesofhybridmodelsthathaveworkedbecausetheysuitedspecificlocal requirementsatthetime.Thisisapatternthatmightfitthe/źƷǤ͸ƭsituationwheretheCitymaybe interestedinapartownershippositioninordertoinitiatetheprojectandthenholdthatinterestforas 3 ThequalifierͻǒƷźƌźƷǤͻistodistinguishthisbusinessmodelfromcampussystemsownedbyuniversities,industries, themilitaryorothergovernmentorganizations. 1 - 50 Page|45 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 longasitprovesusefultoensureexpansiontomeetCitygoalsforlocaleconomicdevelopmentandGHG reduction.ManyoftheW͸ƭhavemoved,oraremoving,toasingleownerposition;thesplitownership modelistheleastfavorableoption. Figure14:HybridOwner/OperatorModels ModelDescriptionExamples JVbetweenamunicipalityandaprivatesectorΘTorontoCommunityHousing/Corix(now100%public) 6 company(theprivatesectorcompanymayprovideΘCityofSubury/Toromont(now100%private) operatingexpertise)ΘOvalVillageRichmondΑLIEC/Corix Splitownershipandoperation,themunicipalityΘWindsorDistrictEnergy/Enwave 7 owningandoperatingthedistributionsystemswith privatesectorowningandoperatingEnergyCentre 1 - 51 Page|46 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 9.NextSteps:DESImplementationStrategy Task1DevelopDESBusinessConcept ThefirsttaskistoconfirmtheOwner/Operatormodelandestablishsuitablegovernanceforacommercial DESsystemorutility(e.g.relationshipwithshareholdersandfunders).Keyquestionstoconsiderinclude: Whowillowntheplantanddistributionsystem? Whowilloperatethesystemmosteffectivelytobenefitthecommunity? Whohasaccesstopotentialsourcesofprivatefinancingorgovernmentgrants? Cancapitalcostsandfinancingresponsibilitiestobeshared? FromC.͸ƭexperience,itisunderstoodthatbuildingowners/developerswantaclearunderstandingof: ΘWhattheDESservicebeingprovidedis. ΘWhotheyaredealingwith? ΘThattheserviceisfairandtheprocesstransparent. ΘThattheDESservicewillmeettheirprojecttimeline. ΘThattheserviceiscostcompetitive. ΘWhatarethebenefitsandwheredogoalalign? IdentifyDESengagementstrategy: City/RegionalRole EffectiveDESimplementationrequiresaproactiverolebytheCity/Region.Staffwill needtoarticulatetherationaleandroleoftheCity/Regionandrequirementsoftheserolestoall departments,theCityChiefAdministrativeOfficer(CAO)andultimatelyCity/RegionalCouncil.The City/Regionalstaffateverylevelmustunderstandthattheyareinstrumentaltotheultimatesuccessof theDESimplementation. AseniorstaffpersonshouldbeassignedtoplaytheleadroleintheestablishmentoftheDESbusiness structure,aswellasnegotiatingthetermsofahybridmodelifthatistheƚǞƓ͸ƭpreferredoption.This individualwouldalsoberequiredtomakethecasetointernalapprovalauthoritiesforanyspecific monetaryorinkindcontribution. AuthoritytoexecutetheCity/RegionalrolesshouldbesoughtfromCouncil.Havingestablisheda responsibleentitytotakecarriageoftheproject,theassignedrepresentativeswouldbedulyauthorized toexecutethebalanceoftheimplementationplanasoutlinedbelow. Priortothecommencementofmarketing,aninitialbusinessplanshouldbedevelopedwithaproject schedule,costs/revenueprojection,anddraftsampleMemorandaofUnderstandingΛah ͸ƭΜand ThermalEnergyServiceAgreementsˁ9{!͸ƭΜforcustomers. KeyStakeholders ΑIdentifyandinvolvekeystakeholderswhomaybenefitfromtheestablishmentofa DESinKitchener.Toursofsuccessfuldistrictenergysystems,workshops,andsharedexperienceswith 1 - 52 Page|47 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 otherbuildingownersandoperatorsareaneffectivewaytoinvolvecommunitystakeholdersand familiarizethemwithdistrictenergy. ΘCityCouncilorsRegional/ProvincialGovernmentOfficials ΘDevelopers/Landowners ΘLocalResidentsandResidentialOrganizations ΘBusinessGroups ΘEnergyManagers,OrganizationsandEnvironmentalGroups ΘGeneralPublic DESDevelopers InternalCity/RegionalGroupssuchasWater,MunicipalInfrastructure,Roads,Building Operators,Planning/Policy AcademiaΑUniversityofWaterloo,ConestogaCollege,WilfridLaurierUniversity Others:Enbridge,IESO,KitchenerWilmotHydro,GrandRiverHospital,Metrolinx KeyCommunityMembers BenefitstotheCommunity Itisimportanttocommunicateaconciseclearmessagebasedon: 1.AddingValuetotheCity/Region 2.Strengtheningthelocaleconomy 3.Improvingenergyefficiencyandenergysecurity 4.Offeringacleanermeansofmeeting(thermal)energydemands 5.Providingenergyflexibilityandresilience. UnderstandBarrierstoDESImplementation: ΘLowenergyprices. ΘLackofcapital:communityenergysystemsarecapitalintensive. ΘEconomics:requirementforshorttermpaybacksonenergyinvestments. ΘLackoftechnicalandDESbusinessknowledgebycompanies,policymakers. ΘNeedforeffectivepolicyincentivestostimulateinvestmentinenergy. ΘLackofbuyinfromͻğƌƌͼstakeholdersincludingmultiplelevelsofgovernment,developers,local utilities,buildingowners. ΘUnderstandingofthetruecostofenergyproductionΑcapital&operatingandmaintenance. ΘLittlebenchmarkingandmeasurementintheHVACindustrytounderstandefficienciesand performance. Task2ΑDESMarketing DESMarketingistheprocessofteachingconsumerswhytheyshouldchooseaconnectiontoadistrict energyproviderovercontinuingwithastandaloneheating/coolingsystemfortheirbuilding.Marketingis aformofpersuasivecommunicationwhichincludescreatingtheproductorserviceconcept,identifying whowillbeDEScustomerbuildings,promotingit,andmovingitthroughtoaconnectionagreement.The DESmarketingphaseinvolvesincreasingawarenessanddemonstratingviability. 1 - 53 Page|48 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Themostimportantbuildingowners/developerstoapproachwouldbetheCity,Region,andProvince. Staffanddecisionmakersresponsibleforheatingandcoolingofallpubliclyownedbuildingsidentifiedas potentialconnectionsshouldbeengagedinpreliminarydiscussionsaimedatintroducingthepossibility connectiontoDES. ThepotentialvaluetotheCity/Regionshouldbestressedandtheplannedprocessforestablishingthe DESbusinessexplained,includingtheexpectedschedule.Animportantoutcomeofthisactivitywouldbe togainthecooperationandparticipationofeachbuildingowner/operatorintheestablishmentofthe DESalongwithcommitmentstocoordinatetheirplanningactivitieswiththeDESactivity. DESmarketing,learning,andincreasingknowhowwillcontinuetobeanongoingeffort. Task3RefinetheTechnicalConceptFurther TheDEStechnicalconceptshouldbedetailedfurtherbasedontheresultsofdiscussionswiththebuilding owners/developers.Includedinthiseffortwouldmoreindepthinvestigation: Commitmentofthesiteidentifiedfortheenergycentre,coordinatewitharchitecturaland developmentteamifenergycentrewillbeembeddedinabuilding. Technicalplanningandcoordinationwilloccurwiththeoverallsiteplanning. Identifycoordinationrequiredandpotentialsynergieswithotherongoinginfrastructure developmentworkinthetargeteddevelopmentareas. Analysisoftestboreholesandconfirmsuitabilityofgroundsource,ifapplicable. Reviewbuildingenergymodelsandidentifysimultaneousheatingandcoolingopportunitiesto increaseeffectivenessofGSHP. Investigateutilityservicingrequiredforenergycentreincludingnaturalgasservice,electrical connection,water,etc. PreliminaryreviewofEnvironmentalComplianceApprovalrequirementsrelatedtoairemissions, noiseassessment,useofgroundwater,effectongroundtemperature,anduseofcoolingtowers. Refinetechnicalconceptdesignandimprovecostestimateclass. Task4ProjectReview StockwouldbetakenoftheprospectsandsuggestedcharacteroftheDESasinformedbyongoingand previousefforts.Anespeciallyimportantstepwouldbetosolicitcommentsonthecurrenteffortfrom buildingsowners/developers,asthesewillformthebasisofah ͸ƭthattheywillbeaskedtosign.The listofprospectivecustomerpeakloadsandenergyuse,andconsequentlythecost/revenuemaybe revisedasaresultofthiswork. Task5DevelopProjectTechnicalDefinition Basedonaprimaryreviewoflikelycustomers,theProjectTechnicalDefinition(PTD)shouldbedeveloped. (ThisissometimescontainedinaDesignBasisDocument).ThePTDwillincludeinitialsizingofequipment, 1 - 54 Page|49 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 schematicsandlayouts,includingpiperouteandsamplepipedetails.Morerefinedcapitalcostestimates wouldbedevelopedfromthePTD. BasedontheprojectedĭǒƭƷƚƒĻƩƭ͸avoidablecostsanddiscussionswiththelandowners/developers,a pricingstructurewillbedeveloped.Thepricingstructureandcapitalcostestimateswillbeusedtodevelop theprojectbusinesscaseandreviewofrisks. Task6ObtainCustomerCommitment Withasolidbusinessplan(includingpricing)inhand,presentationswillbemadeto landowners/developersaimedatsecuringsignoffofah ͸ƭ͵Explanationswillbegivendescribingwhat itmeansforabuildingtobeconnectedtodistrictenergyfrombothatechnicalandbusinessperspective. Thekeypricingmessagewillbetheconceptthatdistrictenergywillcostnomorethanthebusinessas usualalternativebutwillprovidebettervalueformoneythroughriskmitigationandservicereliability.In astandalonesituation,thebuildingowner/operatorassumesallriskoffaultyequipmentandoperator error.ByconnectingtoaDES,buildingownerstransferthisrisktotheCESowner. Thelandowners/developerswillbeaskedtosignoffonah ͸ƭͲinacknowledgementofdraft9{!͸ƭthat willalsobepresentedtothem. Experiencehasbeenthatexecutionof9{!͸ƭcanbeatimeconsumingprocess.ah ͸ƭprovidetheDES developerwithsomeassuranceofcustomercommitmenttosupportapplicationforcapitalapprovalsand constructionfinancing,evenwhilefinalcustomerreviewandexecutionof9{!͸ƭareinprocess. Task7FinalizeProjectDefinition TheProjectTechnicalDefinitionandbusinessplanwillbereconfiguredasnecessaryinaccordancewith theah ͸ƭ͵Thismayincludesomerefinementtothepricingandconsequentlyrevenueprojections. Thefinalbusinessplanshouldincludeconfirmationofbusinessandfinancingstructure,governance, pricing,cost/revenueprojection,projectschedule,riskmanagementplan,environmentalandsocial performanceandsamplesofMOUandESA. AtthisstageagoornogodecisionfordevelopmentofaDESmaybemade,andifpositivewouldmove intoadetaileddesignandimplementationphase. Task8DistrictEnergyReadyInfrastructure OneofthemostcommonconcernsofprospectiveDEinvestorsistheextenttowhichenoughcustomers arecommittedtosubscribetotheservice.Therefore,thebestthingtheCitycoulddotofacilitate realizationofthebenefitsofDESistoencouragebuildingstoconnecttotheDES. TheCityiswellpositionedtobeeffectiveinthisrolethroughitsrelationshipwithrealestatedevelopers. RepresentativesoftheCitycanengagedevelopersindiscussionaboutthemutualbenefitsofDES.In areaswhereDEserviceis,ormay,becomeavailable,thedevelopmentapprovalprocessmightbeusedto 1 - 55 Page|50 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 requirelarge,newbuildingstobeconstructedinawaythatareatleastͻ59ƩĻğķǤͼ͵Newdevelopments andsubdivisionplanscanincludespacereservedinrightofwaysforDEinfrastructureoritcanbe installedaspartofthemunicipalservicing.Theseinitiativescanbedevelopedthroughplanningandpolicy. ‘ŷğƷ͸ƭinItforDevelopers?‘ŷğƷ͸ƭinItfortheCity/Region? ResiliencyandReliability Centralenergysystemsareveryreliable,andtheburiedinfrastructurereducessusceptibilitytoextreme weathereventssuchastornadoesandicestorms.Theuseoflocalandwasteenergysourcesaswellas CHPopportunityincreasesenergysecurityandresilience. EnvironmentalandEnergyEfficiency TheeconomiesofscaleandcentralizednatureofDESenablesahighlyflexibleandadaptablefueland technologymixtobeused;increasesopportunitytouselocalwasteenergystreams,implementlow carbonenergysourcesandcombinedheatandpower.Inaddition,purposebuiltandoperatedcentral energyfacilitiestogetherwithcombinedthermalloadsallowsprimaryfuelsourcestobeusedmore efficiencytherebyreducingGHGemissions.Buildingsconnectingtodistrictenergysystemsdemonstrates environmentalandenergyleadershipandacommitmenttocombattingclimatechange. FlexibleBuildingDesign Reducesmechanicalandelectricalserviceandrooftopspacethatwouldhavehousedboilerandchillers, coolingtowerandboilerstacks/chimneys.Spacecanbeusedforamenityandcommunityspace,green roofs,rainwaterharvesting,solarPV/thermalinitiatives.Reductioninnoise,vibration,andonsitebuilding emissions. ReducedCosts Buildingownerscandefercapitaldollars;upfront/replacementscostsforpurchasingboilersandchillers. Alsolowersriskduetocapitalandoperatingcostsfromboilers,chillers,heatpumps,radiatorsandcooling towers.Eliminatesonsitefuelandreducesbuildingelectricalload. LocalEconomyBoost DESareinfrastructureprojectsthatcancreateandenhancealocalenergymarketandindustry;creating jobsduringconstructionandrequiringoperatorsandservices. ConsumerandPublicSafety DistrictEnergySystemssignificantlyreducetheriskofLegionellabacteriabyeliminatingtheneedfor coolingtowers.Italsoeliminatestheriskofcarbonmonoxidepoisoningfromboilers.Furthermore, connectingtoDESallowsforpublicspacessuchascommunitycentres,schools,andlibrariestohavethe 1 - 56 Page|51 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 capabilityofbeingutilizedasemergencycentresinthecaseofenvironmentaldisastersandother incidentsoflocalcrisis. Figure15:SummaryofBenefitstoKeyStakeholdersfromaDES ToRealEstateDevelopers,BuildingOwnersTotheCity/Region andResidents ROI,localeconomicdevelopment BusinessSense Costsavings,deferredcapitalcosts Jobcreation,riskmitigation &Economic Energysavings,stabilizedenergycosts Infrastructureasset Development Alternativeincomestream,wastefuel Increaseurbandensificationandplanning sources Increasespotentialforuptakeofwaste Energy Energyreliabilityandflexibility heatandrenewableenergysources Security Increasedefficiencyandconservation Increasedenergysecurityandresilience Reduceimpactfromlossofheatingand withlocalenergyproductionandfuture coolingthatcanaffectproductivity proofing Fuelflexibility Potentialtodeveloplocalfuelsources Lowerdemandonexistinggas/electricity infrastructure Reducedelectricalpeakdemand Environmentalbenefitfromefficiency, Environmental Greenimage/marketing,environmental CO2eGHGreduction andOther stewardship/leadership HelpstomeetGHGreductiontargetsand Architecturalopportunities:rooffreefor fuelconservationmethods amenityspace,greenroof, Canreducewaterusageincoolingsystems Renewableopportunities:rooffreefor Promoteenergyawareness solarthermal/PV Synergywithpotentialstormwater Increasecomfortfromhydronicheating reductionstrategy andpossiblyradiantfloorheating Improvedairquality+healthbenefits Potentialtoprovidegreenroofspace 1 - 57 Page|52 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 10.Evaluation/Recommendation BasedontheproposeddevelopmenttimelinesanddensitiesprojectedfordowntownKitchener,itis concludedthatthereispotentialtoestablishaDESwithapositivebusinesscase.TheDESconcept proposedfordowntownKitchenerwouldserveapproximately416,000m2(4,485,000ft2)ofnew developmentinfourphasesbetween2023Α2029. Scenario1,aDESusingconventionaltechnologies,hasthelowestbuildoutcostof$37.6Mandhighest IRRat8.9%.ItalsohasthelowestGHGbenefitcomparedtoBAUat~700tonnesCO2reduction. Scenario2,aDESusingbaseloadedopensourcegroundsourceheatpumps/heatrecoverychillerswith conventionaltechnologiesusedforpeakingandbackup,hasthenexthighestbuildoutcostof$47Mand IRRof5.3%over25years.TheGHGreductionisestimatedat~5,100tonnesofCO2reduction. ItisrecommendedthattheCEISproceedwithdevelopingaDESfortheCityofKitchenerbasedon Scenario2Op enLoopGSHP.TheDESisestimatedtotalbuildoutcostis$47M(classDindicativeestimate +/50%)withanestimated$20MrequiredtoestablishPhase1.ThebusinesscaseforScenario2hasa lowerIRR,5.3%,thanScenario1usingconventionaltechnologies,IRR=8.9%,buthasagreaterGHG reductionpotentialof~5,000tonnesvs.~700tonnesandisthereforeamoreattractiveopportunityto meetthewĻŭźƚƓ͸ƭinterestsininnovation,effectiveness,security,andresilienceinenergy.Thecreation oftheDESinKitchenerwouldestablishathermalenergygridthatincreasesenergysharingopportunities andflexibilitytoadoptalternateandwasteenergysourcesand/ortechnologies. ThenextstepstoestablishingaDESfortheKitchenerInnovationDistrictareprimarilysocial,economic andpoliticalinnature.CEISmustdevelopaDESBusinessPlanincludingdecisionsonownership,financing, operationsandmanagementstrategy,stakeholderengagement,identifyingpolicydriversaswellas solidifyingpotentialenergycentersites,identifyingsynergieswithothermunicipalprojectstoenablethe developmentofaDES.Areasonabletimelineforthisworkisestimatedtobe~12monthsarriveatago nogodecision.A12monthtimelinewouldbereservedfordetaildesignwithapprox.1218monthsfor implementation.TemporarystrategiescanbeutilizedifneedtosatisfyinitialcustomersshouldtheDES developlagbehindthefirstcustomerconnection. 1 - 58 Page|53 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 Table14:EvaluationGuideline 1 - 59 Page|54 KitchenerInnovationDistrictDESPreFeasibilityStudy219309 11.AppendixA 1)SK9309100ΑKitchenerDESOverviewMap 2)SK9309101ΑKitchenerDESDPS 3)SK9309200ΑDPSTypicalTrenchDetail 4)SK9309001ΑConventionalPlantConceptualSchematic 5)SK9309002ΑOpenLoopGeoExchangeConceptualSchematic 6)SK9309003ClosedLoopGeoExchangeConceptualSchematic 7)BeattyFigure1ΑWaterWellandCrossSectionLocations 8)BeattyFigure2ΑCrossSectionAA 1 - 60 L A U T P E C N O C 1 - 61 L A U T P E C N O C 1 - 62 1 - 63 L A U T P E C N O C 1 - 64 L A U T P E C N O C 1 - 65 L A U T P E C N O C 1 - 66 WaterWellMECPWellRecordNo.CrossSectionLocation 2870 7980 870 948 6502 6504 175 6504 1 - 67 CALE S 1 - 68 Beatty Geothermal Consulting A Division of Beatty Geothermal Inc. ___________________________________________________________________ Table 1 - Kitchener Project Open Loop Well System Assumptions Summary (3,500 kW option) ParameterAssumption/Estimate No. of Wells Required6 (3 supply and 3 injection) Well Flow Available, L/s (gpm)95 (1,500) Cooling capacity kW (tons)3,500 (1,000) Heating Capacity kW (tons)3,500 (1,000) oo 6 (43) Min, Heat Pump EWT - Peak Heating,C (F) oo 15.5 (60) Max. Heat Pump EWT - Peak Cooling,C (F) Maximum/Minimum Groundwater Injection 20/4 (68/40) oo Temperature,C (F) Budget Estimate ($)1,000,000 NOTES: - all estimates are high-level, based on rules of thumb and previous experience. - assumes supply well separation of 60 m (200 ft), and supply/injection well separation of 150 m (500 ft) oo - assumes ambient groundwater temperature is 10C (50F) - well flow assumes three supply wells, each with a capacity of ~31.5 L/s (500 gpm) - EWT = heat pump Entering Water Temperature oo - cooling capacity based on a heat pump EWT of 15.5C (60F) and EER of 22 oo - heating capacity based on a heat pump EWT of 6C (43F) and COP of 3.5 oo - assumed 1.1C (2F) heat exchanger approach temperature - budget estimate includes: 3 supply wells, 3 injection wells, stainless steel casing, drop pipe, 3 submersible pumps. etc. (does not include distribution piping) - all values are approximate Beatty Geothermal Consulting -A Division of Beatty Geothermal Inc. British Columbia - 1965 West 4th Avenue, Suite 202 | Vancouver, BC | V6J 1M8 Ontario - 2175 King Road | King City, Ontario | L7B 1G3 1 - 69 Beatty Geothermal Consulting A Division of Beatty Geothermal Inc. ___________________________________________________________________ Table 2 - Kitchener Project Closed Loop System Assumptions Summary (3,500 kW option) ParameterAssumption/Estimate Number of Boreholes250 Depth of Boreholes, m (ft)200 (650) Cooling capacity kW (tons)3,500 (1,000) Heating Capacity kW (tons)3,500 (1,000) oo 4.5 (40) Heat Pump EWT - Peak Heating,C (F) oo 32 (90) Heat Pump EWT - Peak Cooling,C (F) Budget Estimate, $3,750,000 NOTES: -all estimates are high-level, based on rules of thumb and previous experience. -total annual heat rejection/extraction to/from the boreholes has not been considered in the above estimates -budget estimate includes: boreholes, u-loop, grout, horizontal header piping and trenching, antifreeze, etc. (does not inlcud main distribution piping). -all values are approximate Beatty Geothermal Consulting -A Division of Beatty Geothermal Inc. British Columbia - 1965 West 4th Avenue, Suite 202 | Vancouver, BC | V6J 1M8 Ontario - 2175 King Road | King City, Ontario | L7B 1G3 1 - 70 REPORT TO:Planning & Strategic Initiatives Committee DATE OF MEETING:September 28, 2020 SUBMITTED BY:Justin Readman,General Managerof Development Services 519- 741-2200 ext. 7646 PREPARED BY:Tim Donegani, Senior Planner 519-741-2200 ext. 7067 WARD(S) INVOLVED:3, 9, 10 DATE OF REPORT:September 14,2020 REPORT NO.:DSD-20-150 SUBJECT:Inclusionary Zoningfor Affordable Housing: Background and Fiscal Impact Analysis RECOMMENDATION: THATCouncil Report DSD-20-150(Inclusionary Zoning for Affordable Housing: Background and Fiscal Impact Analysis)be received. BACKGROUND: TheHousing Needs Assessment prepared as part of Phase 2 of the Affordable Housing Strategydemonstratedunserved needs for affordable housing across the housing continuum for low, moderate and middle incomehouseholds. Municipalities have a range of planning and financial tools to supportand enablethe creation of affordable housing. Inclusionary Zoning (IZ) is a new tool that allows municipalities to require residential developments to include affordable housing units.When used alongside federal, provincial, regional and local initiatives, IZcanbe effective inincreasingthe supply of affordable housing.Inclusionary zoning is one of the actions included in the draft Affordable Housing Strategy that was received by Council in August. The provincial requirements for developing and adopting an IZprogram are summarized in Appendix A.IZ can only apply to multi-residential developments with 10 or more unitswithin Major Transit Station Areas (generally within 500-800 metres of ION stops).Prior to approving an inclusionary zoning by- law, municipalities must first prepare a housing assessment report to understandlocal demographics andhousing supply and demand.Kitchenerhas largely addressed this requirement through the completion ofits Housing Needs Assessmentpresented to Council in January 2020.Municipalities must alsoconduct a financial impact study to evaluate the viability of development under an inclusionary zoning framework. The City, in partnership with City of Waterloo, City of Cambridge and Regionof Waterloocontracted consulting firm N. Barry Lyon Consultants Limited to carry out a financial impact studyincluded asAppendix B.This work isbeing undertaken through the Kitchener- Waterloo Joint Services Initiative. Staffatall four municipalities continue tocollaborate on data sharing, analysis, stakeholder engagement,policy developmentand action planning towards common affordable housing objectives. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 2 - 1 Inclusionary Zoning has been used extensively in the United States and some Canadian cities. While several other Ontario municipalities are working to advance inclusionary zoning, no IZ policies have been adopted yet. How Does Inclusionary Zoning Work? Inclusionary zoning works by leveraging increases indensity and value achieved through development approvals, investment in LRT and increasing demand for centrally-located housing to provide affordable housing. In this way inclusionary zoning programs canbe designed to work withoutgovernment subsidies. Because inclusionary zoning programs result in lower revenues for developers through lower rents or sales prices than would otherwise be the case, the provincial legislation requires thatIZ programs be designed to ensure that residential development continues to be financially viable for private market housing providers. Key considerationsthat affect the achievement of affordable housing objectives and influence development feasibility include: The the duration of affordability, range of household incomes addressed by the affordable units, and the tenure of affordable units (rental vs. ownership). Where the economics of site development cannot support inclusionary zoning on its own, programs can include measures to offsetthe financial impact so thatthe development projectsbecome financially viable. They can also be usedto deepen the degree of affordability to serve a broader range of household incomes.Measures could include the phasing in of the program, increased height or density permissions, or financial incentives. REPORT: Financial Impact Analysis Approach and Key Findings financial impact study uses an approach called residual land value (RLV)analysisto testif prototypical residential projectsin 10 Major Transit Station Areas across the Region are financially viable under four scenarios: 1.No IZ policy 1 2.10% of units are required to bepriced at the affordable benchmark 3.5% of units are required to be priced at 60% of the affordable benchmark 4.Determine the maximumviable set aside rate that could be supportedat the affordable benchmark Fiscal Impact Analysis Highlights The costs of inclusionaryzoning cannot be passed onto the market rate units in abuildingthrough higher prices/rents because developers are already pricing units as high as the market will bear. Developer profits are not reduced under IZ. Without the prospectforsufficient profit,developers will not be motivated to build. Instead, an inclusionary zoning policy will put downward pressure on land value. If an inclusionary zoning policyistoo onerous, land valuewill be reduced by toomuch,so a residential redevelopment project cannot displacethe existing land use andwill not be viable. 1 Affordable Rental Benchmark: Bachelor $810/mo; 1 Bedroom $1,045/mo; 2 Bedroom $1,231/mo; 3 Bedroom $1,300/mo Affordable Ownership Benchmark: $350/square foot 2 2 - 2 Amodest and carefully designed inclusionary zoning policy is financially viable in the near term insome Major Transit Station Areaswiththestrongestresidential market conditions. Major Transit Station Areasarenot all equally capable of delivering new units through IZ as illustrated in Figure1, and in more detail on pg 54-59of Appendix B.Currently, IZ policy is viable in a few MTSAs but not others.Ageographically uniform approachto IZ is not recommended. Instead,the initialfocus of Inclusionary Zoning should be on MTSAswith strong residential markets. The analysis does not include any new municipal incentives. NBL quantify how incentives could help achieve more affordable units, deeper levels of affordability, or longer duration than policy alone. In weaker submarkets, the policy framework should be set up now, with very low affordability requirements in the near term. These requirements can increase gradually as weak submarkets improve. IZ candeliver a modest but meaningful number of affordable units in the near term. There is significant value however in setting up an IZ framework toprepare for a more ambitious policy asdevelopment economics improve in the future.Frequent monitoring and adjustment of an IZ policy is critical. Cities should provide an early signal to residential developers and MTSA landowners that an inclusionary zoning policy is coming. When coupled with transition policies, this approach providestime for the market to adjustto aninclusionary zoning policyand minimize land market disruption. This analysis is limited to a point in time. Residential development economics are dynamic due to changing constructioncosts, changes in the real estate marketdue to COVID-19, the introduction of Bill 108, Bill 197and its impacts on Development Charges, Community Benefit Charges, Density Bonusing and Parkland dedication. 3 2 - 3 Figure 1 -Financial Viability of Inclusionary ZoningCondominium with 10% of units as permanently affordable rental units -100% of Average Market Rent Viable Marginal Challenge Peer Review Per provincial regulations, the Citiesretainedthe consulting firmurbanMetricsto provide a peer review review, included asAppendix E,confirms thatmeets the statutory requirements,confirms the appropriatenessof themethodology,key assumptions, findings, their interpretation andrecommendations.suggestions surroundingthe complexity of monitoringandmaintainingaffordability in perpetuity will require consideration in the next phase of thisproject. WhatWeHeard Engagement to date has focused on key stakeholders from the development and affordable housing advocacy communities.These conversations are further detailed in Appendix B.Highlights include: In person meetings with key MTSA residential developersto introduce the project and learn about their concerns Zoom meeting with 49key development industry and affordability advocate stakeholders regarding preliminary study findings One-on-one follow up meetings with key developers to verify study proformas with real world examples Project webpage https://www.engagewr.ca/inclusionary-zoninglaunched on April 1 Presentation to Affordable Housing Strategy Advisory Committee Council Strategy Session Meetings with Yes inMy Backyard Waterloo Region (affordability advocates) 4 2 - 4 Conclusions and Next Steps Inclusionary Zoning policy has potentialto deliver a modest but meaningful number of affordable units within market developments.The study shows that under ,IZis fiscally viable in Downtown and Midtown. Usingmanagement assumptionthat half of the total number of units currently allowed in zoning will be constructed,there is potential for up to 1,500affordable rental unitsin the long term.If residential development economicsimprove,the IZ policy could be expanded to other MTSAsto deliver moreaffordable units. IZ is one tool that can be used alongside policy and investment by Local, Regional,Provincial and Federal governments together with the to achieve affordabilityobjectives. Staff recommend that Inclusionary Zoning warrants further research, policy and program development and broader community consultation. Staff recommend that these principlesguide this next step. 1.Affordability -Secure affordable housing that is not otherwise being provided by the market. 2.Partner with development communityTo achieve housing targets the Cityneedsdevelopers to build new affordable units under IZ. Residential development projects must continue to be viable. 3.Minimize landmarket disruption Provide early signals and transition time for the land market to adjust to IZ 4.Longterm sustainabilityIZpolicy should be viable without financial incentives. Incentives may beusedto achieve affordability objective beyond what is supported by land economics Appendix C is an initial list of policy and program questions to be considered in the next phase. Staff plan to continue to collaborate with the Cities and Region. The integrated nature of our residential real estate markets would makeit challenging for any one municipality to implement this kind of policy in isolation. Furthermore, collaborationprovides more staff resources,opportunitiesto cost share,economies of scale in program delivery,and ultimately better policy.Staff at the municipalities intend to continue to work together on policy and program development and report back to Council. Key milestones Council Financial Key Background Work Housing Needs direction to Impact Stakeholder Assessmentcontinue Jan-Sept 2020 AssessmentMeetings working on IZ Explore Community Policy set aside, price Ownership and and Development point, duration, operation stakeholder tenure etc. Q4 2020-2021 modelsengagement Finalize ROP amended Adopt OPA and Policy Finalization ownership and to delineate Zoning By-law operation 2021/2022+ MTSAsamendment models New affordable Policy IZ applies to monitoring Implementation units Approved by new reports and constructed 2022/2023+ Regionapplicationsadjustment and occupied 5 2 - 5 ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: 2019-2022 Strategic Plan Caring Community Theme Strategic Plan Action: Create an Affordable Housing Strategy for Kitchener by 2020 in collaboration with Waterloo Region, community groups and the development industry. FINANCIAL IMPLICATIONS: Most of the work in developing an IZ policy, regulations and programwillbe completed by staff, and are includedin departmental work plans.However, the report and peer review both recommend frequent monitoring and adjustment of an IZ policy to ensure its success. An update or addendum to the fiscal impact model report is likely required, prior to implementation to account for COVID-related changes to developmenteconomics,market conditionsand changesin legislation that affect soft cost. This required update will likely have resource implications that are currently unbudgeted. Staff are exploring opportunities to build capacityto undertake monitoring andfinancial modelingin-house, potentially in collaboration with the partner municipalities. Staff are proposing to develop an inclusionary zoning framework that is sustainablewithout municipal financial contributionor subsidies towards providing affordable units. Should Councilwish toachieve additional affordability objectives above what is supported by land economics, financial incentives may be required. The cost of implementing an IZ policy and program will be considered in a subsequent report. Staff have identified a potential for the non-profit housing sector (e.g. Kitchener Housing) to provide mutually beneficial assistance with ownership and operation of affordable units long-term. COMMUNITY ENGAGEMENT: Given the technical nature of thisstage of the project,community engagement was primarily addressed to key stakeholders, informing them about this tool and the fiscal impact study and receiving feedback. In person meetings with key MTSA residential developers to introduce the project and learn about their concerns Zoom meeting with 49 key development industry and affordability advocate stakeholders regarding preliminary study findings One-on-one follow up meetings with key developers to verify study pro formas with real world examples Project webpage https://www.engagewr.ca/inclusionary-zoninglaunched on April 1 Presentation to Affordable Housing Strategy Advisory Committee Council Strategy Session Meetings with Yes in My Backyard Waterloo Region (affordability advocates) The next phase of the project will include broad based community engagement, including but not limited to the questions included in Appendix C. PREVIOUS CONSIDERATION OF THIS MATTER: DSD-19-134Affordable Housing Strategy Work Program Overview DSD-20-006-Affordable Housing Strategy Phase 2: Housing Needs Assessment DSD-20-034-Council Strategy Session Affordable Housing Issues and Options DSD-20-108Draft Housing Strategy REVIEWED BY:Karen Cooper, Manager, Strategic and Business Planning, City of Kitchener Michelle Lee, Senior Policy Planner, City of Waterloo Valerie Spring, Senior Planer -Reurbanization, City of Cambridge 6 2 - 6 Judy Maan Miedema,Principal Planner, Region of Waterloo ACKNOWLEDGED BY: Justin Readman, General Manager of Development Services APPENDICES: Appendix A: Provincial Requirements for an Inclusionary Zoning Study AppendixB:Evaluation of Potential Impacts of anAffordable Housing Inclusionary Zoning Policy Appendix C: Key Questions to be answered in next phase Appendix D: What we heard Appendix E: Peer Review Letter of Opinion onInclusionary Zoning Financial Impact Analysis Report 7 2 - 7 Appendix A-Inclusionary Housing Assessment Information Requirements Inclusionary Housing Assessment and Monitoring Requirements-(From Ontario Regs) An assessment report required by subsection 16 (9) of the Act shall include information to be considered in the development of official plan policies described in subsection 16 (4) of the Act, including the following: 1.An analysis of demographics and population in the municipality. 2.An analysis of household incomes in the municipality. 3.An analysis of housing supply by housing type currently and planned for in the municipality. 4.An analysis of housing types and sizes of units that may be needed to meet anticipated demand for affordable housing. 5.An analysis of the current average market price and the current average market rent for each housing type, taking into account location in the municipality. 6.An analysis of potential impacts on the housing market and on the financial viability of development or redevelopment in the municipality from inclusionary zoning by-laws, including requirements in the by-laws related to the matters mentioned in clauses 35.2 (2) (a), (b), (e) and (g) of the Act, taking into account: i. value of land, ii. cost of construction, iii. market price, iv. market rent, and v. housing demand and supply. Provincial policies and plans and Official plan policies A written opinion on the analysis from a person independent of the municipality and who, in the opinion of the council of the municipality, is qualified to review the analysis. Monitoring reports to include: 1. The number of affordable housing units. 2. The types of affordable housing units. 3. The location of the affordable housing units. 4. The range of household incomes for which the affordable housing units were provided. 5. The number of affordable housing units that were converted to units at market value. 6. The proceeds that were received by the municipality from the sale of affordable housing units. 8 2 - 8 2 - 9 2 - 10 2 - 11 2 - 12 2 - 13 2 - 14 2 - 15 2 - 16 2 - 17 2 - 18 2 - 19 2 - 20 2 - 21 2 - 22 2 - 23 2 - 24 2 - 25 2 - 26 2 - 27 2 - 28 2 - 29 2 - 30 2 - 31 2 - 32 2 - 33 2 - 34 2 - 35 2 - 36 2 - 37 2 - 38 2 - 39 2 - 40 2 - 41 2 - 42 2 - 43 2 - 44 2 - 45 2 - 46 2 - 47 2 - 48 2 - 49 2 - 50 2 - 51 2 - 52 2 - 53 2 - 54 2 - 55 2 - 56 2 - 57 2 - 58 2 - 59 2 - 60 2 - 61 2 - 62 2 - 63 2 - 64 2 - 65 2 - 66 2 - 67 2 - 68 2 - 69 2 - 70 2 - 71 2 - 72 2 - 73 2 - 74 2 - 75 Usvtufe!bewjtpst!tjodf!2:87/! 2 - 76 2 - 77 2 - 78 2 - 79 SOURCE: Google Earth (2020) EVALUATION OF IMPACTS OF INCLUSIONARY ZONING POLICY Peer Review Kitchener / Cambridge / Waterloo, Ontario Prepared for the Cities of Kitchener, Cambridge, Waterloo September 16, 2020 2 - 80 This document is available in alternative formats upon request by contacting: info@urbanMetrics.ca 416-351-8585 (1-800-505-8755) 2 - 81 September 16, 2020 Cities of Cambridge, Kitchener, Waterloo c/o Tim Donegani Senior Planner City of Kitchener 200 King Street West Kitchener, Ontario N2G 4G7 Dear Tim: RE: Evaluation of Impacts of Inclusionary Zoning Policy Peer Review (Kitchener / Cambridge / Waterloo, Ontario) , April 2020 draft report titled Evaluation of Potential Impacts of an Affordable Housing Inclusionary Zoning Policy, prepared by NBLC on behalf of the Cities of Cambridge, Kitchener, Waterloo and Waterloo Region. Based on our review of the subject report and our own re-cast of selected elements of the associated financial analyses relied upon to inform the findings of the study, we ultimately support the work prepared by NBLC and are confident that the study adequately addresses the requirements set out in Ontario Regulation 232/18 with respect to the implementation of new Inclusionary Zoning programs. In particular, we have not identified any material deficiencies in the work prepared by NBLC and generally note that they appear to have completed a detailed, thorough and accurate financial analysis. This analysis appropriately captures the required nuance and submarket-specific conditions across the various subject communities while also having regard for the inherently high- level nature of this type of analysis in informing municipal land use planning policy. The following opinion letter provides a more detailed overview as to the underlying purpose and scope of our review, urbanMetrics commentary as to the appropriateness of the underlying methodology employed by NBLCincluding associated analytical assumptions and statistical inputs as well as our own professional opinions as to the interpretation of the research findings presented and final recommendations advanced by NBLC. www.urbanMetrics.ca | 67 Yonge Street, Suite 804, Toronto, ON, M5E 1J8 | 416-351-8585 (1-800-505-8755) | info@urbanMetrics.ca 2 - 82 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 1 1.0Introduction 1.1Background In 2018, the Provincial government passed Regulation 232/18, which allows municipalities to implement Incertain predefined conditions and parameters. Simply put, IZ is essentially a housing policy approach that seeks to secure non-market housing as a biproduct of broader market developments. The policy tool has been implemented in many jurisdictions throughout the United Statesto varying degrees of successand the approach is now being actively studied and considered in many Canadian cities, including across Ontario. In response to the above policy direction at the Provincial level, the Cities of Cambridge, Kitchener, Waterloo and Region of Waterloo collectively commissioned a study specifically targeted at preparing a more detailed investigation and testing of local development conditions; ultimately informing whether the adoption of an IZ policy framework is economically feasible in this jurisdictional and locational context. More specifically, the purpose of this study has been to explore how the implementation of a new IZ framework could impact development activity in these communities, with the objective of maximizing the creation of new affordable housing units and minimizing any unwanted impacts on investment interest, land values or overall market affordability. To complete this study, the subject municipalities have retained the services of NBLC, a consulting practice specializing in housing, development feasibility analysis and real estate strategy. As outlined in more detail herein, the NBLC study has largely been completed at this stage, including an extensive supporting research program, the preparation of financial pro forma analyses for a number of different submarket areas (10), consideration for a range of alternative scenarios or potential outcomes sitivconsultations with local real estate professionals active in the Waterloo Region market (i.e., the development community), and delivery of a complete draft report inclusive of all related research findings, conclusions and recommendations as of April 2020. 1.2Purpose The aforementioned introduction of new IZ policies by the Government of Ontario under the Planning Act resulted in Ontario Regulation 232/18, which was filed on April 11, 2018. The study commissioned by the subject municipalities and completed by NBLC is ultimately intended to satisfy the requirement for the identified under this regulation and as part of the 2 - 83 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 2 for developing new Official Plan policies. As noted in the NBLC report, thi and on the financial viability of development or redevelopment in the municipality from inclusionary zoning by- the following factors: value of land; cost of construction; market price; market rent; and housing demand and supply. analysis described above that is prepared by a independent of the municipality and who, in the In satisfying this measure, the Cities of Cambridge, Kitchener and Waterloo have now retained the services of urbanMetrics to undertake this peer review and written opinion of the NBLC study. Although the consideration for implementing IZ policies is a relatively new concept for Ontario municipalities and therefore very few of these peer reviewsif anyhave been completed to date, we note that they are commonplace in various other areas of land use planning and the municipal development approvals process. In particular, they are perhaps most common as part of critiquing other types of land economics assignments, including market demand and impact studies and/or in support of dispute resolution (e.g., in preparation for OMB/LPAT hearings, etc.). In our experience, these types of studies are typically intended to provide a municipality or other public sector organization with an unbiased, third-party perspective and to further validate (or refute) the findings presented as part of an original research assignment. To this end, role for this assignment has ultimately been to ensure the underlying appropriateness, accuracy and suitability of the study prepared by NBLC, thereby providing the subject municipalities with additional confidence in the findings presented. 1.3Scope It is important to make clear at the outset of this review the underlying extent and scope of our involvement with this assignment. As established in the original Terms of Reference with the City of Kitchener (and also on behalf of the City of Waterloo and City of Cambridge), this review has generally been intended to address a number of core elements of the NBLC study and ultimately to prepare the following key tasks/deliverables: 2 - 84 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 3 Written opinion of NBLC draft report of April 2020 (as presented in this document). Determination as to whether the draft report meets the requirements in Ontario Regulation 232/18. A review of the: (i) appropriateness of the methodological structure of the analysis; and (ii) the validity of the key assumptions and inputs relied upon by NBLC. Review of 3-4 sample pro forma analyses prepared by NBLC (assumed to be sufficiently representative of the larger body of work undertaken). Commentary on the key findings and recommendations provided, including in the context of . In addition to the specific tasks identified above, we have also engaged in ongoing and active discussions with municipal staff and appropriate representatives of NBLC at a number of occasions, including liaising with relevant technical/analytical staff to clarify our understanding of the analysis and key data inputs, as needed. In light of the above scope of work, and as agreed upon with the subject municipalities before undertaking this review, we further note that there are a number of specific exclusions and/or limitations to our review, including but not necessarily limited to the following: We have not validated the calculation of relevant development-related municipal fees and charges (e.g., development charges, planning application fees, etc.), which are all assumed to be sufficiently accurate for the purposes of this review and have already been vetted by each of the lower tier municipalities involved. Beyond a high-level review of their general suitability and consistency with current development patterns, we have not provided a direct critique nor other commentary on the conceptual developments considered by NBLC within each of the ten submarket areas identified (e.g., with respect to overall scale of development, densities, consistency with municipal policy and development permissions, etc.). We assume that these have all been appropriately reviewed and accepted by municipal staff before being tested for viability. We have not prepared a detailed, line-by-line audit of the 140 financial pro forma analyses produced by NBLC and all corresponding spreadsheets, cell references, etc. Instead, and respecting the propriety nature of many of these elements of the study, we have undertaken a more high-level review and recast of sample pro forma analyses provided by NBLC in PDF format. Given that all of the distinct feasibility analyses and related sensitivities follow a similar/identical analytical structure and format, these are generally assumed to be appropriately representative of the entire body of work prepared by NBLC as part of this assignment. 2 - 85 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 4 2.0Review 2.1Methodology The following section details our high-level review of the methodology employed by NBLC to evaluate the effects of IZ on the financial feasibility of development in each MTSA considering a combination of tenures (i.e., condo and rental) and affordability types. Analytical Structure & Approach In completing this type of community-wide feasibility analysis and ultimately informing future municipal policies, it is important to emphasize that no two development sites are the same and individual developers will have varying motivations and return expectations (or requirements) to consider when investigating a new development project. This presents one of the single greatest challenges in assessing the impacts of IZ on the financial viability of development across broad market areas. With this in mind, the following provides a brief overview of our review, understanding and commentary on the fundamental methodologies and approach adopted by NBLC as part of this study. The approach taken by NBLC was to first develop prototypical development concepts for each of the ten submarkets identified based on emerging development trends, as well as consultations with City staff and the development community. These development concepts considered both purpose-built rental and condominium/ownership tenures in each submarket. In our experience, although not without its pitfalls in terms of appropriately reflecting the potential unique conditions or requirements of individual sites, this general approach is certainly most common and can generally be considered an emerging for such high-level analysis. Similarly, we can confirm that urbanMetrics has regularly employed a similar methodology in other municipal jurisdictions where this type of high-level demonstrative or illustrative analysis was required. Utilising these prototypical developments, NBLC then assessed the financial viability of development using a residual land value (RLV) approach to estimate the maximum land value a developer may be willingor ableto pay for a development site while also meeting their own internal development return requirements. Often utilized in the development community ntial development site acquisitions, an RLV assessment requires less detail and specificity than a more comprehensive discounted cash flow (DCF) proforma modelling technique typically relied upon once a site has already been identified as having some underlying development potential. The latter DCF approach is 2 - 86 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 5 generally more appropriate when a detailed site-specific development concept is being tested and optimized to ensure returns will be met and financing can be secured. In our experience, if a development site is unable to pass the preliminary RLV test, it is unlikely to be feasible when modeled on a DCF basis. As such, while this general approach will not necessarily guarantee the future feasibility of a given development project, it typically provides an appropriate measure of viability and economic promise at a much earlier stage such as this (i.e., as part of a municipal policy exercise). Given the challenges of evaluating IZ policies across ten distinct submarkets and hundreds of unique sites, we believe that the RLV approach is appropriate for informing policy-based decisions such as this, whereas a DCF model is only appropriate for site-specific analysis when more detailed development plans are available (i.e., detailed design stage of development or immediately approaching market entry). Additionally, we note that the NBLC analysis involved the creation of some 140 unique proforma models, which would have otherwise required an unnecessarily burdensome amount of time and resources to complete as a DCF for each scenario. It is our opinion that this additional effort would have been of little to no value to the subject municipalities, yielding marginalif anybenefit. Similarly, we note thatas a perquisite to undertaking any more detailed analysis than already prepared by NBLCadditional design conceptualization and site-specific considerations would have been required, which are not necessarily available from the three lower-tier municipalities at this time. In order to estimate the impact to land values associated with the implementation of IZ, NBLC undertook the following specific work steps: Firstly, estimates of the base land value for each prototypical development were established based on prevalent existing under-utilized uses in each submarket area. Next, redevelopment for both condo and rental residential uses were tested under the current policy (i.e., with no IZ) to understand if development is viable before an IZ policy is implemented. Finally, various implementations of IZ were tested considering different levels of affordability (condo) and affordability periods (rental). If the land value of any redevelopment scenario approached (within 10%) or fell below the base value of a site, NBLC assumed that the viability of the development project would be in question. This assumes that if a residential developer cannot offer the existing landowner at least 10% higher than a base value, it will not be enough to motivate a landowner to close their business and sell their site to the developer. 2 - 87 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 6 In executing this assessment, NBLC also notes that: The policy framework is forward looking. It considers the implications for development if a developer were to pursue land acquisition and development under current market conditions. Perhaps more accurately, we would suggest that it rather takes into account current market conditions to then forecast potential or likely future conditions (e.g., considering growth in both revenues and costs, etc.), which is a suitable approach in our opinion. Overall, we find this to be a reasonable approach for understanding the high-level implication of implementing IZ within each submarket. We do, however, caution that it is unlikely that the prototypical base land values assigned to each submarket will be consistent with current landowner actual or perceived values on a more site-by-site basis. NBLC also recognizes and acknowledges this limitation as part of the following note in Section 5.5 of their report: This analysis cannot capture certain nuances arising from the nature of a historical land purchase or the former capitalization of land costs through the operation of an income- generating use in the interim. Nor can it contemplate the acquisition of land at speculative values, not fully appreciating the magnitude of impacts from future policy adjustments. To appropriately reflect this limitation, it will be important for the subject municipalities to provide sufficient flexibility in their IZ policies, even in areas where financial viability may appear strong with IZ, as presented in the analysis prepared by NBLC. Application & Accuracy As part of our methodological review, NBLC has provided us with detailed RLV models for four sample submarkets representing varying locational and market conditions across the Region. These include: the University of Waterloo MTSA, the Central/ Victoria Park/ Queen/ Kitchener City Hall/ Frederick MTSA, the Fairway MTSA, and the Downtown Cambridge/ Main (Existing BRT/ Future LRT) MTSA. Although it is outside of the scope of this peer review to perform a line-by-line audit of each model, we have ensured that the mathematical approach to calculate the residual land value under each scenario is sound and that the general equations appear to be correctly formed. Furthermore, we have also conducted a high-spot check across each of the RLV models to identify any obvious inconsistencies or analytical deficiencies. Through our review of the sample models provided, we have co-ordinated directly with NBLC on numerous occasions to obtain further clarification in several areas. These topics and discussions included, but were not necessarily limited to, the following: the application of parking requirements and suitability of parking types; 2 - 88 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 7 the use of market revenue assumptions which are higher than their market research reflected in Table 1; property tax assumptions; construction financing rates and construction draw schedules; the inclusion of HST in both the revenue and cost calculations; the methodology for valuing the affordable rental scenario with a 25-year term; and the appropriateness of the discount rate applied. Based on the high-level scope of this peer review, we cannot be certain that the NBLC analysis is completely error free, however, based on our detailed discussions and additional background research, combined with our own review and spot check, we are sufficiently confident that the RLV approach described above has been applied correctly and accurately. 2.2Inputs & Data Based on the general analytical structure set out in the previous section of this review, the following provides a more detailed overview of our findings with respect to a number of the more specific sub- elements of the NBLC study. This includes the range of specific inputs, assumptions and other statistical sources relied upon to complete the subject analyses. Development Concepts Table 3 of the NBLC report summarizes the prototypical site assumptions (e.g., site area, building height, Gross Floor Area) while Table 4 summarizes prototypical units and parking assumptions (e.g., average unit size, parking ratio, unit and parking pricing, absorption) for each of the ten submarkets. In our opinion, these assumptions appear reasonable and reflective of both existing policies and emerging development trends present in each submarket. The general scale and nature of development contemplated is also consistent with our own professional experience in this part of the Province, including work directly on behalf of the local development community and/or other landowners and investors. 2 - 89 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 8 Market Information The base land values upon which all development scenarios were judged have been calculated using land values of existing low-density commercial uses. While this may not be a perfect solution, it likely represents the most appropriate high-level and consistent assumption available to NBLC in this particular application (i.e., that which best reflects the current identified). As noted earlier, there are some inherent and unavoidable limitations to this type of analysis in terms of potential disconnect between the land values modelled in the analysis versus the actual or perceived values for specific landowners throughout these areas. This is a distinct challenge of introducing any new IZ policy framework, whereby local landowners could be reluctant to acknowledge or accept downward pressures on land values. This reluctance to accept downward pressure on land values can be particularly strong for sites that currently may be worth more to the owners based on the existing income generating operations than the one-time payout of selling the site for re-development. NBLC provides an illustrative example of such a situation on page 6 of their report. Furthermore, we also note that land values do tend to be more resilient to change or market fluctuation and generally exhibit a certain level of per square foot sales levels, which are more immediately responsive to changing market conditions or consumer preferences, land use policy amendments, infrastructure announcements, etc.). As highlighted by NBLC, the resulting risk of this dynamic is that overall development activity is thereby reduced given the weakened financial prospects resulting from the lower revenue-generating opportunities inherently presented by non- market/affordable housing options. As recommended by NBLC and discussed further herein, there are nonetheless a number of approaches that can potentially be utilized by the subject municipalities in addressing these risks, including gradual introduction of policy changes, continued monitoring of market impacts on a go-forward basis, as well as a broader commitment to frequent and direct communication with the local development community/landowners. Revenue Assumptions Table 1 in the NBLC report summarizes the results of their high-level scan of condominium sale prices and rents across the ten submarkets, while Table 2 details the affordability levels considered in the RLV models. Through discussions with NBLC, we note that the market sales assumption ultimately input into the RLV models (as contained in Table 4) are slightly higher as they are based on the most recently launched projects captured within the research sample and therefore most indicative of potential ongoing or future market conditions. Based on our 2 - 90 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 9 high-level review, the revenue assumptions (including additional interim occupancy charges and various recoveries) appear reasonable. We will, however, underscore the importance of updating these assumptions regularly on a go-forward basis, especially considering the potential short/medium-term effects of the ongoing COVID-19 pandemic. Ground Floor Commercial Uses in Mixed Use Developments Although not directly related to the core housing focus of this analysis (i.e., including both market and non-market components), NBLC acknowledges thatin some areasprevailing planning policy would require developments to be mixed-use, thereby incorporating some commercial uses within the development on a given site. It is our understanding, however, that the RLV models prepared by NBLC assume that these types of commercial spaces would be and therefore have been excluded from their analysis, accordingly. Based on our experience across suburban and emerging urban markets across Ontario, we note thatwhile nonetheless important in achieving active and animated complete communitiesthese grade-related retail and service commercial spaces can, in many cases, remain vacant for many years and indeed reduce the profitability of broader mixed-use projects. We further note that, during underwriting, it has become increasingly common for developers to assume revenues from this portion of a given building, yet still consider the associated costs as a more conservative approach (i.e., appropriately reflecting the potential risks associated with investing in the construction of these non-residential spaces yet not necessarily realizing the corresponding revenues). Therefore, although we generally agree with the approach adopted by NBLC in this regard (particularly for the sake of simplicity), we would recommend that any requirements to include commercial spaces as part of future should be carefully considered before or in parallel to the implementation of new IZ policy. Hard Costs Assumptions The RLV models rely on the hard cost estimates from the Altus Construction Cost Guide. It is our understanding that these costs per square foot ratios were also vetted and confirmed by representatives from the local development community as being appropriate in this application. Given the high-level nature of the development concepts considered and in the absence of more site or development-specific cost estimates from a quantity surveyor, we consider the hard costs in the Altus Guide appropriate for inclusion in this type of RLV analysis. Soft Cost Assumptions Municipal development fees (including planning application fees, building permit fees, development charges, parkland contributions, and property taxes), which make up a large portion of soft costs, have been included by NBLC as direct inputs from the Region and local lower-tier municipalities. Other soft costs have been estimated as a percentage of hard costs utype ratios, a common technique across all real estate 2 - 91 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 10 proforma analysis. In our opinion, this is an appropriate level of detail to have included in this portion of the analysis and consistent with the approaches commonly utilized by urbanMetrics. Other Assumptions In addition to the more targeted market-based assumptions, the RLV models require several assumptions that research reveals and therefore incorporate an element of professional judgement. These include: Capitalization Rates (Cap Rates) Combined with the net operating income (NOI) expected from the new buildings, cap rates are used to estimate an income-value upon completion. Market cap rates across all asset classes are readily reported on for both current and historical periods, however, future cap rates are unknown and must be forecast based on the modellbest estimate of future market conditions and expected investment returns. The cap rates utilized by NBLC are generally in-line with the current cap rates reported by CBRE in KitchenerWaterloo as of Q2 2020 and in our opinion, are reasonable to assume over the short- to medium-term in the Region. Revenue & Cost Growth The RLV models utilized by NBLC involve consideration for market conditions over future periods and as such, current market revenue and cost assumptions were assumed to grow into the future. In particular, NBLC has conservatively assumed that both revenues and costs will grow by some 2% annually on a go-forward basis. We appreciate this conservative growth rate (by comparison to recent/historical patterns) and believe that by assuming revenues and costs will grow equally, the future value of development land is not reliant on growth in market demand (i.e., revenue growth) outpacing the corresponding growth of costs, which would then speculatively add value to land into the future. Moreover, based on follow-up discussions and responses to targeted questions posed by urbanMetrics, we understand that NBLC have not applied a unique growth rate to the future municipal fee portion of soft costs (e.g., development charges). This was an active decision on their part to hold the rate of growth for municipal fees directly in line with other hard and soft construction costs, with recognition and acknowledgement of the fact that these could ultimately fluctuate in time. While we note that this could ultimately understate the potential future costs associated with increased municipal feeswhich could very likely increase at a rate of greater than 2% on average in the coming yearswe appreciate that this is difficult to pinpoint based on uncertainty in the future cost recovery needs of the subject municipalities 2 - 92 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 11 in future periods. Regardless, we do not anticipate this will necessarily result in a material impact on feasibility, as characterized in the context of this study. In particular, as confirmed and noted by NBLC, these fees are typically levied relatively early on in the development process (upon issuance of building permits), so any impacts of applying a unique growth rate to these figures would only be marginal. That is, they are unlikely to deviate significantly from current rate structures in a relatively short period of time. A key component of any RLV model is to account for, and preserve, a reasonable developer profit. NBLC has set-aside a total of 15% of project revenues to reflect this opportunity for profit-generation. It is important to note thatalthough developers often do not achieve the targeted profit margin included in their RLV upon completion of a development project assuming anything less at this early stage of the development process would not allow for the that development projects often need to see them through more detailed site-specific planning process and execution. This, in effect, serves to reflect an appropriate continge on any profit margins, thereby allowing for potential future fluctuations (increases) in costs, poor sales performance and/or other potential unforeseen circumstances. Furthermore, a healthy profit margin ensures that projects will secure financing in terms of presenting more favourably to prospective lenders. Overall, and in consideration for the above factors, developers typically underwrite their projects at a baseline or starting point of 15% (in our experience), although anywhere in the range of 10-20% is generally considered reasonable or an appropriate benchmark in this type of applicationto target the middle end of this range is appropriate both in terms of exercising reasonable conservatism, but also in terms of consistency with our own work and practices of the development community itself. Discount Rate The NBLC models assume will occur more than 5 years after land acquisition and a 6.0% discount rate was applied to calculate their present value and the amount that the developer would be able to pay for land today. Through supplementary conversations with NBLC, we understand that this discount rate was chosen in large part through their previous consulting experience with the development community in comparable Ontario communities. Although it is impossible to know each individual discount ratewhich undoubtably will vary, typically somewhere in the range of 6% to 12%we believe that 6% is an appropriate keted assumption in this case where there is a need for consistent and blended averages across multiple properties and geographies. If anything, however, we do note that this may be potentially optimistic. 2 - 93 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 12 Overall, we believe that the assumptions requiring professional judgement have been reasonably considered by NBLC and serve to ensure that land values across all scenarios and submarkets are comparable to their base values. 2.3Interpretation of Findings As is the case with any land economics assignment of this nature, it is important to not only ensure the quantitative methods and underlying calculations, assumptions and statistical inputs are sound and appropriately representative of potential real-world conditions, but also to validate the resulting interpretation of the analysis and any key takeaways and recommendations. That is, the analysis achieve some substance in more practical vs. theoretical applications. Whereas the previous sections of this review substantiate the more technical aspects of the NBLC study, the following focuses on providing a secondary review of their end conclusions and recommendations to the subject municipalities from the perspective of future implementation. Overall, we agree with the general advice and observations made by NBLC in light of the analysis presented. There is a direct and immediate connection to the analytical findings established and the recommendations thereof. Flexibility in Policy As noted previously in this reviewand as addressed directly by NBLCit will be critical to ensure that appropriate flexibility is built in to any future IZ policy established by local area municipalities. In our opinion, this is generally two-fold: Firstly, given the hypothetical nature of this analysis for demonstrative parcels of land within each submarket, there will undoubtedly be unique development conditions, expectations and resulting land pricing for individual sites in practice versus theoretical development projects. Although it is impossible to truly capture all the distinct conditions on each of these sites, it is nonetheless important to accommodate the range of possibilities or potential outcomes in this regard. As such, a future policy implementation that avoids being overly prescriptive while also maintaining sufficient protection of the underlying objectives or strategic goals of the municipalities will be important. Secondly, and notwithstanding the above, NBLC highlights the obvious diversity of market conditions across the Region. In addition to general flexibility to bridge the gap between policy and the realities of the real estate market, it will also be important to encompass the full range of development conditions presented across the various submarketsand/or individual sitesidentified within each municipal jurisdiction. At its most basic manifestation, we agree 2 - 94 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 13 cial incentives may be required to compensate for the obvious reduction in revenues associated with affordable housing minimums; particularly in the context of poorer- addition, however, we further note that there could be a myriad of other parameters or that can potentially be considered by the subject municipalities to improve feasibility conditions in more isolated cases, including: adjusting the quantum of affordable housing required (i.e., total % of units or floor areas required); or representation for low and moderate income households; considering reductions in parking requirements (although we do note that the rates assumed by NBLC are already relatively low); as well as offering opportunities for additional density permissions (i.e., simple exchange for additional market-based height or density). Further to above, it could be important to consider appropriate policy mechanism(s) that allow for site-specific exemptions or other accommodations to achieve appropriate conditions on unique and/or strategic sites. For example, there will inevitably be sites that are particularly challenging from the perspective of viability (e.g., severe contamination and remediation costs, difficult or complex physical/location/access characteristics, awkward relationship with surrounding land uses, exceptionally large sites for which unique challenges are presented with respect to phasing and possible absorption timelines, etc.). Loosening of some of the IZ policies may be required in order to continue to incentivize and/or allow for development to occur for these types of sites. Similarly, there may be specific strategic sites for which the various lower-tier municipalities would like to secure additional development to achieve other planning or economic development-related objectives, which require discretionary relaxation of policy to alleviate constraints to develop relating to reduced opportunities for revenue generation. Gradual Introduction In their draft reporting, and based on our own discussions with relevant members of their team, NBLC appears to advocate for introducing any new IZ policies gradually , so as to provide appropriate advanced warning to landowners and the development community. Although in theoryand perhaps at face valuethis could delay the delivery of new affordable housing supply to the Region, we ultimately agree with their assessment and believe that this is a necessary first step to ensure the longer-term sustainability of the new policy framework. This may also serve to avoid any unwanted immediate or short- in the local market area(s). 2 - 95 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 14 In addition to establishing a reasonable timeline for introduction of the new IZ policy, this initiative should also be accompanied by active and regular communication, education and outreach with the development community to ensure clarity of the intended direction and motivations of this policy, as well as the anticipated outcomes from the perspective of each of the municipalities. Monitoring Framework Consistent with the notion of a gradual introduction of new IZ policies, per above, a related and subsequent task for the municipalities will be to continuously monitor the market impacts of the new IZ policy and to actively adjust in response to any unwanted changes. This will also be required to simply update and reflect constant changes in a dynamic real estate market, including: evolving construction cost profiles and rates, changing revenue/demand prospects, adjustments to developer preferences, ongoing supply/demand relationships, broader macroeconomic trends, etc. Similarly, as alluded to in some of the case study examples identified by NBLC (e.g., New York City), there may be a need to hear appeals or challenges to the policy in circumstances for which a reasonable agreement cannot be established between municipal authorities and local landowners/developers. With respect to future monitoring, however, we recognize that this will be particularly challenging in an environment of limited financial and/or staff resources and potential lack of in-house subject matter expertise within each of the subject municipalities. These challenges could also be further exacerbated by the fact that there likely will not be sufficient scale or magnitude of IZ-related development activity to justify the costs of monitoring in this manner (e.g., relative to other larger municipalities where there could be a critical mass of development to warrant such a framework). One potential solution to this problem would be to simplify the analyses prepared by NBLC and effectively isolate or reduce to the model to its core principles same modelling that follows the same general RLV structure but with fewer individual assumptions or statistical elements to be updated). This may facilitate any future updates by municipal staff and/or others involved that may not be able to offer the same level of expertise as external consultants. Although we generally caution municipalities against updating or re-running these types of financial models in isolation and without an appropriate understanding of the underlying concepts and requirements for said inputs, this approach may nonetheless offer an interim or temporary solution that requires less significant time and effort (as well as reduced risk of inaccuracy or misinterpretation). For example, it is our opinion thatwhile the NBLC analysis may be appropriately detailed to inform the development of the new IZ policies under consideration as an initial baseline the modelling structure may be overly or even unnecessarily detailed to be updated on an annual basis. That said, we would generally encourage the municipalities to leverage this additional rigour and specificity to best inform the introduction of the new IZ policies at the outset, but thereafter seek to prioritize the frequency of any monitoring or update schedules established rather than necessitate a similar level of detail in this monitoring process. Based on our earlier discussions, we believe that 2 - 96 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 15 NBLC shares the same sentiment with respect to the importance of frequent updating, wherever or however possible. Perpetuity of Affordable Units Another one of targeted recommendations is to seek affordability for units created through IZ in perpetuity, where possible in support of ongoing municipal strategic objectives (e.g., increasing the supply and indeed the term of affordable housing supply), we certainly agree with this direction. As noted as part of previous discussions with representatives of each of the lower-tier municipalities, however, we will caution that this often places undue pressure and reliance on external sources of funding from other levels of government (i.e., depending on the depth of affordability being pursued and/or the specific parameters established as part of the resulting IZ policies and opportunities for exemptions, additional financial incentives, etc.). More broadly, we note that there will undoubtedly continue to be a finite source of provincial and federal funding available to support the creation of affordable housing and municipalities in Waterloo Region will continue to vie for these moneys in direct competition with other parts of the province and country. As such, we would simply suggest that the subject municipalities carefully consider the extent to which they are willing, capable and prepared to support this type of housing over the longer-term planning horizon, if and where applicable. 3.0Conclusions Based on our review of the NBLC report and supporting financial analyses, we support their research conclusions and recommendations with respect to the feasibility of introducing new IZ policies in the Cities of Cambridge, Kitchener and Waterloo. The following provides a summary of our specific findings in this regard: We believe that the RLV approach and analytical structure adopted by NBLC represents a reasonable and reliable methodology for understanding the high-level implication of implementing IZ within each submarket. Although we cannot necessarily guarantee the full accuracy and completeness of the 140 proformas prepared by NBLC, we are sufficiently confident that the RLV approach and analysis described above has been applied correctly, accurately and in a comprehensive manner. 2 - 97 Evaluation of Impacts of Inclusionary Zoning PolicyPeer Review(Kitchener / Cambridge / Waterloo, Ontario)| 16 The various statistical inputs and other assumptions requiring professional judgement relied upon by NBLC as part of their analysis appear to be entirely reasonable and consistent with our own research and experience in this market area. Although we have identified a number of potential alternative approaches, assumptions and/or considerations for selected elements of the NBLC study, these would not result in a material impact to the end results of the study, nor any of the associated study conclusions and recommendations provided to the municipalities. Based on our review of the NBLC findings and recommendations, including in the context of agree with the advice and observations made by NBLC in light of the analyses presented. Overall, no fundamental deficiencies nor other issues were identified as part of our review, which need to be addressed as part of any future updates or re-issuing of the draft reporting prepared by NBLC to date. Consequently, and as identified at the outset of this opinion letter, it is the professional opinion of urbanMetrics that the study prepared by NBLC on behalf of the subject municipalities adequately addresses the requirements set out in Ontario Regulation 232/18 with respect to the to be prepared in support of the implementation of new IZ policies. It has been a pleasure conducting this study on behalf of the Cities of Cambridge, Kitchener and Waterloo and we hope that you find this information helpful in your continued efforts to explore the appropriate application of new IZ policies across the Region. Please do not hesitate to contact the undersigned with any questions or comments that you may have, or if further discussion and coordination is required with relevant members of NBLC. Yours truly, urbanMetrics inc. Christopher White, PLE Matthew Paziuk Partner Senior Project Manager cwhite@urbanMetrics.ca mpaziuk@urbanMetrics.ca 2 - 98 REPORT TO:Planning & Strategic Initiatives Committee DATE OF MEETING:September 28,2020 SUBMITTED BY:Janine Oosterveld,Manager of Site Development and Customer Service, 519-741-2200 ext. 7076 PREPARED BY:Katie Anderl, Senior Planner, 519-741-2200 ext. 7987 WARD(S) INVOLVED:Ward 10 DATE OF REPORT:August 26,2020 REPORT NO.:DSD-20-106 SUBJECT:Zoning By-law Amendment ZBA19/013/S/KA 290 Sheldon Avenue North Thresholds Homes and SupportsInc. RECOMMENDATIONS: A.That Zoning By-law Amendment Application ZBA19/013/S/KA for Thresholds Homes and SupportsInc.be approved- -20-106 as Appendix A; AND B.That in accordance with Planning Act Section 45 (1.3 & 1.4) that applications for minor variances shall be permitted for lands subject to Zoning By-law Amendment Application ZBA 19/013/S/KA; AND FURTHER C.That the City of Kitchener grant an exemption to Council Policy MUN-PLA-1035, proposed on the lands municipally addressed as 290 Sheldon Avenue North, to allow development on a cul-de-sac having a length greater than 150 metres provided that: a)buildings are sprinklered; and b)Direct-to-Fire Alarm Monitoring be installed EXECUTIVE SUMMARY: The owner of 290 Sheldon Avenue is proposing to change the zoning of the property from Residential Four Zone to Residential Six Zone with Special Regulation Provision 756R to permit the site to be developed with a 25unit multiple dwellingand retention ofthe existing 6 bedroom group home. Staff recommend that the application be approved. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 3 - 1 Location Map 290 Sheldon Ave N REPORT: The subject property contains a single detached dwelling that isused as a 6 bedroom group home by Thresholds Homes and SupportsInc.(Thresholds). Thresholds provides subsidized accommodation through agency-owned properties, and all individuals housed with Thresholds receive a range of ongoing support services. The applicant is proposing to change the zoning to permit intensification of the site to provide affordable,supported housing. The existing house is proposed to remain as a 6 bedroom crisis and respite care facility, and will continue to bestaffed 24/7 with two staff. A new multiple dwelling is proposed to be constructed which would contain 25one-bedroom units.The original development proposal also included a new 5 bedroom residential care facility within the multiple dwelling. Through the review process,technical concerns were raised with respect to emergency access for the residential care component andthe applicant has elected to proceed with only the multiple dwelling component,in addition toretention ofthe existing group home. The site is located in a predominantly residential neighbourhood, which has been developed with a mix of low and medium density residential uses including single detached dwellings and a mid-rise condominium tower.Astacked townhouse development has recently been site plan approvedin principleat 289and 295Sheldon AveN. 290 Sheldon Avenue backs on to Randerson Green and is adjacent to Highway #7. Planning Analysis: Provincial Policy Statement, 2020 The Provincial Policy Statement (PPS) provides policy direction on matters of provincial interest related to land-use planning and development.The PPS is supportive of efficient development and land-use patterns which accommodate an appropriate range and mix of residential and other uses, in order to achieve a complete community. The PPS supports focusing growth and development to settlement areas, and supports a land use pattern within settlement areas that isbased on achieving densities and a mix of land uses that efficiently use land, resources, and infrastructure,and which support active transportation and are transit-supportive. Policies also supportthe provision of an appropriate range and mix of housing types by establishing and implementing targets for the provision of housing which is affordable to low and moderate income households, permitting and facilitating all forms of housing required to meet the social, health and wellbeing requirements of 3 - 2 current and future residents. Local housing prioritiesare articulated in the which was prepared by the Region to coordinate with policies of the PPS and Places to Grow. Thesubject lands are located in a settlement area, and theproposed zoning facilitatesthe development of the subject property with a low-rise residential usethat efficientlyuses the lands and existing infrastructure. The proposed development is located in an urban area with proximity to transit routes, parks and open spaces, and a variety of uses including public institutions, service and commercial uses. The density of the development is appropriate and will not create adverse impacts on the surrounding neighbourhood. The proposed multiple dwellingand existing group home help provide a rangeof housing options within the community andwill help to achieve targets for the provision of affordable housing for a priority population, as identified inthe RegionHousing Action Plan. Planning staff is of the opinion that the proposed ZoningBy-law Amendmentis consistent with thepolicies and intent of thePPS. A Place to Grow: Growth Plan for the Greater Golden Horseshoe, 2019(Growth Plan): The Growth Plan supports the development of complete and compact communities that are designed to support healthy and active living, make efficient use of land and infrastructure, provide of a range and mix of housing types,and support transit viability. Policies of the Growth Plan focus growth within the delineated built-up area. Tdelineated built up area, represent intensification and will help the City achievedensity targets. The surroundingneighbourhood is primarily residential with institutional, commercial and service uses nearby.Theproposed zoningwill permita form of housing (low rise apartments)that improvesthe range of housing options within this neighbourhood. The additional housing will make use of existing infrastructure and support existing transit. Housing policies of the Growth Plansupportthe development of a range and mix of housing options that will Planning staff is of the opinion that the applications conform to the Growth Plan. Regional Official Plan (ROP): Urban Area. The subject lands are designated Built-Up Areain the ROP. This neighbourhood provides for the physical infrastructure and community infrastructure to support the proposed residential development, including transportation networks, municipal drinking-water supply and wastewater systems. Regional policies require Area Municipalities to plan for a range of housing in terms of form, tenure, density and affordability to satisfy the various physical, social, economic and personal support needs of current and future residents. Regional policies also support the provision of special needs housing in all residential designations.The proposed zoningincreases the range and mix of housing forms within this neighbourhood, and the applicant is proposing to develop this site with housing that is both affordable and which may be considered special needs housing. Planning staff is of the opinion that the proposed Zoning By-law Amendment conforms to the Regional Official Plan. Regional Planning staff have no objections to the proposed applications andhaveprovided comments evelopment applications. 3 - 3 City of Kitchener Official Plan: Urban Structure Community Area The lands are identified as a Community Area in the Official Plan. The planned function of Community Areas is to provide for residential uses as well as non-residential supporting uses intended to serve the immediate residential areas. Intensification ispermitted within Community Areas in accordance with the applicable land use designation and the Urban Design Policies in the Official Plan. The proposed development must be sensitive to and compatible with the character, form and planned function of the surrounding context. Land Use Designation Low Rise Residential The Low Rise Residential land use designation permits a range of low rise dwelling types including low risemultiple dwellings. Policies provide for a maximum Floor Space Ratio of 0.6which may be increased to 0.75 where it can be demonstrated that the increase in the Floor Space Ratio is compatible and meets the general intent of the policies of the Plan. The maximum height of buildings in the Low Rise Residential designation is 11.0m at the highest grade elevation.Relief from the building height may be considered for properties with unusual grade conditions provided the increased building height is compatible with the built form and physical character of the neighbourhood. The developmentconcept shows a future FSR of 0.57 whichcomplies with the maximum FSR of 0.6 based on the existing lotsize. The subject lands back onto Randerson Green, which is a small city owned green space. Parks staff has identified that they intend torequest a park land dedication through the site plan approval which will reduce the sizeof 290 Sheldon Ave by about 0.046 hectares, resulting in the future FSR of 0.63. The lands to be dedicated will not be developed with buildings whether they remain part of the 290 SheldonAve N, or are added to Randerson Green. Staff feel it is appropriate to include special zoning regulations which will allow the FSR to be calculated based on the pre-dedication lot size of 0.46 hectares. Further discussion with respect to compatibility and character is provided in the Urban Design section of this report. Housing The Official Plan policies support the provision ofan appropriate range, variety and mix of housing types and styles, densities, tenure and affordability to satisfy the varying housing needs of our community through all stages of life. The proposed development incorporates the existing Group Home which provides asupervised and supportive living environment for a small group of residents, with the proposed multiple dwelling for residents who can successfully live independently, but with some degree of support from Thresholds. Special needs housing is defined in t as any housingused by people who have specific needs beyond economic needs. The PPS provides examples of special needs housing including housing for persons with disabilities such as mental health disabilities. The proposed developmentis amultiple dwelling,and residents live independently, with supportson a needs basis. Official Plan policies support the provision of appropriately scaled special needs housing in any land use designation which permits residential uses, provided the use and building form is compatible with the surrounding context. Special needs housing is encouraged to locatein close proximity to public transit, commercial uses, parks and have convenient access to community, social and health services. The subject site is located in a residential neighbourhood and within a 10 minute walking 3 - 4 distance of several bus routes including an I-Xpress route, commercial areas along King Street East and Ottawa Street South, andcommunity uses including churches, parksand recreationaluses. Urban Design & Compatibility Official Plan policies seek to ensure thatresidential intensification within existing neighbourhoods will be designed to respect existing character by beingsensitiveto surrounding context.Policies indicatethat all new residential buildings in predominantly low density neighbourhoods should be compatible with and respect the massing, scale, design and physical character of the established neighbourhood and have bothappropriate landscaped areas and parking areas provided on site. The neighbourhood is generally characterised with low rise residentialhouses, however the subject site is located at the edge of the neighbourhoodabuttingHighway #7 to the east, a small city green space to the north(Randerson Green), a9storey apartment building is located to the east, anda new low-rise multiple dwelling has recently beensite planapproved in principle to the south. There is one house located immediately east of the subject site and this property is zoned R-7 which would also permit multipleresidential development. The proposed R-6 zone will permit development of a low-rise multiple dwelling. The buildingis proposed to be 3 stories high from the highest grade elevation, with an exposed basement lobby which will create a 4 storey elevation facing the street. While higher thansurrounding single detached dwellings, the proposed buildingissetback back from Sheldon AveNand recessed behind the existing single detached dwelling which is proposed to be retained and will continue to be used as a group home. The existing housewill be most prominent along the street, and will continue to contribute to the look and feel thatis valued by residents of this neighbourhood. Staff is of the opinion that the proposed building is compatible with respect to massing and scale of the neighbourhood. Details of the elevations will be finalized through the Site Plan review, however the conceptual architectural design is contemporary using a variety of materials, warm tones and materials that take inspirationfrom the surrounding neighbourhood. Conceptual drawings depict facadeswithJuliet balconies and with windows on all sides.Parking is setback back from the street and is located behind the façade of the existing dwelling, allowing for landscaping along the street. The site design will also allowfor the retention of many of the trees in good condition around the periphery of the site, including trees along the Highway and within the lands to be conveyed to the City as part of the future park land dedication. Details of the landscape design and outdoor amenity spacesfor residentswill be reviewed and detailed as part of the site plan approval process. Emergency Access and Requested Exemption to the Emergency Services Policy City policyrequiresthat new development and redevelopment be designed to ensure adequate protection by fire services. The subject property is located on a section of Sheldon Ave Nwhich exceeds the maximum cul-de-sac length of 150 metres as identified in the Council Policy.The length of Sheldon Ave Nis an historical situation which pre-dates the current Emergency Services Policy. Development on such a cul-de-sac is permitted subject to either provision of a secondary emergency access route, or other alternative life safety measures such as sprinklers and Direct Detect as outlined in the policy. Thresholds originally proposed to change the zoning to permit an expansion to the residential care facility/group homeuse, as well as to permit a multiple dwelling. Fire Services staff has reviewed 3 - 5 additional residential care facility cannot be supported without a secondary emergency access, however, the existing group home may remain in the single detached dwelling. An appropriate alignment of a secondaryaccess route has been explored at length, however due to restrictionson the Ministry of Transportation regulated portion of the lands (within 14 metresof the highway), it was determined that a permanent secondary access route is not feasible. As such, Thresholds has agreed not to pursue the expansion of the residential care facility, focussing instead only on the multiple dwelling. Thresholds Housing and SupportsInc. Policy to permit the proposed multiple dwellingwithout a secondary emergency access, on a cul-de- Eion criteria outlined in section 3.6 of the Emergency Services Policy, Thresholds has agreed to construct the multiple dwelling with a residential sprinkler system conforming to the latest version of NFPA 13D, or other standard acceptable to the Chief FireOfficial, and a direct-to-fire monitoring system. These measures are above and beyond the typical Building Code standard for a multiple dwelling and improve the response times for Emergency Services and life safety for future residents. Details of this solution will be finalized through the future Site Plan Approval and Building Permit processes. Fire staff is satisfied that with the provision of these additional life safety measures the proposed development is appropriate.Based on the foregoing, Fire and Planning staff recommend that the requested Exemption to the Emergency Services Policy be approved. Proposed Zoning By-law Analysis: The subject property is zoned ResidentialFour Zone (R-4) which permits a range of low-rise low intensity residential usessuch as single detached, duplex, and semi-detached dwellings. The applicant is proposing to change the zoning to Residential Six Zone, with Special Regulation Provision 756Rto permit the site to be developed with a new multiple dwelling in addition to the existing group home. Special Regulation Provision 756Ris proposed as follows: a)The maximum building height measured from lowest grade level shall be 13.5 metres and may exceed 110% of the building height measured from the highest grade level. The purpose of this regulation is to permit a three storey building, which is fourstoreys from the lowest grade elevation. The subject lands have a substantialgrade change between Sheldon Avenue and the developable area. In order to accommodate a driveway with appropriate and accessible grades,one sidethebasement level will be fully exposed, allowing for a lobby which is accessible from the driveway and parking area. The new buildingis recessed behind the existing house, and will not be prominent along the street, therefore having a minimal impact to the streetscape. The other elevations of the building will comply with the maximum 10.5 metre height. b)Where lands affected by SpecialRegulation 756Rarededicated to the City, the maximum Floor Space Ratio for development on the retained portion may be 2 calculated based on a lot area of 4639.1 m(being the size of the lands prior to any dedication). 3 - 6 The purpose of thisregulation is to allow the Floor Space Ratio to be calculated based on the current lot size. City Parks has indicated that they will request that a small portion of the sitebe conveyed to the City and added to Randerson Green rather than requesting cash-in-lieu paymentfor parkland dedication.Byreducing the lot size, the amount of gross floor area permitted by the FSR calculation is reduced, reducing the size of the building. As the dedicatedlands will not be developed and will be held publicly, this regulation wouldnot result in any actual increase in density over what can be constructed on the current lot with a cash payment, and the neighbourhood receives the benefit of a larger green space. c)That on a lot containing a group home or small residential care facility with up to 6 bedrooms and a multiple dwelling with up to 25 dwelling units, parking shall be provide as follows: Small residential care facilityor group home2spaces per facility Multiple dwelling with up to 25 units 0.4spaces per unit. The purpose of this regulation is to permit a reduced parking requirement for the proposed development.AParking Assessmenthas been submitted in support of the proposed parking reduction. The assessment is based on the actual parking demand of other multiple dwellings operated by Thresholdsand finds that most tenants do not have personal vehicles, and parking spaces are primarily used by staff and visitors to the site. Thestudy demonstrates that the maximum parking requirementper unit at similar multiple dwellingsoperated by Thresholds isbetween 0.08 and 0.25 spaces per unit (inclusive of staff, resident and visitor parking)representing a demand of between 2 and 6 spaces for the 25 unit multiple dwelling. A small residential care facility is required to have 2 parking spacesby Zoning By-law 85-1and this is not proposed to change.Staff recommend a parking rate of 0.4spaces per unit, which is slightly higher than the ratio demonstrated by the parking study to further ensure that parking can be accommodated on-site, and that staff and visitors do not regularly rely on on-street parking.Transportation Services staff have reviewed the Parking Assessment and concur with the findings. They agree that the proposed parking ratios are appropriate for the proposed development. Further, parking spaces will not be assigned to the small residential care facilityor multiple dwelling allowing support staff to use parking spaces during the day, and visitors to use parking evenings and weekends. d)Off-street parking and loading spaces may be located between the façade of a new building and the front lot line (SheldonAve N), and between the façade of an existing building and the side lot line abutting a street (Highway #7). Parking and loading spaces must be setback a minimum of 10.0 metres from Sheldon Ave N. Parking lots for a multiple dwellingare generally not permittedto be located between buildings and the street. The purpose of this is to ensure that streetsare animated by buildingsand landscaping. The parking loton the subject siteis proposed to be setback behind the façade of the existing house, but between the new building and Sheldon Ave N, and the existing house and Highway 7. The parking area is setback back a significant distance from Sheldon AveN, is at a higher elevation and will be screenedby landscaping. It is also fullyscreened from the highway by the existing 3 - 7 noise wall, and staff is of the opinion that it will not causea negative visual impact. The proposed location also ensuresthat the parking area is separated and screened from neighbouring dwellings,mitigatinglight trespass and headlight glare which may result from it being in a rear yard. e)a residential care facility or a group home shall be permitted to have up to 6 residents and shall only be located in a building existing on the date of the passing of this by- law. The purpose of this regulation is to only permit the existing group home/small residential carefacility. Due to the length of the cul-de-sac, it has been determined in consultation with Fire, that permitting additional residents in a residential care or group home setting is not supportable without an Emergency Access Route. As discussed previously, the proposed additional life safety measures of a sprinkler system and direct-to-fire alarm monitoring system is an acceptable alternative for amultiple dwelling, but Fire cannot support increasing the number of residents in aresidential caresettingin this location. f)a multiple dwelling shall have a central air conditioning system, and special building components as identified in the Environmental Noise Assessment. The purpose of this regulation is to ensure that requirednoise mitigation measures are incorporated into the multiple dwelling when it is constructed. The Region is satisfied with the Noise Assessment and the addendum thereto, and these measures must be incorporated to ensure indoor sound level criteria are achieved. Staff isof the opinion that the proposed R-6 Zone together with the special provisionswill provide for a form of development that is compatible with the neighbourhood, which will help to improve the mix of housing types, and which will appropriatelyaccommodate on-site parking needs,and which represents good planning.Staff recommend thatthe proposed Zoning By-law Amendment be Reports, Studies and Technical Memos: The following Reports and studies were considered as part of this proposed Zoning By-law Amendment: Planning JustificationReport: 290 Sheldon Ave Prepared by: GSP Group, October2019 Preliminary Environmental Noise Assessment: 290 Sheldon Avenue North Prepared by: MTE Consultants Inc., October 24, 2019 o Environmental Noise Assessment Addendum Prepared by: MTE Consultants Inc., August 18, 2020 Functional Servicing and Stormwater Management Report: 290 Sheldon Avenue North Prepared by: MTE Consultants Inc.,September 26,2019 3 - 8 Salt Management Plan: 290 Sheldon Avenue North Prepared By: MTE Consultants Inc., December 12, 2019 General Vegetation Overview and Tree Management Plan Prepared By: MacKinnon & Associates.,(last revised) September 27, 2019 Parking Assessment Prepared By: Salvini Consulting,September 26, 2019 Department and Agency Comments: Preliminary circulation of the applicationwas undertakenNovember 20, 2019 to applicable City departments and other review authorities.Copies of comments may be found in AppendixC this report. Comments of the following City Departments and Commenting Agencies are attached: Kitchener Engineering&Utilities Kitchener Fire Kitchener Environmental Planning Region of Waterloo All questions and comments related to the proposed land use change have been resolved and staff are supportive of the proposed Zoning By-law Amendment. The following Departments and Agencies have indicated they have no concerns or comments: Kitchener Transportation Services Kitchener Building Division Kitchener Parks and Cemeteries (Design and Development) Waterloo Region District School Board Waterloo Catholic District School Board Grand River Conservation Authority Ministry of Transportation Community Input& Staff Responses Staff received written responses from twenty-threehouseholds with respect to the proposed January 29, 2020 and was attended by thirty-fiveresidents.In addition,a petition against a future trailconnection from Montgomery Road to Ottawa Street with sixty-five signatures was submitted. A broad range of questions and comments were heard from property owners andare discussed below. Theme: Traffic and Parking What We HeardStaff Comment The proposed amount ofparking Transportation Services staff have reviewed the Parking will notbe sufficient for the Justification Study and are satisfied that the recommended development.parking ratioof 0.4 spaces per unit is appropriate for the proposed development.housed by Thresholds typically do not own a personal automobile and instead cycle, walk and use transit. 3 - 9 On-street parking is in high Staff acknowledge that visitors to the Auditorium park on demand during events at thesurrounding streets. While a parking reduction is proposed, Kitchener Auditorium. This staff is of the opinion that sufficient on-site parking is development will further impact provided to accommodate the regular needs of the problems caused by on-street proposed development and do not expect that there will be parking.a regular overflow onto local streets. The pavement width of Sheldon In accordance with Complete Street Guidelines, the Avenue was narrowed when it preferred pavement width fora local street is about 7.0 was recently reconstructed. With metres. This design prioritizes space for sidewalks, parking on both sides of the boulevards and street trees, while accommodating travel street it can be difficult for lanes for vehicles and on-street parking as well as drive vehicles to pass each other.lanes. The narrower pavement width has the effect of With increased traffic, this may helping to slow local traffic. Sheldon Ave N is currently built be a problem.with an 8.0 m pavement width as the design preceded the Complete Streets Guidelines. Parking is currently permitted on both sides of certain sectionsof Sheldon Ave N. If there is concernin the futurewith the ability for vehicles to maneuver safely, Transportation staff have indicated that they could explorelimiting parking to one side of the street. Traffic calming measures should The city maintains a list of streets where traffic calming beinstalled on Sheldon Ave N.measures have been requested, and requests are prioritized for interventions. Transportation Services staff indicated Sheldon Ave N would likely not meet the criteria for physical traffic calming measures such as curb extension or speed humps, however, it would be possible to explore surface treatments such as an intersection mural at Fairmount Road and Sheldon Ave N. This could be further explored as a once the top coat of asphalt is applied following the Fairmount Road reconstruction. Sheldon Ave N was not designed Transportation Services staff has reviewed the proposal to accommodate increases in and have not identified capacity constraints on SheldonAve traffic that will cumulatively result N, or at nearby intersections. from this development and the townhouses which were also recently approved. Will bus routes be extended into The Region of Waterloo has indicated that there areno the neighbourhood?plans to extendbusroutes into the neighbourhood. There are existing bus routes on nearby arterial roads including Weber Street, King Street and Ottawa Street. These are within about a 10 minute walk of the subject site and provide adequate access to transit. Vehicles have been cutting Staff have reached out to the owner regarding this concern, through Randerson Green to and the they have indicated that landscape contractors access the subject lands.required an alternate access to the site while Sheldon Ave N was being reconstructed. The owner has advised contractors that they must access the property via Sheldon Ave N rather than through Randerson Green. 3 - 10 Theme: Pedestrian Connection along Highway What We HeardStaff Comment Residents do not currently At the outset of this proposal, staff identified that there may support further exploration of a be a long term opportunity for an off-road connection along trail connection from Montgomery the highway between Montgomery Road and Ottawa Street Road to Ottawa Street North. North to improve pedestrian and cyclist accessibility through the community. This trail connectionis not going to proceed at this time. Should it be revaluated at sometime in the future, a separate neighbourhood consultation process will be initiated by the City. Theme: Neighbourhood Character and Building/Site Design What We HeardStaff Comment Residents like that the building is set back from the street with parking hidden from street. Concern from nearby condo The proposed buildingis a maximum of 3 stories high from owners that their view will be the highest grade. The existing condominium buildingis9 blocked.stories high. While residents of with upper storey units facing eastwill likely see the new building, given existing vegetation, longer range views will likely not be impacted. Concerns about changing The subject neighbourhood,while historically developed with character of neighbourhood from mostly single detached dwellings, has for many years been single detached dwellingsto zoned to permit lowand medium rise multiple dwellings. The multiple dwellings, and the proposed zoning and development is less intensive than is cumulative impacts of permitted by the R-7 zone on neighbouring lands, and is intensification and consistent with the permissions on lands zoned R-6 redevelopment.elsewhere in the neighbourhood. Questions about whether fencing,Landscaping, fencing and visual barriers will be further trees and additional landscaping considered through the site plan review process. would be installed. Concerns about construction Staff acknowledge that there may be some disruption during nuisance, traffic, noise etc.the construction period, including dust,noiseand construction traffic. Construction activity is generally limited to day time hours (between 7 am and 7 pm) and Building, Engineering and/or Property Standards staff will be able to respond to concerns during the construction period and can work with the neighbourhood and the owner to mitigate these.The owner will be required to direct construction traffic to use the most direct route to the site from a major street in order to limit impacts on local streets. 3 - 11 Theme: Affordable& Supported Housing What We HeardStaff Comment Several residents commented that they liked that this proposal need for affordable housing. Concerns were raisedregarding Affordable housing is a much-needed option for many people the operationand management ofwho are HumanRightsCode. the proposed housing People who need affordable housing are part of every development, and behavioural community. They often already live in the communityand may characteristics of future residents.currently beunder-housed or struggling to pay rent. When neighbourhoodsare inclusive, they meet the needs of more residents, and provide more opportunities and choices for everyone. Both affordable and market-rate housing must meet the same building restrictions and design standards of the neighbourhood and can be designed to fit in with the character of the area. A Canadian study of 146 supportive housing sites found that there was no real increase in crimes in general, or in violent, property, mischief or disorderly conduct crimes in the areas (Alice de Wolff,Weare Neighbours:TheImpactofSupportiveHousingon Community,Social,Economic,andAttitudeChanges, Wellesley Institute, 2008).People who need affordable housing are already part of the community, andsupported housing can provide more stability and security. (http://www.ohrc.on.ca/) Planning Conclusions In considering the foregoing, staff are supportive of the proposed Zoning By-law Amendment to permit 290Sheldon Ave Nto be developedwith a low rise multiple dwelling. Staff isof the opinion that the subject application isconsistent with policies of the Provincial Policy Statement, Growth Plan for the Greater Golden Horseshoe, and the Regional Official Plan, and City of Kitchener Official Plan andrepresentsgood planning.Staff further recommend that the requested exemption to the Emergency Services Policy be approved. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: the delivery of core service. FINANCIAL IMPLICATIONS: There are no financial implications associated with this recommendation. 3 - 12 COMMUNITY ENGAGEMENT: INFORM & CONSULT -The proposed Official Plan Amendment and Zoning By-law Amendment wereoriginally circulated to property owners within 120 metres of the subject lands in November 2019. Staff received responses from twenty-three households, which are summarized as part of this DJanuary29, 2020and was attended by 35 residents. Notice signs are also posted on the property. A courtesy notice of the public meeting will be circulated to all property owners responding to the preliminary circulation and who attended the Neighbourhood Information Meeting.Notice of the Public Meeting will be given in The Record on September4, 2020and a copy of the Notice is attached as Appendix Bwill be council/committee meeting. CONCLUSION: Theproposed Zoning By-law Amendment isappropriate and representsgood planning and it is recommended that the application be approved. REVIEWED BY: Janine Oosterveld, Manager of Site Development and Customer Service ACKNOWLEDGED BY: Justin Readman -General Manager, Development Services APPENDICES: AProposed Zoning By-law Amendment BNewspaper Notice CDepartment and Agency Comments DPublic Comments Requested Exemption to Emergency Services Policy 3 - 13 PROPOSED BY LAW ________,2020 BY-LAW NUMBER ___ OF THE CORPORATION OF THE CITY OF KITCHENER (Being a by-law to amend By-law 85-1, as amended, known as the Zoning By-law for the City of Kitchener Thresholds Homes and SupportsInc. 290 Sheldon AvenueNorth) WHEREAS it is deemed expedient to amend By-law 85-1; NOW THEREFORE the Council of the Corporation of the City of Kitchener enacts as follows: 1.Schedule Number175of-law Number 85-1ishereby amended by changing the zoning applicable to the parcel of land specified and illustrated as Area 1on Map No. 1, in the City of Kitchener, attached hereto, from Residential FourZone (R-4)toResidential Six Zone (R-6) with Special Regulation Provision 756R. 2.ApD-law 85-1is hereby amended by addingSection 756thereto as follows: 756.Notwithstanding Sections4.2,6.1.1.1.d),6.1.2 and 40.2 of this By-lawwithin the lands zoned R-6,756Rand shown as being affected by this subsection on Schedule Number 175the following special regulations shall apply: a)The maximum building height measured from lowest grade level shall be 13.5metresand may exceed 110% of the buildingheight measured from the highest grade level. b)Where landsaffected bySpecialRegulation 756Ris dedicated to the City,themaximum Floor Space Ratiofor developmenton the retained portion may be calculatedbased on a lot area of 4639.1 2 m(being the size of the lands prior to any dedication). c)That on a lot containingagroup home or small residential care facilitywithup to 6 bedrooms and a multiple dwelling with up to 25 dwelling units,parkingshallbeshared between uses and unassigned, andshall be providedasfollows: Group home or small residential care facility 2spacesper facility Multiple dwelling with up to 25 units 0.4spacesperunit. 3 - 14 d)Off-street parking and loadingspacesmay be locatedbetween the façadeof a new buildingandthe front lot line(Sheldon Avenue North), and between thefaçadeof an existingbuildingandthe sidelot line abutting a street (Highway #7). Parking and loading spaces must be setback a minimum of 10.0metresfrom Sheldon Avenue North. e)asmall residentialcarefacilityora group home shall be permitted to have up to 6 residents,shallonly be located in a building existing on the date of the passing of this by-law, and may be located on the same lot as a multiple dwelling. f)Amultipledwelling shall have a central air conditioning system, andspecialbuildingcomponents asidentified in thePreliminary EnvironmentalNoise Assessment,for 290 Sheldon Avenue North, dated October 24, 2019,andtheaddendumtheretodated August 18, 2020,prepared by MTE Consultants Inc. PASSED at the Council Chambers in the City of Kitchener this day of,2020. _____________________________ Mayor _____________________________ Clerk 3 - 15 SCHEDULE 192SCHEDULE 193 SCHEDULE 175SCHEDULE 174 3 - 16 DSD-20-106 Appendix B PROPERTY OWNERS AND INTERESTED PARTIES ARE INVITED TO ATTEND AN ELECTRONICPUBLIC MEETING TO DISCUSS A PROPOSED ZONING BY-LAW AMENDMENT UNDER SECTION 34OF THE PLANNING ACT 290 Sheldon Avenue North Thresholds Homes and Supports is proposing a Zoning By-law Amendment to permit the lands at 290 Sheldon Avenue North to be developed with a multiple dwelling. In keeping with physical distancing measures recommended by Public Health due to COVID-19, anelectronic public meeting will be held by the Planning & Strategic Initiatives Committee, a Committee of Council which deals with planningmatters,on: Monday,September28, 2020at 7:00 p.m. (live-stream video available at kitchener.ca/watchnow) If you wish tomake written and/or verbal commentseither in support of, or in opposition to, the above noted proposalyou may register as a delegation at kitchener.ca/delegationsor by contacting Legislated Services at 519-741-2200 ext. 2203by no later than 4:00 p.m. on September 28, 2020.Aconfirmation email and instructions for participating in the meeting electronically with be providedonce your registration is received. If a person or public body would otherwise have an ability to appeal the decision of the City of Kitchener to the Local Planning Appeal Tribunal, but the person or public body does not make oral submissions at a public meeting or make written submissions to the City of Kitchener prior to approval/refusal of this proposal, the person or public body is not entitled to appeal the decision. ADDITIONAL INFORMATIONis available by contacting the staff person noted belowor byviewing the report contained in the meeting agenda (posted 10 days before the meeting at www.kitchener.ca-click on the date in the Calendar of Events and select the appropriate committee). Katie Anderl,SeniorPlanner -519-741-2200 x 7987(TTY: 1-866-969-9994);katie.anderl@kitchener.ca 3 - 17 Department and Agency Comments Hi Katie, Engineering is ok with the zone change with a proposed sanitary flow of 1.44L/s. surcharge in the trunk sewer, but through detailed design we will ensure the inverts into the new building are high enough. Thanks, Christine Goulet, C.E.T. Project Manager | Development Engineering | City of Kitchener 519-741-2200 Ext. 7820 | TTY 1-866-969-9994 | christine.goulet@kitchener.ca Hi Katie, I got comments back from Angela Mick who I circulated for the water distribution portion. Per her comments below, they should tap into the new watermain on Sheldon, instead of the old watermain within the easement. Thanks, Christine Goulet, C.E.T. Project Manager | Development Engineering 519-741-2200 Ext. 7820 From: Angela Mick <Angela.Mick@kitchener.ca> Sent: Thursday, November 28, 2019 1:24 PM To: Christine Goulet <Christine.Goulet@kitchener.ca> Subject: 290 Sheldon Hi Christine, The proposed servicing shows a 100 mm from the existing easement. This watermain is old. The 200mm watermain on Sheldon is new. They have to cut the asphalt to remove the existing service so it would be best to tap from the new, larger watermain. Flows are fine Regards, Angela Mick, P.Eng Manager Quality Management and Water Programs | Kitchener Utilities | City of Kitchener 519-741-2600 x 4408 | TTY 1-866-969-9994 | angela.mick@kitchener.ca 3 - 18 Department and Agency Comments Hello Katie, to Direct Detect and Sprinklering, and implementation of a Fire Route Plan through the Site Plan Approval Process. Hope that helps, Greg Date: 20 December 2019 To: Katie Anderl, Kitchener Planning Aaron Hill, MacKinnon & Associates From: Barbara Steiner, Senior Environmental Planner cc: Sandro Bassanese, Urban Designer, Kitchener Planning Subject: Zoning Bylaw Amendment ZBA19/013/S/KA 290 Sheldon Avenue North Thresholds Homes & Supports DĻƓĻƩğƌ ĻŭĻƷğƷźƚƓ hǝĻƩǝźĻǞ ğƓķ ƩĻĻ ağƓğŭĻƒĻƓƷ tƌğƓ (GVO). 27 September 2019. MacKinnon & Associates. Environmental Planning staff has reviewed the environmental supporting documentation and advise that we are in support of the Zoning Bylaw Amendment noted above, provided that confirmation regarding Species At Risk is provided as outlined in Comment 1 below. Sandro Bassanese also preliminarily reviewed the plan to ensure that Urban Design staff are in agreement with the d development moves on to Site Plan Approval (SPA). If required, any other urban design comments will be provided under separate cover by Sandro We offer brief comments below to ensure drawings can be appropriately amended and stamped approved at the time of Site Plan Approval. 1.Although the species table indicates that there are no (tree) Species At Risk, the City would like confirmation at this time that no Butternuts are present that could be affected by the proposed development. Sometimes other species (Black Walnut) can be confused for Butternut (White Walnut). 2.The GVO / Tree Management Plan (MacKinnon & Associates 27 Sept 2019) is not consistent with a separate an agreed to as part of the SPA. This will ensure that when removals occur only those trees approved by the City for approved Tree Management Plan sh protective fencing). 3.The Tree Management Plan submitted as part of SPA (called a ƩĻĻ ağƓğŭĻƒĻƓƷ Ή 9ƓŷğƓĭĻƒĻƓƷ tƌğƓ) must have surveyed locations of trees on the site, not approxim not surveyed. 4. 5.The Limit of Disturbance (Grading and Servicing) must be coordinated and accurately shown on both the Grading / Servicing / SWM Plan and the Tree Preservation / Enhancement Plan. 3 - 19 Department and Agency Comments Hi Katie; I can confirm no butternuts or hybrids were observed. While my arborist isn't a certified butternut assessor, she is familiar with Walnuts/Butternuts and their hybrids, and all tree observed on site were Walnuts. Aaron Hill BLA, OALA Landscape Architect MacKinnon & Associates A21-550 Parkside Drive 3 - 20 Department and Agency Comments 3 - 21 Department and Agency Comments 3 - 22 Department and Agency Comments 3 - 23 Department and Agency Comments Hi Katie, Staff at the Waterloo Catholic District School Board have no concerns with the above noted application. Have a wonderful day. Lindsay Ford Manager of Planning, Waterloo Catholic DSB 480 Dutton Drive, Waterloo, ON N2L 4C6 tel: 519.578.3660 ext. 2253 fax: 519.884.6635 Hi Katie, The Waterloo Region District School Board has no comments on or concerns with this application. Shawn Callon Principal Planner Good morning Katie, The subject property at 290 Sheldon Avenue North is not regulated by the GRCA under Ontario Regulation 150/06. As such, we will not be providing comments on this application. Andrew Herreman, CPT |Resource Planning Technician Grand River Conservation Authority 400 Clyde Road, PO Box 729, Cambridge, OntarioN1R 5W6 (519) 621-2763 x 2228|www.grandriver.ca Katie, MTO have no further issues with this proposal. John Morrisey Senior Project Manager (A) Corridor Management Section Engineering Office Ministry of Transportation 659 Exeter Road, London, ON N6E 1L3 Telephone 226-984-8397 Fax 519-873-4228 John.morrisey@ontario.ca 3 - 24 Department and Agency Comments 3 - 25 Department and Agency Comments 3 - 26 Department and Agency Comments 3 - 27 Department and Agency Comments 3 - 28 Department and Agency Comments From: Melissa Mohr <MMohr@regionofwaterloo.ca> Sent: Tuesday, August 25, 2020 2:27 PM To: Katie Anderl <Katie.Anderl@kitchener.ca> Subject: \[EXTERNAL\] RE: 290 Sheldon (ZBA 19-13) update Good Afternoon Katie, Please see the attached memo from Joginder related to the addendum.Please note that the Region agrees with the implementation of the special regulation within the Zoning By-law as the comments above indicate that all items can be addressed at Building Permit stage. Should you have any questions or require additional information, please do not hesitate to ask. Kind Regards, Melissa Melissa Mohr, MCIP, RPP Principal Planner Planning, Development and Legislative Services Region of Waterloo 150 Frederick Street, 8th Floor, Kitchener ON N2G 4J3 Cell: 1-226-752-8622 mmohr@regionofwaterloo.ca 3 - 29 Department and Agency Comments 3 - 30 Department and Agency Comments 3 - 31 Department and Agency Comments 3 - 32 Department and Agency Comments 3 - 33 3 - 34 3 - 35 3 - 36 3 - 37 3 - 38 3 - 39 3 - 40 3 - 41 3 - 42 3 - 43 3 - 44 3 - 45 3 - 46 3 - 47 3 - 48 3 - 49 3 - 50 3 - 51 3 - 52 3 - 53 3 - 54 3 - 55 3 - 56 3 - 57