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TO: |
Mayor and Members of Council |
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FROM: |
Jim Baird, Commissioner of Development Services Andy Taylor, Commissioner of Corporate
Services |
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PREPARED BY: |
Jamie Bosomworth,
Manager of Strategy and Innovation Development Services Commission |
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DATE OF MEETING: |
2005-Dec-06 |
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SUBJECT: |
Amendment to Development Fee
By-law Development Services Commission ( |
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RECOMMENDATION:
That the Report titled “Amendment to
Development Fee By-law, Development Services Commission (
And that the amendment to the “Tariff of Fees
for Processing Development Services Commission Applications,” By-law 211-83, attached
to this report as Attachment "A" be enacted.
PURPOSE:
The purpose of this report is to provide
background information and justification to pass an amendment to the
BACKGROUND:
Interim
At the June 28 Council meeting, fee by-laws for
the
The new Building By-law (2005 – 190) had been
in preparation since 2004, to meet the requirements of Bill 124 (the Building Code Reform Act). Under Bill 124, the Building Department is
able to charge fees to cover direct and in-direct costs and a reserve to help
cover costs in “down cycle” years of lower volume activity. The Building Department is not permitted to
generate “general revenues” beyond Building Department costs.
No revisions to Building By-law 2005 – 190 are
proposed at this time. Staff will
monitor and update Council on Building Department expenses/revenue balance
under By-law 2005 – 190 through the course of 2006.
The effect of Building By-law 2005 – 190 is a
27.8% reduction in building fees. This
requires a corresponding increase in
At the time that the Building By-law was passed
in June, work was well underway on corresponding adjustments to the
Authority
to Collect Fees
Under the
Principles
for Assessing Fees
In 2004, the Building Department retained IBM
to review the new Building Code legislation and recent court decisions to
determine the principles for setting up a revised fee by-law.
The following is a summary of the results of
this review:
·
services must be authorized by legislation
·
fee payer must be a direct beneficiary of the program
·
fees can include all reasonably anticipated costs, direct
costs (salaries, benefits, rent, etc.) and indirect costs (IT
equipment, other department’s services, etc.)
·
fees are not necessarily required to cover cost of
individual activity but must cover overall cost of business cycle
·
fees can include a reserve to stabilize revenues
The above principles have also been utilized to
determine costs assessed to the
OPTIONS/DISCUSSION:
General
Methodology for Calculating new Fees
The first task was to determine the percentage
of costs (to run the various Development Services Commission Departments) recovered
through Development fees, Development Charges and taxes for each Department
within the Development Services Commission.
The following table outlines the percentage costs to be recovered by
each Department through the different sources available to the Town:
|
Department |
Development Fees |
Development Charges |
Taxes |
|
Economic Development |
0% |
0% |
100% |
|
|
70% |
8% |
22% |
|
|
54% |
29% |
17% |
|
Building |
100% |
0% |
0% |
The Economic Development Department is a
support service intended to attract, retain and expand business in
Within the Development Charge component of both
the
Having determined the percentage of cost
recovered from development fees, Staff next determined the total costs to be recovered based on the 2006 budget (see Attachment
“B” for summary of costs for
Using revenues received over the past 5 years, Staff
calculated the overall percentage increase/decrease in fees required to achieve
full cost recovery for each Department’s share of the cost for processing
development applications. The following
table summarizes the costs, revenues and increase/decrease in fees recommended
for each Department:
|
Department |
Building |
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Totals |
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Direct |
$6.03M |
$1.88M |
$4.17M |
$12.27M |
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In-direct |
$1.59M |
$0.69M |
$1.45M |
$3.92M |
|
Total Costs Recoverable |
$7.62M* |
$2.58M |
$5.63M |
$15.83M |
|
Average
Fees Collected over last 5-years |
$10.55 |
$1.82M |
$2.14M |
$14.51M |
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Difference |
($2.93) |
$0.76M |
$3.49M |
$1.32M |
|
Average
increase (decrease) |
-27.8% |
41.9% |
163.3% |
9.1% |
*Based on 2005 Budget numbers, current as of
June 2005. Note that 2006 budgeted costs
for Building are $7.99 million. Fees
will not be adjusted at this time to reflect this. However, contributions to the Building
reserve will only occur after the $7.99 million revenue target has been met.
The effect of Bill 124 and Building By-law 2005
– 190 is to decrease the building fees that historically were subsidizing the
planning and engineering fees. As shown
in the table above
It should be noted that the Town of
Changes
to Structure of
The structure of the
|
APPLICATION TYPE |
CHANGES MADE |
RATIONAL |
|
Official
Plan and Secondary Plan Amendment |
Provided definitions of major and minor applications |
Clarity |
|
Zoning By-law Amendment |
·
Defined major and minor applications ·
Added a new fee for Deeming By-law ·
Added new fees for additional public meetings and additional reports (when
requested or required by the owner) |
· Clarity · Cost not previously
recovered · Cost not previously
recovered |
|
Site Plan Control |
·
Kept one fee for individual residential units ·
Eliminated the sliding scale for residential units not in a
subdivision ·
Included a base fee for residential site plans not part of a
subdivision ·
Method of calculation has changed from half hectare to GFA ·
Added a fee for recirculation of drawings |
· Staff spend a lot of time on
these individual site plans so fee had to be different and higher than previous
fee · Most site plans do not have
hundreds of units · Creates a means to collect
fees at different stages of the process · Most other municipalities
collect using this method and better reflects cost of processing ·
Cost not previously recovered |
|
Plan of Subdivision |
·
Eliminated sliding scale for residential units ·
Added a cost to review and prepare subdivision agreement for the first
phase and all subsequent phases ·
Added a fee for model home and sales trailer agreements ·
Added a fee for recirculation of the draft plan when requested
revisions have been made by the owner |
·
Most subdivisions are not large (due to restrictions on servicing
allocation) ·
The total cost for preparing subdivision agreements was not being
collected. The agreement of the first phase is more
complicated than subsequent phases ·
Cost not previously recovered ·
Cost not previously recovered |
|
Plan of Condominium |
Eliminated
various types of Condominium applications and created one fee for all
condominium applications |
Historically
we did not receive different types.
Easier to monitor and track |
|
Committee of Adjustment |
Added
a fee for a Development Agreement when required as a condition of severance
approval |
Cost not previously
recovered |
|
Studies for all Departments, |
Added
a fee for review and approving studies |
Cost not previously
recovered |
|
Fence Variance |
Added
a fee for fence variance applications |
Cost not previously
recovered |
|
Site
Plan Works for |
Changed
method of calculation from land area to percentage of cost of works with
minimum fee |
More
realistic method of recovering costs |
Determination
of Fees
Understanding the total cost to be recovered
through development fees, staff then calculated the individual fee amount for
each activity. This was based on tracking
and estimating the time it took for each employee to complete each task of an
activity and the average annual level of activity (based on a 5-year historical
average). Using this method, staff were
able to calculate the individual cost to complete each activity (see Attachment
“C”, Distribution of Revenue by Application Type).
Comparison
with other Municipalities
Staff have reviewed
Town retained Hemson Consulting
The Town retained
Hemson Consulting to peer review the work undertaken by staff in updating the
Fee By-laws. Hemson has concluded that
the review undertaken by staff is a reasonable basis for establishing full cost
recovery through fees. Hemson is in
agreement with the analysis and recommendations contained herein.
Presented
Proposal to Developers Working Group
At the time of the passing of the June by-law,
staff committed to the development community to meet with a working group of
development industry representatives to discuss the basis of the fees and the proposed
fees. This working group was made up of
representatives of development and consulting interests in
|
APPLICATION TYPE |
DEVELOPERS CONCERNS |
STAFF COMMENTS |
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· Eliminate earth works from the total cost
of Public Works · Reduce percentage from 5% to 4% |
· Agreed to change · This would require other planning/engineering
fees to increase and is not recommended.
Actual costs must be recovered. |
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Studies/Reports |
Reduce the
minimum fee |
Agreed to reduce
the minimum fee to $500.00 per study/report |
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· Move collection of fees further into the
process · Reduce residential unit cost |
· Agreed to keep existing collection times
to 10% at submission, 30% at draft plan approval and 60% at registration,
rather than accelerated payments as earlier proposed · Did not change as actual costs must be
recovered. Note that subdivision plans
are being registered in smaller increments in any event, given servicing
restrictions |
|
Zoning by-law
amendment |
Distinguish fee
by type of application |
Created a minor
and major type of zoning application |
|
Passing of
by-law |
Requested a
“grace period” between authorization by Council and when new fees come into
effect |
It is proposed
that By-law be adopted by Council on |
The Development
Industry representatives expressed concern generally with the increase in
application processing fees in Markham and other GTA municipalities.
FINANCIAL CONSIDERATIONS:
The Finance Department has been working closely
with the Development Services Commission to ensure proper direct and indirect
cost recovery. Town wide indirect
development application processing costs have been incorporated into the
recommendations.
Historically, the Town has benefited from
revenues generated in the Building department.
Due to the changes initiated by Bill 124, any excess revenue (greater
than the direct and indirect costs) brought in by Building will be transferred
to a dedicated reserve. However, the
proposed revenue increases in
The following chart outlines the costs of
operating
from the new fee by-law (assuming activity
levels are equal to five year averages).
See Attachments “B” and “C” for more details:
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Total |
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Revenues from Fees |
2,599,841 |
5,515,527 |
8,115,368 |
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Total Costs |
2,581,869 |
5,627,585 |
8,209,455 |
|
Net Surplus/(Deficit) |
17,972 |
(112,058) |
(94,087) |
It is important to note that the new few by-law
differs from what was presented in June 2005 in two ways. First of all, the total recoverable costs for
The year 2006 is seen as a transition year, the
first full year of activity under the new fee structure. Fee projections for the 2006 budget have
generally been based on five year average levels of activity by application
type, except where more accurate estimates or projected activity are available
(e.g. subdivision related activity corresponding to servicing allocation). However, development activity is cyclical and
subject to a broad range of regulatory and market forces. Staff will continue to monitor and review
the fees and application activities and report back to Committee when required.
Collecting reserves is an important component
of the fees. There may be a drop off in development
fees in the coming years, unless the Region of York can resolve servicing
constraint issues. Further, we have been
in a prolonged period of high development activity, and there can also be
expected to be cyclical market based adjustments in the future volume of
activity. The reserves are meant to act as a stabilizing mechanism in order to
stabilize the budget during lean years.
In theory, reserves should only be contributed to once all applicable direct
and indirect costs are covered.
BUSINESS UNITS CONSULTED AND AFFECTED:
The Legal Department and Finance Department
have supported the Development Services Commission in formulating the
recommendations and by-laws attached.
ATTACHMENTS:
Attachment “A” Amendment
to Fee By-law 211-83
Attachment “B” Summary
of costs for
Attachment “C” Distribution
of Revenue by Application Type
Attachment “D” Comparison
of
Attachment “E” Comparison
of
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Commissioner of Development Services |
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Andy Taylor Commissioner of Corporate Services |
Q:\Development\Strategy\Fee
By-law\Reports\Committee Report Nov 2005.doc