Report
to: General Committee Report
Date: April 20, 2010
SUBJECT: Development
Charge Reimbursement Application – Greensborough Landowners Group
PREPARED BY:
Kevin Ross, Ext.
2126
Alain
Cachola, Ext. 2711
RECOMMENDATION:
1) That the report entitled “Development Charge
Reimbursement Application – Greensborough Landowners Group” be received;
2) That Council authorize a Town Wide Hard Development
Charge reimbursement of $1,867,105.82 to the Greensborough Landowners Group for the construction of public works
relating to sidewalks and the extension of Castlemore
Avenue in the Greensborough community;
3) That Council authorize the reimbursement of
$1,867,105.82 to be paid from the Town Wide Hard Development Charge
Reserve;
4)
That Engineering fees in the amount of $93,046.28 be transferred from the
Town Wide Hard Development Charge Reserve to the Engineering Fees account;
5)
That the Mayor and Clerk be authorized to execute a Development Charge
Reimbursement Agreement with the
Greensborough Landowners Group, or
their successors in title;
6)
And that staff be directed to do all
things necessary to give effect to this report.
EXECUTIVE
SUMMARY:
Not applicable.
PURPOSE:
The
purpose
of this report is to obtain Council’s authorization to grant a Town Wide Hard
Development Charge reimbursement to the Greensborough Landowners Group. The reimbursement is for the
cost of the extension of Castlemore Avenue from
Highway 48 to Gracewell Road east of the Canada
National Railway tracks (see Appendix A) in the amount of $1,867,105.82. The works are included in the 2008 Town Wide
Hard Development Charge Background Study and by-laws and are as follows:
a)
The design and construction costs of the north collector road;
b)
Land cost for the 23m right of way; and
c)
The construction of the at-grade crossing at the Canada National Railway
tracks.
These works were necessary
for the
Greensborough Landowners Group to
proceed with the development of their community.
BACKGROUND:
The
Greensborough Landowners Group entered into a credit agreement with the Town of
Markham in November 2001 for the design and construction of Castlemore
Avenue from Highway 48 to Gracewell Road east of the
Canada National Railway (CNR) tracks.
The costs of these works were included in Area Specific 43 in the 2004
Development Charge Background Study with an estimated cost of $991,600.40
broken down as follows:
North
Collector Road – Design & Construction - $315,506.40
Property
Acquisition – 23m Right of Way - $506,094.00
North
Collector Road – At-Grade Crossing at CNR - $170,000.00
$991,600.40
The
Greensborough Landowners Group (hereafter referred to as the Group) purchased
the property for the right-of-way in 2003 and conveyed it to the Town, however they did not undertake the construction of the
road at that time. In 2007, the Group
commenced the process of designing the road works and approached the Town with
a request for a reimbursement, rather than development charge credits. The Engineering Department agreed to
reimburse the Group for the works and after being approved in the 2008 capital
budget, opened a capital account to facilitate the reimbursement. The Town has in the past reimbursed developers
for the construction of works done on the Town’s behalf; this was therefore in
keeping with past practice.
In
2008, the Town updated its Town Wide Hard by-laws and during the process the
Group through its agent,
Subsequent
to the approval of the 2008 Background Study,
Current Status
The
Group completed the works in 2009 and provided the Town with the Final Payment
Certificates from their sub-contractors at each stage of the development
process. Town staff examined and
verified the submitted documentation to ensure that the component costs were
reasonable and related to the works being constructed.
The
completed cost of the works, based on actual cost, amounted to $2,012,945.14,
excluding Municipal fee charges (i.e. engineering fees) of $93,046.28. The Town advised the Group, at a later date,
that whereas the Town was willing to reimburse for the works, a discount factor
would be applied to the actual cost, to take into account the Town paying for
the works in advance of collecting the related development charge revenues.
The
recommended reimbursement to the Group is to (1) pay the amount of $767,443.54
collected in Area Specific 43 DC Reserve [prior to the transfer of the works to
the Town Wide Hard Services by-law] precisely related to these works, (2) hold
back 20% (or $402,589.03) of the actual cost, for a two-year maintenance period
to cover the cost, if any, of fixing defects in the works and (3) discount the
remaining amount of $842,912.57 over a 5-year period based on the expected
build-out of the Greensborough community.
By
applying a discount factor to the remaining amount of $842,912.57 over 5 years,
the Town will reimburse the amount of $697,073.26; this represents a payment
reduction of $145,839.32 to the Group.
The result is a total reimbursement of $1,867,105.82 to the Group (see
Appendix B). The reimbursement is
proposed in two tranches, the first amount of $1,464,516.80 upon execution of
the reimbursement agreement, and the hold back amount of $402,589.03 to be paid
at the completion of the two-year maintenance period (see summary below).
Based
on the 2001 Credit Agreement that was signed between the Group and the Town,
the amount of $2,012,945.14 would have been available to the Group in the form
of credits against development charges paid.
Due to the Group requesting a reimbursement of costs rather that the
previously agreed DC credits, staff now requires Council approval. By offering a discounted payment in advance,
the Town will reimburse the Group $145,839.32 less than their actual cost,
whereas the full cost of the works will be recovered through development
charges from future development.
Municipal
fee charges (i.e. Engineering fees) in the amount of $93,046.28 would normally
be paid by the developer to the Town for the review and inspection of the proposed
works. These fees were included in the
estimated cost of the works included in the 2008 Background Study and are
payable to the Engineering department for their management of the project. Instead of reimbursing these fees to the
Group, they will be paid on the Developer’s behalf by a transfer from the Town
Wide Hard Services reserve directly to the
Summary
of Costs and Proposed Reimbursement
Actual Cost
Ø North Collector
Road - Design & Construction Cost $1,124,353.31
Ø North Collector
Road - Property Acquisition $ 505,936.54
Ø CNR at Grade
Crossing - Design & Construction Cost $ 382,655.29
Actual
cost of the Castlemore Avenue Extension
$2,012,945.14
Recommended
Discounted Reimbursement
Ø Actual Cost of
the Castlemore Extension
$2,012,945.14
Ø Discount on
total cost of works ($ 145,839.32)
Ø Discounted Amount to be Reimbursed for Works $1,867,105.82
Recommended
Payment Timeline
Ø ASDC 43
Collection for Castlemore works $ 767,443.54
Ø Discounted
Payment $ 697,073.26
Amount to be reimbursed at
Agreement Execution $1,464,516.80
Ø Holdback (20%)
to be repaid after maintenance period $ 402,589.03
Total to be reimbursed for Castlemore Ave. Works $1,867,105.82
Development
charge credits and reimbursements have been used in a number of development
applications to facilitate the construction of infrastructure in advance of the
Town’s capital program. In these instances, the developers comply with all the
Town’s standards for design and construction.
It is recommended that the Group be
reimbursed for the discounted cost of the Phase II works totalling
$1,867,105.82 – the Castlemore Avenue extension from
Highway 48 to Gracewell Road – and that Engineering
fees in the amount of $93,046.28 be transferred from Town Wide Hard Services to
the
FINANCIAL
CONSIDERATIONS
ENVIRONMENTAL
CONSIDERATIONS:
Not applicable.
ACCESSIBILITY CONSIDERATIONS:
Not applicable.
ENGAGE 21ST CONSIDERATIONS:
Not applicable.
BUSINESS UNITS CONSULTED AND AFFECTED:
Finance, Engineering and Legal Services Departments.
RECOMMENDED BY:
