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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-Jun-20 |
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SUBJECT: |
Amendment to
Development Fee By-laws Development Services Commission |
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RECOMMENDATION:
That the Report titled “Amendment to
Development Fee By-laws, Development Services Commission", be received:
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;
And that
By-Law
No. 145-93, “A By-Law Under The Building Code Act, 1992, Respecting
Permits and Related Matters”,
be repealed;
And that a new Building
By-law, attached as Attachment “B”, be enacted;
And that a Development Fee
Reserve be established to stabilize development fee rates and to fund actual
shortfalls in Building,
And that future year-end
surpluses from Building,
And that staff report back
in Fall, 2005 with further adjustments to the Fee By-law for development
applications within the
PURPOSE:
The purpose of this report is to provide
background information and justification to pass an amendment to the
EXECUTIVE SUMMARY:
Bill 124, which comes into force on
Bill 124 identifies certain principles related
to the collection of fees. For example,
fees must reflect a service the customer is receiving. Fees can include not only the direct costs
but also indirect costs and municipalities can include reserves to cover, among
other matters, down turns in the economy. Similar principles have been applied to the review
of
In considering full cost recovery through
anticipated fees, including indirect costs and a minor reserve component, we recommend
a 6.3% overall increase in development fees for the Development Service
Commission. The Building Department fees
decrease by 27.8%,
Staff are proposing to revise the fee structure
for the
BACKGROUND:
Authority
to collect Fees
Under various Provincial Acts (e.g.
New
Building Code Statute Law Amendment Act, 2002 (Bill 124)
The new Building Code Statute Law Amendment Act,
2002 (Bill 124) takes effect
Due to the requirements of Bill 124, Markham
must pass an amendment to the existing Building fee By-law prior to July 1, to
be in compliance with the new legislation, as the existing fees recover more
then the costs of the current Building Department budget and services. Staff are recommending we also pass an
amendment to 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
·
Bill 124 requires Building Department’s to provide a
minimum mandatory level of service (e.g. permit approval time frame) which may
require additional resources to meet
The above principles were utilized to determine
costs assessed to each Department to calculate the appropriate fees.
OPTIONS/DISCUSSION:
General
Methodology for calculating new fees
The first task was to determine the percentage
of costs recovered through Development fees, Development Charge fees and the
tax rate 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.
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Department |
Development Fees |
Development Charge Fee |
Tax Rate |
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Economic Development |
0% |
0% |
100% |
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75% |
17% |
8% |
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55% |
33% |
12% |
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Building |
100% |
0% |
0% |
The Development Charge Fee within the
Knowing the Development fee component, staff
next determined the total costs to be recovered based on the 2005 budget. These costs include not only the direct
costs (e.g. salaries, benefits, rent, etc.) but also indirect costs (e.g. IT
equipment, other departments costs provided to support department, etc), additional resources and operational costs anticipated to meet the service requirements of Bill 124 (Building Department
only) and a rate stabilization reserve to cover down turns in the economy. 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 individual Department. The
following table summarizes the costs, revenues and increase/decrease in fees
recommended for each Department:
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Department |
Building |
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Totals |
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Direct |
$6.03M |
$1.64M |
$4.11M |
$11.78M |
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In-direct |
$1.59M |
$0.65M |
$1.41M |
$3.65M |
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Total Costs Recoverable |
$7.62M |
$2.29M |
$5.52M |
$15.43M |
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Average
Fees Collected over last 5-years |
$10.55M |
$1.82M |
$2.14M |
$14.51M |
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Difference |
($2.93M) |
$0.47M |
$3.38M |
$0.92M |
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Average
increase (decrease) |
(27.8%) |
25.8% |
158.5% |
6.3% |
After reporting to the development community
and Council members on June 10, staff have reviewed the base model and found the
Building Department costs were understated by $275,000 due to a budgetary issue
identified by Finance Staff related to salary recoveries. Additional costs of $70,000 were also added
to meet newly identified operational costs.
Due to this change the total increase in revenues to be generated from
development fees for the Development Services Commission is 6.3%, an increase
from 4.0% previously reported. See Attachment “C”, for a summary of the
indirect costs for each Department.
Calculation
of Building Department Fees
The Building Department existing fee structure
will generally stay the same, with some fine-tuning to meet operational and
industry needs. In this case, the fees
will decrease by 27.8%. Table 1 in
Schedule "A" of Attachment "B" identifies the actual fees
by category of construction and work description. The anticipated additional program and
resource costs that inform the building permit fee adjustment are shown in
Attachment “D”. Bill 124 requires that
revenues and costs be reported starting in 2006. This will provide an opportunity to review
the fee schedule and to make adjustments necessary to maintain the nexus
between revenues and costs. A summary of the reforms to the existing building
by-law, including changes to specific fees is attached to this report as
Attachment “E”.
Calculation
of
The structure of the
Staff are proposing to pass an interim by-law
for
Staff will work over the summer to finalize the
fees based on the costs associated with each service/application type in
•
More detailed cost analysis of each service
(application type)
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Review of reserve fund provisions to ensure protection
for potential development downturns
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Timing of future adjustment to Fees (term of
by-laws)
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Confirm portions of costs to be recovered through
development fees, Development Charge fees and the tax rate
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Increases in costs – anticipated inflation, additional
resources, staff training
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Possibly include fees for poor or duplicate application
submissions
We will meet with Development Community and
bring back a revised
Town has retained Hemson Consulting
The Town has
retained Hemson Consulting to peer review the work staff have completed and
Hemson have concluded that the review undertaken by staff is a reasonable basis
for establishing full cost recovery fees and have endorsed the analysis and
recommendations contained herein.
Presented
Proposal at Part A of Development Services and at Developers Round Table
Staff presented the background and methodology outlined
in this report at the June 7, Part A of Development Services Committee Meeting. Committee asked staff to review subsidizing Heritage costs, and noted that costs
should include staff training and liability insurance. These two issues will be reviewed over the
summer period and will be finalized in the Fall.
Staff also met
with the development community on Friday, June 10. A similar presentation was presented and
included the actual amounts by which fees will be increased or decreased. The development community asked the Town to
ensure that “Level of Service” will be commensurate with the fees they will be
paying. Again, this issue will be
reviewed over the summer with the development community and the results will be
brought back in the Fall. In addition
the development community requested a breakdown of the in-direct costs applied
to each Department. We have enclosed as
Attachment “D” a summary of these allocations.
FINANCIAL CONSIDERATIONS:
The Finance Department has been working 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.
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.
The Waterworks and Legal Departments are also reviewing their fees and
cost recovery options.
ATTACHMENTS:
Attachment “A” Amendment
to Fee By-law 211-83
Attachment “B” New
Building Code Fee By-law
Attachment “C” Summary
of Indirect costs
Attachment “D” Anticipated
Program and Resource Costs for the Building Department
Attachment “E” Summary
of Building Department Reforms to the existing Building Bby-law
Attachment “F” Comparison
of
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Commissioner of Development Services |
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Jamie Bosomworth, B.U.R.Pl., C.E.T. Manager of Strategy and Innovation Development Services Commission |
Q:\Development\Strategy\Fee
By-law\Reports\General Committee Meeting Report June 20.doc