REPORT TO Finance and Administrative Committee
	TO:	Mayor and Members of Council
	FROM:	Andy Taylor, Commissioner of Corporate Services Barb Cribbett, Treasurer
	PREPARED BY:	Barb Cribbett, Treasurer Jennifer Nelson, Manager of Development Finance
	DATE OF MEETING:	August 30, 2004
	SUBJECT:	Development Charge – Final Consultation

RECOMMENDATION:

THAT the report titled “Development Charge - Final Consultation” be received;

AND THAT the Town-Wide Hard Special Projects (Streetscaping) Capital Program be reduced by $1,000,000

AND THAT the $1,000,000 reduction in the Town-Wide Hard Special Projects be used to reduce the Town-Wide Hard Non-residential charge, amending the per hectare charge from $64,770 to $63,580;

THAT the increase in the Town-Wide Hard Non-residential charge be phased in over 3 years with equal increments (adjusted by indexing) on September 1^st of each year;

AND THAT payment of Town-Wide Hard Non-residential charges be deferred until a building permit is issued.

PURPOSE:

The purpose of this report is to advise Council of the outcome of a final meeting with members of the development community on the proposed Development Charges

BACKGROUND:

The report “Development Charge Update” is before the Finance and Administrative Committee today. The recommendations in that report were discussed with members of the development community on Thursday August 26, 2004. There were still concerns with the Urban Design (Streetscaping) hard services costs included in Town Wide Special Projects (approximately $4 million) and the increase in the Town Wide Hard Non-residential charge ($39,436 per hectare to $64,770 per hectare).

OPTIONS/DISCUSSION:

Special Projects – Urban Design Component (Streetscaping) – Members of the development community have previously expressed the opinion that justification for the Town Wide allocation of the Urban Design projects has not been demonstrated. The Town Wide Hard Capital program includes approximately $4 million in growth related Urban Design Projects, and approximately $4 million has been allocated to the Town as the non-growth share (non-development charge funding). Staff are recommending a reduction of $1 million from the growth related portion of the Town Wide Urban Design projects.

Town Wide Hard Non-residential charge – The proposed Town Wide Hard Non-residential charge is $64,770, an increase of $25,334 or 64.2%. Increased costs for hard services is a trend that has been observed in recent GTA development charge by-law approvals. The development community has commented that increased development charges for non-residential development does not support the Town’s mandate to encourage economic development. In order to mitigate this impact, staff have the following recommendations:

· That the entire $1 million reduction from the Urban Design projects be applied to reduce the Town Wide Hard non-residential charge. The proposed residential development charges are generally decreasing in an active residential development market in comparison to the 64.2% increase in the non-residential charge for development in a less active market. Application of the $1 million to the Town Wide Hard non-residential charge will reduce the charge from $64,770 per hectare to $63,580 per hectare (See attached Table 10).

· That the Town Wide Hard non-residential development charges be paid at building permit stage, rather than the current process of payment at execution of development agreement. This would allow a deferral of the payment of the increased Town Wide Hard non-residential development charges, providing a cash flow benefit to the developer.

· That the increase in the Town Wide Hard non-residential development charge be phased in equally over 3 years. This would allow the non-residential development community time to adjust to the higher charge. The estimated cost to the Town of the proposed 3 year phase is approximately $652,647 to $773,777 (see attached schedule). If the market for non-residential development is less active than projected, the cost to the Town will be less. While there is a cost to the Town of a phase-in, the intent of the phase-in is to spur non-residential development, resulting in the acceleration of assessment related revenues.

FINANCIAL CONSIDERATIONS:

The overall Town Wide Capital program cost is $198 million, of which $115 million is expected to be recovered from development charge revenues. Approval of the recommendation to reduce the Town Wide Urban Design projects by $1 million will result in a reduction in the scope and cost of the projects, therefore there is no cost to the Town, but rather a service level reduction. The recommended 3 year phase-in program for the Town Wide non-residential charge will shift costs of approximately $652,647 to $773,777 to the Town’s non growth share ($30.5 million for the Town Wide hard services).

BUSINESS UNITS CONSULTED AND AFFECTED:

ATTACHMENTS:

• Table 10 – Town Wide Development Charges – Non-residential Development
• Estimated Loss of Phasing in the Town Wide Hard Charge

Barb Cribbett, Treasurer

Andy Taylor, Commissioner of Corporate Services

Q:\Finance and Administration\Finance\SHARED\2004 Finance_Admin Cttee Reports\0462 DC Final Consultation.doc