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13. DEFERRAL OF DEVELOPMENT CHARGES FOR HABITAT FOR HUMANITY
REPORT des REDEVANCES d’aménagement pour habitat pour l’humanité
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COMMITTEE RECOMMENDATION
That Council approve one time funding of
$19,306 from the Development Charge Reserve Fund to offset development charges Habitat paid last year
on their development at 859-861 Pinecrest and delegate authority to the Director of Housing to enter into Municipal
Housing Project Facilities Agreement with Habitat for Humanity to allow for and
secure the deferral of Development Charges in the amount totalling $38,612 for
the development charges associated with the four Habitat homes at 859-861
Pinecrest and 855-857 Pinecrest.
RECOMMENDATION DU COMITÉ
Que le Conseil approuve
un financement unique de 19 306 $ à partir de la réserve des redevances
d'aménagement pour contrebalancer les redevances d'aménagement qu'Habitat pour
l'humanité a payé l'an passé pour le projet d'aménagement des 859 et 861,
chemin Pinecrest; et d’autoriser le directeur, Logement à
participer à un accord sur les immobilisations domiciliaires municipales avec
Habitat pour l’humanité afin de permettre et de garantir le report des
redevances d’aménagement totalisant 38 612 $ et concernant les quatre maisons
d’Habitat situées aux 859 et 861 Pinecrest et aux 855 et 857 Pinecrest.
DOCUMENTATION
1. Community
and Protective Services, Deputy City Manager’s report dated
27 March 2006
(ACS2006-CPS-HOU-0005).
Report
to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services organisationnels
et du développement économique
27 March 2006 / le 27 mars 2006
Submitted by/Soumis par : Steve Kanellakos, Deputy City Manager/Directeur
municipal adjoint,
Community and Protective Services/Services communautaires et de
protection
Contact
Person/Personne ressource : Janet Kreda, Housing Developer
Housing/Logement
(613) 580-2424 x, Janet.Kreda@ottawa.ca
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Ref N°: ACS2006-CPS-HOU-0005
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SUBJECT:
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DEFERRAL OF DEVELOPMENT CHARGES FOR
HABITAT FOR HUMANITY
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OBJET :
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REPORT des REDEVANCES d’aménagement pour habitat pour l’humanité
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REPORT RECOMMENDATION
That Corporate Services and Economic Development Committee recommend
that Council approve one time funding of $19,306 from the Development Charge
Reserve Fund to offset development
charges Habitat paid last year on their development at 859-861 Pinecrest and delegate
authority to the Director of Housing to
enter into Municipal Housing Project Facilities Agreement with Habitat for
Humanity to allow for and secure the deferral of Development Charges in the
amount totalling $38,612 for the development charges associated with the four
Habitat homes at 859-861 Pinecrest and 855-857 Pinecrest.
RECOMMANDATION DU
RAPPORT
Le Comité des services
organisationnels et du développement économique recommande au Conseil d'approuver un financement unique de 19 306 $ à
partir de la réserve des redevances d'aménagement pour contrebalancer les
redevances d'aménagement qu'Habitat pour l'humanité a payé l'an passé pour le
projet d'aménagement des 859 et 861, chemin Pinecrest; et d’autoriser le directeur, Logement à participer à un accord sur les
immobilisations domiciliaires municipales avec Habitat pour l’humanité afin de
permettre et de garantir le report des redevances d’aménagement totalisant 38
612 $ et concernant les quatre maisons d’Habitat situées aux 859 et 861
Pinecrest et aux 855 et 857 Pinecrest.
BACKGROUND
City
Council on October 13, 2004, in considering Amendments to the City Council Approved
Official Plan to modify policies related to affordable housing, provided
direction to staff to im plement various planning incentives and direct
supports to promote and encourage the achievement of the Official Plan
policies. Habitat for Humanity is a
charitable organization that develops housing for families who are at or below
the Low Income Cut-Off or LICO as established by Statistics Canada. Habitat recently developed a duplex at
859-861 Pinecrest and they are in the process of building two more units at
855-857 Pinecrest. They are seeking
relief from development charges on these two properties.
The
housing meets the Official Plan definition of "affordable" in that
the household will not pay more than 30% of
income on the mortgage payment, and the household income is at or below
the 40th income percentile.
Attached in Document 1,please find the most recently published LICO's
from 2004, and Document 2, Housing Continuum by Household Income Percentiles
2004. Habitat holds a first and second
mortgage on the home and arranges an affordable payment schedule with the buyer
to ensure that the mortgage payment is no more than 30% of household
income. The organization also retains
the right of first refusal, if the home is sold before the mortgages are paid
off.
Under the current Development Charge By-law
(By-law 2004-298) as adopted by Council on July 14, 2004, the exemption for
affordable housing extends only to units that are owned by non-profit or
charitable housing organizations. It
does not extend to units that are developed by a non-profit and subsequently
sold to private individuals, because private individuals are not
"non-profit" or charitable entities.
The
Legal Department advises that it may be possible to revise the Development Charges
By-law to allow non-profit organizations such as Habitat for Humanity to be
exempt from DC’s, providing there are mechanisms in place to ensure the
benefits are used to support the organizations mandate for long term
affordability of the home.
Since
the option to exempt DC’s is not currently available, the proposed alternative
is to enter into a Municpal Housing Project Facilities Agreement to defer the
payment of development charges until such time as the benefited home is sold. At that time, the value of the deferred
development charges would be repaid by the vendor to the City as part of the
sales process. This requires that
Habitat enter into a Municipal Capital Facilities Agreement with the City for each
benefited unit, and that the value of the deferred fees plus interest would be
secured as a second mortgage in favour of the City. Staff propose that the interest rate for the deferred fees be the
rate used by City staff to determine the annual affordable housing costs for
the purposes of the Official Plan affordable housing targets. This is similar to the agreement reached for
the development at 138 Somerset/St. John's Church. (ACS2005-PGM-APR-0129), approved June l8, 2005.
The
term of the Municpal Housing Project Facilities Agreement is 20 years. The Development Charges would be repayable
to the City when:
1. The property is sold for fair market value
and no longer meets the Official Plan definition of affordable.
2. The Habitat mortgages are paid in full
within the 20 yr term of MHPFA, and the occupant family income exceeds the 40th
income percentile, or subsequent affordable housing threshold as decided by
Council.
If
neither of the above conditions occur prior to the expiry of the MHPFA, the
Development Charges will be forgiven at the end of the 20 year MHPFA, and the
mortgage on title in favour of the City will be removed.
CONSULTATION
The
report has been circulated to Planning and Growth Management, Legal and
Finance. No public consultation has
been conducted with respect to this request for assistance. The request and recommended response is
consistent with current program practice.
FINANCIAL IMPLICATIONS
Approval
of this report will result in a total refund of $19,306 from the Development Charge
Reserve Fund to offset the development charges Habitat paid last year on their
development at 859-861 Pinecrest. In
addition, approval of this report will result in the deferral of $38,612
($19,306 in development charges related to the development at 859-861 Pinecrest
and $19,306 in development charges currently due for 855-857 Pinecrest). Over the life of this program, the overall
financial implication is minimal, as it is expected these properties will be sold
at fair market value by the end of the 20 year MHPFA and the deferred
development charges will be repaid to the City.
For
2006, there is no current budget identified to fund this initiative.
Subject to Council approval, one time funding from the $19,306 from the
Development Charge Reserve Fund is recommended to address this requirement in
2006. As part of the 2007 budget, the
Community and Protective Services Department will bring forward a budget
pressure identifying the funding requirement.
The
tax increase forecast for 2007 as presented in the 2006 Draft Budget Summary
document was projected to be 8.1%.
All additional requirements approved by Council that have a 2007 budget
implication will be summarized and presented in the City’s quarterly status
reports.
SUPPORTING DOCUMENTATION
Document
1: Low Income Cut-Offs 2004
Document
2: Housing Continuum and Household Income Percentiles 2004
DISPOSITION
A
project specific Municipal Housing Project Facilities By-law will be brought
forward to Council.
Upon
approval by Council, the Housing Branch will execute a Municipal Capital
Facilities Agreement with Habitat for Humanity as per the terms identified in
this report.
Corporate
Services, Financial Services Branch to prepare the payment and adjust accounts
accordingly.
