Document 2
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5. DEFERRAL OF DEVELOPMENT CHARGES FOR HABITAT
FOR HUMANITY REPORT des REDEVANCES d’aménagement pour
habitat pour l’humanité |
Committee Recommendation
That
Council 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 $38,296,
associated with the construction of a semi-detached home located on White Cedar
Street.
Recommandation du comité
Que le Conseil délègue l’autorité au directeur
du Logement de conclure une entente sur les projets
domiciliaires municipaux avec Habitat pour l’humanité afin d’autoriser des
redevances d’aménagement, d’un montant de 38 296 $, associées à la construction
d’une maison semi-détachée rue White Cedar et d’en obtenir le report.
Documentation
1. Deputy City Manager's report (Community and
Protective Services) dated 21 January 2008 (ACS2008-CPS-HOU-0003).
Report
to/Rapport au :
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council/et au Conseil
21 January 2008/ le 21 janvier 2008
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 : Russell
Mawby, Director/Directeur
Housing/Logement
(613) 580-2424 x 44162, russell.mawby@ottawa.ca
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Ref N°: ACS2008-CPS-HOU-0003 |
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SUBJECT: |
DEFERRAL
OF DEVELOPMENT CHARGES
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OBJET : |
REPORT des REDEVANCES d’aménagement |
REPORT
RECOMMENDATION
That the Corporate Services and Economic Development
Committee recommend Council 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 $38,296, associated with the construction of a semi-detached
home located on White Cedar Street.
Que le
Comité des services organisationnels et du développement économique recommande que le Conseil délègue l’autorité
au directeur du Logement de conclure une entente sur
les projets domiciliaires municipaux avec Habitat pour l’humanité afin
d’autoriser des redevances d’aménagement, d’un montant de 38 296 $, associées à
la construction d’une maison semi-détachée rue White Cedar et d’en obtenir le
report.
Under the current Development Charge By-law (By-law 2004-298) the exemption for affordable housing extends only to units that are owned by non-profit or charitable housing organizations and not to units that are developed by a non-profit, such as Habitat for Humanity, and then sold to private individuals. The proposed alternative is to enter into a Municipal Housing Project Facilities Agreement to defer the payment of development charges for a minimum of 20 years or until such time as the benefited home is sold. The Housing Branch is recommending that the development charges for a recent Habitat for Humanity Project constructed at 11 and 13 White Cedar Street be deferred and secured through a Municipal Housing Project Facilities Agreement. The Agreement secures the development charges as a third mortgage that will be paid in full in the event that the owner sells or transfers the property to another property owner, prior to the end of the 20 year period, unless Habitat for Humanity purchases the property back from the owner in accordance with its buy-back policy in which case the third mortgage will remain on title.
En vertu du
Règlement municipal actuel sur les redevances d’aménagement (Règlement 2004-298),
l’exemption pour les logements à prix abordable s’applique seulement aux
logements qui appartiennent à un organisme d’habitation sans but lucratif ou de
bienfaisance, et non à ceux qui sont construits par un organisme sans but
lucratif, comme Habitat pour l’humanité, et ensuite vendus à des particuliers. L’option proposée est de conclure une
entente sur les installations des ensembles d’habitations afin de reporter le
paiement des redevances d’aménagement pour une période minimum de vingt ans, ou
jusqu’à ce que la demeure jouissant de l’exemption soit vendue. Par conséquent,
la Direction du logement recommande que les redevances d’aménagement pour un
récent projet d’habitations construit par Habitat pour l’humanité au 11 et 13,
rue White Cedar soient reportées et garanties en vertu d’une entente sur les
installations des ensembles d’habitations. Cette entente garantirait le
paiement des redevances d’aménagement dans le cadre d’un prêt hypothécaire de
troisième rang qui serait intégralement remboursé si le propriétaire devait
vendre la propriété ou en transférer le titre à un autre propriétaire avant le
terme des vingt ans, à moins qu’Habitat pour l’humanité lui rachète la
propriété en vertu de sa politique de rachat et, dans ce cas, le prêt hypothécaire
de troisième rang resterait attaché au titre.
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 implement 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 (LICO) as established
by Statistics Canada.
The housing at White Cedar Street 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, are the most recently published LICO's from 2006, and in Document 2, the
Housing Continuum by Household Income Percentiles for 2006. 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. If the purchase sells or defaults on the Property within twenty years of
the date of the transfer of the Property they will be required to repay all or
some of the second mortgage plus applicable taxes, to Habitat for Humanity. The
obligation to repay the amount is secured by a second mortgage on the Property.
After your twelfth year of occupation of the Property, the principal amount of
the second mortgage will be reduced on an annual basis of 12.25% of the
original principal amount and if the property is occupied as a principal residence
for twenty years the principal amount of the second mortgage will be deemed to
have been paid in full.
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.
Since the option to exempt DC’s is not currently available, the proposed alternative is to enter into a Municipal Housing Project Facilities Agreement to defer the payment of development charges for a minimum time period of 20 years or until such time as the benefited home is sold. If the home is sold before the 20-year period and not kept affordable as defined in the Official Plan, 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 third 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 a previous Habitat development at 859-861 Pinecrest and 855-857 Pinecrest (ACS2006-CPS-HOU-0005), approved April 12, 2006 (By-law 2006-295).
The term of the Municipal Housing Project Facilities Agreement is 20 years and the amount of the first, second and third mortgages will be as follows:
11 White
Cedar:
2nd
mortgage: $39,000 less development charges ($19,148): $19,852
3rd mortgage (held by the City): $19,148
13 White Cedar:
1st
mortgage: $162,790.40
2nd
mortgage: $39,000 less development charges ($19,148): $19,852
3rd mortgage (held by the City): $19,148
The third mortgage will be paid in full in the event
that the owner sells or transfers the property to another property owner, prior
to the end of the 20 year period, unless Habitat for Humanity purchases the
property back from the owner in accordance with its buy-back policy in which
case the third mortgage will remain on title.
CONSULTATION
The report has been circulated to Planning, Transit
and the Environment, Legal Services Branch and Financial Services Branch. 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
This agreement defers development charges in the amount of $38,296 and ultimately forgives the development charges unless the property(s) is sold to another property owner other than Habit for Humanity prior to the 20-year expiry of the agreement.
City Strategic Direction –
Priority E. Sustainable Healthy and Active City – Objective 12: Continue work to achieve the annual
development of 500 housing units affordable to people earning low income. The
objective is to close the gap in the affordable and appropriate housing supply.
SUPPORTING DOCUMENTATION
Document 1: Low Income Cut-Offs 2006
Document 2: Housing Continuum and Household Income
Percentiles 2006
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.
Low
Income Cut-Offs (before tax) 2006
|
Size of Family Unit |
Community of
500,000 or more. |
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1
person |
$21,202 |
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2
person |
$26,396 |
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3 person |
$32,450 |
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4
person |
$39,399 |
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5 person |
$44,686 |
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6 person |
$50,397 |
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7 or more persons |
$56,110 |
Source : Statistics Canada, Released May 10, 2007
The Low Income Cut-Off is inflated annually by the Consumer Price Index, which is the same inflationary measure used for the 40th income percentile.
Document 2