1. DEVELOPMENT CHARGES POLICY REPORT

RAPPORT SUR LA POLITIQUE DES REDEVANCES D’AMÉNAGEMENT

Committee recommendations as amended

That Council approve:

1. The revised City of Ottawa Development Charge Background Study dated June 8, 2009 and the City of Ottawa Area-Specific Development Charge Background Study dated June 8, 2009, issued separately, with the following amendments:

a. That the three large area Single Dwelling Unit (SDU) residential rates as described in the City of Ottawa Development Charges Background Study, dated June 8, 2009 be amended, based on anticipated funding from the Stimulus Program, as follows: Inside the Greenbelt SDU charge of $15,536 (was $16,111), Outside the Greenbelt SDU charge of $22,071 (was $22,546) and Rural SDU charge of $14,769 (was $15,244);

b. That the Non-residential General development charge be amended, based on anticipated funding from the Stimulus Program, as follows: $16.06 per square foot for full service rate (was $16.63), Non-residential Commercial/Institutional/Industrial rate be capped at $13.01 (was $13.47) and that the (full service) rate for Limited Industrial uses be set at $7.39 (was $7.65);

2. That the current list of non-statutory exemptions, subject to the proposed transitional provisions, be modified as follows:

a. That the development charge exemptions for non-profit health care facilities be limited to the portion that is not reimbursed or subsidized by either the Provincial or Federal government;

b. The types of non-profit uses that will be exempt by resolution of Council was narrowed to include child care and long term care facilities, which are both municipally mandated services;

c. The residential Development Charges exemption within the designated areas fronting lsabella Street and Chamberlain Avenue, was removed;

d. The area-based exemption for residential properties in downtown Ottawa will be discontinued after two years, as of August 1, 2011, and no transitional provisions will apply;

3. That rates be indexed on an annual basis, commencing on August 1, 2010 in accordance with the Statistics Canada Infrastructure Development Charges Price Index;

4. That the current Development Charges By-laws be repealed and that the successor general development charge by-law and the area-specific stormwater by-laws, substantially in the form and content included in the City of Ottawa Development Charges Background Study, dated June 8, 2009 and the City of Ottawa Area-specific Development Charges Background Study for Individual Stormwater Management Ponds and Drainage Systems, dated June 8, 2009 be enacted;

5. The policy regarding front-ending agreements as detailed in Document 3 be approved including the provision for the award of contracts for front-ended works upon certification by an independent engineer that the contract provides for a competitive price;

6. Subject to 2(d), that owners who have filed a building permit application prior to September 15, 2009 and obtain a building permit prior to December 31, 2009 be subject to the lesser of the total rates in place as of June 23, 2009 and June 25, 2009;

7. That the requirement for being eligible for current provisions within the exemption zone be based on entering into an approved site plan agreement with the City before the end of the 24-month transition time frame;

8. That the requirement for being eligible for current provisions provided to the application of redevelopment credits applied to the demolition of buildings that are statutorily exempt be based on entering into an approved site plan agreement with the City before the end of the 24-month transition time frame;

9. That the proposed increase in the development charge rates be phased in, according to the following schedule:

a. From the time of by-law enforce date to January 15, 2010 the rates in the current by-law will be in effect;

b. January 16, 2010 to January 15, 2011 - current rates plus 25 per cent of difference between current and calculated charges;

c. January 16, 2011 to January 15, 2012 - current rates plus 50 per cent of difference between current and calculated charges;

d. January 16, 2012 to January 15, 2013 - current rates plus 75 per cent of difference between current and calculated charges;

e. January 16, 2013 to by-law expiry - full calculated rates;

10. That the timing of payment of non-residential development charges be calculated in two instalments - the non-discounted portion of the charge shall be paid at the time of issuance of the building permit and the discounted portion of the charge shall be payable at a maximum of two years from the date of issuance of the initial building permit subject to certain conditions. This option will not be available to institutional developments;

11. That the development in the vicinity of transit stations reduction due to the proximity to rapid transit networks are consistent with the zoning by-law;

12. That the redevelopment of land credits be amended so that any demolitions of pre-existing residential and non-residential buildings that have taken place prior to the passage of the new by-law, excluding a type of use exempt from paying development charges, be subject to redevelopment credit expiry period ending January 1, 2019;

13. That as part of the passage of the main by-law a mid-term review will be undertaken to determine if sufficient revenue is being contributed to meet development-related cost requirements;

14. That pursuant to the Development Charges Act, subsection 12(3), no further notice or meeting is required.

RecommandationS MODIFIÉES DU Comité

Que le Conseil :

1. approuve la version révisée de l’étude préliminaire sur les redevances d’aménagement de la Ville d’Ottawa du 8 juin 2009 et l’étude préliminaire sur les redevances d’aménagement d’application particulière de la Ville d’Ottawa du 8 juin 2009, études qui ont été publiées séparément, sous réserve des modifications suivantes :

a. modification des trois taux résidentiels pour les unités d’habitation individuelles des grands secteurs décrits dans l’étude préliminaire sur les redevances d’aménagement de la Ville d’Ottawa du 8 juin 2009, en fonction du financement prévu dans le cadre du programme d’incitation, soit : redevances de 15 536 $ pour les unités à l’intérieur de la Ceinture de verdure (au lieu de 16 111 $), de 22 071 $ pour les unités à l’extérieur de la Ceinture de verdure (au lieu de 22 546 $) et de 14 769 $ pour les unités en milieu rural (au lieu de 15 244 $);

b. modification des redevances d’aménagement générales pour les unités non résidentielles en fonction du financement prévu dans le cadre du programme d’incitation, soit : établissement du taux tous services compris à 16,06 $ le pied carré (au lieu de 16,63 $), plafonnement du taux pour les unités non résidentielles des secteurs commercial, institutionnel et industriel à 13,01 $ (au lieu de 13,47 $) et établissement du taux (tous services compris) pour les unités à usage industriel limité à 7,39 $ (au lieu de 7,65 $);

2. modifie la liste actuelle des exemptions non prescrites, sous réserve des dispositions transitoires proposées, à savoir :

a. que les exonérations de redevances d’aménagement pour les installations de soins de santé sans but lucratif soient limitées à la portion qui n’est pas remboursée ou qui est subventionnée soit par le gouvernement fédéral ou le gouvernement provincial;

b. les types d’utilisations à but non lucratif qui seront exemptés par résolution du Conseil ont été mieux définis pour inclure les services de garde d’enfants et les établissements de soins de longue durée, lesquels sont des services mandatés par la municipalité;

c. l’exemption de redevances d’aménagement résidentiel dans les zones désignées donnant sur la rue Isabella et l’avenue Chamberlain a été supprimée;

d. exonération pour les propriétés résidentielles du centreville d’Ottawa sera supprimée après deux ans, au 1^er août 2011, et aucune disposition transitoire ne s’appliquera;

3. indexe les taux sur une base annuelle à partir du 1^er août 2010, conformément à l’indice des prix de Statistique Canada pour les redevances d’aménagement d’infrastructures;

4. abroge les règlements actuels sur les redevances d’aménagement et adopter le nouveau règlement général sur les redevances d’aménagement et les règlements sur les eaux pluviales propres à certains emplacements, essentiellement selon la forme et le contenu de l’étude préliminaire sur les redevances d’aménagement de la Ville d’Ottawa, en date du 8 juin 2009, et de l’étude préliminaire sur les redevances d’aménagement d’application particulière de la Ville d’Ottawa relativement aux systèmes individuels de gestion des eaux pluviales et de drainage, en date du 8 juin 2009;

5. approuve la politique concernant les ententes de financement préalable décrite dans le document 3, y compris la disposition prévoyant l’octroi d’un contrat pour les travaux financés au préalable dès qu’on obtient la confirmation d’un ingénieur indépendant que le contrat prévoit un prix concurrentiel;

6. sous réserve de 2d), applique les taux les plus bas entrant en vigueur le 23 juin 2009 et le 25 juin 2009 aux propriétaires qui présentent des demandes de permis de construire avant le 15 septembre 2009 et obtiennent un permis de construire avant le 31 décembre 2009;

7. approuve l’exigence voulant que l’admissibilité aux dispositions actuelles dans la zone d’exemption soit fondée sur la conclusion d’un accord de plan d’implantation approuvé par la Ville avant la fin de la période de transition de 24 mois;

8. approuve l’exigence voulant que l’admissibilité aux dispositions actuelles concernant l’application de crédits de réaménagement lors de la démolition d’édifices dont l’exemption est prescrite soit fondée sur la conclusion d’un accord de plan d’implantation approuvé par la Ville avant la fin de la période de transition de 24 mois;

9. que l’augmentation proposée du taux des redevances d’aménagement se fasse par étape, selon le calendrier suivant :

a. de la date d’entrée en vigueur du règlement municipal jusqu’au 15 janvier 2010 – les taux du règlement actuel s’appliqueront;

b. du 16 janvier 2010 au 15 janvier 2011 – les taux actuels plus 25 p. 100 de la différence entre les redevances actuelles et les redevances calculées;

c. du 16 janvier 2011 au 15 janvier 2012 – les taux actuels plus 50 p. 100 de la différence entre les redevances actuelles et les redevances calculées;

d. du 16 ja nvier 2012 au 15 janvier 2013 – les taux actuels plus 75 p. 100 de la différence entre les redevances actuelles et les redevances calculées;

e. du 16 janvier 2013 à l’expiration du règlement – 100 p. 100 des taux calculés;

10. que le moment du paiement des redevances d’aménagement non résidentiel soit calculé en deux versements, la partie non escomptée de la redevance étant payée au moment de la délivrance du permis de construction et la partie escomptée de la redevance étant payable dans les deux ans de la date de délivrance du permis de construction initial, sous réserve de certaines conditions. Les aménagements institutionnels ne pourront se prévaloir de cette option;

11. que la réduction des aménagements au voisinage des stations des couloirs de transport en commun due à la proximité de réseaux de transport en commun rapide soit conforme au règlement de zonage;

12. que le réaménagement des crédits fonciers soit modifié de telle sorte que toutes les démolitions d’édifices résidentiels et non résidentiels existant déjà qui ont eu lieu avant l’adoption du nouveau règlement, à l’exclusion d’un type d’utilisation exempté du versement de redevances d’aménagement, soient assujetties à la période d’expiration des crédits de réaménagement se terminant le 1^er janvier 2019;

13. qu’un examen à miparcours visant à déterminer s’il y a suffisamment de revenus pour régler les dépenses associées à l’aménagement soit effectué dans le cadre de l’adoption du règlement principal;

14. que conformément à la Loi de sur les redevances d’aménagement, paragraphe 12(3), aucun autre avis ne soit donné.

Documentation

1. Transmittal letter to Planning and Environment Committee and City Council, from the Development Charges Council Sponsors.

2. Deputy City Manager’s report, Infrastructure Services and Community Sustainability dated 15 June 2009 (ACS2009-ICS-PGM-0134).

Transmittal Letter to Planning and Environment Committee and City Council

From the Development Charges Sponsors

Dear Members of Council,

Since being designated as Sponsors for this policy initiative we have worked diligently with City staff and met with a number of stakeholders throughout the development of the staff recommendations.

As Sponsors we support and endorse the staff recommendations for development charges in the three development charge areas. The charges proposed are in keeping with City Council’s principle that growth must pay for growth and the recommendations respect the economic crisis that our community is experiencing.

Staff and the Sponsors have taken every opportunity to meet with stakeholders and understand how development charges affect the development industry. This consultation has allowed the City to make positive refinements to the proposed development charges.

We are asking Planning and Environment Committee and City Council to consider seven additional refinements that have come to light during consultations after the report was made public. These recommendations are:

That the timing of payment of non-residential development charges be calculated in two installments - the non-discounted portion of the charge shall be paid at the time of issuance of the building permit and the discounted portion of the charge shall be payable at a maximum of two years from the date of issuance of the initial building permit subject to certain conditions. This option will not be available to institutional developments.

That the development in the vicinity of transit stations reduction due to the proximity to rapid transit networks are consistent with the zoning bylaw.

That the redevelopment of land credits be amended so that any demolitions of pre-existing residential and non-residential buildings that have taken place prior to the passage of the new by-law, excluding a type of use exempt from paying development charges, be subject to redevelopment credit expiry period ending January 1 2019.

That the development charge exemptions for non-profit health care facilities be limited to the portion that is not reimbursed or subsidized by either the Provincial or Federal government.
That as part of the passage of the main by-law a mid-term review will be undertaken to determine if sufficient revenue is being contributed to meet development-related cost requirements.

6. That the proposed increase in the development charge rates be phased in, according to the following schedule:

a. From the time of By-law enforce date to January 15, 2010 the rates in the current by-law will be in effect;

January 16, 2010 to January 15, 2011 - current rates plus 25 per cent of difference between current and calculated charges;
January 16, 2011 to January 15, 2012 - current rates plus 50 per cent of difference between current and calculated charges;
January 16, 2012 to January 15, 2013 - current rates plus 75 per cent of difference between current and calculated charges;
January 16, 2013 to by-law expiry -full calculated rates.

The area-based exemption for residential properties in downtown Ottawa will be discontinued after two years as of August 1, 2011 and no transitional provisions will apply.

The first recommendation was the result of discussions with BOMA related to the financing and working capital constraints of commercial building projects. The intent of the policy is to provide greater flexibility relating to DC payments by balancing the needs of the City to fund growth-related infrastructure costs and the ability of a non-residential developer to bridge finance the entire fee before revenue streams from construction materialize. The portion payable at a later phase will be subject certain requirements and conditions such as no reductions in the security provided for works until full development charges paid and indexing at the development charge rate.

The second recommendation adjusts the Road component reduction related to apartment dwellings within 600 metres of the primary transit network to include an 800-metre exemption where the lot is separated from the rapid transit station by a highway, grade-separated arterial roadway, railway yard, watercourse, private lands or any other major obstacle such that the actual walking distance to the rapid transit station is increased. This adjustment makes the discount consistent with the provisions of the zoning by-law.

The third recommendation relates to the February report outlining the DC By-law Review Framework. Redevelopment credits are provided in recognition that a pre-existing residential and non-residential building or structure, that has been demolished, had an existing demand on services allocated to the property. Staff are recommending the imposition of an extended grandparenting clause, ending January 1 2019, for preserving the redevelopment credit for pre-existing demolitions. After the passage of the new by-law any demolitions that occur will be subject to the five-year redevelopment credit expiry period.

The fourth recommendation refers to the current non-statutory exemption, which allows for non-profit health care facilities to receive a full development charge waiver. The funding circumstances surrounding the initial imposition of the exemption have changed. This amendment will, therefore, limit the threshold of the amount of the waiver to the portion that is not reimbursed by other levels of government. The full charge will be payable at the building permit stage and, subsequently, only the portion not reimbursed by either the Provincial or Federal governments will be refunded to the applicant.

The next item is a proposal to have staff undertake a mid-term review, which is not a statutory requirement, prior to the full study update in 2014 in order to revisit the calculation of various rates. One of the Guiding Principles passed as part of the Fiscal Framework-2007 is that growth should pay for itself to the full extent allowed by legislation and not be subsidized by property taxes and utility rates. The review would focus on whether the imposition of the charges has provided the City with the revenue streams needed to offset development-related costs for each service.

The transition and phase-in dates have been extended by fifteen days to allow planning staff additional time to process applications post the holiday season.

Finally, the staff report has recommended the phase-out of the downtown residential exemption. However, there are unique challenges to developing a downtown project. The timelines in urban areas are often longer and involve additional requirements in terms of information to be supplied. Therefore, the criteria for being eligible for current provisions within the exemption zone would be based on entering into an approved site plan agreement with the City before the end of the 24-month transition time frame. After the 24- month period the development charge applicable at the time will be payable. None of the transitional provisions of the proposed development charges by-law will apply.

During the course of the consultation a number of issues were raised unrelated specifically to the DC Background Study but involving development. The Sponsors have agreed to further investigate these tangential issues with staff and the stakeholders and report back to Planning and Environment Committee. These issues are:

The impact of regulatory restrictions and cost of electrical relocation and provision on development inside the greenbelt including the issue of provision of underground electrical service. A preliminary meeting with Hydro Ottawa has taken place.
The management of front ending agreements.
The cost of development and building permits on Ottawa’s health care facilities. This review is consistent with Corporate Services and Economic Development direction of March 3, 2009.
The costs of development inside the greenbelt and potential incentives to meet the goals of the City’s Official Plan.

In closing, we Sponsors have found this initiative as an extremely positive experience and the feedback from staff and stakeholders has been uniformly positive. We recommend that Planning and Environment Committee continue the practice of policy sponsors for major policy initiatives within the mandate of the Committee.

Respectfully submitted,

Peter Hume Peggy Feltmate Jan Harder Christine Leadman

Report to/Rapport au :

Planning and Environment Committee

Comité de l'urbanisme et de l'environnement

and Council/et au Conseil

15 June 2009 / le 15 juin 2009

Submitted by/Soumis par : Nancy Schepers, Deputy City Manager/Directrice municipale adjointe,

Infrastructure Services and Community Sustainability/Services d’infrastructure et Viabilité des collectivités

Contact Person/Personne ressource : John L. Moser, General Manager/Directeur général, Planning and Growth Management/Urbanisme et Gestion de la croissance

(613) 580-2424 x 28869, john.moser@ottawa.ca

City Wide/à l'échelle de la Ville

Ref N°: ACS2009-PGM-0134

SUBJECT:	DEVELOPMENT CHARGES POLICY REPORT

OBJET :	RAPPORT SUR LA POLITIQUE DES REDEVANCES D’AMÉNAGEMENT

REPORT RECOMMENDATIONS

That the Planning and Environment Committee recommend Council approve:

2. That the current list of non-statutory exemptions, subject to the proposed transitional provisions, be modified as follows:

a. Development Charges exemptions for non-profit health care facilities are to be limited to the capital cost that must be raised locally by the community;

b. The types of non-profit uses that will be exempt by resolution of Council was narrowed to include child care and long term care facilities, which are both municipally mandated services;

c. The residential Development Charges exemption within the designated areas fronting lsabella Street and Chamberlain Avenue, was removed;

d. The area-based exemption for residential properties in downtown Ottawa will be discontinued after two years as of August 1, 2011.

3. That rates be indexed on an annual basis, commencing on August 1, 2010 in accordance with the Statistics Canada Infrastructure Development Charges Price Index;

6. That owners who have filed a building permit application prior to September 15, 2009 and obtain a building permit prior to December 31, 2009 be subject to the lesser of the total rates in place as of June 23, 2009 and June 25, 2009;

9. That the proposed increase in the development charge rates be phased in, according to the following schedule:

· From the time of By-law enforce date to December 31, 2009 the rates in the current by-law will be in effect;

· January 1 to December 31, 2010 - current rates plus 25 per cent of difference between current and calculated charges;

· January 1 to December 31, 2011 - current rates plus 50 per cent of difference between current and calculated charges;

· January 1 to December 31, 2012 - current rates plus 75 per cent of difference between current and calculated charges;

· January 1, 2013 to by-law expiry - full calculated rates.

RECOMMANDATIONS DU RAPPORT

Que le Comité de l’urbanisme et de l’environnement recommande au Conseil de prendre les mesures suivantes :

1. approuver la version révisée de l’étude préliminaire sur les redevances d’aménagement de la Ville d’Ottawa du 8 juin 2009 et l’étude préliminaire sur les redevances d’aménagement d’application particulière de la Ville d’Ottawa du 8 juin 2009, études qui ont été publiées séparément, sous réserve des modifications suivantes :

2. modifier la liste actuelle des exemptions non prescrites, sous réserve des dispositions transitoires proposées, à savoir :

a. les exemptions de redevances d’aménagement pour les établissements de soins de santé à but non lucratif devront se limiter aux coûts en capital qui doivent être financés à l’échelle locale par la collectivité;

c. l’exemption de redevances d’aménagement résidentiel dans les zones désignées donnant sur la rue Isabella et l’avenue Chamberlain a été supprimée;

d. l’exemption propre au secteur s’appliquant aux propriétés résidentielles dans le centre-ville d’Ottawa sera supprimée dans deux ans, soit le 1^er août 2011.

3. indexer les taux sur une base annuelle à partir du 1^er août 2010, conformément à l’indice des prix de Statistique Canada pour les redevances d’aménagement d’infrastructures;

4. abroger les règlements actuels sur les redevances d’aménagement et adopter le nouveau règlement général sur les redevances d’aménagement et les règlements sur les eaux pluviales propres à certains emplacements, essentiellement selon la forme et le contenu de l’étude préliminaire sur les redevances d’aménagement de la Ville d’Ottawa, en date du 8 juin 2009, et de l’étude préliminaire sur les redevances d’aménagement d’application particulière de la Ville d’Ottawa relativement aux systèmes individuels de gestion des eaux pluviales et de drainage, en date du 8 juin 2009;

5. approuver la politique concernant les ententes de financement préalable décrite dans le document 3, y compris la disposition prévoyant l’octroi d’un contrat pour les travaux financés au préalable dès qu’on obtient la confirmation d’un ingénieur indépendant que le contrat prévoit un prix concurrentiel;

6. appliquer les taux les plus bas entrant en vigueur le 23 juin 2009 et le 25 juin 2009 aux propriétaires qui présentent des demandes de permis de construire avant le 15 septembre 2009 et obtiennent un permis de construire avant le 31 décembre 2009;

7. approuver l’exigence voulant que l’admissibilité aux dispositions actuelles dans la zone d’exemption soit fondée sur la conclusion d’un accord de plan d’implantation approuvé par la Ville avant la fin de la période de transition de 24 mois;

8. approuver l’exigence voulant que l’admissibilité aux dispositions actuelles concernant l’application de crédits de réaménagement lors de la démolition d’édifices dont l’exemption est prescrite soit fondée sur la conclusion d’un accord de plan d’implantation approuvé par la Ville avant la fin de la période de transition de 24 mois;

9. adopter progressivement l’augmentation proposée des redevances d’aménagement en fonction du calendrier suivant :

· de la date d’entrée en vigueur du règlement jusqu’au 31 décembre 2009 : application des taux du règlement actuel;

· du 1^er janvier au 31 décembre 2010 : application des taux actuels plus 25 p. 100 de la différence entre les redevances actuelles et les redevances établies;

· du 1^er janvier au 31 décembre 2011 : application des taux actuels plus 50 p. 100 de la différence entre les redevances actuelles et les redevances établies;

· du 1^er janvier au 31 décembre 2012 : application des taux actuels plus 75 p. 100 de la différence entre les redevances actuelles et les redevances établies;

· du 1^er janvier 2013 jusqu’à la date d’expiration du règlement : taux établis.

BACKGROUND

A Background Study must be prepared pursuant to Section 10 of the Development Charges Act, 1997 (DCA) and, together with the proposed by-law, must be made available to the public, as required by Section 12 of the Act, more than two weeks prior to the public meeting of Council, which is to be held June 23, 2009.

The charges calculated represent those which can be recovered under the DCA based on the City's capital spending plans and other assumptions which are responsive to the requirements of the DCA. A decision is required by Council, after receiving input at the public meeting, as to the magnitude of the charge it wishes to establish, for residential, commercial, industrial and/or institutional development. Property tax, user rates or other funding sources will be required to finance any potentially Development Charges-recoverable capital costs which are not included in the charge that is adopted.

Other decisions involve finalizing development charge policy and the by-law, including exemptions, phasing-in, indexing, applicability to the redevelopment of land, and the schedule of charges by type of land use. The purpose of the public meeting is to obtain additional input concerning these matters.

As part of the February report to Planning and Environment Committee a four-member Development Charges By‑law Sponsor Committee was established. The mandate of the Committee was to guide the update of the by-law by advising and assisting staff and by reviewing options to amend the Development Charges rates. The Committee was composed of the following members: Councillor Hume, Councillor Feltmate, Councillor Harder and Councillor Leadman.

Several meetings took place between staff, the Committee and stakeholders to review the proposed growth-related program. The sessions resulted in numerous recalculations of the various components of the residential and non-residential charges. The acceptance of the recommendations in this report, championed by the Committee, represent the accumulation of discussions that would ensure that both adequate infrastructure is available to meet the needs of planned growth, while at the same time, provide stable funding for growth-driven infrastructure.

DISCUSSION

Development Charge Background Studies

The DCA sets out the essential steps necessary to create successor Development Charges By‑laws. Most importantly, the DCA requires that a Development Charges Background Study be completed. Staff has undertaken the afore-mentioned studies and the resulting reports are important companion documents to this policy report. Copies of the main study, entitled City of Ottawa Development Charges Background Study Report (dated April 9, 2009) were made available to the public. Revised copies of the main study, City of Ottawa Development Charges Background Study Report (dated June 8, 2009) and the City of Ottawa Area – specific Development Charges Background Study for Individual Stormwater Management Ponds and Drainage Systems (dated June 8, 2009) were made available prior to the public meeting.

In March, 2009, Council approved the report, “The New Development Charge By-law – Approach and Timetable”, which set out for departments the basic way in which growth-related municipal services should be assessed in relation to the charges and the timing of the preparation work for the by-law and background study.

The preliminary development charge analysis was subsequently tabled at the Planning and Environment Committee on May 11. This analysis summarized the rate information contained in the April 9 draft Development Charges Background Study and outlined some of the cost implications of growth-related services.

Following an extensive consultation process, the Background Study and proposed Development Charges By-law are being provided for information purposes as part of that consultation process. Through this report, final development charges recommendations are being made to Committee and Council for approval of the 2009 Development Charges By-law and the amended Background Study.

Development Charge Rates

In summary, the gross capital cost of the entire program is $6.67 billion. Of this amount, $2.65 billion has been deemed to be development charge-recoverable ($1.77 billion from residential development and $0.88 billion from industrial, commercial and institutional development (non-residential)). The difference between the gross and development charge-recoverable amounts is comprised of the following deductions, pursuant to the Development Charges Act:

- $250 million Beyond 10-year Service Level Cap

- $1,383 million Benefit to Existing Development

- $372 million Post Period Capacity

- $2,014 million Subsidies, Other Contributions, and 10 per cent Statutory Deduction

Total - $4,019 million

The sole purpose of development charges is to fund the servicing costs of growth, thereby enabling growth to pay for growth and to proceed in a timely and efficient manner. It reflects the City's desire to establish a development charge schedule, which reasonably reflects servicing benefits received in the broad areas of the city. As a result, the single detached dwelling charge for fully serviced development lnside the Greenbelt is marginally above the Rural area charges and approximately 28 per cent below the Outside the Greenbelt charge (see Document 1).

The proposed charge for a single detached unit is greater than the current development charge in all three cases, but the increase varies significantly. The increase is highest for Rural development for two main reasons:

(i) Rural cost allocation has increased significantly to reflect the City-wide attribution of arterial road costs which are designed to move commuters, shoppers and other traffic throughout the City;

(ii) Rural cost allocation of a portion (one-third) of transit costs.

Increase in the charge Inside the Greenbelt reflect the same road-related circumstances, as well as an increase in water and sanitary sewer charges based on assigning a growth component to replacement of existing sewers located in intensification areas.

It is important to note that the development charge for semi-detached and large apartment units located Outside the Greenbelt decreased as a result of a significant decline in the updated occupancy statistics for those unit types. The large apartment unit rate located Inside the Greenbelt is also lower than the current charge (see Document 2).

The DCA also requires that the capital costs must be reduced or adjusted for capital grants, subsidies and other contributions made to a municipality. A number of the projects identified in the background study have been included in the City's application to Federal and Provincial governments for two-thirds funding under the Infrastructure Stimulus Program. All of the Public Transit projects that have been included in the application are identified in the Development Charges Background study with two-thirds funding coming from Grants, Subsidies and Contributions. The road projects that have been included in the funding application that are growth related have been shown in the Background Study without any outside funding, thereby increasing the amount of development charges that are projected to be collected.

On June 5, 2009 the Federal and Provincial governments announced they would fund two-thirds of various growth-related road projects. This will reduce the required amount of development charges to be collected on the city-wide roads component by $79 million. This will result in a reduction of $475 per single-family household. As the timing of the printing of the background study did not allow these changes to be included, they will be included in the final document and the development charges will be amended accordingly.

Inside Greenbelt - Single Dwelling Unit

Revised $15,636 (was $16,111 as of June 8)

Outside Greenbelt - Single Dwelling Unit

Revised $22,071 (was $22,546 as of June 8)

Rural – Serviced - Single Dwelling Unit

Revised $14,769 (was $15,244 as of June 8)

Rural – Unserviced - Single Dwelling Unit

Revised $12,756 (was $13,231 as of June 8)

Non-residential charges have been calculated using one uniform, City-wide charge. This was done to reflect current policy, industry input and to support employment growth to the fullest extent possible throughout the city.

The non-residential charge has increased by 51 per cent, as compared to the April 1, 2009 "Non‑Residential General" charge (from $10.65 per square foot of GFA to $16.06 per square foot). This is largely due to an increase in the development charge-recoverable cost of Roads, Transit and Sanitary Sewers, which comprise the bulk of the non-residential charges.

A fully calculated non-residential charge is proposed for development within the non-residential general category (e.g. retail and hotels). For other categories of non-residential development, the following reductions are proposed:

Commercial/Industrial/lnstitutional - reduced to 81 per cent of full-calculated charge;
Limited Industrial - reduced to 46 per cent of the full-calculated charge.

These reductions are consistent with the adjustments made in the 2004 Development Charges By-law for these categories of uses.

Non-residential – General – Gross Floor Area

$16.06 (was $16.63 as of June 8)

Non-residential – Commercial/Industrial/Institutional – Gross Floor Area

$13.01 (was $13.47 as of June 8)

Non residential – Limited Industrial – Gross Floor Area

$7.39 (was $7.65 as of June 8)

Exemption Policy

It is recommended that most non-statutory exemptions and discounts be maintained. However, the following policies pertaining to exemptions, credits and related matters are proposed as changes to the existing by-law:

e. Development Charges exemptions for non-profit health care facilities are to be limited to the capital cost that must be raised locally by the community;

f. The types of non-profit uses that will be exempt by resolution of Council was narrowed to include child care and long term care facilities, which are both municipally-mandated services;

g. The residential development charges exemption within the designated areas fronting lsabella Street and Chamberlain Avenue, was removed;

h. Redevelopment credit provisions were narrowed to reduce the time between demolition and new construction to a maximum of five years, starting August 1, 2009;

i. As of August 1, 2011, redevelopment credits are not applicable in cases of demolition of development that is exempt from charges under the by-law (for example former school sites);

j. The required distance from a light rail or transitway station was increased from 500 metres to 600 metres for apartment dwellings to qualify for the 50 per cent reduction in the Roads and Related Services component of the charge.

The following would continue to be exempt from development charges: a place of worship, churchyard, cemetery or burying ground, agricultural buildings, farm retirement lots, non-profit housing, temporary and seasonal buildings. Non-statutory exemptions such as for places of worship or temporary buildings result in little revenue to the City and a removal of the exemption would create greater hardship to individuals that would be justified by the small increase in revenue.

The area-based exemption for residential properties in downtown Ottawa will be discontinued after two years as of August 1, 2011. Staff have, however, recognized the unique challenges of developing a downtown project. The timelines in urban areas often involve more complicated matters and have additional requirements in terms of information to be supplied. Therefore, the requirement for being eligible for current provisions within the exemption zone would be based on entering into an approved site plan agreement with the City before the end of the 24-month transition time frame. The same transition provision, based on receiving site plan approval before August 1, 2011, will be provided to the application of redevelopment credits applied to the demolition of buildings that are statutorily exempt from paying development charges.

Given that there has been ‘take up’ of the reduction for residential apartment dwelling units in the vicinity of transitway and light-rail stations due to the qualifying requirement for parking space limits, it is proposed that the reduction be continued in the new by-law. Location in proximity to the stations is an attractive feature for providing more intensive residential redevelopment. The qualifying distance from a station has been increased to 600 metres from 500 to be eligible for the 50 per cent reduction in the Roads and Related Services component of the charge. Parking spaces allocated for visitors are not considered in the parking space calculations.

Deduction for Post Period Capacity

Although there is no requirement under the Act, staff has made an additional deduction on road projects programmed in the 2020 to 2031 time frame to account for the fact that development occurring after 2019 will receive some benefit from these works. A number of Water, Sanitary Sewer, and Road projects are forecasted to be constructed during the end of the 22-year planning horizon (approaching 2031). Therefore a portion of the cost of these projects (20 per cent for Roads and 25 per cent for Water and Sanitary Sewer) will be assigned to post 2031, therefore decreasing the residential and non-residential development charge rates.

Indexing of the Charges

It is important that the quantum, of the development charges collected, increases over time in accordance with the change in construction prices so that its purchasing power is preserved. It is, therefore, recommended that the indexing of the charge continue on an annual basis but on August 1 each year starting in 2010. As of April 22, the indexing was rescinded and rates rolled back to their 2008 levels. Historically, over the past five years, the yearly inflation percentage has been lower than the factors used in other municipalities. However, the index is considered to better reflect the increased development related costs incurred in Ottawa.

Transition Measures

Staff have recommended a transition period, for the main by-law, for implementing the new rates. Development for which a complete building permit application has to be filed by September 15, 2009 and for which a building permit has to be obtained before January 1, 2010 shall be subject to the lower of the total rate in effect as of June 23, 2009.

Phasing of the Development Charge Rates

It is recommended that the new charges be phased in, starting January 1, 2010, over a four-year period with the only exception to this phase-in is the residential charge for the area Outside the Greenbelt. The Inside the Greenbelt and Rural charges will be phased in starting January 1, 2010. The phase-in schedule is proposed as follows:

From the time of By-law enactment to December 31, 2009 the rates in the current by‑law will be in effect;
January 1 to December 31, 2010 - current rates plus 25 per cent of difference between current and calculated charges (revised to reflect the discounted non-residential charges, as discussed above);
January 1 to December 31, 2011 - current rates plus 50 per cent of difference between current and calculated charges;
January 1 to December 31, 2012 - current rates plus 75 per cent of difference between current and calculated charges;
January 1, 2013 to by-law expiry -full calculated rates (including discounting as discussed above).

Front-ending Agreements

Development Charge legislation permits municipalities to enter into front-ending agreements with developers whose need accelerates a capital work by undertaking it themselves and having the City pay them back over time. The City currently has a number of these agreements in place. The adoption of such a policy also sets the parameters for discussion for what can often be lengthy discussions with the developers (see Document 3).

City policy generally requires that contracts only be awarded after being tendered or having obtained quotations from at least three different firms. As front-ending agreements provided for the expenditure of City funds by developers, developers are encouraged to follow this policy.

However, staff are advised that developers often cause front-ended works to be constructed by the developer's general contractor for the overall development, as opposed to awarding a specific contract for the works in question. It is possible in such circumstance that the best price will be achieved by awarding the work to the contractor who will already be on the site. However, to ensure that such is the case, the front-ending policy will require that an independent engineer certify to the City that a competitive price has been achieved. Further, to provide for transparent review of such contracts, the developer must ensure that the contract that includes the front-ended works can be provided by the City to any member of the public who wishes to see it.

The Parks Development capital program was established in recognition of projected cash flow and affordability over the required 10-year timeframe (2010-2019). Recently, the City has agreed to various park crediting agreements, where ownership and development charge contributions are received from one landowner. Repayment under the agreements is directly related to the pace at which development occurs within the benefiting lands based on the growth-related park fees collected at building permit issuance. To help assist with the overall construction schedule an agreement was reached with the homebuilders, through the Council Sponsors’ review process, to maximize the capital project funding allocations based on level of service measurements, for both Parks Development and Recreation Facilities.

Area-specific Stormwater Charges

Stormwater management is being addressed separately from the City's overall Background Study, given its unique features, i.e. a wide range of development and area specific SWM requirements and solutions with widely varying costs. Also, some developments outside of these areas provide fully for their own SWM needs, pursuant to individual development agreements or use existing previously funded capacity and are therefore exempt from these area-specific by laws. In addition to these two sets of circumstances, there are a number of stormwater drainage works, which are city-wide or large-area in nature (i.e. storm sewer rehab program and trunk storm sewer oversizing), which provide broad benefits to development in the City and are included separately in the City-wide Development Charge Background Study and by-law.

A separate stormwater charge has been calculated for each project area, based on the recoverable costs. Approximately $233 million in costs are involved, split approximately 61 per cent/39 per cent between residential and non-residential benefit, overall (see Document 4).

Conclusion

The charges calculated represent those which can be recovered under the DCA, based on the City’s capital spending plans and other assumptions which are responsive to the requirements of the DCA. It is hoped that after weighing the various options and receiving input at the public meeting, that the charges outlined in this report will be adopted.

The aim of the Council Sponsors was to provide for a setting in which an open and frank dialogue between staff and stakeholders could be take place. Overall, the various meetings have assisted all groups in obtaining a better understanding and analysis of the complex set of information presented during the review process. Therefore, the proposed framework represents a balanced approach to the calculation of capital costs for development charge purposes.

This has lead to the ultimate goal of having all the groups directly involved in ensuring that the various provisions in the study represent a fair methodology in implementing the overall policy of having them pay their fair share of infrastructure, while at the same time, distribute eligible capital costs fairly between residential areas and non-residential development.

CONSULTATION

Various meetings were held with stakeholders and groups, over the last nine months, to obtain feedback at various stages of the study process. A preliminary development charge analysis was tabled at Planning and Environment Committee on May 11. A notice to inform the public of this process was placed in newspapers on May 22, 2009. The background studies were made available on June 8, 2009. The Development Charges By-law Sponsor Committee has met several times with staff and stakeholders, since the February 24 Planning and Environment Committee meeting, to make recommendations and to advance additional options.

LEGAL/RISK MANAGEMENT IMPLICATIONS

The appeal provisions are as set forth in the disposition. The current development charge by‑laws expire on 14 July 2009. Therefore the new by-laws must be enacted before that date.

FINANCIAL IMPLICATIONS

The background study identifies capital projects with a growth component of $6.67 billion over the next 22 years. Of this amount, $2.65 billion has been determined to be recoverable from residential and non-residential development. The City’s share of these projects is $1.44 billion. An additional $1.96 billion is recoverable through subsidies and $623 million is identified as being above the service level cap or benefiting future development beyond 2031.

The timing of capital works is initially established by the background study. Subsequently, the capital budget process is the mechanism by which the City establishes its future expenditures of development charge revenues.

SUPPORTING DOCUMENTATION

Document 1 – Comparison of Development Charge Rates by Type

Document 2 – Map of Residential Charge Areas

Document 3 – Copy of Revised Front-ending Policy

Document 4 – Summary of Area-specific Stormwater Management Rates by Area

DISPOSITION

Planning and Growth Management will make any changes to the City of Ottawa Development Charges Background Report and the Area-Specific Development Charges Background Report as a result of the direction of Planning and Environment Committee and Council.

Legal Services will prepare the required by-laws and submit them to Council.

Within 20 clear days of the passage of the by-law, Planning and Growth Management to ensure that there is a notice of the passage of the By-laws and appeal deadline placed in the Citizen and Le Droit.

Within 20 days, the City Clerk’s Office to notify everyone, who has provided a written request for notice and a return address and the secretary of every school board within the City of Ottawa, of the passage of the By-laws and appeal deadline.

The public has 40 days after the adoption of the by-law to file an appeal with the City Clerk. If appeals are made, the City Clerk’s Office to compile a formal record of appeals including: a certified copy of the by-law; a copy of the two development charge background studies; certification that the notice of passage and last day of appeal was given in accordance with the Act; and an original or true copy of all written submissions and materials received in respect of the by-law before it was passed. The City Clerk’s Office to forward a notice of appeal and record to the Ontario Municipal Board secretary within 30 days of the last day of the appeal period and provide such information and material as the Board may require.

The Planning and Growth Management to prepare a pamphlet for each development charge by‑law that has been adopted and is in force within 60 days after the by-law comes into force if the by-laws are not appealed to the Ontario Municipal Board. If the by-laws are appealed, the pamphlets are to be prepared within 60 days of the Board’s decision or amendment order. The pamphlets are to be made available to the public upon request.

COMPARISON OF DEVELOPMENT CHARGE RATES BY TYPE DOCUMENT 1

MAP OF RESIDENTIAL CHARGE AREAS DOCUMENT 2

COPY OF REVISED FRONT-ENDING POLICY DOCUMENT 3

Front-ending agreements are requested by developers who wish to have specific growth-related capital works in place in advance of the City’s capital project plans for emplacement of these same works: developers agree to finance the works at the “front end” and recover their costs from the City at a later date. The following conditions must be met in order for the City to enter into a front-ending agreement:

1. All front-ending agreements with the City will be for growth-related capital works that have been included in a development charge study.

2. The contract for Front-Ended works shall be awarded by the Front-Ender in accordance with the City’s Purchasing Policy of a competitive procurement process and subject to the review and satisfaction of the General Manager, Planning and Growth Management Department. Where the front-ender does not award the work in accordance with the City’s purchasing policy, they must demonstrate that competitive pricing has been obtained, through independent analysis of their engineer, to the satisfaction of the General Manager, Planning and Growth Management Department. The contract for the work must be made available to the City to provide to the public.

3. Storm water ponds and related sewer works that are 100% development charge funded in the recommended by-laws will be paid back to the developer based on revenues as they are collected from the designated area. This means that at no time are the repayments to exceed the revenues received. Each front-ending agreement will define the geographic area involved and a separate and specific deferred revenue account may be set up to keep track of the revenues collected and payments made. Crediting will also be allowed for the front-ending agreements related to storm water ponds. Indexing shall apply to the outstanding balance in accordance with the rate of indexation pursuant to the Development Charge By-Laws.

4. For all other capital projects, a lump sum payment, both the development charge portion and the City portion, will be made to the developer in the year the project is identified in the City’s ten year capital plan at the time the front-ending agreement is approved. Should growth occur earlier than forecasted, then repayment would be accelerated to reflect the revised timing the City would have budgeted for the project. If growth occurs more slowly than forecasted, then the City will have an additional one to three years (one to three years from the year the project was identified in the ten year plan) to make repayments. Only in this latter case will the City’s portion of the payment be indexed beginning with the year the project was identified in the ten-year plan.

5. The development charge portion that will be reimbursed will be indexed yearly in accordance with the rate of indexation pursuant to the Development Charge By-Laws up to the year the capital project has been budgeted. (City Council approved February 7, 2005.)

6. Given that the City will be assuming operating costs earlier than anticipated through the front-ending agreement process, the City is not to pay any carrying costs to the developer.

7. All development charges payable by developers must be paid up front in accordance with the City’s by-law. With the exception of the storm water ponds and related sewer works, there will not be any crediting allowed as a result of entering into a front-ending agreement. On December 8, 2004, City Council approved, “That staff be directed to work with the industry to develop the details of a credit policy to be incorporated into the front-ending policy”.

8. In the case where a developer(s) has front-ended a project that at the discretion of the City benefits other developers, those developers who were not part of the front-ending agreement shall pay all of their development charges owed either at the time of registration of a plan of subdivision or upon the issuance of the first conditional building permit, whichever comes first. (City Council approved July 14, 2004 Motion 16/5)

9. In the case where multiple Front-Ending Agreements are in force in the same area-specific development charge By-Law, and the City has approved the Front-Ended works for development charge reimbursements, the Front-Enders will share in the distribution of development charge revenues on a pro-rata basis with other storm water drainage projects. The pro-rated works shall be based on the balance of the outstanding amount owing on the date the repayment is due. Existing Front-Enders will be advised of new Front-Ending Agreements for storm water works within the same benefiting area and area-specific development charge By-Law.

10. The capital project upset limits for engineering, project management, and contingency shall be the established rates set in accordance with the City’s Development Charge By‑Laws and accompanying background studies, as amended.

11. Land remuneration shall be subject to an appraisal by a professional land appraiser and the appraisal shall be conducted in accordance with the terms of reference as established in the City’s Development Charge By-Laws and accompanying background studies, as amended. The upset limit for land remuneration shall be the lesser of the appraised value and the upset limit in accordance with the City’s Development Charge By-Laws and accompanying background studies.

12. Indexing shall apply to the total project costs if the Front-Ended works have been delayed over a period of time, the Front-Ender provides justification for the delay, and with the written concurrence of the City.

13. Where a Front-Ender is eligible for development charge reimbursement, documentation is required to support the reimbursement in accordance with the City’s Purchasing Policy. The Front-Ending Agreement shall identify at which stage the documentation shall be required. The following documentation shall be forwarded to the City before payment is issued:

· An invoice summarizing the Front-Ended works, and separate cost items, if applicable, for land, construction costs, engineering fees, project management fees, contingency fees, and applicable taxes.

· Payment Certificates, including the final certificate, signed by the developer’s civil engineer.

· All invoices supporting re-payment for the Front-Ended works.

· Statutory Declaration.

· Certificate of Substantial Performance.

· Workplace Safety & Insurance Board Clearance Certificate (WSIB).

· Certificate of Publication.

14. A report to Council is required to authorize staff to enter into a front-ending agreement. The recommendation will include the financial commitment of the City, specify the funding source(s), the project timeline and where necessary, request that a specific deferred revenue account be established. The financial comment in the report will specify the timelines for the repayment, an operating budget impact and an estimate of the year in which the operating budget impact will begin. It should also indicate the year in which the project was originally identified in the City’s ten-year capital plan. A capital project will be established upon Council approval to enter into a front-ending agreement. The status of these projects will be provided to Council on a yearly basis.

15. No capital project identified outside of the Council approved ten year long range capital plan, shown in the Development Charge Background Study is eligible to be Front-ended unless another item(s) of comparable value, funding allocation, and timing is delayed. A capital project identified with a post-period deduction applied to the gross cost will only have the development charge portion reimbursed if front-ended over the term of the by‑law. Indexing would not be applicable to the repayment of the post-period component of the project cost. If growth occurs more slowly than forecasted, then the City Treasurer will have the authority to add an additional three years, without interest, to the repayment of the post-period component of the front-ended project from development charges.

SUMMARY OF AREA-SPECIFIC STORMWATER MANAGEMENT

RATES BY AREA DOCUMENT 4