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2. DEFERRAL OF FEES – GROUP LEPINE REPORT DE DROITS
– GROUPE LEPINE |
COMMITTEE RECOMMENDATION
That Council defer the payment of development charges for the rental housing project proposed by Group Lepine on Maritime Way and Canadian Shield Avenue for a period of 24 months from the date of issuance of each building permit, without interest, subject to the development charge payments being equal to the current indexed charge at the time of payment and subject to Group Lepine entering into an agreement with the City respecting the amount and the timing of the payment of the development charges.
Recommandation du ComitÉ
Que le Conseil reporte le paiement
des redevances d’aménagement pour le projet de logements locatifs que le Groupe
Lépine prévoit réaliser sur la voie Maritime et l’avenue Canadian Shield pour
une période de 24 mois à compter de la date de délivrance de chaque permis de
construire, sans intérêt, à la condition que la somme à verser alors
corresponde au montant indexé des redevances d’aménagement et à la condition
également que le Groupe Lépine conclue avec la Ville une entente concernant le
montant des redevances d’aménagement à verser et le moment de leur versement.
DOCUMENTATION
1.
Councillor
Wilkinson’s report dated 7 September 2010 (ACS2010-CMR-CSE-0019).
Report
to/Rapport au:
Corporate Services and Economic Development Committee
Comité des
services organisationnels et du développement économique
and Council / et au Conseil
September 7, 2010 / le 7 septembre 2010
Submitted by/Soumis par : Kanata North Ward/quartier
Kanata-Nord Councillor/Conseillère Marianne Wilkinson
Contact Person/Personne ressource :Marianne Wilkinson,
Councillor, Kanata North Ward / conseillère, quartier Kanata-Nord
(613) 580-2474, Marianne.Wilkinson@ottawa.ca
SUBJECT:
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OBJET :
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REPORT RECOMMENDATION
That the Corporate Services and Economic Development Committee recommend Council defer the payment of development charges for the rental housing project proposed by Group Lepine on Maritime Way and Canadian Shield Avenue for a period of 24 months from the date of issuance of each building permit, without interest, subject to the development charge payments being equal to the current indexed charge at the time of payment and subject to Group Lepine entering into an agreement with the City respecting the amount and the timing of the payment of the development charges.
RECOMMANDATION DU RAPPORT
Que le Comité des services organisationnels et
du développement économique recommande au Conseil de reporter le paiement des
redevances d’aménagement pour le projet de logements locatifs que le Groupe
Lépine prévoit réaliser sur la voie Maritime et l’avenue Canadian Shield pour
une période de 24 mois à compter de la date de délivrance de chaque permis de
construire, sans intérêt, à la condition que la somme à verser alors
corresponde au montant indexé des redevances d’aménagement et à la condition
également que le Groupe Lépine conclue avec la Ville une entente concernant le
montant des redevances d’aménagement à verser et le moment de leur versement.
BACKGROUND
At its meeting of May 4, 2010 Corporate Services and Economic Development Committee (CSEDC) considered a report (ACS2010-CMR-CSE-0018) to defer the payment of development charges and waive the road encroachment fees associated with a major rental housing complex situated south of Canadian Shield Avenue at the eastern end of the Kanata Town Centre Central Business District.
CSEDC, and subsequently Council, approved
waiving of the road encroachment fees
but referred the recommendation respecting the deferral of development charges
to Housing Branch to review and
provide a proposed policy context to be reported back to the CSEDC.
DISCUSSION
Housing Branch Comments
The project consists of five separate buildings, including four rental apartment buildings and an athletic facility in a separate building. The apartment buildings are intended to contain between 146 and 214 dwelling units each, with a total of 739 units on the site. The apartment buildings range from nine storeys to ten storeys in height and the athletic facility is intended to be two storeys, contain a daycare and restaurant, all totalling approximately 2000 square metres. The site is intended to be developed as rental housing in phases over several years.
The Official Plan indicates that there is a need to accommodate a mix of dwelling types and tenure to provide affordability options and to meet varied housing needs in the community. According to the 2006 census, six per cent of housing in Kanata is made up of apartments while 32 per cent of housing are apartments in the City as a whole. Additionally, 10 per cent of housing is rental in Kanata while 39 per cent of housing is rental in Ottawa as a whole. Although the Official Plan does not set specific targets for unit type mix or rental housing proportion, it is clear that there is a large discrepancy in the unit mix and tenure between Kanata and the City at large. The 739 apartment dwelling units proposed for this development are of varying unit sizes, ranging from studio units of 45 square metres to two bedroom units of 100 square metres. An increase in the number and variety of apartment and rental units in Kanata will help to achieve a greater mix of housing types and provide greater options for households seeking rental accommodation in the area, as intended by the Official Plan.
The Official Plan encourages 25 per cent of new rental housing to be affordable to households up to the 30th income percentile. Affordable housing is defined as housing for which a low or moderate income household pays no more than 30 per cent of its gross annual income. The Official Plan also seeks to encourage affordable housing through alternative standards and other incentives that can be administered through the development review process.
Under Action Ottawa and the Canada Ontario Affordable Housing Program (AHP) rents cannot exceed the Canada Mortgage Housing Corporation (CMHC) average market rent for each specific unit type which results in most rents being affordable to households with incomes between the 10th and 30th income percentiles. Rents in each development are typically mixed to accommodate higher and lower income households as well as households needing deeper subsidies such as rent geared to income assistance or units at Ontario Disability Support Program (ODSP) and Ontario Works (OW) rent allowance levels.
In reviewing the Group Lepine Project, Housing Services has determined that the project is not eligible for any Action Ottawa incentives which typically include 20 year deferral and ultimate forgiveness of development charges, grant in lieu of building permit fees and capital grants for new construction. However, the project does represent a significant investment in rental housing, 739 units, which has been lacking for the last decade in the City as the trend for developers is for building high-rise condominium apartment buildings.
The Group Lepine development is intended to be rental in tenure, the first phase of which is to contain 146 units. The proposed 2012 rents in the development, are expected to start from $1290 for a one bedroom apartment and will not be affordable to households below the 30th income percentile and is much higher than the maximum permitted market rent allowed under Action Ottawa for a 1 bedroom which is currently $853 (and typically rented for $597). A two bedroom unit in the Groupe Lepine project is expected to rent for $2000 to $2100 per unit and up to $2,900 for a penthouse compared to $1028 for the maximum permitted rent in an Action Ottawa Affordable Housing Project.
Vacancy rates in Ottawa have been relatively low for the last decade and the number of rental units available has not increased with the growth in the City’s population particularly in Kanata. The results of the annual rental apartment vacancy survey undertaken by CMHC indicated a vacancy rate in Ottawa of 1.4% and 1.5% for 2008 and 2009 respectively. This is below the 3% considered by CMHC as representative of a balanced rental market in terms of supply and demand.
Housing Services in 2009/10 retained Corporate Research Group (CRG) to study the viability of the private sector building affordable market rental and ownership housing for lower income households. CRG found that with no incentives, it was not viable for the private sector to build new “affordable” high rise rental housing to households below the 40th income percentile. High-rise affordable homeownership / condominium apartments were possible under certain circumstances.
A healthy rental market is needed to sustain a healthy local economy as more rental units, even for higher income households helps to lighten demand for other existing rental units in the City. However, the private sector has been reluctant to undertake new rental projects as it involves relatively high risk compared to other forms of housing, and based on current building costs, new rental housing is not deemed to be profitable. High-rise non-combustible construction, as in the case of the Group Lepine project, is considerably more expensive than wood frame construction and deferral of development fees would help defray the upfront cost of construction until the buildings are completed.
Conclusion
After reviewing the current policy context and previous deferral
agreements, Housing Services Branch would support the deferral of Development
Charges associated with the project for a period of 24 months from the date of
issuance of each building permit, without interest.
In addition, in lieu of applying the standard annual interest rate of
10%, Housing Services recommends that the payment of development charges be
indexed so that the payment due is equal to the Development Charge at time of payment
and no less than the Development Charge at time of the original Building Permit
Issuance. The current increase in development charge rates in 2010 was 2.9%
from 2009, and has ranged between 5 and 10% in previous years.
The deferral would be subject to Group Lepine entering into an
agreement with the City respecting the amount and the timing of the payment of
the development charges.
CONSULTATION
This report was not subject to consultation.
COMMENTS BY THE WARD COUNCILLOR(S)
The Ward Councillor has received a copy of this report.
LEGAL/RISK MANAGEMENT IMPLICATIONS:
There are no legal/risk management impediments to implementing the recommendation in this report.
CITY STRATEGIC PLAN
Not applicable.
TECHNICAL IMPLICATIONS
Not applicable.
FINANCIAL IMPLICATIONS
The financial implications associated with the deferral of payment of development charge fees owed would be approximately $140,000 per year in lost interest, however; this would be mitigated due to the indexed development charge payment required.
SUPPORTING DOCUMENTATION
Document 1 – 2009
Housing Continuum
DISPOSITION
Subject to approval of the recommendation of this report, Corporate Development and Environmental Law Division shall prepare and register against title to the project an agreement respecting the amount and the timing of the payment of the development charges, in accordance with the recommendation in this report and Subsection 15(2) of the City’s Development Charges By-law 2009-216.
Document 1
