11. TREASURER'S STATEMENT ON DEVELOPMENT CHARGES RESERVE FUNDS FOR 2011
COMMUNICATION DE LA TRÉSORIÈRE DE LA VILLE SUR LES REDEVANCES D’AMÉNAGEMENT DE 2011
That Council receive this report for information.
Recommandation DU Comité
Que le Conseil prenne connaissance du présent rapport.
1. Deputy City Manager's report, Planning and Infrastructure, dated 11 April 2012 (ACS2012-CMR-FIN-0014).
Report to/Rapport au :
Comité de l’urbanisme
and Council / et au Conseil
11 April 2012 / le 11 avril 2012
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource : Gary Baker, Program Coordinator, Development Charges /Coordonnateur, Coordonnateur de programme, Redevances d’aménagement
Planning and Growth Management /Urbanisme et Gestion de la croissance
613-580-2424 ext./poste 27406, Gary.Baker@ottawa.ca
Ref N°: ACS2012-CMR-FIN-0014
That the Planning Committee and Council receive this report for information.
Section 43 of the Development Charges Act, 1997 requires that the City Treasurer submit financial statements regarding development charge fund activity to Council and the Ministry of Municipal Affairs and Housing. The attached Summary Statement of Development Charges Reserve Funds activity, provided as Document 1, includes opening and closing account balances, descriptions of the category of services covered and a summary of the financial transactions for the year 2011.
Development charges are one-time fees levied by municipalities on new residential and non-residential properties to help pay for a portion of growth-related capital infrastructure requirements. Development charges are determined and accounted for by type of service. The Development Charges Act requires municipalities to determine the ten-year historic average level of service cap in order to set their rates. This legislative requirement to look backwards restricts the funding available for future capital projects and financially limits a municipality’s ability to expand or change the delivery of certain services in their communities such as Public Transit.
The attached statement provides a summary of financial activity in various reserve funds by service area for the year ending December 31, 2011. Revenues consist of development charges collected plus interest earned during the fiscal year and amount to $114.5M. Transfers to capital projects of $120.3M were made in accordance with regulations that stipulate that development charges may only be applied to projects when costs are incurred. The unapplied funding requirements of $428.5M represents the outstanding commitments that have not yet been transferred to capital projects. The closing balances for each service category indicate how much revenue is still uncommitted and available to fund future growth-related capital works.
Growth-related spending authority is approved annually as part of the City’s budgeting process with only those capital projects included in the current Development Charges Background Study being eligible for funding. Reserve account balances are monitored annually through the capital budget approval process to ensure they are in compliance with the overall DC funding policies adopted by Council. In some service areas, the reserve fund may have a negative account balance resulting from overall capital project transfers being greater than revenues collected to date. The City allows deficit positions for certain reserve funds, as this is necessary to ensure that upfront infrastructure services are in place so that developments can proceed in a timely manner. Reserve funds form part of the legislatively mandated re-examination process which takes place every five years.
The City has placed a high priority on having the Province amend the Development Charges Act to allow for an alternative forward looking approach to calculating certain level of service standards (e.g. Public Transit). In addition, certain services for which there is a 10% statutory reduction (e.g. Public Transit) may not be grouped with categories for which there is no deduction (e.g. Roads and Structures) thus preventing integrated transportation financial planning. As the City attempts to increase its investment in a new light-rail system, these differences have highlighted the inability to consider transportation modal alternatives as a single service with 100 percent development charge recoverability.
The City must continue to balance the lost revenue associated with policy choices, such as non-statutory exemptions and the phase-in of rates, which must be replaced from other funding sources and ultimately negatively impacts the timing of the construction of growth-related projects. It should be noted that the legislation prohibits any discount of non-residential rates by the City being passed on to other types of development. For example, the industrial rate discount cannot be made up by charging more development charges on residential developments.
While development charges are to pay for the infrastructure needed for new growth, reducing the charge or applying discounts in particular areas correspondingly increases the cost the City must pay through taxes. Also, area specific service charges cannot be used to pay for new infrastructure in other areas, or other services.
There are no rural implications associated with this report.
Preparation of the attached document is a legislative requirement; no public consultation is required.
There are no legal impediments to receiving the information contained in this report.
RISK MANAGEMENT IMPLICATIONS
There are no risk management implications.
There are no accessibility impacts to receiving this report.
There are no ties to the City Strategic Plan.
There are no technology implications to this information report.
The Development Charges Act requires that a yearly Treasurer’s Statement be prepared for Council prior to submission to the Ministry of Municipal Affairs and Housing.
Document 1 – Summary Statement of Development Charges Reserve Funds
In accordance with the Development Charges Act, a copy of the Treasurer’s Statements will be provided to the Minister of Municipal Affairs and Housing.