The Regional Municipality of Halton. Chair and Members of the Administration and Finance Committee

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1 The Regional Municipality of Halton Report To: From: Chair and Members of the Administration and Finance Committee J. E. MacCaskill, Commissioner, Corporate Services and Regional Treasurer Mark G. Meneray, Commissioner, Legislative and Planning Services and Corporate Counsel Date: November 5, 2009 Report No. - Re: CS-78-09/LPS BILD Proposal re: the Financial and Implementation Plan for the 2008/2009 Allocation Program RECOMMENDATION REPORT THAT the 2008/2009 Financial and Implementation Plan for the 2008/2009 Allocation Program as approved in report CS-49-09/PW-20-09/LPS80-09 re: Financial and Implementation Plan for the 2008/2009 Allocation Program be modified as outlined in report CS-78-09/LPS re: BILD Proposal re: the Financial and Implementation Plan for the 2008/2009 Allocation Program. The purpose of this report is to recommend modifications to the Region s Financial Plan as a result of consultation with the Building Industry and Land Development Association (BILD). The recommended modifications are consistent with Council s objective of ensuring that existing taxpayers are not impacted by the cost of the capital infrastructure required to service growth. Background On July 15, 2009, Regional Council approved the Financial and Implementation Plan for the 2008/2009 Allocation Program in report CS-49-09/PW-20-09/LPS80-09 (the Financial and Implementation Plan). In approving the Plan, Regional Council also approved the following resolution: THAT the Halton development industry be requested to provide a written proposal to the Region within 30 days of Council approval of Region No. CS-49-09/PW-20-09/LPS80-09 which addresses alternatives to the financing mechanisms and payment timing contained in the Financial and Implementation Plan for the 2008/2009 Allocation Program, and following the receipt thereof that staff be directed to consult with the Halton development industry and report back to the Administration and Finance Committee meeting on September 30,

2 The Region received a proposal from BILD dated August 14, A committee of Regional staff and BILD representatives was established to discuss the proposal. The Region was represented by the CAO, the Commissioner of Planning and Legislative Services and Corporate Counsel, the Commissioner of Corporate Services and Regional Treasurer and the Director of Budgets and Fiscal Policy. The discussions with BILD were productive and provided an excellent opportunity to share information. The key principle advocated by BILD throughout the discussion was that the financial requirements of the developers in the Plan should be structured and secured under the provisions of the Development Charges Act (DCA). The Financial and Implementation Plan requires the payment of development charges (DCs) in accordance with the Region s Development Charges By-law, in addition to municipal contributions under the Municipal Act, 2001 for cashflow payments and non-residential nonrecoverable amounts totalling $7,888 from the residential developers participating in Phase 1 of the 2008/2009 Allocation Program. The municipal contributions are required to provide sufficient financing for the significant water, wastewater and transportation infrastructure required to service growth. Revisions to the Financial and Implementation Plan The following recommended modifications to the Financial and Implementation Plan respond to BILD s key principle that the financial requirements for the revised Plan be structured and secured under the provisions of the DCA. The recommended modifications are summarized as follows: Elimination of the municipal contributions for cashflow and non-residential non recoverable amounts totalling $7,888. Requirement for an up-front financing contribution of $7,888 as an early payment of future estimated DCs under the DCA. Provide a credit to the developer, for the amount of the up-front financing contribution, to be recovered when available from future residential DCs as a development charge credit or elimination of the municipal contributions for cashflow and non-residential non-cash. The cost of the credit will be included in future development charge updates beginning with the update in There will be no indexing or interest to the credit and the credit will expire in The ability to provide a credit reimbursement will be predicated on the Region s ability to include these costs in future DC updates and collect them within the 2021 planning horizon. All other provisions of the Plan would remain as approved by Regional Council in CS-49-09/PW /LPS The results of the recommended revisions are that all financial requirements are now payable under the DCA and recoverable credits are provided for all amounts paid, in contrast to the approved Financial and Implementation Plan for Phase 1 which included a non-recoverable component (the non-residential non-recoverable amount). 2

3 The total payment requirements for the revised Financial and Implementation Plan have not changed. Payments under the revised plan are based on costs and assumptions in CS-49-09/PW /LPS80-09 total $36,963 and are summarized as follows: (a) (b) Water and wastewater DCs of $16,065 (based at April, 2009 DC rates) plus an upfront financing contribution of $2,717 for a total of $18,782. Roads DCs of $13,010 (based at April, 2009 DC rates) plus up-front financing contribution of $5,171 for a total of $18,181. The total payment requirements and payment terms for each allocation program are reviewed and updated based on updated capital costs, the number of units participating and the timing of the program. BILD has indicated support for the modifications to the Financial and Implementation Plan recommended in this report. Regional staff recommend the proposed modifications to the Financial and Implementation Plan given that the revised Plan continues to provide the financing required to deliver the necessary infrastructure without impacting existing taxpayers. In particular, the recovery of the financing credits is from future development charges only and therefore the Region s taxpayers are not at risk. This recovery would be limited to amounts collected within the 2021 planning period. Implications for Phase 1 of the 2008/2009 Allocation Program Regional Council approved the allocation of 1197 SDE in report CS-49-09/PW-20-09/LPS The Financial Agreements with the participating developers receiving allocation are currently being finalized consistent with the approved Financial and Implementation Plan. In approving report CS-49-09/PW-20-09/LPS80-09, Council approved the following resolution: THAT to the extent possible, ensure that should any terms and conditions of Phase 2 of the 2008/2009 Allocation Program provide a benefit not otherwise provided in the current program, that the developers participating in Phase 1 of the 2008/2009 Allocation program also be given the same benefit on a retroactive basis. The Financial Agreements for Phase 1 of the 2008/2009 Allocation Program therefore include provisions which require any beneficial revisions to the Financial and Implementation Plan to be provided as amendments to the agreements. If the recommended revisions to the Financial and Implementation Plan are approved, the Financial Agreements for the participating developers in Phase 1 of the 2008/2009 Allocation program will be amended to reflect the provision of credits for the total non-residential nonrecoverable amount. As outlined previously, the credits will be recoverable when available from future residential DCs as a development charge credit or cash. The cost of the credit will be included in future development charge updates beginning with the update in There will be no indexing or interest to the credit and the credit will expire in

4 Phase 2 of the 2008/2009 Allocation Program As described in detail in CS-49-09/PW-20-09/LPS80-09 the 2008/2009 Allocation Program was planned to include 8951 SDEs. As a result of economic conditions only 2697 SDEs (including the 1500 units pre-released to Mattamy Homes) committed to proceed. The Allocation Program was therefore divided into 2 Phases. Phase 1 included 2,697 SDEs and Phase 2 is planned to include 6254 SDEs. As indicated in CS-49-09/PW-20-09/LPS80-09, Phase 2 will proceed when the Region receive sufficient commitments from developers/landowners. The requirements for Phase 2 of the 2008/2009 Allocation Program will be based on this modified Financial and Implementation Plan and will be presented to Regional Council for approval when there is sufficient commitment to the program from the developers. FINANCIAL/PROGRAM IMPLICATIONS There are no financial implications to the taxpayer as a result of the recommended revisions to the Financial and Implementation Plan for the 2008/2009 Allocation Program. 4

5 RELATIONSHIP TO THE STRATEGIC PLAN This report supports the goals of the Strategic Plan to preserve and enhance Halton Region s strong fiscal foundation and administrative excellence. Respectfully submitted, J. E. MacCaskill Commissioner, Corporate Services and Regional Treasurer Mark G. Meneray Commissioner, Legislative & Planning Services and Corporate Counsel Approved by Pat Moyle Chief Administrative Officer If you have any questions on the content of this report, please contact: J. MacCaskill Tel. #