Residential Development $2691 per residential unit per residential unit

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1 TO: FROM: RE: The Chair and Members of the Halton District School Board David Euale, Director of Education Lucy Veerman, Superintendent of Business Services Education Development Charge Bylaw Amendment Report Number: Date: May 15, 2014 FOR DECISION Warrant: This report provides information regarding the need to amend the current EDC Bylaw as a result of changes to assumptions included in the EDC Bylaw Background Study, initially used to calculate the current Education Development Charge. As well, the report includes proposed changes to the EDC Bylaw, resulting in increased levies for residential and nonresidential development in Halton Region. RECOMMENDATIONS: Be it resolved that no further public meeting is required in regard to the Education Development Charges ByLaw Amendment; THAT it be resolved that the Halton District School Board enact an Education Development Charge ByLaw amendment to apply to the Region of Halton; THAT the amending EDC ByLaw be in the form attached hereto and that it amend the Board s EDC ByLaw 2013 in the following respects: in Section 9, substitute $3,380 as the education development charge applicable to each dwelling unit in a residential development; in Section 12, substitute $0.87 as the education development charge per square foot of gross floor area applicable to nonresidential development. Background Education Development Charges (EDCs) are used to fund the acquisition of school sites and related costs to accommodate growthrelated pupil needs. These are levies that are applied to all new residential and nonresidential development, with certain exceptions. The existing Bylaw recovers 85% of education land costs (i.e. the purchase price of school sites and associated costs) from residential development and 15% from nonresidential development. On June19, 2013 the Board adopted a jurisdiction wide 2013 EDC Bylaw under the legislative authority of the Education Act, R.S.O., 1990 c.e.2, which was undertaken jointly with the Halton Catholic District School Board. The 2013 EDC Bylaw had an effective implementation date of June 24, 2013 and may be in effect for no more than five (5) years. The HDSB current charges are as follows: $ per residential unit (as defined in the EDC Bylaw) $ per sq. ft. of gross floor area or $ per sq. m. of gross floor area (as defined in the EDC Bylaw) Residential Development $2691 per residential unit per residential unit 20 NonResidential Development $ 0.69 per sq. ft. or $7.43 per sq. m. The legislation provides the Board the opportunity to amend its EDC Bylaw annually, based on increasing site acquisition and site preparation costs.

2 Report page 2 Discussion Since the adoption of the 2013 EDC Bylaw, staff from HDSB and HCDSB have met with Watson & Associates Economists Ltd. (W&A) and have had discussions for the purpose of completing the annual review of the 2013 EDC ByLaw. As a result of these discussions, it was confirmed with W &A that both boards are experiencing higher site acquisition costs than were initially identified in the 2013 EDC Bylaw Background Study. Recent negotiated site purchases in Milton and North Oakville reflected an increase of 20% to 30% in land acquisition costs. Consequently, the current charges need to be increased so that the Board collects the appropriate amount of funds that are required to finance the cost of site acquisitions. Watson & Associates Economists Ltd. has updated the model (refer to APPENDIX A). Therefore, the new proposed levies are as follows: Charge on residential development Charge on nonresidential development June 19, 2014 EDC ByLaw Proposed New Charge $2691 per residential unit $3380 per residential unit $0.69 per square foot ($7.43 per square metre) of gross floor area $0.87 per square foot ($9.36 per square metre) of gross floor area A board seeking to amend its EDC ByLaw is not required to secure Ministry approval or hold a public meeting; however, Paragraph 6.2 of the EDC Guidelines issued by the Business Services Branch of the Ministry encourages a board to hold at least one public meeting prior to passing an amending ByLaw. As such, a public meeting will be held on Wednesday, June 4, 2014, at 7 p.m. The Board s solicitor has recommended that a notice of the meeting be published 20 days prior to the meeting. A notice of the meeting (refer to APPENDIX B) has been published in the local newspapers, as well notifications have been sent to every person and organization that has given the secretary of the board a written request for notice of any amendments to the EDC ByLaw and has provided a return address. Adoption of the ByLaw amendment is scheduled for the same evening immediately following the public meeting. The Halton Catholic District School Board is having its public meeting and presentation of the amendment on June 3, 2014, with adoption proposed at that meeting. The Board s current EDC ByLaw is jurisdictionwide; it applies throughout the Region of Halton. The existing ByLaw recovers 85% of education land costs (i.e., the purchase price of school sites and associated costs) from residential development and 15% from nonresidential development. This apportionment will not change as part of the ByLaw amendment. Staff recommends that the Board adopt the proposed EDC ByLaw amendment. The form of the ByLaw amendment is attached (refer to APPENDIX C). Conclusion Board staff has undertaken a review of the EDC ByLaw 2013, as a result of concerns regarding increasing land acquisition costs. W & A has reviewed the actual detailed site acquisition costs for properties since 2013 and has included those details as part of the analysis. As well, W & A has utilized recent property appraisals to recalculate the EDC levies. A public meeting has been scheduled as part of the Regular Board meeting on June 4, 2014 to present the proposed changes. As well, the ByLaw amendment adoption is scheduled for the same evening after the public meeting. Respectfully submitted (signed) Lucy Veerman Superintendent of Business Services David Euale Director of Education 21

3 HALTON DISTRICT SCHOOL BOARD EDUCATION DEVELOPMENT CHARGE AMENDMENT REPORT MAY 14, 2014

4 1. EDUCATION DEVELOPMENT CHARGE AMENDMENT Watson & Associates Economists Ltd. HDSB EDC AMENDMENT

5 1 1. EDUCATION DEVELOPMENT CHARGE AMENDMENT 1.1 The Education Development Charge Amendment Process Education Development Charges (EDC s) are a revenue source, for school boards that qualify, to purchase and develop land for growth related schools. EDC s are based on a formulaic approach which focuses on three main areas enrolment forecasting to determine need, the number of school sites necessary to accommodate that need and the associated costs. The Education Act and associated Ontario Regulations provide the direction, methodology and guidelines necessary for a school board to pass an EDC bylaw. The Education Act stipulates that an EDC bylaw can have a maximum term of 5 years and that school boards have the ability to amend their bylaws within that period, should they choose to do so. Under the Education Act, a Board can amend a bylaw only once in a one year period if the amendment would; A. Increase the quantum of the charge. B. Remove or reduce the scope of an exemption. C. Extend the term of the bylaw. It is the Halton District School Board s (HDSB) intention to amend their current Education Development Charge bylaw. The amendment would serve to increase the quantum of the charge to reflect the increasing costs of purchasing land in the Region of Halton, specifically the Towns of Oakville and Milton. 1.2 BACKGROUND The Halton District School Board s current and inforce EDC bylaw was passed in June of 2013 and is applicable to the Region of Halton. The charge at the time of passage was $2,691 per residential dwelling unit and $0.69 per square foot of gross floor area for nonresidential development. The residential and nonresidential allocation at the time of passage was 85% of the costs charged to residential development and 15% to nonresidential development. This residential/nonresidential allocation remains unchanged. Since bylaw inception, land prices in the Region of Halton have increased and board staff proposed an amendment to the original bylaw to reflect the higher land purchase costs. Watson & Associates Economists Ltd. HDSB EDC AMENDMENT

6 2 1.3 THE PROCESS The EDC amendment is being proposed to revise/adjust the land values contained in the 2013 EDC Background Study to better reflect the actual cost of land in the Region of Halton. Amending the current bylaw would ensure that the EDC rate is consistent with actual land values in the Region and better ensure that the Board has sufficient revenues to purchase future school sites. In the amendment process, care is taken not to change or revise any of the assumptions or calculations on which the original study is based and which the Minister of Education has approved. Only the assumptions related to the amendment are revised in this case the costs to purchase land. The forecasted number of growth related students and number of identified school sites can t be changed in the amendment process and thus remain the same until an existing bylaw is renewed. The Ministry of Education s EDC Guidelines state that The EDC Regulation specifies that adjustments to the original calculation are to be made by a board amending the quantum of the EDC. This provision requires boards to make necessary modifications to the application of section 7 of the EDC Regulation when determining an amended EDC. Estimates of the EDC Reserve fund used in the calculation are to be made as of the day before the Amending ByLaw comes into force. When revising land costs in the EDC amendment process, School Boards typically have two options available to them; they can use historical purchases as a basis or use a qualified appraiser to provide updated current values. In this case the Board has used both options as a basis to revise land purchase costs. The HDSB as well as its coterminous School Board, the Halton Catholic District School Board HCDSB) have both purchased school sites since the original EDC bylaw was passed in June The HDSB purchased an elementary school site in Milton at a value of $950,000 per acre and the HCDSB purchased an elementary school site in North Oakville at a value of $1,150,000 per acre. In addition, the HDSB is preparing to purchase an elementary site in North Oakville and recently had an appraisal prepared by Integris Real Estate Counsellors with an effective date of April 1, 2014 and the site was valued at $1,250,000 per acre. Based on the aforementioned purchase prices and appraisal, the revised values used in the calculation of the amended charge are as follows: Watson & Associates Economists Ltd. HDSB EDC AMENDMENT

7 3 North Oakville $1,250,000 per acre Milton $950,000 per acre The original land values in the 2013 EDC Background Study were $900,000 per acre in North Oakville and $725,000 per acre in Milton. The new proposed land values are 39% higher in North Oakville and 31% higher in the Town of Milton compared to original land values. The per acre land costs for the Town of Halton Hills have not been revised and remain unchanged at $625,000 per acre. The EDC reserve fund balance has also been updated (as per the aforementioned EDC Guidelines) to reflect the actual opening balance as of September 1, 2013 (consistent with the most recent Ministry of Education Appendix D1/D2 for 2012/13) as well as any actual and estimated expenditures and revenues from September 1, 2013 to June The EDC reserve fund balance on September 1, 2013 was $44,282,046. The Board has actual and estimated expenditures of $15,457,315 and actual and estimated revenues of $5,701,356 from September 2013 to June This results in an estimated reserve fund balance for June 2014 of $54,038,005. In addition, existing estimated expenditures from the 2013 EDC Background Study which have not yet been expended for the 2013/14 year must be added to the reserve fund estimated balance above for a total estimated opening balance of $66,492, FINDINGS The EDC is meant to recover funds to pay for, what are referred to, as the total growth related net education land costs. These total net education land costs include the costs to acquire land, develop land and all associated study and financing costs. The increase in the price of land and the revisions made to the estimated costs in the EDC has resulted in the total net education land costs increasing. The total net education land costs in the proposed EDC amendment total $306,732,042. This represents an increase of $45,044,762 or 17% from the total net education land costs contained in the 2013 EDC Study. Watson & Associates Economists Ltd. HDSB EDC AMENDMENT

8 4 Based on the above findings, the proposed new residential charge is $3,380 per dwelling unit compared with the existing charge of $2,691. The increase in the charge is $689 for the residential component. For the nonresidential component, the new proposed charge is $0.87 per square foot of gross floor area. This is an increase of $0.18 from the existing nonresidential charge of $0.69 per square foot. A revised Form G and Form H1 can be found at the end of this document. Form G identifies the Board s EDC eligible school sites and the revised education land costs. Form H1 summarizes the total costs, allocations between residential and nonresidential development and the quantum of each charge. The Halton District School Board will consider passage of the Education Development Charge Amendment at a Board meeting on June 4, 2014 at 7PM at the Board offices. Official notice of the proposed amendment has been provided by the Board. Watson & Associates Economists Ltd. HDSB EDC AMENDMENT

9 Halton District School Board Education Development Charges Submission 2014 Amendment Form G GrowthRelated Net Education Land Costs ELEMENTARY PANEL Site Status Net Growth Percent of Capacity Total Number of (Optioned, Proposed Related Pupil Proposed Attributed to Net Growth Acres Required Acreage To Be Eligible Site Land Total Review Purchased, Year Of Site Location/ Place School Related Pupil Place (Footnote Funded in EDC Cost Per Education Preparation Escalation Financing Education Area Reserved, Etc.) Acquisition Facility Type Requirements Capacity Requirements Oversized Sites) * ByLaw Period Acre Land Costs Costs Costs Costs Land Costs ERA104 Accommodated In Existing Facilities 32 $ $ $ ERA107 Accommodated In Existing Facilities 12 $ $ $ ERA109 Accommodated In Existing Facilities 116 $ $ $ ERA111 Accommodated In Proposed Lakeshore Woods 1 29 $ $ $ ERA113 Accommodated In Existing Facilities $ $ $ ERA114 Accommodated In Existing Facilities $ $ $ ERA118 TBD 2013 New North Oakville % $ 1,250,000 $ 10,000,000 $ 1,227,080 $ $ 1,756,477 $ 12,983,557 ERA118 TBD 2015 New North Oakville % $ 1,250,000 $ 10,000,000 $ 1,281,665 $ 506,250 $ 1,844,220 $ 13,632,135 ERA118 TBD 2018 New North Oakville % $ 1,250,000 $ 10,000,000 $ 1,368,130 $ 1,314,082 $ 1,984,133 $ 14,666,345 ERA118 TBD 2021 New North Oakville % $ 1,250,000 $ 10,000,000 $ 1,460,428 $ 1,314,082 $ 1,998,573 $ 14,773,083 ERA118 TBD 2027 New North Oakville % $ 1,250,000 $ 7,414,773 $ 1,233,909 $ 974,362 $ 1,505,526 $ 11,128,570 ERA119 Accommodated In Existing Facilities 294 $ $ $ ERA120 TBD 2022 New Milton ES % $ 950,000 $ 5,570,455 $ 1,093,976 $ 732,004 $ 1,157,173 $ 8,553,608 ERA121 TBD 2014 New Milton ES % $ 950,000 $ 7,600,000 $ 1,254,076 $ 190,000 $ 1,414,946 $ 10,459,022 ERA121 Accommodated In Existing Facilities 125 $ $ $ ERA122 TBD 2020 New Milton ES % $ 950,000 $ 7,600,000 $ 1,428,990 $ 998,702 $ 1,568,833 $ 11,596,525 ERA122 TBD 2022 New Milton ES % $ 950,000 $ 7,600,000 $ 1,492,557 $ 998,702 $ 1,578,778 $ 11,670,037 ERA122 TBD 2023 New Milton ES % $ 950,000 $ 7,600,000 $ 1,309,862 $ 998,702 $ 1,550,195 $ 11,458,759 ERA122 TBD 2025 New Milton ES % $ 950,000 $ 7,600,000 $ 1,593,249 $ 998,702 $ 1,594,531 $ 11,786,482 ERA122 Accommodated In Existing Facilities 111 $ $ $ ERA123 Accommodated In Existing Facilities 154 $ $ $ ERA124 Site H New Halton Hills ES % $ 625,000 $ 5,000,000 $ 1,368,130 $ 657,041 $ 1,099,088 $ 8,124,259 ERA124 TBD 2023 New Halton Hills ES % $ 625,000 $ 5,000,000 $ 1,525,393 $ 657,041 $ 1,123,692 $ 8,306,126

10 Halton District School Board Education Development Charges Submission 2014 Amendment Form G GrowthRelated Net Education Land Costs ELEMENTARY PANEL Site Status Net Growth Percent of Capacity Total Number of (Optioned, Proposed Related Pupil Proposed Attributed to Net Growth Acres Required Acreage To Be Eligible Site Land Total Review Purchased, Year Of Site Location/ Place School Related Pupil Place (Footnote Funded in EDC Cost Per Education Preparation Escalation Financing Education Area Reserved, Etc.) Acquisition Facility Type Requirements Capacity Requirements Oversized Sites) * ByLaw Period Acre Land Costs Costs Costs Costs Land Costs ERA124 Accommodated In Existing Facilities 156 $ $ $ ERA127 TBD 2013 New Milton ES % $ $ $ 1,227,080 $ $ 191,977 $ 1,419,057 ERA127 TBD 2014 New Milton ES % $ 950,000 $ 7,600,000 $ 1,254,076 $ 190,000 $ 1,414,946 $ 10,459,022 ERA127 TBD 2016 New Milton ES % $ 950,000 $ 7,600,000 $ 1,309,862 $ 584,369 $ 1,485,373 $ 10,979,604 ERA127 TBD 2018 New Milton ES % $ 950,000 $ 7,600,000 $ 1,368,130 $ 998,702 $ 1,559,311 $ 11,526,143 ERA127 TBD 2022 New Milton ES % $ 950,000 $ 7,600,000 $ 1,492,557 $ 998,702 $ 1,578,778 $ 11,670,037 ERA127 Accommodated In Existing Facilities 88 Total: 13,419 12, $ 131,385,227 $ 24,289,150 $ 13,111,444 $ 26,406,548 $ 195,192,369 1 Lakeshore Woods has been identified as an EDC eligible site in the Board's previous EDC bylaw.

11 Halton District School Board Education Development Charges Submission 2014 Amendment Form G GrowthRelated Net Education Land Costs SECONDARY PANEL Site Status Net Growth Percent of Capacity Total Number of (Optioned, Proposed Related Pupil Proposed Attributed to Net Growth Acres Required Acreage To Be Eligible Site Land Total Review Purchased, Year Of Facility Place School Related Pupil Place (Footnote Funded in EDC Cost Per Education Preparation Escalation Financing Education Area Reserved, Etc.) Acquisition Type Requirements Capacity Requirements Oversized Sites) ByLaw Period Acre Land Costs Costs Costs Costs Land Costs SRA101 Accommodated In Existing Facilities 80 $ $ $ SRA103 TBD 2015 New North Oakville Secondary School % $ 1,250,000 $ 18,435,000 $ 2,362,750 $ 933,272 $ 3,399,819 $ 25,130,841 SRA104 Accommodated In Existing Facilities 214 $ $ $ SRA105 TBD 2014 New Milton Secondary School % $ 950,000 $ 14,250,000 $ 2,351,392 $ 356,250 $ 2,653,024 $ 19,610,666 SRA105 Accommodated In Existing Facilities 489 $ $ $ SRA106 TBD 2018 New Milton Secondary School % $ 950,000 $ 7,968,600 $ 1,434,484 $ 1,047,139 $ 1,634,938 $ 12,085,161 SRA107 Accommodated In Existing Facilities 216 $ $ $ Total: 4,177 3, $ 40,653,600 $ 6,148,626 $ 2,336,661 $ 7,687,781 $ 56,826,668

12 Halton District School Board Education Development Charges Submission 2014 Amendment Form H1 EDC Calculation Uniform Residential and NonResidential Determination of Total GrowthRelated Net Education Land Costs Total: Education Land Costs (Form G) $ 252,019,037 Add: EDC Financial Obligations (Form A2) $ 54,038,005 Subtotal: Net Education Land Costs $ 306,057,042 Less: Operating Budget Savings Positive EDC Reserve Fund Balance Subtotal: GrowthRelated Net Education Land Costs $ 306,057,042 Add: EDC Study Costs $ 675,000 Total: GrowthRelated Net Education Land Costs $ 306,732,042 Apportionment of Total GrowthRelated Net Education Land Costs Total GrowthRelated Net Education Land Costs to be Attributed to NonResidential Development (Maximum 40%) 15% $ 46,009,806 Total GrowthRelated Net Education Land Costs to be Attributed to Residential Development 85% $ 260,722,235 Calculation of Uniform Residential Charge Residential GrowthRelated Net Education Land Costs $ 260,722,235 Net New Dwelling Units (Form C) 77,148 Uniform Residential EDC per Dwelling Unit $ 3,380 Calculation of NonResidential Charge Board Determined GFA NonResidential GrowthRelated Net Education Land Costs $ 46,009,806 NonExempt BoardDetermined GFA (Form D) 53,109,241 GFA Method: NonResidential EDC per Square Foot of GFA $ 0.87

13 NOTICE OF PROPOSED AMENDMENT TO EDUCATION DEVELOPMENT CHARGE BYLAW THE HALTON DISTRICT SCHOOL BOARD PUBLIC MEETING ON JUNE 4, 2014 at 7:00 P.M. Take notice that the Halton District School Board (the Board ) proposes to amend the Halton District School Board Education Development Charges Bylaw, 2013 (the Bylaw ), which came into effect on June 24, The schedule of education development charges now imposed by the Bylaw is as follows: Charge on residential development Charge on nonresidential development $2, per dwelling unit $0.69 per square foot ($7.43 per square The proposed amending bylaw will increase the charge on residential development to $3,380 per dwelling unit and the charge on nonresidential development to $0.87 per increase in the education land costs incurred by the Board over those estimated when the Bylaw was passed in The Bylaw applies to all lands in the Regional Municipality of Halton. Accordingly, a key map showing the location of the land subject to the Bylaw is not provided as part of this notice. The Board will consider the proposed amending bylaw at the meeting of the Board to be held on June 4, 2014, at 7:00 p.m. at the J.W. Singleton Centre, 2050 Guelph Line, Burlington, Ontario. Should an amending bylaw be passed on such date, collection of education development charges pursuant to the Bylaw, as amended, will commence on June 9, If a person wishes to address the Board at the meeting, he or she is requested to advise the Board on or before noon, May 27, Any written submissions on the proposed amending bylaw must be received on or before noon, May 29, 2014, in order that they may be distributed to trustees. Requests to address the Board as delegations at the meeting of Education, Halton District School Board, Tel: (905) Ext All submissions received in writing and those opinions expressed at the meeting will be considered prior to a decision by the Board to amend the Bylaw. Further information regarding this matter may be directed to Domenico Renzella, Manager of Planning, Halton District School Board at (905) Ext David Euale Director of Education and Secretary to the Board

14 APPENDIX C HALTON DISTRICT SCHOOL BOARD EDUCATION DEVELOPMENT CHARGE AMENDING BYLAW (2014) A bylaw to amend Education Development Charges Bylaw, 2013 WHEREAS the Halton District School Board enacted Education Development Charges Bylaw, 2013 on June 19, 2013; AND WHEREAS Section of the Education Act, R.S.O. 1990, c. E.2 (the Act ), provides for amendments to education development charges bylaws; AND WHEREAS the Halton District School Board requires amendments to Education Development Charges Bylaw, 2013; AND WHEREAS in accordance with the Act, the background study for Education Development Charges Bylaw, 2013 has been made available to the public; AND WHEREAS the Halton District School Board has made available to the public sufficient information to allow the public to understand the proposed amendments to Education Development Charges Bylaw, 2013; AND WHEREAS the Halton District School Board has given notice of the proposed amendments to Education Development Charges Bylaw, 2013 in accordance with the Act and held a public meeting on the 4th day of June, 2014; NOW THEREFORE, THE HALTON DISTRICT SCHOOL BOARD HEREBY ENACTS AS FOLLOWS: 1. Section 9 of Education Development Charges Bylaw, 2013 is hereby amended by repealing the number $2, in the first line and replacing it with the number $3, Section 12 of Education Development Charges Bylaw, 2013 is hereby amended by repealing the number $0.69 in the first line and replacing it with the number $ For greater certainty, Education Development Charges Bylaw, 2013 remains in full force and effect subject to the amendments thereto described in Sections 1 and 2 of this amending bylaw. 4. This amending bylaw shall come into force on June 9, ENACTED AND PASSED this 4th day of June, 2014 Chairperson Director of Education and Secretary