CITY OF CORNWALL DEVELOPMENT FEES REVIEW STUDY

Transcription

1 CITY OF CORNWALL DEVELOPMENT FEES REVIEW STUDY SEPTEMBER 28, 2012

2 CONTENTS Page 1. INTRODUCTION 1.1 Introduction Legislative Context for User Fees Review ACTIVITY BASED COSTING USER FEE METHODOLOGY 2.1 Activity Based Costing Methodology Application Category Definition Application Processing Effort Cost Allocation Direct Cost Business Units Indirect Cost Functions and Cost Drivers Capital Costs Building Code Act Reserve Fund Policy DEVELOPMENT FEES REVIEW 3.1 Development Fees Costing Results Planning Application Fees Building Permit Fees Development Industry Stakeholder Consultation IMPACT ANALYSIS OF FEE STRUCTURE RECOMMENDATIONS 4.1 Impact Analysis of Fee Structure Recommendations 4-1 Appendix A - Development Industry Stakeholder Consultation - March 29, 2012 (Presentation and Meeting Notes)

3 1. INTRODUCTION

4 INTRODUCTION 1.1 Introduction (Watson) was retained by the City of Cornwall to undertake a comprehensive financial review of its development fees. The focus of the review included quantifying the full costs of processing activities related to planning application fees and building permit fees, assessing the sufficiency of current development fees to recover these costs and recommended full cost recovery development fees. The results of this analysis and proposed full cost recovery fees were presented to a development industry stakeholders group for their input. Recommended fees were adjusted to account for the input provided by the stakeholder group. This technical report summarizes the legislative context for the fees review, provides in detail the methodology utilized to assess the full costs of processing activities, summarizes the full cost recovery fees and changes made to the development fee recommendations arising from the development stakeholder consultation process and presents the financial implications of recommended development fees. 1.2 Legislative Context for Development Fees Review Municipal development fees are governed by multiple statutes, each with specific requirements for imposing fees. The City s statutory authority for imposing planning application fees is provided under Section 69 of the Planning Act. Building permit fees are governed by the provisions of Section 7 under the Ontario Building Code Act. For municipal services where specific statutory authority is not provided, municipalities have the ability to impose fees and charges under Part XII (s. 391) of the Municipal Act. The following summarizes the provisions of the statutes as they pertain to fees and charges.

5 1-2 Planning Act, 1990 Section 69 of the Planning Act, allows municipalities to impose fees through by-laws for the purposes of recovering processing costs related to planning applications. In determining the associated fees, the Act requires that: The council of a municipality, by by-law, and a planning board, by resolution, may establish a tariff of fees for the processing of applications made in respect of planning matters, which tariff shall be designed to meet only the anticipated cost to the municipality or to a committee of adjustment or land division committee constituted by the council of the municipality or to the planning board in respect of the processing of each type of application provided for in the tariff. Section 69 establishes many cost recovery requirements that municipalities must consider when undertaking a full cost recovery fee design study. The Act specifies that municipalities may impose fees through by-law and that the anticipated costs of such fees must be cost justified by application type as defined in the tariff of fees (e.g. Subdivision, Zoning Bylaw Amendment, etc.). Given the cost justification requirements by application type, this would suggest that cross-subsidization of planning fee revenues across application types is not permissible. For instance, if Minor Variance application fees were set at levels below full cost recovery for policy purposes this discount could not be funded by Subdivision application fees set at levels higher than full cost recovery. Our interpretation of the Section 69 is that any fee discount must be funded from other general revenue sources such as property taxes. In comparison to the cost justification requirements of the Building Code Act, where the justification point is set at the aggregate level of the Act, the requirements of the Planning Act are more stringent in this regard. The legislation further indicates that the fees may be designed to recover the anticipated cost of processing each type of application, reflecting the estimated costs of processing activities for an application type. This reference to anticipated costs represents a further costing requirement for a municipality. It is noted that the statutory requirement is not the actual processing costs related to any one specific application. As such, actual time docketing of staff processing effort against application categories or specific applications does not appear to be a requirement of the Act for compliance purposes. As such our methodology which is based on staff estimates of application processing effort meets with the requirements of the Act and is in our opinion a reasonable approach in determining anticipated costs.

6 1-3 The Act does not specifically define the scope of eligible processing activities and there are no explicit restrictions to direct costs as previously witnessed in other statutes. Moreover, recent amendments to the fee provisions of the Municipal Act and Building Code Act are providing for broader recognition of indirect costs. Acknowledging that staff effort from multiple business units is involved in processing planning applications, it is our opinion that such fees may include direct costs, capital-related costs, support function costs directly related to the service provided, and general corporate overhead costs apportioned to the service provided. The payment of Planning Act fees can be made under protest with appeal to the Ontario Municipal Board (OMB) if the applicant believes the fees were inappropriately charged or are unreasonable. The OMB will hear such an appeal and determine if the appeal should be dismissed or direct the municipality to refund payment in such amount as determined by the Board. These provisions confirm that fees imposed under the Planning Act are always susceptible to appeal. Unlike other fees and charges (e.g. Development Charges) there is no legislated appeal period related to the timing of by-law passage, mandatory review period or public process requirements. Building Code Act, 1992 Section 7 of the Building Code Act provides municipalities with general powers to impose fees through passage of a by-law. The Act provides that: The council of a municipality may pass by-laws (c) Requiring the payment of fees on applications for and issuance of permits and prescribing the amounts thereof; (d) Providing for refunds of fees under such circumstances as prescribed; The Building Code Statute Law Amendment Act imposed additional requirements on municipalities in establishing fees under the Act, in that: The total amount of the fees authorized under clause (1)(c) must not exceed the anticipated reasonable cost of the principal authority to administer and enforce this Act in its area of jurisdiction. In addition, the amendments also require municipalities to:

7 1-4 Reduce fees to reflect the portion of service performed by a Registered Code Agency; Prepare and make available to the public annual reports with respect to the fees imposed under the Act and associated costs; and Undertake a public process, including notice and public meeting requirements, when a change in the fee is proposed. O.Reg. 305/03 is the associated regulation arising from the Building Code Statute Law Amendment Act, The regulation provides further details on the contents of the annual report and the public process requirements for the imposition or change in fees. With respect to the annual report, it must contain the total amount of fees collected, the direct and indirect costs of delivering the services related to administration and enforcement of the Act, and the amount of any reserve fund established for the purposes of administration and enforcement of the Act. The regulation also requires that notice of the preparation of the annual report be given to any person or organization that has requested such notice. Relating to the public process requirements for the imposition or change in fees, the regulations require municipalities to hold at least one public meeting and that at least 21-days notice be provided via regular mail to all interested parties. Moreover, the regulations require that such notice include, or be made available upon request to the public, an estimate of the costs of administering and enforcing the Act, the amount of the fee or change in existing fee and the rationale for imposing or changing the fee. The Act specifically requires that fees must not exceed the anticipated reasonable costs of providing the service and establishes the cost justification test at the global Building Code Act level. As the requirements of the Act do not limit municipalities to the costs directly related to the service, Building Code Act fees can include corporate management costs related to the provision of service (e.g. Governance, Chief Administrative Officer, Finance, etc.). Moreover, the recognition of anticipated costs also suggests that municipalities could include costs related to future compliance requirements or fee stabilization reserve fund contributions. As a result, Building Code Act fees modeled in this exercise include direct costs, capital-related costs, indirect support function costs directly consumed by the service provided, and corporate management costs related to the service provided, as well as provisions for future anticipated costs.

8 1-5 Municipal Act, 2001 Part XII of the Municipal Act provides municipalities with broad powers to impose fees and charges via passage of a by-law. These powers, as presented in s.391 (1), include imposing fees or charge for: Services or activities provided or done by or on behalf of it; Costs payable by it for services or activities provided or done by or on behalf of any other municipality or local board; and Use of its property including property under its control. Fees and charges permissible under the authority of the Municipal Act would include engineering review and inspection fees relating to the development process that are not specifically provided for under the statutes identified above. In contrast to cost justification requirements under other legislation, the Municipal Act does not impose explicit requirements for cost justification when establishing fees for municipal services. However, in setting fees and charges for these services, municipalities should have regard for legal precedents and the reasonableness of fees and charges. The statute does not provide for appeal of fees and charges to the Ontario Municipal Board, however, fees and charges may be appealed to the courts if municipalities are acting outside of their statutory authority. Furthermore, no public process or mandatory term for fees and charges by-laws is required under the Act. There is, however, a requirement that municipal procedural bylaws provide for transparency with respect to the imposition of fees and charges.

9 2. ACTIVITY BASED COSTING USER FEE METHODOLOGY

10 2. ACTIVITY BASED COSTING USER FEE METHODOLOGY Activity Based Costing Methodology An activity based costing (ABC) methodology, as it pertains to municipal governments, assigns an organization's resource costs through activities to the services provided to the public. One of the service channels provided by municipalities is the development review process. Conventional municipal accounting structures are typically not well suited to the costing challenges associated with development processing activities, as these accounting structures are business unit focussed and thereby inadequate for fully costing services with involvement from multiple business units. An ABC approach better identifies the costs associated with the processing activities for specific application types and thus is an ideal method for determining full cost recovery development fees. As illustrated in Figure 2-1, an ABC methodology attributes processing effort and associated costs from all participating municipal business units to the appropriate development fee service categories. The resource costs attributed to processing activities and application categories include direct operating costs, indirect support costs, and capital costs. Indirect support function and corporate overhead costs are allocated to direct business units according to operational cost drivers (e.g. information technology costs allocated based on the relative share of departmental personal computers supported). Once support costs have been allocated amongst direct business units, the accumulated costs (i.e. indirect, direct and capital costs) are then distributed across the various development fee service categories (and other nondevelopment City services), based on the business unit s direct involvement in development review process activities. The assessment of each business unit s direct involvement in development review process activities is accomplished by tracking the relative shares of staff processing effort across each development fee category s sequence of mapped process steps. The results of employing this costing methodology provides municipalities with a better recognition of the costs utilized in delivering development review processes, as it acknowledges not only the direct costs of resources deployed but also the operating and capital support required by those resources to provide services. The following sections of this chapter review each component of the ABC methodology as it pertains to the City s development review process fees review.

11 2-2 Figure 2-1 Activity Based Costing Conceptual Cost Flow Diagram Activity Based Costing Development Fees Model Support Functions A A Drivers Corporate Overhead Functions B B Drivers B Drivers Development Review Divisions (Examples) Planning Building % Effort Time Drivers Development Fee Categories Site Plan OPA/Rezoning Res. Building Permits B Drivers Public Works & Engineering ICI Building Permits A Drivers Fire Prevention Minor Variance 2.2 Application Category Definition A critical component of the full cost user fees review is the selection of development fee costing categories. This is an important first step as the process design, effort estimation and subsequent costing is based on these categorization decisions. It is also important from a compliance stand point where, as noted previously, the Planning Act requires user fees to be cost justified by application type consistent with the categorization contained within the City s tariff of fees. Moreover, it is equally important in costing building permit fees to understand the cost/revenue relationships within the City s Bylaw, beyond the statutory cost justification for fees established at the administration and enforcement under the authority of the Building Code. The fee categorization process for development fees occurred at the project initiation stage of the study process and through subsequent discussions with City Project Team members. Planning application characteristics for major costing category were provided by City Planning Department staff for input into the fee structure design. City Building Department staff provided input from the City s building permit reporting system into the various permit costing categories.

12 2-3 Tables 2-1 and 2-2 summarize the development fee costing categories for various development fees included in the activity based costing model and later used to rationalize the recommendations to the City s development fee structure. Site Plan Approval Minor Variance Consent for Severance Official Plan Amendment Plan of Subdivision Table 2-1 Planning Application Fee Type/Costing Categories Subdivision Amendment for Prior Plan Approval Condominium Standard Condominium Conversion Zoning Bylaw Amendment Lifting of Holding Symbol Heritage Designation Zoning Compliance ESA Phase I Work Order Report Encroachment Agreement Planning Application Type/ Costing Category Table 2-2 Building Permit Fee Types and Costing Categories Group A - Assembly Group B - Institutional Group C - Residential Application Type Group D & E Business Personal Service and Mercantile New Addition/Repair/Alteration New Addition/Repair/Alteration Single Detached - New Application Costing Category Single Detached - Addition/Repair/Alteration Doubles (Duplex, Semi-Detached) New Doubles (Duplex, Semi-Detached) Addition/Repair/Alteration Multiples - New Multiples - Addition/Repair/Alteration Accessory Buildings New Addition/Repair/Alteration

13 2-4 Table 2-2 (cont d) Building Permit Fee Types and Costing Categories Group F - Industrial Other New Addition/Repair/Alteration Demolition Permits Change of Use/Location/No Construction Temporary Buildings Fence Permits Conditional Permits 2.3 Application Processing Effort Cost Allocation To capture each participating City staff member s relative level of effort in processing development applications, process map templates were prepared for each of the above referenced costing categories. These process map templates outline the typical process steps undertaken for each development fee costing category identified previously. The process maps utilized were developed to reflect the City s current processing activities and participants. The finalized process templates were circulated to members of the City Project Team and initial effort estimates were provided through internal business unit discussions. The effort estimates received were applied against average annual application volumes for the period to assess the average annual processing time per position spent on each development fee category. Annual processing effort per staff position was measured against available processing capacity to determine overall service levels. The results of the initial capacity analysis were reviewed with the City Project Team. Effort estimates were subsequently refined by the City Project Team in consultation with the participating business units to better reflect current staff utilization levels. These refinements provided for the recognition of efforts within the development fees review processes ancillary to direct processing tasks, i.e. application oversight activities by departmental senior management and administration and enforcement activities under the authority of the Building Code. The processing effort review produced the following results regarding staff resource utilization. The Planning Department expends approximately 55% of available staff resources annually processing development applications. The balance of Planning Department staff time is devoted to long-range planning, administration, pre-consultation on development, program implementation, and other corporate initiatives. The majority of annual staff resources attributed

14 2-5 to planning applications is spent on Minor Variance, Consent, Official Plan Amendment, Zoning Bylaw Amendment and Site Plan applications. Minor amounts of time from the Infrastructure and Municipal Works/Engineering Division relate to development processing activities for Site Plan, Minor Variance and Consent applications. The Building By-law Department expends approximately 70% of staff processing effort on administering and enforcing the Building Code Act, with the remaining 30% attributable to by-law enforcement matters and non-permit related general administrative activities. Approximately 2/3 of annual processing capacity is attributable to residential building permit processes. 2.4 Direct Cost Business Units The following City business units that are directly involved in processing the development fees included in the review: Planning Services; Building Services; and Infrastructure and Municipal Works/Engineering Division Based on the results of the resource capacity analysis summarized above, the proportionate share of each individual s direct costs is allocated to the respective development fee categories. The City s 2011 Operating Budget was used to generate the direct cost allocations within the model and include the cost components such as: Salary and Benefits; Purchase of Goods; Services & Rent; and Financial Expenditures (e.g. insurance premiums) 2.5 Indirect Cost Functions and Cost Drivers An activity based costing review includes not only the direct service cost of providing service activities but also the indirect support costs that allow direct service business units to perform these functions. The method of allocation employed in this analysis is referred to as a step costing approach. Under this approach, support function and general corporate overhead

15 2-6 functions are classified separate from direct service delivery departments. These indirect cost functions are then allocated to direct service delivery departments based on a set of cost drivers, which subsequently flow to development fee categories according to staff effort estimates. Cost drivers are a unit of service that best represent the consumption patterns of indirect support and corporate overhead services by direct service delivery business units. As such, the relative share of a cost driver (units of service consumed) for a direct department determines the relative share of support/corporate overhead costs attributed to that direct service department. An example of a cost driver commonly used to allocate information technology support costs would be a business unit s share of supported personal computers. Cost drivers are used for allocation purposes acknowledging that these business units do not typically participate directly in the development review process, but that their efforts facilitate services being provided by the City s direct business units. The indirect costs provided for in the development fees analysis were provided by the City Finance Department. The City currently allocates corporate costs to each City department as part of the budget process. These costs are determined based on a step costing methodology and are contained within the Financial expenditures component of departmental budgets. These corporate costs include annual expenditure provisions for A/P Support, Accounting Support, Auditing, Building Maintenance, Budget Support, CAO Support, Courier, Finance Support, HR Support, IT Support, Insurance, Payroll Support, Printing, Purchasing Support and Retiree Benefits. 2.6 Capital Costs The inclusion of capital costs within the full cost development fees calculations follow a methodology similar to indirect costs. Market-equivalent rents and/or replacement value of assets commonly utilized to provide direct business unit services have been included to reflect capital costs of service. The replacement value approach determines that annual asset replacement value over the expected useful life of the respective assets. This reflects the annual depreciation of the asset over its useful life based on current asset replacement values using a sinking fund approach. This annuity is then allocated across all fee categories based on the capacity utilization of direct business units. For market-equivalent rents, the annual rent costs is calculated based on market rate and floor space utilized and then allocated to the various fee categories in a similar manner.

16 2-7 Similar to indirect costs, the City s budgets reflect capital cost allocations for each department in the form of transfers to reserves and capital. These budgeted amounts have been included in the full cost assessment and allocated to the respective fee categories based on the staff resource capacity utilization. 2.7 Building Code Act Reserve Fund Policy The Building Code Statute Law Amendment Act imposed municipal financial reporting regulations that recognize the legitimacy of creating a municipal reserve fund to manage Building Code Act responsibilities. However, the Act and its regulations are silent on the design/rationale of reserve funds. Some latitude therefore exists around rationale, along with an obligation to quantify reserve fund target balances. It is recognized that a Building Code Act Fee Stabilization Reserve Fund (FSRF) has been created by the City specifically for smoothing out any revenue shortfalls associated with temporary declines in permit activity. Moreover, any funds accumulated for this purpose would not be available to fund any other municipal financial priorities. The rationale for a FSRF is to reduce the staffing and budgetary challenges associated with an economic downturn and legislative service level compliance. Without such a reserve fund, reduced growth and permit volumes during a downturn could result in severe budgetary pressures and the loss of certified Building Department staff, which would be difficult to replace during the subsequent economic recovery. Establishing a reserve fund will provide the City with the ability to retain a sustainable portion of the qualified staff across a temporary downturn in activity, while recognizing the City s obligation to manage resources during these periods. Based on a review of building permit activity within the City over the previous 15 years, a reserve fund target of 1.7x annual direct costs should be considered as the target balance. This reflects the anticipated revenue loss associated with declines in building permit activity during this period, relative to the long-term average. Once this target has been achieved the City would be required to review its building permit fees and adjust them accordingly as to not provide for revenues exceeding anticipated costs of administration and enforcement under the Building Code Act. The financial impact associated with this reserve fund policy is addressed in subsequent chapters of this report.

17 3. DEVELOPMENT FEES REVIEW

18 DEVELOPMENT FEES REVIEW 3.1 Development Fees Costing Results Table 3-1 documents the City s annual costs of providing development fee services by cost component. The annual costs reflect the organizational direct, indirect and capital costs associated with processing activities at average historic volumes levels for the period These costs are based on 2011 budget estimates and are compared with revenues derived from current development fee schedules applied to average application/permit volumes and charging parameters. The charging parameters for these applications/permits were provided by the City Project Team from development applications and reporting systems. As summarized in the table below, the development fee processes account for $1.27 million annually. The City s fee schedules currently recover $0.58 million annually or 46% of full cost. Direct costs of processing represent the largest component of annual costs at $1.16 million or 92% of full costs. These costs are derived from the capacity analysis generated based on the processing estimates for each application/permit type. Indirect support and corporate overhead costs and capital costs represent 8% of total processing costs, or $0.10 million annually. Planning application fees are generally recovering 14% of annual costs of processing, with current fee structures recovering approximately $73,000 annually compared with costs of processing totalling approximately $526,000 annually. As a result of these under-recovering planning application fees, approximately $453,000 in City expenditures occupied by processing activities are being subsidized by other revenue sources, e.g. general levy. Building permit fees currently recover 67% of the annual full costs of processing. Current annual expenditures total approximately $746,000 annually, with current fee structures producing $503,000 annually on average. As a result, approximately $242,000 annually is being funded from the City s reserve fund, established to sustain operations. This reserve fund has been accumulated from excess revenues provided from large non-residential applications, periodically and infrequently over the last 5 years. Given the underperforming recoveries of fees currently the City s reserve fund is depleting and unsustainable.

19 3-2 Table 3-1 Consolidated Development Fees Impacts (2011$) Planning Application Fees Building Permit Fees Total Annual Expenditures - Direct Costs 475, ,739 1,164,609 - Indirect Costs 50,384 56, ,190 Total Annual Expenditures 526, ,544 1,271,799 Annual Development Fee Revenues 73, , ,100 Net Surplus/(Deficit) (453,255) (242,444) (695,699) 3.2 Planning Application Fees The focus of this assignment is to develop full cost recovery fee structure recommendations that would achieve legislative compliance, maximize revenue certainty and generally recognize marginal cost attributes of development applications. Table 3-2 expands upon the aggregate cost/revenue presentation for planning application fees provided above and identifies the average cost and revenue impacts by planning application fee type. Table 3-2 Annual Planning Fees Full Cost Impacts by Fee Type (2011$) Planning Application Type Annual Costs (2011$) Annual Net % Cost Direct Indirect Total Revenues Position Recovery Site Plan Control 104,710 13, ,896 6,300 (111,596) 5% Minor Variance 146,094 14, ,843 19,305 (141,538) 12% Consent for Severance 45,312 4,702 50,014 9,100 (40,914) 18% OPA 14,085 1,322 15,407 4,000 (11,407) 26% Subdivision 16,269 1,632 17, (16,911) 6% Subdivision Amendment for Prior Plan Approval 11,324 1,176 12,500 - (12,500) 0% Condo Standard 5, , (5,232) 11% Condo Conversion 7, , (7,157) 8% ZBA 73,463 6,778 80,241 12,000 (68,241) 15% Lifting of Hold Symbol 2, , (1,609) 30% Heritage Designation (49) 0% Zoning Compliance 13,009 1,357 14,366 1,100 (13,266) 8% ESA Phase I 2, , (2,046) 15% Work Order Report 34,588 3,676 38,264 17,650 (20,614) 46% Encroachment Agreement (173) 54% TOTAL 475,870 50, ,255 73,000 (453,255) 14% Total Allocation 90% 10% 100%

20 3-3 Table 3-3 summarizes the annual processing costs and revenues provided in the previous table on a per application basis. Based on the results presented in Table 3-3 the following summarizes the fee structure analysis by planning application type to achieve full cost recovery. The recommended fee structures are based on the activity based costing model and average application characteristics underlying planning applications during the period. Table 3-3 Planning Application Fees Full Cost Impacts (2011$) Average Average Full Cost Fee Planning Application Type Cost per Revenue per Adjustment Application Application % Site Plan Control 6, % Minor Variance 2, % Consent for Severance 1, % OPA 7,704 2, % Subdivision 17, % Subdivision Amendment for Prior Plan Approval 12,500 n/c n/a Condo Standard 5, % Condo Conversion 7, % ZBA 10,030 1, % Lifting of Hold Symbol 2, % Heritage Designation 49 n/a n/a Zoning Compliance % ESA Phase I % Work Order Report % Encroachment Agreement % Site Plan Control The City currently imposes a fee of $350 for site plan approval and a fee of $300 for a site plan agreement amendment. The average cost of processing a site plan application is $6,550. No recommendation is provided for Site Plan Amendment Approval as it was not included in the costing assessment. Full Cost Recovery Fee Recommendation o Site Plan Approval - $6,550 Minor Variance and Consent Currently the City imposes a flat rate fees for minor variance and consents/severances. The current fees are as follows:

21 3-4 Minor Variance Signage & Fencing - $225 Zoning/Land Use - $270 Consent/Severance Severance (New Lot) - $350 Correction to Title; Severance (semi-detached or addition to a lot or right-ofway/easement); Consent (a lease) - $300 Stamping of Deeds for Consent - $100 Minor Variance applications are recovering $248 per application compared to processing costs of $2,062. Consent applications are recovering $325 per application compared to processing costs of $1,786. Full Cost Recovery Fee Recommendation o Minor Variance - Signage & Fencing - $1,875 o Minor Variance - Zoning/Land Use - $2,250 o Severance (New Lot) - $1,925 o Correction to Title; Severance (semi-detached or addition to a lot or right-ofway/easement); Consent (a lease) - $1,650 o Stamping of Deeds for Consent - $550 Official Plan Amendment (OPA) Currently the City imposes a flat rate fee for OPA applications of $2,500. The City s costs of processing an OPA total $7,700 on average. Full Cost Recovery Fee Recommendation o Official Plan Amendment - $7,700 Plan of Subdivision The City currently imposes of base charge of $240 and a per hectare fee of $30. Based on this fee structure the City is recovering $990 per application on average. The full cost fees associated with processing this type of application is approximately $17,900. Maintaining the current fee structure the City would have to increase the base charge fee to $4,340 and the per hectare charge to $542. This fee structure places a significant amount of cost recovery on the per hectare component of the process, which does not reflect the significant amount of fixed processing costs inherent therein. Moreover, City staff indicated that amendments to a Plan of Subdivision that has received prior approval constitute a significant amount of processing effort,

22 similar to a new plan of subdivision. Currently the City does not impose fees for these amendments which cost the City $12,500 per application on average. 3-5 Full Cost Recovery Fee Recommendation o Subdivision Base Charge - 9,150 o Subdivision per Hectare Charge - $350 o Subdivision Amendment - $12,500 Condominium The City imposes charges for a Draft Plan of Condominium application including a base charge of $240 and $20 per condominium unit. The City s fee structure currently recovers $640 per application on average. This compares with costs of processing condominium applications of $5,870 for a standard application and $7,800 for a condominium conversion application. Full Cost Recovery Fee Recommendation o Condominium Standard Base Charge - $2,200 o Condominium Conversion Base Charge - $4,125 o Condominium per Unit Charge - $180 Zoning By-law Amendment Currently the City imposes a flat rate fee for a Zoning Bylaw Amendment application of $1,500. The City s cost of processing a Zoning Bylaw Amendment application totals $10,030 on average. Removal of a Holding Category application fee is currently $700, compared with average processing costs per application of $2,300. Full Cost Recovery Fee Recommendation o Zoning Bylaw Amendment - $10,030 o Lifting an H Holding Symbol $2,300

23 Other Fees The following table summarizes other planning application fees considered in the costing exercise, the current fee and the recommended full cost recovery fees for each type. Fee Type Current Fee Proposed Full Cost Recovery Fee Heritage Designation n/a $50 Zoning Compliance $50 $650 ESA Phase I $25 $160 Work Order Report $50 $110 Encroachment Agreement $200 $ Building Permit Fees Table 3-4 expands upon the aggregate cost/revenue presentation for building permit fees provided above and identifies the average cost and revenue impacts by planning application fee type. It should be noted, that the current fee recovery of 67% is relative to annual processing costs and does not provide additional funds to achieve service sustainability with contributions to a building permit stabilization reserve fund. As provided in Section 2.6 of this report, historic building permit activity over the prior 15 years suggests a reserve fund target of approximately 1.7x annual direct costs (or $1.17 million) should be considered. Providing for accumulation over a 7-year period, this would require an annual reserve fund contribution of $167,000 annually beyond the annual costs presented in Table 3-4. Based on discussions with the City Project Team, it was determined that the recommended fees should consider full cost recovery only at this time with additional contribution to a reserve fund for service sustainability to be considered in future fee reviews. Table 3-4 summarizes the building permit fee performance relative to the activity based costs of each permit type. Based on the costing analysis, residential building permits account for the largest component of the under-recovery of processing activities. More specifically, single detached additions, repairs and renovations account for $210,000 of the annual $242,000 under-recovery. These circumstances are not uncommon from other municipalities, where other permits fees generally cross-subsidize these types of permit processes. The magnitude of the impact in the City is a result of the significant volume of permits attributable to these types of permits each year and pricing pressures.

24 3-7 Table 3-4 Annual Building Permit Fees Full Cost Impacts by Fee Type (2011$) Building Permit Category Annual Costs (2011$) Annual Net % Cost Direct Indirect Total Revenues Position Recovery Group A - AssemblyNew 20,961 1,680 22,641 49,612 26, % Group A - AssemblyAddition/ Repair/Renovation 43,185 3,412 46,597 59,145 12, % Group B - InstitutionalNew 1, ,794 1, % Group B - InstitutionalAddition/ Repair/Renovation 12,894 1,018 13,912 25,387 11, % Group C - Residential - SingleNew 64,858 5,292 70,150 51,698 (18,452) 74% Group C - Residential - SingleAddition/ Repair/Renovation 209,325 16, ,052 15,727 (210,325) 7% Group C - Residential - Doubles - (Duplex, Semi)New 37,054 3,036 40,091 20,898 (19,193) 52% Group C - Residential - Doubles - (Duplex, Semi)Addition/ Repair/Renovat 38,352 3,103 41,454 1,974 (39,480) 5% Group C - Residential - MultiplesNew 12,658 1,009 13,667 47,188 33, % Group C - Residential - MultiplesAddition/ Repair/Renovation 39,664 3,140 42,803 6,667 (36,137) 16% Group C - Residential - Accessory Buildings 44,419 3,708 48,127 7,393 (40,734) 15% Group D & E - Office/ Personal Service/ MercantileNew 8, ,204 28,249 19, % Group D & E - Office/ Personal Service/ MercantileAddition/ Repair/Renova 54,081 4,311 58,393 28,192 (30,201) 48% Group F - IndustrialNew 3, ,832 94,696 90, % Group F - IndustrialAddition/ Repair/Renovation 11, ,814 19,290 6, % Demolition Permits 12,366 1,154 13,520 2,900 (10,620) 21% Change of Use/Location/No Construction 3, ,593 1,500 (2,093) 42% Temporary Building 4, , (3,569) 18% Fence Permit 42,604 4,685 47,289 7,550 (39,739) 16% Conditional Permits 23,402 1,839 25,241 32,443 7, % TOTAL 688,739 56, , ,100 (242,445) 67% Total Allocation 92% 8% 100% Based on discussions with the City Project Team and consideration for market comparators, increasing the current building permit fees from $9.00/$1,000 of construction value to $12.50/$1,000 of construction value would result in overall cost recovery performance of approximately 95%. The proposed full cost recovery permit fees would generate an additional $195,000 annually based on underlying permit activity levels. Table 3-5 summarizes the per permit fee comparison associated with the fee increase by permit type.

25 Table 3-5 Current and Proposed Full Cost Recovery Building Permit Fees by Fee Type (2011$) Existing Proposed Building Permit Category Fees per Revenue Fees per Fee Increase Revenue Permit Estimate Permit % Estimate Group A - AssemblyNew 5,512 49,612 7,656 16% 68,905 Group A - AssemblyAddition/ Repair/Renovation 2,335 59,145 3,243 16% 82,145 Group B - InstitutionalNew 2,691 1,794 3,737 16% 2,491 Group B - InstitutionalAddition/ Repair/Renovation 3,808 25,387 5,289 16% 35,260 Group C - Residential - SingleNew 1,282 51,698 1,780 16% 71,803 Group C - Residential - SingleAddition/ Repair/Renovation 76 15, % 41,400 Group C - Residential - Doubles - (Duplex, Semi)New ,898 1,382 16% 29,024 Group C - Residential - Doubles - (Duplex, Semi)Addition/ Repair/Re 49 1, % 8,000 Group C - Residential - MultiplesNew 9,438 47,188 13,108 16% 65,538 Group C - Residential - MultiplesAddition/ Repair/Renovation 230 6, % 5,800 Group C - Residential - Accessory Buildings 79 7, % 18,800 Group D & E - Office/ Personal Service/ MercantileNew 7,062 28,249 9,809 16% 39,234 Group D & E - Office/ Personal Service/ MercantileAddition/ Repair/R , % 39,155 Group F - IndustrialNew 56,818 94,696 78,913 16% 131,522 Group F - IndustrialAddition/ Repair/Renovation 1,995 19,290 2,772 16% 26,791 Demolition Permits 100 2, % 5,800 Change of Use/Location/No Construction 200 1, % 2,250 Temporary Building % 1,600 Fence Permit 50 7, % 22,650 Conditional Permits 2,317 32,443 3,219 16% 45,059 TOTAL 503, ,170 Cost Recovery % 67% 94% Development Industry Stakeholder Consultation The City hosted a consultation meeting with various developments industry stakeholders on March 29, A presentation of preliminary study findings and full cost recovery fee recommendations were provided to the stakeholder group for their consideration and input. The presentation covered the purpose of the review, statutory authority for imposing development user fees, activity based costing methodology and annual cost impacts, full cost recovery fees with a provision for phase-in to 2013, and development fee impacts and municipal fee comparisons. Appendix A of this report contains the presentation document and notes arising from the meeting. There were a number of items discussed at the meeting including: The inclusion of surcharges for applications requiring additional processing effort (e.g. incomplete applications, multiple submissions, etc.); Municipal development fee comparators should be limited to municipalities within the surrounding area; Support for increases for larger industrial and commercial applications, as well as Minor Variance applications deemed to require significant amounts of planning staff resources; Little support for increases on residential or smaller residential applications; and

26 Comments outside of the scope of this review, including regionalization of services across municipalities and taxation policy. 3-9 At the conclusion of the meeting the City requested that the development industry stakeholders provide written comments on the proposed development fee increases. Mr. Guy Menard of Menard Bros. & Associates Ltd. offered to provide written comments to the City on the matter. On May 25, 2012, the City received the following comments from Mr. Menard in this regard. 1) Permits and planning fees must be seen as a combination of investment (in our tax base) and municipal expense. 2) The planning/permits department is unique because if directly affects municipal tax base growth: this is the investment component that should be reflected in rate changes. 3) A major municipal strategic plan would great help to add direction to this exercise. 4) Fairness: different situations warrant different treatments. Further category breakdowns should be added. 5) Some fees should have a fixed cost component and a variable component. This allows for sufficient fees for smaller yet time consuming applications. At the same time, it does not penalize the larger projects. 6) Please keep in mind that our true competition comes from neighbouring townships and not necessarily other Ontario municipalities. Cornwall rates must remain competitive with township rates. Consultation with township planning departments could yield a more even playing field. Regional planning services could also be an alternative. 7) Increases should be phased in over a few years. Timing is critical as Cornwall is currently re-inventing itself. 8) User fees should be strongly considered to the many time consuming services given to the general public. Based on the feedback provided the City asked that the full cost fee structure be reconsidered and that the municipal comparisons only include the surrounding Townships. In this regard, the planning applications fees structure for major development applications currently imposed on a flat fee basis have been revised to include both a base charge component and a variable fee component (i.e. per unit/sq.mt. of GFA). It should be noted that no empirical data was provided relating to the historic size characteristics of applications, thus full cost recovery is difficult to predict for these fee structure changes. Also for minor variance and consent applications, the

27 3-10 current flat fee structure is maintained, consistent with practices in other municipalities. Moreover, as the proposed fees reflect municipal costs related to performing a typical application process, applications requiring multiple applications resubmissions or additional processing efforts relating to incomplete applications have not been included in current fee proposals. Fee recommendations include additional surcharges for applications triggering additional processing activities. Lastly, the full cost recovery fee recommendations maintain the multi-year phase-in over two years (i.e. 2014). Building permit full cost fee structure recommendations remain unchanged from current municipal practice. Table 3-6 summarizes the development fee recommendations. Table 3-6 Recommended Development Fees ($) Application Type Existing Fees Proposed Fees (2013) Proposed Fees (2014) Flat Fee/ Base Charge Per Unit/ Hectare Fee Flat Fee/ Base Charge per Unit Fee per Hectare Fee Flat Fee/ Base Charge per Unit Fee per Hectare Fee Planning Application Fees Site Plan Approval 350 1, , Site Plan Amendment Approval Minor Variance (signage/fencing) 225 1,050 1,875 Minor Variance (zoning/land use) 270 1,260 2,250 Consent for Severance (New Lot) 350 1,140 1,925 Stamping Deeds for Consent All Other Consent/Severance ,650 OPA 2,000 2, , Subdivision , , Subdivision Amendment for n/c Prior Plan Approval 7,500 12,500 Condo Standard , , Condo Conversion , , Zoning Bylaw Amendment 1,500 3, , Lifting of Hold Symbol 700 1,500 2,300 Heritage Designation Zoning Compliance ESA Phase I Work Order Report Encroachment Agreement Building Permit Fees (per $1,000 of const. value)

28 3-11 Surcharges for major applications equivalent to 25% of total application fee would be applicable where multiple submissions are required or if applications are deemed to be incomplete requiring significant staff processing effort.

29 4. IMPACT ANALYSIS OF FEE STRUCTURE RECOMMENDATIONS

30 IMPACT ANALYSIS OF FEE STRUCTURE RECOMMENDATIONS 4.1 Impact Analysis of Fee Structure Recommendations In order to understand the impacts of the proposed full cost recovery development user fees an impact analysis for sample developments has been prepared. The development user fee comparison includes planning application fees, building permit fees and development charges for each development sample. The comparison illustrates the impacts of the recommended development user fees in the context of the total development fees payable to provide a broader context for the fee considerations. In addition to providing the fee impacts for the City of Cornwall, Figures 4-1 through 4-3 provide development fee comparisons for select municipalities within the area. The municipal comparator group has been refined to focus on the neighbouring Townships, however the City of Ottawa and Kingston have been provided for a more thorough comparison. The three development samples analyzed include: Residential subdivision application of 50 single detached units (Figure 4-1); Site plan control application for a retail building of 1,000 square meters (Figure 4-2); and Minor variance application (Figure 4-3). Residential subdivision application of 50 single detached units (Figure 4-1) The City s current development fees imposed on a 50 unit single detached residential subdivision include plan of subdivision application fees and building permit fees imposed by the City. On a per unit basis these fees total $1,464. These development user fees on a per unit basis comprise, planning application fees of $6 per unit and building permit fees of $1,458 per unit. The 2013 recommended development user fees would increase the total fees payable by $380 per unit ($97 planning fees and $284 building fees) or an increase of 26% in total development costs. The 2014 recommended development user fees would subsequently increase the total fees payable by an additional 21% or $380 per unit. In comparison to the neighbouring Township s, South Glengarry currently imposes fees for this type of application totalling $1,416/unit ($24 planning and $1,392 building). The Township of

31 South Stormont imposes fees for this type of application totalling $791/unit ($30 planning and $761 building). 4-2 Comparable fees imposed in the City s of Ottawa and Kingston are significantly higher than those imposed in the City and neighbouring Township s, principally due to the imposition of development charges in these jurisdictions. Development fees in Ottawa total $27,892/unit, with development fees accounting for $3,099/unit (or 11% of total fees) and development charges providing for $24,793/unit (or 89% of total fees). Development fees in Kingston total $17,293/unit, with development fees accounting for $2,551/unit (or 15% of total fees) and development charges providing for $ $14,742/unit (or 85% of total fees). The narrative above shows the City of Cornwall compared to the Townships of South Glengarry and South Stormont, and the Cities of Kingston and Ottawa. Appendix A includes a survey that includes a more complete comparison to urban centres. Typically, the City of Kingston and others are a better representation of development fees in urban centres for comparison to the City of Cornwall than the Township comparators. Site plan approval application for a retail building of 1,000 square metres (Figure 4-2) The City s current development fees imposed on a 1,000 square metre retail development include site plan application fees, zoning bylaw amendment application fees and building permit fees imposed by the City. In total, the fees imposed would be $10,043 comprising, planning application fees of $2,150 and building permit fees of $7,893. The 2013 recommended development user fees would increase the total fees payable by $4,416 ($2,882 planning fees and $1,535 building fees) or an increase of 44% in total development costs. The 2014 recommended development user fees would subsequently increase the total fees payable by an additional 35% or $5,066 per unit. In comparison to the neighbouring Township s, South Glengarry currently imposes fees for this type of application totalling $9,077 ($1,500 planning and $7,577 building). The Township of South Stormont imposes fees for this type of application totalling $6,749 ($2,200 planning and $4,549 building). Similar to the residential subdivision application comparison, development fees imposed in the City s of Ottawa and Kingston are significantly higher than those imposed in the City and neighbouring Township s, principally due to the imposition of development charges in these

32 4-3 jurisdictions. Development fees in Ottawa total $200,174, with development fees accounting for $41,836 (or 21% of total fees) and development charges providing for $158,338 (or 79% of total fees). Development fees in Kingston total $156,047, with development fees accounting for $20,421 (or 13% of total fees) and development charges providing for $135,626 (or 87% of total fees). Minor variance application (Figure 4-3) Existing development fees imposed for this application type in the City of Cornwall would total $270. These fees are currently the lowest of the comparator municipalities with fees imposed in the neighbouring Township s at $450 in the Township of South Stormont and $350 in the Township of South Glengarry. Fees currently imposed in the City of Kingston represent the highest fees in the comparator municipalities at $1,749, with fees imposed in the City of Ottawa at $1,300. Recommended full cost recovery fees would require a 2013 increase of $910 (160%) to a total fee imposed of $1,260. The subsequent increase in 2014 would total $990 (79%) for a total fee payable of $2,250. In conclusion the City s current development fees are comparable to those imposed in the surrounding Township s. By comparison with the broader market, the City s existing fees and recommended fees, with the exception of Minor Variance recommended fees, are significantly lower. This is largely due to the additional costs of development imposed in these jurisdictions for Development Charges. As provided in the appendix to this report, development charges generally impose the largest cost burden to applicants. The absence of development charges within the City effectively provide lower overall development costs for applicants, suggesting a competitive advantage to these jurisdictions even at full cost recovery development fee levels.

33 4-4 Figure 4 1 Development Fee & DC Comparison 50 Single Dwelling Unit Subdivision (cost per unit) $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Subdivision Building Permit Fees Development Charges

34 4-5 Figure 4 2 Development Fee & DC Comparison 1,000 m 2 Retail Development $250,000 $200,000 $150,000 $100,000 $50,000 $ Site Plan Zoning Building Permit Fees Development Charges

35 4-6 Figure 4 3 Development Fee Comparison Minor Variance $2,500 $2,000 $1,500 $1,000 $500 $ Cornwall Proposed 2013 Kingston Ottawa Cornwall Proposed 2012 Brockville South Stormont South Glengarry Cornwall Existing Minor Variance

36 APPENDIX A DEVELOPMENT INDUSTRY STAKEHOLDER CONSULTATION - MARCH 29, 2012 (PRESENTATION AND MEETING NOTES)

37 City of Cornwall Development Industry Stakeholder Consultation March 29, 2012

38 Introduction ti City has retained Watson & Associates Economists Ltd. (Watson) to undertake a financial review of its development processing fees Scope of development processing fees review includes: Planning application fees, and Building permit fees Financial review considered: Full costs (direct and indirect costs) assessment of providing development processing services and net financial position Reserve fund strategy for building permit fees Recommend full cost fee structures

39 Legislative Context t Planning application fees Governed by s.69 of the Planning Act Recovery of anticipated costs of processing by type of application No public process required in setting fees Fees may be paid under process and appealed to the OMB Building permit fees Section 7 of the Building Code Act provides statutory powers to impose fees Total amount of fees must not exceed reasonable costs to administer and enforce the Act

40 Legislative Context t Building permit fees (cont d) Reasonable costs inferred from O.Reg. 305/03 may include direct and indirect costs Reserve funds under the Act are permitted Statutory public process for a change in fee and annual reporting

41 Activity Based Costing Methodology INDIRECT COSTS DIRECT COSTS Development Approvals Divisions Development User Fees Overhead Function Cost Drivers Support Functions Support Function Cost Drivers Overhead Functions Overhead Function Cost Drivers Building Planning Development Approvals Divisions Processing Effort Site Plan Subdivison Support Function Cost Drivers Overhead Function Cost Drivers Engineering Residential Building Permits Other Engineering Inspections

42 Development Approvals Divisions i i Processing Effort Development Approvals Division staff processing time estimates for each costing category/ development user fee application X Historical average = annual user fee application volumes annual processing time for each Development Total = p Approvals Division staff position by costing category/ development user fee application Expressed percentage of total available processing capacity per Development Approvals Division staff position

43 Capacity Analysis Results Development fee processing effort estimates appear reasonable when measured against available annual processing capacity Planning Department t Approximately 55% of Planning Department available processing capacity is allocated to planning applications Majority of annual resourcing spent on Minor Variance/Consent, OPA/Rezoning, and Site Plan applications Does not include time related to planning policy, OMB hearings, general administrative time not related to applications

44 Capacity Analysis Results Building Department approximately 70% of Building Department processing capacity is utilized administering and enforcing the Building Code Act Majority of annual processing activity annually relates to residential permits (2/3 of processing activity) Does not include time related to bylaw enforcement matters or non-permit general administrative time Approximately 5% of annual effort from Infrastructure & Municipal Works is related to development fee processing activities (Site Plan and Minor Variance/Consent)

45 Costing Analysis Full cost recovery fees include: Direct costs salaries, wages, benefits, materials and supplies, contracted services, etc. Indirect costs corporate support and overhead costs allocated based on City s indirect cost allocation model (e.g. Information Technology, Human Resources, Finance, etc.) Full cost fees are calculated lated on a per application/permit basis and compared with City fees or actual revenues per application for same applications used in the capacity model (i.e. costing analysis)

46 Annual Net Position Impacts Aggregate fiscal impacts Planning and building permit applications account for $1.3 million in costs annually (92% direct costs and 8% indirect costs) Revenue estimates suggest the City is recovering $582,100 annually in revenue or 46% cost recovery Planning applications are recovering 15% of costs Building permit fees are recovering 67% of costs SUMMARY ANNUAL NET POSITION Total Planning Building Direct Costs 1,164, , ,739 Indirect Costs 107,190 50,384 56,805 Full Cost 1,271, , ,544 Existing Fee Revenues 582,063 78, ,100 Net Position (689,736) (447,292) (242,444) 444)

47 Planning Application Fees Full Cost Recovery Position Annual Costs (2011$) Annual Net % Cost Direct Indirect Total Revenues Position Recovery Site Plan 104,710 13, ,896 11,700 (106,196) 10% Minor Variance 146,094 14, ,843 19,305 (141,538) 12% Consent for Severance 45,312 4,702 50,014 9,100 (40,914) 18% OPA 14,085 1,322 15,407 4,000 (11,407) 26% Subdivision i i 16,269 1,632 17, (16,911) 6% Subdivision Amendment for Prior Plan Approv 11,324 1,176 12,500 - (12,500) 0% Condo Standard 5, , (5,232) 11% Condo Conversion 7, , (7,157) 8% ZBA 73,463 6,778 80,241 12,000 (68,241) 15% Lifting of Hold Symbol 2, , (1,609) 30% Heritage Designation (49) 0% Zoning Compliance 13,009 1,357 14,366 1,100 (13,266) 8% ESA Phase I 2, , (1,484) 39% Work Order Report 34,588 3,676 38,264 17,650 (20,614) 46% Encroachment Agreement (173) 54% TOTAL 475,870 50, ,255 78,963 (447,292) 15% Total Allocation 90% 10% 100%

48 Full Cost Recovery Planning Application Fees Average Average Full Cost Fee Cost per Revenue per Adjustment Application Application % Site Plan 6, % Minor Variance 2, % Consent for Severance 1, % OPA 7,704 2, % Subdivision 17, % Subdivision Amendment for Prior Plan Approv 12,500 n/c n/c Condo Standard 5, % Condo Conversion 7, % ZBA 10,030 1, % Lifting of Hold Symbol 2, % Heritage Designation 49 n/a n/a Zoning Compliance % ESA Phase I % Work Order Report Encroachment Agreement %

49 Building Permit Fees Full Cost Recovery Position Building Permit Category Annual Costs (2011$) Annual Net % Cost Direct Indirect Total Revenues Position Recovery Group A - AssemblyNew 20,961 1,680 22,641 49,612 26, % Group A - AssemblyAddition/ Repair/Renovation 43,185 3,412 46,597 59,145 12, % Group B - InstitutionalNew 1, ,794 1, % Group B - InstitutionalAddition/ Repair/Renovation 12,894 1,018 13,912 25,387 11, % Group C - Residential - SingleNew 64,858 5,292 70,150 51,698 (18,452) 74% Group C - Residential - SingleAddition/ Repair/Renovation 209,325 16, ,052 15,727 (210,325) 7% Group C - Residential - Doubles - (Duplex, Semi)New 37,054 3,036 40,091 20,898 (19,193) 52% Group C - Residential - Doubles - (Duplex, Semi)Addition/ Repair/Renovati 38,352 3,103 41,454 1,974 (39,480) 5% Group C - Residential - MultiplesNew 12,658 1,009 13,667 47,188 33, % Group C - Residential - MultiplesAddition/ Repair/Renovation 39,664 3,140 42,803 6,667 (36,137) 16% Group C - Residential - Accessory Buildings 44,419 3,708 48,127 7,393 (40,734) 15% Group D & E - Office/ Personal Service/ MercantileNew 8, ,204 28,249 19, % Group D & E - Office/ Personal Service/ MercantileAddition/ Repair/Renova 54,081 4,311 58,393 28,192 (30,201) 48% Group F - IndustrialNew 3, ,832 94,696 90, % Group F - IndustrialAddition/ Repair/Renovation 11, ,814 19,290 6, % Demolition Permits 12,366 1,154 13,520 2,900 (10,620) 21% Change of Use/Location/No Construction , ,593 1,500 (2,093) 42% Temporary Building 4, , (3,569) 18% Fence Permit 42,604 4,685 47,289 7,550 (39,739) 16% Conditional Permits 23,402 1,839 25,241 32,443 7, % TOTAL 688,739 56, , ,100 (242,445) 67% Total Allocation 92% 8% 100%

50 Full Cost Recovery Building Permit Fees Average Average Full Cost Fee Building Permit Category Cost per Revenue per Adjustment Permit Permit % Group A - AssemblyNew 2,516 5,512-54% Group A - AssemblyAddition/ Repair/Renovation 1,839 2,335-21% Group B - InstitutionalNew 2,691 - n/a Group B - InstitutionalAddition/ Repair/Renovation 2,087 3,808-45% Group C - Residential - SingleNew 1,739 1,282 36% Group C - Residential - SingleAddition/ Repair/Renovation 1, % Group C - Residential - Doubles - (Duplex, Semi)New 1, % Group C - Residential - Doubles - (Duplex, Semi)Addition/ Repair/Renovat 1, % Group C - Residential - MultiplesNew 2,733 9,438-71% Group C - Residential - MultiplesAddition/ Repair/Renovation 1, % Group C - Residential - Accessory Buildings % Group D & E - Office/ Personal Service/ MercantileNew 2,301 7,062-67% Group D & E - Office/ Personal Service/ MercantileAddition/ Repair/Renova 1, % Group F - IndustrialNew 2,299 56,818-96% Group F - IndustrialAddition/ Repair/Renovation 1,326 1,995-34% Demolition Permits % Change of Use/Location/No Construction % Temporary Building % Fence Permit % Conditional Permits 1,803 2,317-22%

51 Building Permit Fees Full Cost Recovery Position This increase does not provide additional funds to achieve service sustainability by the creation of a building permit stabilization reserve fund Considering historic building permit activity over the prior 15 years, a reserve fund target of approximately 1.7x annual direct costs (or $ million) should be considered Providing for accumulation over a 7-year period, would require an annual reserve fund contribution of $167,000 annually

52 Development Fee Recommendations Development fee recommendations for planning applications and building permit fees provided for stakeholder consultation and discussion prior to finalizing i background report Fee recommendations are based on average processing costs per application/permit, market comparators and phase-in over two year period

53 Planning Application Fee Recommendations Existing Application Type Fees per Revenue Fees per Revenue Fees per Revenue Application Estimate Application Estimate Application Estimate Site Plan ,700 3,600 64,800 6, ,896 Minor Variance , ,660 1, ,600 Consent for Severance 325 9,100 1,010 28,280 1,700 47,600 OPA 2,000 4,000 4,850 9,700 7,700 15,400 Subdivision i i ,450 9,450 17,900 17,900 Subdivision Amendment for Prior Plan Approval n/c - 6,250 6,250 12,500 12,500 Condo Standard ,740 3,740 6,830 6,830 Condo Conversion ,740 3,740 6,830 6,830 ZBA 1,500 12,000 5,750 46,000 10,000 80,000 Lifting of Hold Symbol ,500 1,500 2,300 2,300 Heritage Designation n/a Zoning Compliance 50 1, , ,300 ESA Phase I , ,400 Work Order Report 50 17, , ,300 Encroachment Agreement TOTAL 78, , ,276 Cost Recovery % 15% 55% 94%

54 Building Permit Fee Recommendations Existing Building Permit Category Fees per Revenue Fees per Fee Increase Revenue Fees per Fee Increase Revenue Permit Estimate Permit % Estimate Permit % Estimate Group A - AssemblyNew 5,512 49,612 6,584 19% 59,256 7,656 16% 68,905 Group A - AssemblyAddition/ Repair/Renovation 2,335 59,145 2,789 19% 70,655 3,243 16% 82,145 Group B - InstitutionalNew 2,691 1,794 3,214 19% 2,143 3,737 16% 2,491 Group B - InstitutionalAddition/ Repair/Renovation 3,808 25,387 4,549 19% 30,327 5,289 16% 35,260 Group C - Residential - SingleNew 1,282 51,698 1,531 19% 61,750 1,780 16% 71,803 Group C - Residential - SingleAddition/ Repair/Renovati 76 15, % 28, % 41,400 Group C - Residential - Doubles - (Duplex, Semi)New ,898 1,189 19% 24,969 1,382 16% 29,024 Group C - Residential - Doubles - (Duplex, Semi)Additio 49 1, % 5, % 8,000 Group C - Residential - MultiplesNew 9,438 47,188 11,273 19% 56,365 13,108 16% 65,538 Group C - Residential - MultiplesAddition/ Repair/Renov 230 6, % 6, % 5,800 Group C - Residential - Accessory Buildings 79 7, % 13, % 18,800 Group D & E - Office/ Personal Service/ MercantileNew 7,062 28,249 8,435 19% 33,740 9,809 16% 39,234 Group D & E - Office/ Personal Service/ MercantileAddi , % 33, % 39,155 Group F - IndustrialNew 56,818 94,696 67,865 19% 113,108 78,913 16% 131,522 Group F - IndustrialAddition/ Repair/Renovation 1,995 19,290 2,383 19% 23,036 2,772 16% 26,791 Demolition Permits 100 2, % 4, % 5,800 Change of Use/Location/No Construction 200 1, % 1, % 2,250 Temporary Building % 1, % 1,600 Fence Permit 50 7, % 15, % 22,650 Conditional Permits 2,317 32,443 2,768 19% 38,752 3,219 16% 45,059 TOTAL 503, , ,170 Cost Recovery % 67% 78% 94% Based on $10.75/$1, of value in 2012 and $12.50/$1, value l in 2013

55 Municipal Development Fee Comparison (1,000 sq.mt. - Site Plan, Zoning Bylaw Amendment) $45,000 Development Fee Comparison 1,000 m 2 Retail Development $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Site Plan Zoning Building Permit Fees

56 Fee Comparison with Development Charges (1,000 sq.mt. - Site Plan, Zoning Bylaw Amendment) $300,000 Development Fee & DC Comparison 1,000 m 2 Retail Development $250,000 $200,000 $150,000 $100,000 $50,000 $ Site Plan Zoning Building Permit Fees Development Charges

57 Municipal Development Fee Comparison (50 unit - Subdivision) $3,500 Development Fee Comparison 50 Single Dwelling Unit Subdivision (cost per unit) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $ Subdivision Building Permit Fees

58 Fee Comparison with Development Charges (50 unit - Subdivision) $45,000 Development Fee & DC Comparison 50 Single Dwelling Unit Subdivision (cost per unit) $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Subdivision Building Permit Fees Development Charges

59 Municipal Development Fee Comparison (Minor Variance Application) $2,000 Development Fee Comparison Minor Variance $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ Minor Variance

60 Next Steps Receive input from the Development Stakeholder Group proposed fees Prepare final report and fee recommendations to Council April 10 th Statutory Public Meeting at PAC May 22 nd Report to Council for adoption June 11 th Implementation date July 1 st