Case Number File Number Appellant Neighbourhood and Legal Description PL101016* PL101036** PL101037***

Transcription

1 OMB Case No. PL et al OMB File No.? ONTARIO MUNICIPAL BOARD IN THE MATTER OF subsection 22(7), subsection 34(11), and subsection 51(34) of the Planning Act, R.S.O. 1990, c. P.13, as amended from Council s neglect to enact proposed amendments to the City of Pickering s Official Plan, Zoning By-law, and failure to make a decision respecting proposed residential plans of subdivision in the City of Pickering in regards to the Seaton Community. Case Number File Number Appellant Neighbourhood and Legal Description PL101016* PL101036** PL101037*** Ontario Limited Neighbourhood 6, Seaton Community, City of Pickering, Being Part Lots PL101017* PL101018* PL101019* PL101020* PL101021* PL101034** PL101035*** PL101032** PL101033*** PL101056** PL101057*** PL101024** PL101025*** PL101026** PL101027*** PL101038** PL101039*** PL101040** PL101041*** PL101044** PL101045*** PL101042** PL101043*** 23-25, Concession Ontario Limited Neighbourhood 10, Seaton Community, City of Pickering, Being Part Lots 22-25, Concession Ontario Limited Neighbourhood 11, Seaton Community, City of Pickering, Being Part Hunley Homes Limited Ontario Limited Affiliated Realty Corporation Chestermere Investments Limited Zavala Developments Incorporated Zavala Developments Incorporated Hunley Homes Limited Ontario Limited Affiliated Realty Corporation Chestermere Investments Limited Zavala Developments Incorporated Hunley Homes Limited Ontario Limited Affiliated Realty Corporation Chestermere Investments Limited Zavala Developments Incorporated Hunley Homes Limited Ontario Limited Affiliated Realty Corporation Chestermere Investments Limited Lots 23-26, Concession 3, et al. Neighbourhood 3, Seaton Community, City of Pickering, Being Part Lots 25-28, Concession 5 Neighbourhood 4, Seaton Community, City of Pickering, Being Part Lots 25-28, Concession 4 Neighbourhood 5, Seaton Community, City of Pickering, Being Part Lots 24, Concession 5, et al. H:\Pickering\Cam Watson Seaton Witness Statement.docx

2 Case Number File Number Appellant Neighbourhood and Legal Description PL101054** PL101055*** White Sun Developments Limited Case Number File Number Appellant Neighbourhood and Legal Description PL101022* PL101028** PL101029*** PL101030** PL101031*** Zavala Developments Incorporated Hunley Homes Limited Ontario Limited Affiliated Realty Corporation Neighbourhood 9, Seaton Community, City of Pickering, Being Part Lots 20, 27, Concession 4, et al. PL101023* PL101343* PL101344* PL101345* PL111108* PL111109* PL111110* PL101046** PL101047*** PL101048** PL101049*** PL101050** PL101051*** PL101052** PL101053*** PL101353*** PL101354** PL101351*** PL101352** PL101349*** PL101350** Chestermere Investments Limited White Sun Developments Limited Neighbourhoods 1 and 2, Seaton Community, City of Pickering, Being Part Lots 30, Concession 5, et al. Mattamy (Seaton) Limited Neighbourhood 7, Seaton Community, City of Pickering, Being Part Lots 21 and 22, Concession 4 and 5 Mattamy (Seaton) Limited Neighbourhood 8, Seaton Community, City of Pickering, Being Part Lots 20 and 21, Concession 4 and 5 Mattamy (Seaton) Limited Neighbourhood 11, Seaton Community, City of Pickering, Being Part Lots 23-26, Concessions 3 and 4 Ontario Infrastructure and Lands Corporation Ontario Infrastructure and Lands Corporation Ontario Infrastructure and Lands Corporation Neighbourhood 17, Seaton Community, City of Pickering, Being Part Lots 19, 20 and 21, Concession 3 Neighbourhood 20, Seaton Community, City of Pickering, Being Part Lots 16, 17, 18, 19, 20 and 21, Concession 4 Neighbourhood 21, Seaton Community, City of Pickering, Being Part H:\Pickering\Cam Watson Seaton Witness Statement.docx

3 Case Number File Number Appellant Neighbourhood and Legal Description Lots 17-34, Concession 5 PL PL120641** PL120642*** * Proposed Official Plan Amendment ** Proposed Zoning By-law Amendment *** Proposed Draft Plan of Subdivision Ontario Infrastructure and Lands Corporation Neighbourhood 21, Seaton Community, City of Pickering, Being Part Lots 21-28, Concession 5 WITNESS STATEMENT OF CAMERON N. WATSON WATSON & ASSOCIATES ECONOMISTS LTD. PLAZA THREE, ARGENTIA ROAD MISSISSAUGA, ONTARIO L5N 1V9 May 7, 2013 H:\Pickering\Cam Watson Seaton Witness Statement.docx

4 TABLE OF CONTENTS Page 1. Introduction Qualifications Retainer Issues to be Addressed Materials Reviewed Summary of Conclusions Opinion Response to Specific Issues 4 APPENDICES APPENDIX A - CURRICULUM VITAE FOR CAMERON N. WATSON A-1 APPENDIX B - FISCAL IMPACT OF THE SEATON COMMUNITY RE: CITY OF PICKERING SERVICE PROVISION, APRIL 10, 2013 B-1 APPENDIX C - EXPERT S DUTY FORM C-1 APPENDIX D - PER CAPITA LEVEL OF SERVICE ANALYSIS FOR SEATON CAPITAL REQUIREMENTS D-1 H:\Pickering\Cam Watson Seaton Witness Statement.docx

5 INTRODUCTION 1.1 Qualifications General I have specialized in municipal finance and demographic studies for the past forty years. I founded, a 20-person firm, thirty years ago and prior to that worked as Vice President, Management Consulting at Giffels Engineering, principal of Strategic Planning Services Inc. and Director of Planning, Ontario Ministry of Government Services. I contributed to the preparation of the Ministry of Municipal Affairs and Housing ( MMAH ) User Guide for the Development Charges Act, 1989, S.O c.58 ( DCA, 1989 ) and to MMAH s consultation program for the Development Charges Act, 1997, S.O. 1997, c. 27, as amended (the DCA, 1997 ). I made presentations to the Legislative Committee reviewing the Bill in both cases and have made a substantial number of seminar presentations on the subject I have carried out several dozen municipal fiscal impact studies for municipalities across Ontario for new towns, rapid transit and expressway infrastructure, shopping centres, residential and industrial subdivisions, business parks, estate residential subdivisions, as well as municipal-wide analyses with broad application in Regional Official Plan updates, land use redesignation, boundary expansion and major undertakings, such as nuclear projects. Development Charge Client Base I have acted as a DC advisor for over 20 years in each case for municipalities that include the Regional Municipalities of Halton, Durham and York, the Cities of Ottawa, Pickering, Oshawa, Burlington and the Towns of Ajax, Whitby, Caledon, Niagara-on-the-Lake, and for lesser periods of time for Toronto, Peel Region, Niagara Falls, Niagara Region, Waterloo, Regina, North Bay, Brantford, Pelham, Welland, Brant and others. Pickering Experience Over the Past 23 Years Some of the projects that I have been significantly involved with for the City of Pickering include: Development Charge Background Studies in 1991, 1999, 2004 and 2009; Municipal-wide Financial Review in 2003; Peer reviewed Seaton Fiscal Impact Analysis; ; Seaton FIS in 2012/13. Expert s Duty I have completed the Expert s Duty form, which is attached to this witness statement as Appendix C. I have attached my curriculum vitae to this witness statement as Appendix A H:\Pickering\Cam Watson Seaton Witness Statement.docx

6 Retainer I was retained by the City of Pickering in 2009 to peer review the Seaton FIS being prepared by IBI for the landowners and in October, 2012 to prepare an assessment of the Fiscal Impact of the Seaton community on the City of Pickering. This report was to be based on 2012 expenditures and tax-purpose assessment values, as well as the capital program, facility-related operating expenditures, per capita operating expenditures and other forecasting assumptions considered to be applicable. 1.3 Issues to be Addressed I will address issues 2 and 32 set out on Attachment 5 to the (revised) Procedural Order issued by the Ontario Municipal Board ( OMB ) in this matter on April 8, 2013 which are as follows: City of Pickering 2. Have appropriate financial measures, incentives, agreements and controls been put in place to ensure the Seaton Community does not become a financial burden on the City of Pickering, as set out in section 2.14(c)(vii) of the Pickering Official Plan? If not, should the draft plans of subdivision be approved? Whitevale and District Residents Association 32. Are there appropriate measures and financial agreements to ensure the development of the community does not cause a financial burden on either the City of Pickering or the Regional Municipality of Durham with respect to facilities, services and infrastructure? 1.4 Materials Reviewed 2012 City of Pickering Budget; 2009 City of Pickering Development Charge Study; IBI/Planning Alliance Growth Forecasts; Region of Durham Seaton Area-specific DC Background Study for Water and Sewer Works. 1.5 Summary of Conclusions My report is entitled, Fiscal Impact of the Seaton Community Re: City of Pickering Service Provision, April 10, This report forms part of my witness statement as Appendix B. Page (ix) of my report summarizes the anticipated taxrelated impact of the Seaton community on the City of Pickering over the period. The analysis indicates that during the period, Seaton s servicing and operating requirements are expected to produce a cumulative City tax fund deficit totalling approximately $7.7 million by This deficit thereafter diminishes annually, but is not expected to become a cumulative surplus until approximately 2027, increasing in size to H:\Pickering\Cam Watson Seaton Witness Statement.docx

7 If no additional funding is available, in order for the City to finance this tax fund deficit, it would be necessary for the City to increase its tax levy. Raising approximately $1.55 million/year for five years would require a 3.3% tax increase, based on the City s 2012 tax levy (and a lesser amount based on its tax levy). This is the estimated magnitude of the financial burden expected to be created by the Seaton community on the City, in the absence of financial assistance from the landowners, beyond full financial coverage of the roads program This fiscal burden would be larger if the blended York Region/Durham Region assessment estimates that have been used, serve to overstate the assessments that are ultimately put in place. While these estimates generally appear to be reasonable, York Region s housing market is much more buoyant than Durham s and the occurrence in Seaton of the values used in the assessment analysis is not assured. In addition, the office and industrial development density (and assessment per acre) assumptions are somewhat optimistic and high end. Further, if the rate of development falls short of the forecast and the City has already proceeded with the various capital program components, the anticipated tax shortfall may be increased The prospect of approximately 1-2 million dollars per year in tax surpluses post 2031 represents a healthy outlook once that point is attained; however, the present value of such a prospect must be significantly discounted as a result of the long term uncertainties involved, as well as the time value of money. For this reason, I consider it important to the City s fiscal well-being that the tax fund deficits anticipated for the period, be eliminated from the outset Based on many months of discussion and negotiations, as well as FIS review, the Seaton landowners have proposed a number of financial contributions designed to eliminate the deficits. Some of these involve increasing City revenues, while others involve reducing City Seaton-related expenditures. The only such revenue-related measure included in my analysis at present relates to the proposed approach to funding transportation capital, wherein it is assumed that the entire Seaton roads capital program will be front-end financed by the landowners, who will fully absorb the DC deduction for benefit to existing development, as well as institutional and any other DC exemptions. This would leave the City fully revenue-neutral with respect to the provision of Transportation capital for Seaton; however, as of this date, the landowners have not fully accepted this obligation The landowners economic consultant (Randy Grimes of IBI) has contended that any funding gap could be adequately filled by means of: a) showing the benefit to existing development deduction for development charge purposes, applicable to the Seaton capital program as being a rest of Pickering fiscal responsibility, rather than a Seaton fiscal responsibility. We have shown this cost item to be a Seaton fiscal responsibility, in that it is Seaton that is generating the need for the capital expenditures and is almost exclusively the beneficiary thereof. H:\Pickering\Cam Watson Seaton Witness Statement.docx

8 - 4 - b) showing smaller growth-related percentages for those services on p. D-6 that are forecast on a per capita basis (e.g. General Government, Planning, Operations, etc.). This amounts to assuming that these services will be subject to larger economies of scale as the City substantially increases its population over time, i.e. that the population increment can be served at, say, 85 per dollar of existing expenditures per capita, rather than $1.00 per capita, as at present, or $0.90 per capita as I have assumed in several cases. Different assumptions have been used in this analysis for Seaton over the years. Those contained in my report are the result of discussions with staff, review of how Pickering s per capita costs by service compare with those of larger municipalities and consideration of a study which found the presence of diseconomies of scale for growth in municipalities of Pickering s size. In most cases, we have assumed the existence of 5-15% economies of scale and consider these to be suitable allowances. c) trimming the capital costs for parks, recreation facilities and libraries to amounts equal to what can be covered by the DC service level cap. The expenditures beyond this cap represent a direct tax funding responsibility. In addition, they involve an additional cost for DC exemptions and deductions. Staff have sized and costed the Seaton facility requirements in order to meet the requirements of this major new community. Appendix D indicates that, over the long term, Seaton s capital program is within the historical 10-year level of service cap prescribed by the Development Charges Act. To the extent that Seaton s capital expenditures exceed the cap in the short term, this is a temporary circumstance and the result of project timing and front-ending requirements. Further, this cap is a development charge calculation constraint and not specifically an operating fund expenditure limit. 1.6 Opinion Response to Specific Issues Issue #2 Issue #2 is as follows: City of Pickering 2. Have appropriate financial measures, incentives, agreements and controls been put in place to ensure the Seaton Community does not become a financial burden on the City of Pickering, as set out in section 2.14(c)(vii) of the Pickering Official Plan? If not, should the draft plans of subdivision be approved? H:\Pickering\Cam Watson Seaton Witness Statement.docx

9 Issue #32 Issue #32 is as follows: Whitevale and District Residents Association 32. Are there appropriate measures and financial agreements to ensure the development of the community does not cause a financial burden on either the City of Pickering or the Regional Municipality of Durham with respect to facilities, services and infrastructure? My response to the two issues, which are essentially the same in regard to the City-specific impact, is as follows: a. Financial contributions have been discussed between the City and the landowners. Agreements have not yet been reached and the landowners have not provided a dollar estimate of these proposed contributions. b. The City s cumulative tax fund shortfall peaks at $7.7 million. In calculating it, I have assumed that the landowners absorb the entirety of the Roads capital cost, inclusive of the benefit to existing development deduction and the full institutional exemption for all Seaton-related roads (internal and external). c. It is not sufficient that the City forecast a break even tax impact in the early years of Seaton s development. It also requires an additional financial buffer or contingency amount to equip it to deal with possible revenue shortfalls (e.g. lower per unit assessment levels), as well as possible cost over-runs. d. Unlike the Region, the City has not yet adopted an updated Development Charge By-law including coverage for Seaton. The FIS includes preliminary estimates of the DC calculations, but the final Background Study and Bylaw(s) are not expected to be ready for City Council consideration for some time, as their calculation involves the inclusion of servicing requirements of the rest of Pickering, as well as Seaton. e. Consistent with the requirements of the Central Pickering Development Plan Amendment No. 1 (June 6, 2012 paragraph 22), prior to the approval of the final plans of subdivision and/or removal of holding symbols in the zoning bylaw, appropriate measures and financial agreements are to be in place. In my opinion, these measures and agreements include the following: 1) City Council-approved development charge by-laws, whether Seaton area-specific and/or Pickering City-wide, that address all of Seaton s capital requirements and are not subject to appeal by the Seaton landowners or their representatives. 2) Agreement by the landowners to assume full funding responsibility for the provision of the entire Seaton-related road program, in accordance with timing, standards and inclusions agreed to by the City. 3) Agreement by the landowners to provide voluntary financial contributions to the City, such that the annualized operating fund forecast in the Fiscal Impact Study shows a sufficiently large fiscal surplus in each year to the H:\Pickering\Cam Watson Seaton Witness Statement.docx

10

11 APPENDIX A CURRICULUM VITAE FOR CAMERON N. WATSON H:\Pickering\Cam Watson Seaton Witness Statement.docx

12 A-1 H:\Pickering\Cam Watson Seaton Witness Statement.docx

13 A-2 H:\Pickering\Cam Watson Seaton Witness Statement.docx

14 A-3 H:\Pickering\Cam Watson Seaton Witness Statement.docx

15 A-4 H:\Pickering\Cam Watson Seaton Witness Statement.docx

16 A-5 H:\Pickering\Cam Watson Seaton Witness Statement.docx

17 A-6 H:\Pickering\Cam Watson Seaton Witness Statement.docx

18 A-7 H:\Pickering\Cam Watson Seaton Witness Statement.docx

19 A-8 H:\Pickering\Cam Watson Seaton Witness Statement.docx

20 A-9 H:\Pickering\Cam Watson Seaton Witness Statement.docx

21 A-10 H:\Pickering\Cam Watson Seaton Witness Statement.docx

22 A-11 H:\Pickering\Cam Watson Seaton Witness Statement.docx

23 APPENDIX B FISCAL IMPACT OF THE SEATON COMMUNITY RE: CITY OF PICKERING SERVICE PROVISION, APRIL 10, 2013 H:\Pickering\Cam Watson Seaton Witness Statement.docx

24 B-1 THE MUNICIPAL FINANCIAL IMPACT OF THE SEATON COMMUNITY ON THE CITY OF PICKERING APRIL 10, 2013

25 B-2 EXECUTIVE SUMMARY CONTENTS Page 1. INTRODUCTION 1.1 Background Terms of Reference THE SEATON GROWTH FORECAST 2.1 Introduction Growth Forecast Overview Non-residential Forecast Assumptions SEATON S CAPITAL REQUIREMENTS 3.1 Capital Forecast to Development Charge Coverage SEATON DEVELOPMENT CHARGES 4.1 Introduction Pickering s Current Development Charges The City s 2009 Development Charge Calculation Seaton Area-specific Development Charges SEATON S OPERATING EXPENDITURE REQUIREMENTS 5.1 The City s 2012 Operating Budget Framework Capital-related Operating Expenditures Per Capita/Employee Operating Expenditures Capital Spending from the Current Budget Operating Expenditure Summary SEATON S PROPERTY TAX YIELD 6.1 Introduction Assessment Sample Tax Yield OPERATING AND CAPITAL FUND IMPACTS 7-1 APPENDICES A SEATON GROWTH FORECAST A-1 B SEATON-RELATED CAPITAL (AND RELATED OPERATING COST) FORECAST B-1 C DEVELOPMENT CHARGE CALCULATION MATERIAL C-1 D CITY OF PICKERING 2012 OPERATING BUDGET MATERIAL D-1 E SEATON ASSESSMENT SAMPLE E-1 F SENSITIVITY CALCULATIONS F-1 (i)

26 B-3 EXECUTIVE SUMMARY

27 B-4 (i) EXECUTIVE SUMMARY 1. Objective This report has been prepared for the City of Pickering in order to provide a high level estimate of the fiscal impact that development of the Seaton Community is expected to have on City property taxes, development charges and debenture debt requirements. This evaluation addresses annual impacts , with broad reference to the post 2031 period. 2. Growth Forecast a) Phase 1 of the Seaton development ( ) is assumed to develop 12,872 housing units 1, occupied by 36,541 persons 1 plus 7,395,049 sq.ft. of institutional, retail, community commercial, office and employment lands development (non-residential) accommodating 9,295 employees (Table ES-1). b) Subsequent phases of the Seaton development ( ) are assumed to add 7,712 housing units, occupied by 18,822 persons, plus 9,812,249 sq.ft. of non-residential floor area accommodating 10,939 employees. c) The final phase of the Seaton development ( Intensification ) , could potentially add 6,516 high density housing units, plus a variable amount of nonresidential development and employment. 3. Capital Requirements This fiscal impact analysis is based on the assumption that all Seaton collector/arterial roads, Regional road sidewalk and streetlight enhancements (as per Table ES-6), local roads and stormwater infrastructure are to be fully funded (and constructed) by the Seaton landowners. This financing arrangement is assumed to apply fully to roads within the Provincially-owned lands as well. In addition, it is assumed that the Seaton District parkland area is to be acquired by the City at no cost. The capital and operating funding for the remaining Seaton capital requirements is addressed herein. 1 Inclusive of 849 units (and 2,437 population) to be developed in 2021, post completion of Phase 1.

28 B-5 (ii) Year Low Density Medium Density Residential Employment Land Total Employment Non-Employment Land Population Acres 1 GFA Sq.ft. Acres Units Total GFA Sq.ft. High Total Retail Office Instituti Other Live/ Density Units onal Private Work Sector Institutional ,839 5, , ,839 5, , , ,957 1, , ,839 5, , , , ,839 5, , ,568 65, ,232 1, ,839 5, , , , , ,839 5, , , , , ,838 5, , ,278 65, ,034 Phase 1 Sub-total 2 5,254 5,251 2,367 12,872 36, ,271, ,253, ,422 5,632 3,663 9, ,839 5, , , ,776 65, , ,839 5, , , , , , ,388 3, , ,776 65, , , , , ,776 65, , , , , , , , , ,960 65, , , , , , , , Subsequent Phases Sub-total 1,899 2,542 3,271 7,712 18, ,739, ,256 1,395,104 1,002,916 7,208 3,731 10,939 Total to ,153 7,793 5,638 20,584 55, ,011, ,927,710 1,395,104 1,873,338 12,840 7,394 20,234 Note: Excludes work at home and no fixed place of work employment, as well as Census undercount provision for population. 1 Includes 41.2 acres of Regional/Institutional development in 2016 and one acre in Phase 1 total including units occurring in the latter portion of Table ES-1 Seaton Community Growth Forecast Employment Land Non- Employment Land H:\Pickering\[Pickering FIS.xlsx]Table ES-1 (2)

29 B-6 (iii) 4. Development Charges a) The estimated Phase 1 City-wide development charge for services other than roads that can be imposed to fund the capital program totals $7,449, also excluding local (but not City-wide) stormwater infrastructure, which is to be fully funded by the landowners (Table ES-2). b) Pickering s development charges are among the lowest in the GTA. The estimated Citywide development charges (excluding stormwater management, which does not form part of many municipal charges, and roads which is proposed to be an area-specific charge in order to facilitate developer front-end financing) is similar to the City s current charges (Table ES-2). This is as a result of a reduced level of benefit being provided to existing development by the Seaton works, facility replacement cost updates to 2012 and because of demographic differences relating to occupancy declines in Seaton vs. the rest of Pickering. Table ES 2 Comparison of Existing City and Proposed Pickering Development Charges Estimated Service Current $/sdu $/sq.ft. $/sdu $/sq.ft. City-wide Fire $ 271 $ - $ 557 $ 0.23 Parks & Recreation $ 2,788 $ - $ 5,008 $ 0.38 Operations incl. w/ Transportation $ 488 $ 0.20 Library $ 538 $ - $ 852 $ 0.06 Studies $ 91 $ - $ 141 $ 0.06 City-wide Stormwater Management $ 1,424 $ 0.94 $ 403 $ 0.20 Sub-total $ 5,112 $ 0.94 $ 7,449 $ 1.13 Transportation -Seaton Area-specific n/a $ 2,024 $ Rest of Pickering $ 5,002 $ 3.10 n/a n/a Total $ 10,114 $ 4.04 $ 9,473 $ 1.79 Seaton Employment Land Area Charge $ - $ - $ - $ 24,599 (per net acre) Calculation outlined in paragraph A City-wide Transportation charge would be approx. $3,200/SDU n/a = not available H:\Pickering\[Seaton Ph 1 DC Estimates.xlsx]DC Summary

30 B-7 c) Because of uncertainties concerning the timing and density of development expected to occur on Seaton employment lands, it is proposed that the development charge for that area be imposed on a land area basis (rather than a building floor area basis). This approach also encourages intensification, benefits the City s capital funding cash flow and avoids the industrial expansion exemption revenue loss. An additional property tax funding requirement would be involved (re DC exemptions for industrial expansions) if this recommendation is not accepted. d) The estimated City-wide stormwater management charge is expected to be significantly reduced, as a result of holding the growth-related program constant and spreading the costs over Seaton development, as well as the rest of Pickering. The five soft service components of the charge are expected to increase substantially as a result of the impact of Seaton, which is of benefit to the City. These charges have been calculated on a City-wide basis, consistent with standard municipal practice. This provides the City with increased flexibility in terms of the way in which it prioritizes development charge projects and deploys the DC reserve funds. The transportation development charge for Seaton has been estimated on an areaspecific basis in order to facilitate front-end financing and any other cost recovery arrangements outlined in paragraph 9(c) below. The development charge for Transportation applicable to the rest of the City has not yet been estimated, but is expected to be higher than the Seaton Transportation charge, consistent with the existing charge. e) It is proposed that the City s non-residential charges be expanded to cover all services in the City s next development charge by-law. This is consistent with general municipal practice but differs from the City s current (2009) approach. 5. Operating Expenditure Requirements Seaton s operating expenditure requirements have been estimated in four categories: (iv) the operating cost implications of the various facilities in the Seaton capital program; per capita and per expenditure estimates for services such as General Government and HQ program administration and support, which are not addressed on a facility basis; the development charge funding gap which relates to DC exemptions, expenditures beyond the service level cap, the 10% statutory deduction and ineligible services such as the City Hall expansion; and capital spending from the current budget and associated reserve contributions.

31 B-8 (v) 6. Seaton Property Tax Revenues Using 2012 tax rates, the Seaton growth forecast has been translated into assessment increments based on assessment samples taken for development considered to be comparable by the landowners. By the end of Phase 1 in 2021, these tax revenues are expected to cumulate to $18.1 million/year (2012 $). Sensitivity tests have been applied in item #8 below, to broadly consider the implications of lower assessment levels and/or slower growth rates. 7. Operating and Capital Fund Impacts a) The Phase 1 operating fund impacts for Seaton show an annual deficit each year , in the $ million/year range. The annual deficits have been levelled to some extent, through the assumed issuance of a 10-year debenture for the $7 million City Hall expansion. b) The City is facing a cumulative operating fund shortfall in the order of $6.7 million by 2021, as a result of Seaton Phase 1 ( ). Seaton Phase 2 ( ) shows annual operating fund surpluses with one minor exception. The cumulative operating fund surplus is in the order of $11.1 million as a result of Seaton Phase 2 ($4.4 million surplus ). The components of these shortfalls and surpluses are summarized in Table ES-3. c) The Seaton non-road capital program is to be funded by development charge revenues and contributions from the operating fund addressing development charge recovery gaps. City-wide Development Charges for services other than roads in Phase 1 is expected to produce $103.2 million in revenue for the $121.2 million non-roads capital program for Phase 1. The remaining $18.0 million will need to be tax funded, $13.3 million can be attributed to Seaton alone, and $4.7 million attributed to South Pickering. In Phase 2, a further balance of $18.8 million ($15.4 million attributed to Seaton and $3.4 million to South Pickering) is required to be tax funded for the $84.0 million non-roads capital program in Phase 2. d) Figure ES-1 graphs the annual capital revenues and expenditures, showing the peaks in 2020/21 and 2029/30. These are expected to be fundable without debt, based on the growth, development charge, and tax funding estimates, which have been used. e) The Seaton roads capital program is expected to be front end financed by the landowners, which leaves the City in a revenue neutral position for this particular service. Seaton area-specific Development Charges for roads are expected to produce $42.1 million in revenue for the $46.1 million road capital program for the period. The remaining $4.0 million is understood to be the funding responsibility of the landowners.

32 B-9 (vi) Table ES-3 Seaton Operating Fund Impact Financial Component Seaton Phase Millions (2012$) Seaton Phase Revenue Property Taxes Non-tax Revenues Total Revenue Expenditures Facility-related Operating (excl SWM) (24.6) (128.3) (153.0) SWM Operating Costs (2.0) (15.8) (17.8) Per Capita/Employee Operating (34.4) (162.2) (196.6) Capital From Current (3.1) (15.3) (18.4) Transfers to Capital (i.e. DC Exempt., 10% Deduction) (15.3) (31.2) (46.4) City Hall Debt (4.8) (3.2) (8.0) Total Expenditures (82.2) (340.2) Forecast Total Operating Surplus (Deficit) Over the Period (6.7) Total H:\Pickering\[Pickering FIS.xlsx]Table ES-3 & ES-4 Millions Figure ES-1 Seaton Annual DC Non-road Capital Expenditures and Funding Sources (2012$) (excluding Storm Water Management) Development Charges Tax Contributions DC Capital Expenditures H:\Pickering\[Pickering FIS.xlsx]Figure ES-1

33 B-10 f) Seaton growth-related capital expenditures post 2031 are expected to be limited but have not been considered in detail. Significant development charge revenues would be gradually generated over the succeeding 20-year period, if the assumed level of redevelopment materializes. 8. Sensitivity Analysis a) The fiscal circumstances noted above would be negatively affected if the forecast rate of Seaton growth is lower than anticipated and/or if the actual average assessment per unit is less than the average for the assessment sample which was used as an estimate. Variances within this range are possible and should be considered as part of assessing the downside risk. In this regard, the implications of two possible scenarios were broadly examined. They are as follows: 1. Reduced Growth Rate Phase 1 residential development at an average rate of 1,200 single detached equivalent units per year, rather than 1,500 and/or employment land absorption at an average rate of 25 acres per year, rather than 40. For example, this could involve a reduced rate of high density development. In this case, the fiscal impact would depend on whether the City anticipated the growth slowdown in time to defer capital investments and per capita operating cost increases. The City would be able to minimize the problem through sound management, but a reduction in the cumulative Phase 1 operating position and/or DC reserve fund requirement of several million $ could be involved. 2. Reduced Assessment Values Average per unit and per acre assessment values which are 90% of those in the sample. If nothing else changed, this would add $6.5 million to the cumulative Phase 1 operating deficit and $36.5 million to the Phase 2 deficit. 9. Overall Conclusion a) Based on the assumptions herein, the Seaton development to 2031 is expected to produce a cumulative Operating Fund surplus over the 17 year period, of approximately $4.4 million, if no special funding assistance is provided to the City by the landowners (beyond what is referenced in paragraph (c) below). b) The forecast summarized on Table ES-4 Cumulative (Deficit)/Surplus indicates that cumulative deficits for the first six years, ranging up to $7.7 million, are anticipated. c) The proposed Seaton area-specific development charge for roads and related services was addressed. It is understood that the landowners will front-end finance and/or construct the Seaton road program, including both local roads and the development charge program (Table ES-6). They will fully assume the funding responsibility, with the (vii)

34 B-11 (viii) roads development charge revenues and development charge credits, flowed through to them by the City, in order to provide the basis for their internal recovery of costs. It is assumed that any road costs not covered by development charges as a result of exemptions or deductions will be funded by the landowners themselves. This arrangement reflects the rationale for establishing an area-specific development charge for this service, the small charge that is involved and previous undertakings made by the landowners. This leaves the City revenue neutral with respect to Seaton s road requirements. d) Accordingly, the City s annual operating impact of Seaton is estimated in Table ES-4 and Figure ES-3. These estimates are without specific consideration of the downside risk of potentially lower assessment values being realized (which could, conceivably also vary on the high side in some cases). e) The Seaton capital requirements are largely to be funded by development charges. The capital cost components which are not DC-fundable are covered by transfers which have been provided from the Operating Fund. As a result, the Seaton capital program is potentially fully funded, subject to the potential need for interim funding , as discussed in Section 7, above. The capital forecast is presented in Tables ES- 5 and ES-6 (roads). f) In recent months, the landowners group has offered to make various financial contributions which would serve to eliminate a significant portion of the funding gap noted above. These contributions, beyond the approach to funding the road program outlined in paragraph (c), have not been referenced herein.

35 B-12 (ix) TABLE ES-4 PICKERING'S SEATON-RELATED TAX FUND IMPACT Year Tax Fund (Deficit)/ Surplus Cumulative (Deficit) / Surplus Table 7-1 (excl interest cost) 2015 $ (1,242,147) $ (1,242,147) 2016 $ (2,302,572) $ (3,544,718) 2017 $ (2,490,475) $ (6,035,193) 2018 $ (1,318,178) $ (7,353,371) 2019 $ (315,904) $ (7,669,275) 2020 $ 292,909 $ (7,376,366) 2021 $ 700,726 $ (6,675,640) 2022 $ 2,765,527 $ (3,910,113) 2023 $ 961,589 $ (2,948,524) 2024 $ 60,288 $ (2,888,236) 2025 $ 55,469 $ (2,832,767) 2026 $ 1,401,025 $ (1,431,742) 2027 $ 1,839,475 $ 407, $ 1,828,153 $ 2,235, $ 450,692 $ 2,686, $ (45,327) $ 2,641, $ 1,794,664 $ 4,435,914 Total $ 4,435,914 1 Excluding full roads funding Figure ES-3 Annual Operating Fund (Deficit)/Surplus as per Table 7-1 (without additional Landowner Funding) Millions $8 $6 $4 $2 $- $(2) $(4) $(6) $(8) $(10) Table 7-1 (Deficit)/Surplus Cumulative H:\Pickering\[PickeringFIS.xlsx]Revised Summary

36 B-13 TABLE ES-5 CITY OF PICKERING SEATON-RELATED CAPITAL FORECAST (Excluding Roads and SWM) 000's $2011 (x) Total to Parks Neighbourhood Parks ,500 Village Greens ,750 District Park (Seaton Share) , ,000 1,000 1,000 1,000 1, ,000 Community Parks ,400 2, ,300-2, ,800 Trail Heads and Primary Trail Network ,300 Parks Equipment , Recreation - Seaton Recreation Complex ,729 21,285 21, ,300 Seaton Recreation Complex ,147 14,164 14,164-31,475 Complex 2 addition (34,000 sq.ft.) Administrative - City Hall Expansion (20,000 sq.ft.) 700 6, , Library - Seaton Regional Library (25,000 sq.ft.) ,299 5,845 5, ,990 Seaton Community Library (15,000 sq.ft.) ,038 3,038-6, Fire - Station A 1,700 4, ,000 Equipment , ,233 Station B ,250 3, ,750 Equipment , , Operations Centre & Equipment - Equipment ,098 Satellite Centre ,648 1,648-3,662 Central Facility 7, , Studies ,296 Total 10,616 10,600 1,967 7,899 9,727 31,680 31,224 1,699 5,975 8,400 2,133 4,899 1,300 4,187 19,216 19, , ,500 sq.ft. contains leisure pool, 2 rinks, fitness centre, double gym and hall/meeting rooms, seniors' centre, youth room ,000 sq.ft. contains pool, 2 rinks, fitness centre, double gym, multi-purpose activity rooms, youth room. H:\Pickering\[Seaton Ph 1 DC Estimates.xlsx]Table 1 Capital

37 B-14 (xi) TABLE ES-6 SEATON ROADS AND RELATED CAPITAL PROGRAM 2012$ Prj.No Increased Service Needs Attributable to Anticipated Development DC Recoverable Timing (year) Gross Capital Cost Estimate Benefit To Existing / Post Period Capacity Residential Share Non- Residential Share 74% 26% Res % 2 External Roads 1 Sideline 16 (North & South) ,200, ,000 5% 3,040,000 2,249, , % 2 Valley Farm Rd Intersection Improvements - 2 intersections including signalization , ,000 25% 600, , , % External Roads Sub-total 4,000, ,000 3,640,000 2,693, ,400 Regional Road Enhancements 9 Sidewalks and Streetlighting on Taunton ,748,000 87,400 5% 1,660,600 1,228, , % 10a Sidewalks & Streetlighting on Brock-5th Conc to ,000 30,400 5% 577, , , % 10b Sidewalks & Streetlighting on Brock-Taunton to 5th Conc ,000 38,000 5% 722, , , % 11 Sidewalks and Streetlighting on SL ,584, ,200 5% 2,454,800 1,816, , % 12 Sidewalks and Streetlighting on SL ,368,000 68,400 5% 1,299, , , % 13 Sidewalks and Streetlighting on Whitevale Bypass ,204, ,200 5% 2,093,800 1,549, , % 14 Sidewalks and Streetlighting on S Side of Hwy ,159,000 57,950 5% 1,101, , , % new Whites Road Multi-Use Path, Finch Avenue to Seaton Boundary (bridge) ,000 99,000 10% 891, , , % new Taunton Road Multi-Use Path, Seaton Boundary (bridge) to William Jackson Drive ,000 9,000 10% 81,000 59,940 21, % 15 Trails on Regional Roads ,897, ,875 5% 2,752,625 2,036, , % Regional Roads Enhancements Sub-total 14,408, ,425 13,634,075 10,089,216 3,544, % Internal Seaton Roads 16 Sideline 24 Oversizing ,240, ,000 5% 2,128,000 1,574, , % 17 Sideline 24 Within NHS ,300, ,000 5% 2,185,000 1,616, , % 18 New Structures for Sideline ,100, ,000 5% 2,945,000 2,179, , % 19 Oversizing E-W Collector - SL 22 & 26 north of Taunton ,000 38,500 5% 731, , , % 20 E-W Collector SL 22 & 26 north of Taunton with NHS ,000 23,000 5% 437, , , % 21 Structures on E-W Collector north of Taunton ,000 40,000 5% 760, , , % 6 MulberryLane Collector - (i.e. Road XI) m ,000 32,550 5% 618, , , % new Oversizing Fifth Concession Road, Brock Road to SL , ,000 25% 435, , , % 22 Oversizing Collector - SL 26 to Whitevale Bypass ,015,000 50,750 5% 964, , , % 23 Collector - SL 26 to White Bypass within NHS ,000 40,250 5% 764, , , % 24 New Structure for Collector - SL 26 to Whitevale Bypass ,000,000 50,000 5% 950, , , % 25 Oversizing E-W Collector - North Rd to Whitevale ,695, ,750 5% 2,560,250 1,894, , % 26 E-W Collector within NHS ,265,000 63,250 5% 1,201, , , % 27 New Structures for above ,500, ,000 5% 8,075,000 5,975,500 2,099, % 28 Oversizing Collector - above road to Whitevale Bypass ,000 31,500 5% 598, , , % 29 Oversizing new road on existing Brock north of 3rd ,000 42,000 5% 798, , , % Internal Seaton Roads Sub-total 27,651,000 1,498,550 26,152,450 19,352,813 6,799,637 Total Total 46,059,500 2,632,975 43,426,525 32,135,629 11,290, Cost moved to 2015 for Seaton purposes. 2 Seaton 2031 population 55,363. Seaton Employment 20,234. Res % = 55,363 (55, ,234) = 74%. H:\Pickering\[Seaton Ph 1 DCEstimates.xlsx]Roads DC

38 B INTRODUCTION

39 B INTRODUCTION 1.1 Background The policies of the Central Pickering Development Plan (CPDP) require the preparation of a Fiscal Impact Study to assess the financial implications of the development of Seaton for the City with respect to facilities, services and infrastructure. The implementation process was amended by Central Pickering Development Plan Amendment No. 1, on June 6, 2012 to read as follows: It is a policy of this Plan to require, prior to the approval of the final plans of subdivision and/or the removal of holding symbols in the zoning by-law, the implementation of appropriate measures and financial agreements, such as frontending agreements, cost sharing agreements and/or development charges. The cost of development of community services and facilities should be fairly shared by all benefiting parties consistent with the results of a Fiscal Impact Study to be carried out by the City of Pickering and the Regional Municipality of Durham. Conditions to the approval of the plans of subdivision may be imposed or the use of holding symbols in the zoning by-law may be utilized to ensure that financial measures are in place prior to the beginning of construction. (underlining added) The Seaton landowners engaged IBI to prepare a study to meet that requirement. A fiscal impact analysis was prepared for both the City of Pickering and the Region of Durham in December Since that time Neighbourhood Plans were prepared and amendments were made to the Pickering Official Plan to implement the CPDP. IBI also addressed comments received from the City and the Region as part of its consultation process, as it deemed appropriate and produced Seaton Community 1, Municipal Financial Impact City of Pickering, October 14, In the interim, the City raised a number of questions with IBI concerning this report and continued the dialogue with respect to the assumptions involved. The request was made for the analysis to be updated from the City s 2007 taxation year, to the 2012 budget and for the City s Seaton-related capital requirements to be specifically incorporated, together with the inclusion of a revised development phasing plan for Seaton. Arrangements with IBI to secure these and other changes to the analysis could not be made. As a result, Watson & Associates Economists Ltd., who had acted as the City s (and the Region s) Peer Review Consultant for the Fiscal Impact project, was asked to arrive at an independent set of fiscal impact findings, building on the IBI FIS to the extent possible IBI s conclusions were in two parts Capital Analysis and Tax Based Operating Analysis. IBI s October 14, 2011 findings are summarized as follows: 1 CPDP Clause 5, p.77

40 B Capital Analysis (IBI Conclusions) a) As requested, the landowners are prepared to consider building and financing City roads internal to Seaton and SWM infrastructure in Seaton. This would potentially obviate the need for a DC for these services. (p.2) b) The City s DC recoverable capital program for Seaton for Fire, Parks Development, Indoor Recreation, Libraries and Operations, is $153.7 million, which is $74.3 million beyond the amount that the City s existing DC would generate for those purposes. (p.2 and Table 1A) c) The IBI analysis does not address funding for the cost of District Parkland acquisition, which is not DC eligible. (p.3) d) A recalculated DC for these particular services using a higher level of service cap based on development in Seaton (based on no benefit to existing development deduction and the gross population increase equal to the net increase), results in a new DC charge of $6,149 (vs. $3,276 in 2009). This (if continued unchanged to 2050) would still result in a DC funding shortfall of approx. $30 million for the City s capital program. A significant additional DC increase would be required for Fire, Recreation and Libraries in order to fund the program. As these increases may not be possible, the ability to fund the capital facilities at the level proposed by the City is in serious doubt (p.5) and has not been addressed by IBI. e) External road costs attributable to Seaton are estimated by Sernas at $3.913 million and by the City at $ million (2011 $). 1 IBI calculated an area-specific DC in the amount of $309/SDU and $0.12/sq.ft. of non-residential GFA to fund the $3.913 million plus $4 million in road maintenance equipment. (p.5) Tax Based Operating Analysis (IBI Conclusions) a) As noted, IBI concluded that the City s capital program for Fire, Recreation and Libraries is significantly higher than the current 10-year DC level of service. The program also has higher operating budget costs. Because of the capital funding uncertainty associated with the capital program, as perceived by IBI, they did not analyse the capital and operating costs associated with the capital program. (p.6) b) The IBI analysis calculates the present value of the expected stream of operating costs for 19 years to 2032 and for 37 years to 2050, using the City s 2007 average expenditures per capita and per employee, adjusted down in many cases to reflect potential economies of scale. The present value ranges from -$0.97 million to +$ These and other positions have been modified in the intervening period.

41 B-18 million for the period to 2032, with the low end of the range reflecting the assumed continuance of the City s discretionary non-residential DC discounts (except in the case of Seaton roads and SWM which would be fully funded by the landowners) 1 and the high end of the range eliminating them. In the case of the longer period to 2050, the present value range is $21.7 million-$34.3 million. (pp.6 & 7) c) The analysis also estimates the mature state (2050) operating position as being an annual surplus of $4.8 million/year (in 2007 $) based on the same per capita and per employee expenditure assumptions noted above, as well as average assessment assumptions by development type. (p.7) IBI s Overall Conclusions 1-3 a) The development of Seaton will have a positive effect on the short and long term fiscal position of the City, assuming that capital facilities are provided at levels that can be funded through a DC. b) Small early net annual cash flow deficits are forecast. These deficits can be avoided by postponing capital facilities and the resultant foregone DC revenue or via modest property tax increases of 1.2%-3.6% for a time. (p.7) 1.2 Terms of Reference The objective of this 2012 project undertaken by Watson & Associates is to prepare a high level annual forecast (in 2012 $) which addresses the expected fiscal impact of Seaton s capital, capital-related operating and other operating impacts on the City of Pickering. In addition, it is to give broad consideration to Seaton-related development charges (although the preparation of the necessary development charge background study is a separate task to be carried out at a later date) The purpose in preparing this material is to establish whether the Seaton Community is expected to be fiscally self-sustaining, based on the City s 2012 tax rates and the estimated development charges applicable to Seaton-related facilities and infrastructure. Should there be a shortfall between the outlook for Seaton-related capital and operating revenues and expenditures, this analysis will provide a measure of the City s need for additional funding, from the landowners, the Province and/or other possible sources. In this regard, the study is to independently assess whether a fiscal gap is anticipated and, if so, what magnitude it is expected to involve. 1 The low end of the range also assumes that the $6 million City Hall expansion requirement is debentured.