Comments from the Town of…

Comments from the Town of Halton Hills

ERO 019-0184

Proposed Changes to O.Reg. 82/98 under the Development Charges Act related to Schedule 3 of Bill 108 – More Homes, More Choice Act, 2019

Regulatory changes: General

1. Transition Date - January 1, 2021

This transition date will provide the municipality with just over a year to prepare and approve a Development Charges Background Study for a new or amended DC Bylaw as well as the Community Benefit Charges (CBC) Strategy to cover soft services that no longer qualify for DCs. This short time frame will put significant pressure on municipal resources and will have municipalities competing for the limited consulting services to assist them in those tasks. This puts municipalities at risk in their ability to properly transition to the new regime and to secure cost recoveries to the extent allowed by Bill 108.

The Town recommends a staggered transition date based on current DC bylaw expiry dates. For those DC bylaws approved prior to January, 1 2017, the recommended transition date can remain at January 1, 2021. For those DC bylaws approved between January 2, 2017 and December 31, 2017, the recommended transition date can be December 31, 2021. For DC bylaws approved between January 1, 2018 and May 2, 2019 the recommended transition date can be June 1, 2022. In this way, municipalities will have greater access to needed consulting services and an ability to plan for and absorb the costs.

2. Scope of Types of Development Subject to Development Charges Deferrals

The Town supports initiatives that will assist affordable/not-for-profit housing development, including the deferral of DC payments. However, the current definitions proposed for institutional development and non-profit housing development need to be further scoped, in order to promote housing affordability and to restrict DC deferrals on luxury housing/condominiums built by an organization registered as non-profit or in the name of long-term care homes. As such, it is recommended that DC deferrals required for non-profit development should be limited to affordable housing development, as defined by the municipality, and that the housing building/structure subject to a DC deferral should remain only for affordable housing during the deferral period (i.e. 21 years in the case for non-profit housing development). Furthermore, long-term care homes and retirement homes in institutional development should be the buildings/structures subject to licensing under the Long-term Care Homes Act and the Retirement Homes Act to qualify for a DC deferral plan.

To incentivize the development of needed but cost-sensitive housing projects, the regulations also need to contain clearly defined remediation measures in the case where a development changes its purpose after the DC deferral is granted (e.g. development starts as rental or affordable housing and then moves to condominium ownership).

Currently, the proposed regulation provides no guidance as to how the municipalities can secure the deferred DC payment from these development types. It is recommended that municipalities receive acceptable forms of security for the deferred payments such as Letters of Credit or register a lien on title at the time of building permit issuance. For the latter, registration on title should be guaranteed through the land registry office.

The Town continues to raise concerns that the DC deferral provision will significantly constrain municipalities’ financial capacity to fund capital infrastructure required for growth. Furthermore, the deferral includes industrial and commercial development that is not related to the province’s objectives of reducing development costs and providing more housing options. To illustrate the level of potential cash flow impact to the Town arising from the deferral provision, staff looked at DCs collected over the past five years (2014-2018) for institutional, commercial and industrial development. The Town collected approximately $1.7 million of DCs for hard services (e.g. transportation, fire, stormwater management). If the same deferral provision came into force in 2014, the Town’s DC collection would have amounted only to approximately $57,000 (3%) and would have had to incur significant debt or defer growth-related capital projects by $1.6 million (97%). This may have the unintended consequence of slowing down ICI development.

3. Period of Time for Which the Development Charge Freeze Would Be in Place

It is proposed that the development charge would be frozen for two years from the date the site plan application is approved, or in the absence of the site plan application, two years from the date the zoning application was approved.

The Town is concerned that the effective freeze of DC rates will be far greater than 2 years as illustrated below.

DC determined at application Approval of
of Site plan or Zoning Site plan or Zoning applications
|……………………………………............|…………………………………………............|

DC Freeze ……………….Unknown + 2 years from approval

The DC amount will be determined at the time of a site plan or zoning application. The amount will then be held while the application goes through an approval process and held further for two years after approval. As such, the time required for the applications to be approved will be extra time granted to hold the DC rates in addition to the two-year freeze period. This extra period can be a considerable amount of time depending on the state of the application and is potentially subject to abuse (e.g. land owners may apply for minor zoning changes to freeze DC amount for several years). This will further impact the municipality’s cash flow and its ability to accommodate growth. A shorter duration should be considered (i.e. one year) and the determination of the rate should be tied to a “completed” application as determined by the municipality.

4. Interest Rate During Deferral and Freeze of Development Charges

The Town supports the current proposal that provides the municipality with the ability to charge interest during the deferral as well as during the DC rate freeze, with no maximum prescribed rate.

5. Additional dwelling units

Under the current proposal, the existing regulation (O.Reg. 82/98) will be amended for the creation of additional units within ancillary structures to the existing dwellings. Also, one additional unit can be created in new dwellings, including ancillary structures, without triggering DCs. Unlike the existing regulation, the proposed regulation does not address any restrictions on additional units to new structures. In order to limit further financial impact to the municipality, it is recommended that the regulation should set out restrictions on the size of the additional unit (e.g. the gross floor area of the additional dwelling unit must be less than or equal to the gross floor area of the dwelling unit proposed in the new building).

6. Administrative Impact

As previously submitted through ERO 019-0017 on June 1 2019, based on the proposed changes, it is anticipated the staff time and by extension, cost of administering both the Development Charges Act, 1997 and the Planning Act will increase significantly. Calculating DC at various stages of development, applying interest charges from application date to DC payment date and tracking payments and interest under the new 6 to 21 annual installments legislation will require technical solutions and an increase in administrative resources. Additionally, calculating the Community Benefits Charges based on a percentage of the land value at the point of each building permit issuance will be onerous and costly to administer in comparison to the DC collection methods for discounted services and parkland under the current legislation. Furthermore, the Town will be required to develop a CBC Strategy and By-law and amend our existing DC Background Study and By-law. The additional time and cost for the various administrative pieces outlined above is unclear at this time. The Town will need to look at options for recovering the increased costs for administration including increases in user fees and tax rates.