Re: ERO 019-0184 Purpose…

Re: ERO 019-0184

Purpose

This letter is in response to the request for comments on 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.

Background

Bill 108, More Homes, More Choice Act, 2019 (Bill 108) received Royal Assent on June
6, 2019. Bill 108 included changes to the Development Charges Act and the creation of
a new Community Benefits Authority with the intent of making housing more affordable
and development costs more predictable.

The Minister of Municipal Affairs and Housing indicated in a letter to municipalities dated
June 7, 2019 that the intent of the new legislation is to maintain municipal revenues.
On June 21, 2019 draft proposed regulatory guidelines were made available by the
province for the Development Charges Act, Planning Act and the new Community
Benefits Authority. Municipalities have been invited to provide feedback on these
proposed regulations by August 21, 2019.

Discussion

The Town of Whitby is one of the fastest growing municipalities in the province.
Whitby's population is expected to grow by 56% in the next 12 years.

The Town is pleased by the province's commitment to maintain municipal revenues and
not shift any additional cost of growth to Whitby taxpayers.

Under the existing Development Charge legislation, growth does not fully pay for the
cost of growth. The current cost of growth for our taxpayers requires an increase in
property taxes of 1.5% each and every year.

Any additional growth related pressures will have an impact on Whitby, and our ability to
build a complete and vibrant community without impacting both affordability and quality
of life for our residents. Taxpayers struggle with the current cost of growth and will
object to any increased growth pressures shifted to their taxes.

The Town has participated in the analysis of the proposed regulations with the
Municipal Finance Officers' Association of Ontario (MFOA) and supports the submission
made by MFOA.

In addition, subject to clarity on the definitions included in the proposed changes and a
review of the complete draft regulations yet to be released, the Town of Whitby has
provided the following additional comments.

1. Transition - The proposed changes do not specify if a municipality needs to
have a new development charge by-law in place by January 1, 2021 in advance of the
discounted soft services being removed from the DC Act. Given staffing capacity
constraints, limited external expertise available, and the additional time and costs to
convert existing systems and processes this timeframe could be unachievable in some
municipalities.

2. Scope of Types of Development Subject to DC Deferral - The purpose of the
Act is to make housing more attainable. As such the Town of Whitby supports a
targeted DC deferral for rental housing, non-profit housing and would support a DC
deferral for non-profit institutional development , although it requests the ability to
protect the municipality against a possible change of use (i.e. rental to condo) during the
deferral repayment period and not just at occupancy.

The deferrals provided for Industrial and Commercial and for profit Institutional
development are beyond the intended purpose of the proposed changes and as such,
do nothing to support housing, but impacts a municipality's ability to deliver services.
In addition, the increased administrative cost to a municipality to process and monitor a
DC deferral program would not be eligible under the DC regime, and would become an
additional burden on the taxpayer.

Any DC deferrals impacts a municipality's cash flow and its ability to provide growth
related services when needed. In particular, the roads and storm water infrastructure
needs to be in place before growth related development can occur. Most of Whitby's
non-residential development charge rate is dedicated to roads and storm water
infrastructure (79%). Without adequate, predictable cash flows in order to fund the
required projects, a municipality is either forced to:

a) Rely on long term debt (which results in higher costs due to interest),

b) Transfer the cost of the infrastructure to the tax base, or

c) Defer the construction of the infrastructure and impact the municipality's
delivery of services when required.

In order to mitigate the additional cost of growth created by the DC deferral amendment,
the Town of Whitby respectfully requests that the deferrals be limited to rental housing,
non-profit housing and not for profit institutional development.

Clarification is also being sought to determine if the deferral is an opt-in program, or if it
is automatically applied to all eligible development.

3. Period of Time for which the DC Charge Freeze would be in Place -
Clarification is being sought on if the freeze applies to the DC rate at the time or on the
total estimated DC charge (development type multiplied by the DC rate)? The proposed
development at site plan or zoning amendment stage can change by the build I
occupancy stage, as such; the Town of Whitby is requesting the freeze only applies to
the DC rate.

Whitby would also like to acknowledge that current systems and processes do not
capture the required data. The rate freeze introduces a new level of administrative
burden and increased costs to the municipality.

There is a disconnect between a municipality's ability to collect adequate funds when
needed and a rate freeze. The cost of infrastructure has been increasing at a much
greater rate than the stated inflationary rate, putting further pressure on municipalities.
Although not in favour of the rate freeze, the recommended two year cap on the rate
freeze minimizes the impacts of inflation and is appreciated by the Town of Whitby.

4. Interest Rate during Deferral and Freeze of Development Charges - The
Town of Whitby supports the recommendation that a prescribed maximum interest rate
is not proposed. However once again, as a result of the deferral and freeze of
development charges, long term financial planning for a municipality will be affected; as
it will be very difficult for a municipality to actually predict the levels of DC collections in
the future; and when a municipality can afford to fund the required growth related
infrastructure.

5. Additional Dwelling Units - The Town of Whitby appreciates the limits
established for additional dwelling units.

However, clarification on the definition of ancillary structures is required. For instance, is
it only within existing buildings? Does it include any building type on the property like
garden suites? In addition, Whitby is seeking the ability to protect the municipality
against misuse of this clause beyond its original scope, i.e. building an additional
dwelling unit, then severing it from the original property without paying development
charges.

Thank you for the consideration.

Sincerely,
Matthew Gaskell, Chief Administrative Officer, Town of Whitby
Ken Nix, Commissioner of Corporate Services/Treasurer, Town of Whitby