ERO Submission- Town of…

ERO Submission- Town of Halton Hills

Bill 108 will have significant impacts on municipalities in the management of growth and development. Town of Halton Hills staff has reviewed the proposed legislative changes and identify the following concerns and implications.

Lack of Clarity
Overall, more details are needed to fully understand the implications of the proposed legislation for Halton Hills and to provide concrete feedback through the consultation process. The recovery of growth costs will be constrained through the revised legislation and the lack of clarity results in an inability to evaluate the impact on existing residents and taxpayers and on the Towns’ ability to extend existing levels of service to new growth communities.

There is also a lack of clarity as to how the new legislation is to be implemented in a two-tiered municipality. Of specific concern is how the CBC will be shared between the upper and lower tier municipalities as well as the responsibility of the lower-tier municipality to collect DC and interest charges for developments that are eligible for payments under the six annual instalments legislation.

Administrative Impacts
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 six annual instalments 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 any existing DC Background Studies and By-laws. 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.

Cash flow
The proposed legislation contains numerous changes to the timing of the calculation and collection of DC that will impact cash flow forecasting and result in a need to interim finance through debentures. As most of the services remaining eligible for DC are required in advance of development occurring, the delay in receiving DC revenues due to the installment payment structure will require municipalities to enter into debt to fund the necessary capital infrastructure. Additionally, applying the DC rates in effect at site plan/zoning by-law application stage, rather than at the time of building permit issuance, will also impact cash flow and erode the purchasing power of the municipality due to inflationary pressures that will not be reflected in the DC revenues. The legislation permits the municipality to charge interest from the application date; however, it is anticipated the prescribed interest rate will fall short of the inflationary pressures faced by municipalities. Over time, this will cause an upward pressure on the overall DC rates.

Long-term financial forecasting is made more complex by aligning the Community Benefits Charge with property values instead of the costs incurred from building the capital infrastructure to support community growth. The existing DC legislation calculates DC revenues using the cost to extend historical levels of service to new growth areas in conjunction with the estimated number of residential units and square metres of industrial/commercial/ institutional development. The growth forecast is developed through extensive planning studies and provincial targets and remains relatively constant throughout the development of the lands resulting in a predictable revenue stream for the municipality to support infrastructure development. Under the proposed legislation, the calculation will be based on property values which can vary greatly depending on geographical location and proposed land use and which are very challenging to predict over the long-term planning horizon. The lack of linkage between Bill 108’s proposal to use land values as a basis for the Community Benefits Charge and the municipality’s costs relative to growth-related infrastructure warrants further consultation This increases the financial risk for municipalities as revenue streams become more unpredictable and subject to changes in the real estate market, which has little to no relation to municipal funding requirements for capital investments. Also the provision to allocate or spend 60 percent of funding in a given year makes it very difficult to plan for large scale multi-year projects

Long-term Planning
The amount of uncertainty in the legislation makes long-term planning for growth very difficult for the Town of Halton Hills. The Town is currently planning for the expansion of growth within the Vision Georgetown Lands and the Town’s Premium Gateway employment lands. Without further clarity on the proposed changes, timing of implementation and their impact on growth cost recovery, the Town may struggle to plan for new growth development areas in a timely and fiscally responsible manner.

Transition Matters
The legislation provides for some transition matters; however, there is still uncertainty as to when the proposed legislation will take effect as well as how the municipality will transition to the new legislation. The proposed legislation will require significant staff, consultant and legal resources to develop an implementation plan to address the numerous changes, ensure appropriate application of the legislation, understand the implications on existing development and financial agreements and ensure the legislation is accurately reflected in the Town’s policies and growth plans for new development areas.

In summary, Bill 108 will have significant financial implications for the Town; however, the full extent of the impacts cannot be quantified with the information currently available. As discussed above, in the absence of regulations, there is a lack of detail in the proposed legislation but it is clear the Town will face, at a minimum, the following financial implications:
• Increased costs to administer the proposed legislation including the need to add staff resources, absorb appraisal costs for land values These costs will either need to be captured through increased user fees or an increase in the tax levy
• An increased use of debenture financing for growth infrastructure which will impact the Town’s debt capacity limits as well as place upward pressure on development charges
• Financial risk to the collection of the Community Benefit Charge from changes in real estate values, which are beyond the Town’s control
• Increased costs to the taxpayer for new DC exemptions for secondary dwelling units in new residential construction as well as conversions of common space in existing rental buildings

Additionally, the Town could face a material decrease in the funding available for the community’s needs in areas like parks, community centres and libraries depending upon the prescribed rate and exclusions for the proposed Community Benefits Charge.