HEMSON.

Impact Fees: The Canadian Impact Fees: The Canadian ExperienceExperience2006 National Impact Fee Roundtable

Craig BinningCraig Binning

Partner, Hemson Consulting Ltd.Partner, Hemson Consulting Ltd.Toronto, OntarioToronto, Ontario

October 5, 2006October 5, 2006

22HEMSON.

TODAY WE WILL DISCUSS:TODAY WE WILL DISCUSS:

Growth Pressures in CanadaGrowth Pressures in Canada

A Brief History of Development Charges A Brief History of Development Charges in Canadain Canada

Overview of Practices Across CanadaOverview of Practices Across Canada

The Ontario Experience and PracticeThe Ontario Experience and Practice

Emerging IssuesEmerging Issues

33HEMSON.

CANADA IS GROWINGCANADA IS GROWING

Over the last decade Canadian urban Over the last decade Canadian urban centres, especially the Greater Toronto Area, centres, especially the Greater Toronto Area, have experienced significant levels of have experienced significant levels of growthgrowth

Looking forwardLooking forward: : The Greater Toronto/Golden Horseshoe will add 3.7 The Greater Toronto/Golden Horseshoe will add 3.7

million people by 2031million people by 2031 The Province of Alberta is currently experiencing The Province of Alberta is currently experiencing

the fastest rates of economic growth in North the fastest rates of economic growth in North AmericaAmerica

The population of the Greater Vancouver Area is The population of the Greater Vancouver Area is forecast to increase by 1/3 by 2031forecast to increase by 1/3 by 2031

44HEMSON.

GROWTH STARS (1951-2001)GROWTH STARS (1951-2001)

262.0%

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Toronto Los Angeles Montreal Vancouver Ottawa New York Chicago Dallas Houston

55HEMSON.

GTAH IS ONE OF THE FASTEST GTAH IS ONE OF THE FASTEST GROWING REGIONS IN NORTH GROWING REGIONS IN NORTH AMERICAAMERICA

1990 - 2001 POPULATION GROWTH RATES10 Largest CMSA's Canada-U.S.

Dallas-Fort Worth

Toronto-Hamilton

Los Angeles-Riverside

Washington-Baltimore

San Francisco-San Jose

Chicago

New York-Northern NJ

Boston

Detroit

Philadelphia

0% 0.5% 1% 1.5% 2% 2.5%Growth Rate

Source: Hemson Consulting Ltd. based on Statistics Canada and the US Bureau of the CensusNote: To allow comparison the Toronto-Hamilton area is based on applying the US Census definition for a Consolidated Metropolitan Statistical Area to Toronto. This area would include the GTA, Hamilton, Barrie and surrounding areas but not Niagara, Guelph, or Waterloo Region.

66HEMSON.

Toronto-Hamilton-WaterlooMontreal

Vancouver-VictoriaOttawa-Gatineau

Calgary-EdmontonRest of Canada

0

200

400

600

800

-200

Growth (000s)

1996-2001 POPULATION GROWTH

Source: Hemson Consulting based on 2001 Census, Statistics CanadaNote: These areas are based on Hemson's "urban field" analysis and are much larger areas than the typical metropolitan

area definitions

GROWTH IN CANADA IS HIGHLY GROWTH IN CANADA IS HIGHLY CONCENTRATEDCONCENTRATED

77HEMSON.

The 70’s and 80’s:The 70’s and 80’s: Rapid growth – significant greenfield Rapid growth – significant greenfield

developmentdevelopment Demand for infrastructure/capital facilitiesDemand for infrastructure/capital facilities Mounting debt burdens – municipalities Mounting debt burdens – municipalities

with over 30% of net tax levy in debt with over 30% of net tax levy in debt charges = loss of flexibilitycharges = loss of flexibility

Upward pressure on municipal tax ratesUpward pressure on municipal tax rates Development of pro-growth & anti-growth Development of pro-growth & anti-growth

factionsfactions Many municipalities passed first Many municipalities passed first

substantial all encompassing lot levy substantial all encompassing lot levy policies and rates policies and rates

A LITTLE BIT OF HISTORYA LITTLE BIT OF HISTORY

88HEMSON.

Provincial Governments throughout Provincial Governments throughout Canada Began to Shift Servicing Delivery Canada Began to Shift Servicing Delivery to Municipalitiesto Municipalities

Limited New Revenue Raising Tools Limited New Revenue Raising Tools Provided to MunicipalitiesProvided to Municipalities

Many Provinces Enacted “Development Many Provinces Enacted “Development Charge” Legislation:Charge” Legislation: Formalized municipal authority to collect capital Formalized municipal authority to collect capital

contributions charges from new developmentcontributions charges from new development Set out restrictions (i.e. services that could be Set out restrictions (i.e. services that could be

recovered for, etc.), calculation rules, etc.recovered for, etc.), calculation rules, etc.

THE 1990’s: THE DOWNLOADTHE 1990’s: THE DOWNLOAD

99HEMSON.

Most Provinces Allow for the Levying of Most Provinces Allow for the Levying of Development Charges (DCs) Development Charges (DCs)

The Most Permissive Legislation Is in The Most Permissive Legislation Is in Ontario and British Columbia:Ontario and British Columbia: Allows for recovery of most municipal servicesAllows for recovery of most municipal services

Other Provinces Typically Recover for Other Provinces Typically Recover for “Hard” Services (Water, Sewer, Drainage “Hard” Services (Water, Sewer, Drainage and Roads) and Sometimes Recreationand Roads) and Sometimes Recreation

Municipalities in Quebec, and in Particular Municipalities in Quebec, and in Particular Montreal, Fund Growth-Related Montreal, Fund Growth-Related Infrastructure from Property Taxes and Infrastructure from Property Taxes and User Rates User Rates

OVERVIEW OF CANADIAN OVERVIEW OF CANADIAN LEGISLATIONLEGISLATION

1010HEMSON.

DC ELIGIBLE SERVICES IN CANADIAN DC ELIGIBLE SERVICES IN CANADIAN CITIESCITIES

Toronto Vancouver Surrey Saskatoon Calgary Edmonton Halifax Winnipeg MontrealWater X X X X XSewer X X X X X XDrainage X X X X X X X XRoads City-wide X X X X X X X Boundary X X X X X X X XRecreation X X XParks X X X X XTransit X XProtection XLibrary XChildcare X XHousing X XOther XEducation X

Spectrum of Services Included in Infrastructure Charges For External Services

Source: Interviews with municipal finance and planning officials

1111HEMSON.

Ontario Development Charges Act, Ontario Development Charges Act, 19971997

A Background Study and Public Process Is A Background Study and Public Process Is Required Required

A By-Law Must Be Enacted (Maximum Life A By-Law Must Be Enacted (Maximum Life Is Five Years)Is Five Years)

Restriction on Services That Can Be Restriction on Services That Can Be Included and the Level of Growth-Related Included and the Level of Growth-Related Capital Costs RecoveredCapital Costs Recovered

1212HEMSON.

Ontario Development Charges Act, Ontario Development Charges Act, 19971997

Restriction on capital costsRestriction on capital costs Computers excluded and vehicles with a Computers excluded and vehicles with a

useful life less than 7 yearsuseful life less than 7 years

Intensification ExemptionsIntensification Exemptions

Charges restricted to 10 year historic Charges restricted to 10 year historic service level averagesservice level averages

1313HEMSON.

SERVICES ELIGIBLE FOR RECOVERY:SERVICES ELIGIBLE FOR RECOVERY:

100% Cost Recovery100% Cost Recovery Protection Services:Protection Services:

Fire ServicesFire Services Police ServicesPolice Services

Engineered Engineered ServicesServices Roads & RelatedRoads & Related WaterWater Sanitary SewageSanitary Sewage StormwaterStormwater

90 % Cost Recovery90 % Cost Recovery LibraryLibrary Parks and TrailsParks and Trails Indoor RecreationIndoor Recreation Public WorksPublic Works

Buildings & Buildings & Municipal FleetMunicipal Fleet

ParkingParking OtherOther

SERVICE INCLUSIONS:

1414HEMSON.

INELIGIBLE SERVICES:INELIGIBLE SERVICES: Some Services Excluded from Development Charges:

Cultural and Entertainment Facilities (museums, theatres, galleries)

Tourism Facilities including convention centres Parkland Acquisition Hospitals Headquarters for General Administration of Municipalities and

Boards Waste Management Other Services prescribed by Regulation

1515HEMSON.

HIGHLIGHTS OF THE ONTARIO HIGHLIGHTS OF THE ONTARIO LEGISLATIONLEGISLATION

Charges can be municipal-wide and Charges can be municipal-wide and area-specific area-specific

Dedicated reserve funds are requiredDedicated reserve funds are required Credit and “front ending” agreements Credit and “front ending” agreements

are permittedare permitted Charges can be levied on residential and Charges can be levied on residential and

non-residential landnon-residential land Companion act legislates school board Companion act legislates school board

chargescharges

1616HEMSON.

Sample GTA Residential Development Charges per Fully-Serviced Single-Detached Unit

(as of April 2006)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Mississauga Burlington Caledon Newmarket Oakville Brampton Markham RichmondHill

Vaughan Aurora Milton

Municipality

Dev

elop

men

t Cha

rge

($/s

du)

Upper-TierLower-Tier

Sample DC Range: $17,099 - $28,303/unit

1717HEMSON.

Sample GTA Non-Residential Development Charges per sq.m(as of April 2006)

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

Markha

m

Richmon

d Hill

Newmark

et

Vaugh

an

Caledo

n

Aurora

Mississ

auga

Burling

ton

Brampto

nMilto

n

Oakvil

le

Municipality

Dev

elop

men

t Cha

rge

($/s

q.m

)

Upper-TierLower-Tier

Sample DC Range: $45.13 - $118.53/sq.m.

1818HEMSON.

SAMPLE OF ANNUAL DEVELOPMENT SAMPLE OF ANNUAL DEVELOPMENT CHARGE REVENUE IN THE GTACHARGE REVENUE IN THE GTA

Municipality2005 Development Charge Revenues

2005 Capital Expenditures 2005 Tax Levy

City of Toronto 66,780,701 1,053,255,007 3,019,045,452DC Revenue as % 6% 2%

City of Mississauga (Toronto suburb) 102,083,191 136,720,770 221,565,500DC Revenue as % 75% 46%

Town of Oakville (Toronto suburb) 18,723,895 44,635,995 83,816,508DC Revenue as % 42% 22%

City of Vaughan (Toronto suburb) 19,666,824 68,416,944 92,076,320DC Revenue as % 29% 21%

City of Barrie (1 hr drive from Toronto) 29,103,860 32,795,956 112,195,733DC Revenue as % 89% 26%

1919HEMSON.

Correlation Between Development Correlation Between Development Charge Policies and Municipal Planning Charge Policies and Municipal Planning ObjectivesObjectives Downtown revitalization & brownfield Downtown revitalization & brownfield

developmentdevelopment IntensificationIntensification

Increased Use of Area-Specific ChargesIncreased Use of Area-Specific Charges Alignment of costs and demand for services Alignment of costs and demand for services

(Smart Growth) (Smart Growth) Facilitation of front-ending and cost sharing Facilitation of front-ending and cost sharing

agreementsagreements

NEXT DIRECTIONS AND AREAS OF NEXT DIRECTIONS AND AREAS OF INTERESTINTEREST

2020HEMSON.

DOES GROWTH PAY FOR GROWTH?DOES GROWTH PAY FOR GROWTH?

Development Charge Shortfalls:Development Charge Shortfalls:

Legislative exemptionsLegislative exemptions 10% service discounts10% service discounts 10 year historic service level restriction10 year historic service level restriction The transit issueThe transit issue Non-statutory exemptions & reductionsNon-statutory exemptions & reductions Capital cost increases beyond indexingCapital cost increases beyond indexing

2121HEMSON.

QuestionQuestions?s?

Hemson Consulting Hemson Consulting Ltd.Ltd.

www.hemson.com