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CITY OF VANCOUVER POLICY REPORT
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Date: |
November 18, 2003 | |
Author: |
Ronda Howard | |
Phone No.: |
7215 | |
RTS No.: |
03787 | |
CC File No.: |
1755 | |
Meeting Date: |
December 4, 2003 |
TO: |
Standing Committee on Planning and Environment |
FROM: |
Director of City Plans, Director of Current Planning, and Director of Development Services |
SUBJECT: |
City-Wide Development Cost Levy: Effective Date for Rate Increase |
INFORMATION AND CONSIDERATION
This report is submitted for the INFORMATION of City Council.
If Council wishes to change the effective date for the City-Wide DCL rate increases, the following motions are provided for CONSIDERATION:
Ai THAT Council reconsider its motion of June 24, 2003 to "Provide a grace period to February 1, 2004 before DCL rate increases come into effect. Rate reductions will take effect on enactment of the appropriate amendments to the DCL By-law." (Requires a 2/3 majority)
AND:
Aii THAT Council "Provide a grace period to June 24, 2004 before DCL rate increases come into effect. Rate reductions will take effect on enactment of the appropriate amendments to the DCL By-law." (Requires a 2/3 majority)
CITY MANAGER'S COMMENTS
The City Manager submits this report for Council's Information and Consideration.
COUNCIL POLICY
On June 24, 2003 Council approved policies arising from the Financing Growth report, replacing the Interim City-Wide Development Cost Levy (DCL) and Community Amenity Contribution (CAC) Policy, with an updated DCL and CAC Policy. This included DCL rate increases for new development generally, as well as rate reductions for some non-profit uses such as day-care.
To address the dates on which these new rates would come into effect, Council approved the following: "Provide a grace period to February 1, 2004 before DCL rate increases come into effect. Rate reductions will take effect on enactment of the appropriate amendments to the DCL By-law." (The latter sentence allows for rate reductions to come into effect earlier than rate increases.)
PURPOSE
At Council's meeting on November 4, 2003, under Enquiries and Other Matters, the Mayor referred to the February 1, 2004 effective date for the DCL rate increase and asked staff to report on the effects of the timing on developments and added costs on new developments. This report provides the requested information and resolutions should Council wish to reconsider the effective date.
BACKGROUND
The Financing Growth report, based on extensive research and consultation, was presented to Council for final decisions on June 24, 2003. As part of consideration of a range of policies, Council determined that the City-Wide DCL rate be increased from $2.50 per square foot to $6.00 per square foot (($1.00 to $2.40 in industrial areas). The new rates were selected to increase the ratio of growth costs recovered from new development, and were based on a consultant economic impact analysis and a review of rates in other municipalities.
Council also approved a grace period of seven months, so that the effective date for the rate increase would be February 1, 2004.
Recently, letters (attached) have been received by the Mayor and Council, from Intracorp Developments Ltd, Amacon Land Corporation, and the Urban Development Institute. Representatives from the Urban Development Institute have also met with the Mayor. All expressed concern about the timing of the higher rates and requested that Council extend the effective date for the DCL increase to June 24, 2004, to make a one-year grace period before the new rate comes into effect, rather than the seven-month period that was provided.
This request for the one-year grace period would be the same as the grace period provided for the introduction of the Interim City-Wide DCL in January 2000. The rationale for the one-year period was to allow developments currently being processed to clear the system prior to the rate increase, and to allow DCL increases to be absorbed by the market.
DISCUSSION
Under the Vancouver Charter, DCLs are payable at Building Permit issuance. There is no authority either to require, or permit, payment at any other time, or to grandfather projects that are in process, but only achieve Building Permit issuance following the operative rate increase.
Before being issued a Building Permit, the applicant needs to obtain a Development Permit. For this report, staff identified the active Development Applications (for projects subject to the City-Wide DCL) that were in the system as of June 24, 2003 when Council approved the DCL rate increase.
About 50% of these applications have now either been issued Development and Building Permits, or are likely to be issued their permits before the February 1, 2004 effective date for the higher DCL rates.
There are 22 Development Permit applications that were in the system as of June 24, 2003,that staff believe will not make the February 1, 2004 deadline for obtaining a Building Permit. These tend to be larger more complex projects. It is anticipated that most, if not all, of these applications will be able to satisfy their Development and Building Permit requirements by June 24, 2004.
In addition to the 22 applications described above, staff investigated whether there are rezonings that had been in-process prior to June 24, 2003, for which Development Applications were applied for near, but after, the June 24, 2003 date. Staff looked at Public Hearings in June to September 2003 and identified one such rezoning application where City-Wide DCLs apply, Knight and Kingsway. This project will not receive its Building Permit by February 1, 1004, but staff expect that it will receive its permit by June 24, 2004.
FINANCIAL IMPLICATIONS
With the approved DCL rate increase to go into effect on February 1, 2004, the difference in DCL paid per square foot of new development will be the difference between the $2.50 Interim rate and the $6.00 new rate - i.e., $3.50 per square foot ($1.40 difference for industrial areas).
The 22 applications that are unlikely to obtain their Building Permits before February 1, 2004 collectively represent approximately $5.9 million in additional DCLs that will have to be paid by the developments when they receive their Building Permits after this date. There would be an equivalent amount of foregone DCL revenue to the City if the February 1 date were extended to June 24, 2004 by which time these projects likely would have received Building Permits.
PROCEDURAL REQUIREMENTS
As noted above, the City does not have the authority to grandfather projects for DCL payment purposes. Therefore, if Council wishes to address the concerns described in the letters, it would have to change the effective date of the DCL rate increase.
The City Clerk advises that, if Council wishes to change the effective date, Council will need to reconsider its previous decision. This would require a mover who voted with the majority and adoption by a 2/3 vote to allow reconsideration. If Council agrees to reconsider the matter as required, then a 2/3 majority is required to adopt a motion to amend the date. All members may vote in both instances, regardless of whether or not they voted with the majority originally.
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