LATE DISTRIBUTION
FOR COUNCIL DECEMBER 10, 1996
RR1(v)
ADMINISTRATIVE REPORT
December 3, 1996
TO: Vancouver City Council
FROM: Director of Finance
SUBJECT: Regional Development Cost Charges
Adjustment to Municipal Assist Factor
INFORMATION
The Director of Finance submits this report for INFORMATION.
COUNCIL POLICY
On September 26, 1996, Council received a report from the Director of
Finance relating to regional development cost charges. This up-front
charge is applicable to new development and Council approved a 50%
municipal assist factor in an effort to shift the burden to new
development on a phased basis, awaiting the new sewer utility. The
municipal assist factor can be adjusted at anytime.
PURPOSE
In response to direction from the Chair of the City Services and Budgets
Committee, this report is presented to refresh Council on the
considerations given on the issue of the Regional Development Cost
Charges, and the decision to apply a 50% assist to all regional
development charges collected in the City.
DISCUSSION
The GVS&DD is governed by Provincial legislation which provides for the
levying of development cost charges. The regional development cost
charge is designed to fund the growth component of sewerage and drainage
projects, such as new trunk lines, expansion of pumping stations, and a
portion of the costs of environmental upgrades at the Annacis Island and
Lulu Island Wastewater Treatment Plants. It represents a new approach
to financing growth-related regional sewerage costs which had previously
required municipalities to draw from general revenues to pay the GVS&DD
requisition on an annual basis.
The regional development charge applies to a wide range of new
development projects. The types of development impacted and the rates
for the Vancouver Sewerage Area are listed as follows:
Single Family Residential Use: $944 per dwelling unit
Townhouse Residential Use: $826 per dwelling unit
Apartment Residential Use: $590 per dwelling unit
Non-Residential Use: $0.443 per square foot
The only developments exempt from the charge include residential
development of 3 or fewer units, developments of less than $50,000 in
value, alterations and improvements, and various tax exempt buildings.
However, institutional development, such as municipal buildings,
hospitals and the like, are required to pay the charge.
On September 26, 1996, Council considered a staff report on the regional
development charges and heard a delegation from the Greater Vancouver
Homebuilders Association. GVHBA cited increasing housing costs as a
reason for Council to use general revenues, rather than regional
development charges, to fund the regional sewer growth costs. Council
subsequently approved a 50% municipal assist factor. Under the 50%
municipal assist a new development project would still trigger the
regional charges associated with the development, but payment would be
shared 50% by the developer and 50% by the City. Preliminary City
estimates indicate that the City s contribution to maintain a 50%
municipal assist could be as high as $2 million in 1997.
At the September 26th meeting Council acknowledged that the City s $2
million contribution would have to come from general revenues and not
the sewer utility since it had yet to be implemented due to Charter
amendments still pending.
The introduction date is expected to be no sooner than January 1, 1997.
Under the regional By-law, regional development charges will be levied
throughout the GVS&DD. Currently all municipalities in the GVS&DD,
except the City of Richmond, anticipate charging the full amount, with
no provision for a municipal assist. The City of Richmond has a
proposal going forward to offer new development a 100% municipal assist.
On November 26, 1996 the Provincial Government announced substantial
cutbacks to local government. The extent of the reduction in revenues
to the City of Vancouver would be in the order of $17.2 million for
1997. The City is currently in a process of identifying a response to
that loss of funding, and the
response will probably include expenditure reductions and revenue
increases. If the 50% municipal assist for regional development charges
were to be eliminated, there would be a substantial savings to the City
in the range of $1.3 million to $2.0 million per year.
CONCLUSION
By adjusting the municipal assist factor from 50% to 0.0% the
City of Vancouver is reducing City expenditures by $1.3 million
to $2 million per year.
If Council were to consider the elimination of the municipal
assist, then recommendations along the following would be
appropriate:
A. THAT Council adjust the municipal assist factor
applicable to regional development cost charges from 50%
to 0.0%, and require new development to pay the full
amount upon introduction of the regional By-law January
1, 1997.
B. THAT the General Managers of Community and Corporate
Services advise the Greater Vancouver Sewerage and
Drainage District and development industry of this
action.
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