SUPPORTS ITEM
NO. 4
CS&B COMMITTEE AGENDA
JANUARY 30, 1997
ADMINISTRATIVE REPORT
Date: January 21, 1997
Dept. File No. JPC/RJ/CK
Our File No. 1755-1
TO: Standing Committee on City Services and Budgets
FROM: The Director of Land Use and Development and the Director of Finance
SUBJECT: Review of Zoning, Development, Subdivision, and Miscellaneous Fees
RECOMMENDATIONS
A. THAT the fees set out in Zoning and Development Fee By-law No. 5585, in Subdivision By-law No. 5208 and
in the Miscellaneous Fees (Planning) By-law No. 5664, be amended, to fully recover costs as generally
described in Appendix A.
B. THAT the Director of Legal Services be instructed to prepare the necessary amendments to the Zoning and
Development, Subdivision, and Miscellaneous Fee By-laws.
C. THAT upon approval of this report, the Director of Land Use and Development notify the development and
construction industry of the new fees.
CONSIDERATION
D. THAT the 50% subsidy for mega-project rezonings be eliminated by increasing fees by a further 100% in
Sections 3(b), 4(b), 5 and 6 of Schedule 2 of the Zoning and Development Fee By-law No. 5585.
GENERAL MANAGERS COMMENTS
The General Manager of Community Services notes that given the magnitude of the increases, their impact on the
development and construction industries, and the potential implications for the ultimate development consumer,
Council may be inclined to phase-in the increase over a number of years. However, this will mostly just
redistribute the impact among development projects with no rhyme or reason. Those which are lucky enough to
incur certain fees in 1997 will pay less that those which come in 1998 and so on. This only rewards or penalizes
development phasing and creates inequities. If Council is inclined to raise fees, it is more equitable to do it
in one bite.
The General Managers of Corporate and Community Services RECOMMEND approval of A, B and C, and submit D for
CONSIDERATION.
COUNCIL POLICY
On January 17, 1991, Council resolved that every Department and Board review services for which fees are now charged to
ensure that fees are recovering the full costs of the services to the City or are equivalent to competitive charges where
the fee is of a market nature.
Once every three years a comprehensive fee review is conducted to ensure that individual permit fees reflect the City s
changing costs. The last such review was completed in June, 1993.
PURPOSE AND SUMMARY
This report reviews current fees and associated costs of processing development applications, subdivision applications,
and zoning and miscellaneous amendments. Based on projections from the current fee schedules, approximately 67% ($5.1
Million of $7.6 Million) of costs will be recovered in 1997.
Revised fees, based on cost recovery, are recommended to recover 100% of these costs, with the exception of fees in the
categories noted below. Proposed fees are presented in Appendix A.
Approval of the recommended fees would increase annual revenues by an estimated $2.5 Million.
Options for City Assists are referenced, related to:
50% cost recovery for mega-project rezonings;
Tree permit fees;
- Board of Variance Appeal fees;
- Non-Profit Society related fees;
- Maintenance of Heritage Buildings fee; and
- RS-5 Development Application fees.
BACKGROUND
The last comprehensive review of the Zoning and Development and Miscellaneous Fees By-laws was undertaken in 1993. That
review indicated that only 35% to 50% of costs associated with Development and Zoning amendment applications were being
recovered, and recommended a fee structure approaching 100% of direct cost recovery.
The recommendations of the 1993 review were approved by Council and implemented May 1, 1995, following a public forum and
workshops to address development industry concerns. Mega-project rezoning application fees had previously been addressed
in 1991, with Council approving a 50% cost recovery approach.
Notwithstanding the 1991 and 1993 fee increases, fees currently recover 67% of costs. The reasons for this include:
- the 1993 increases were intended to approach cost recovery - analysis after the increases indicates they
achieved 80-90% cost recovery, based on the model used at that time;
- a 5-10% decrease in application volumes in some areas (resulting in a further shortfall in anticipated revenues);
- additional staffing, service improvements and complexity of processes (addressed in Discussion);
- a 6% increase in operating costs (inflationary) since the last comprehensive review in 1993, not captured by
annual adjustments; and
- a revised cost recovery model - the 1991 and 1993 model only recovered a small portion of administration and city
support services (addressed in Discussion - Methodology).
This review of Zoning, Development, Subdivision and Miscellaneous fees is being undertaken concurrently with Council s
review of City Choices , a program to address a budget shortfall resulting from Provincial government funding cutbacks,
and other budgetary pressures.
This review and the conclusions drawn from it are also done within the context of the Development and Building Review of
the Community Services Group. That Better City Government review is intended to radically improve the way we do
business, emphasizing service, quality and an efficient, equitable process . When implemented, such resulting changes to
our Rezoning and Permitting processes will no doubt require further amendments to fee schedules.
DISCUSSION
Methodology: The comprehensive review of development control application fees follows a model which was used in the
recent review of trade permit fees for the Permits and Licenses Department. A detailed inventory of all costs pertaining
to processing development applications, subdivision applications and zoning amendments was prepared. It includes costs
incurred by all City departments, of which the three most significant participants are Planning, Legal Services and
Engineering. Other key departments involved in the process are Housing, Social Planning, Parks, and Permits and Licenses.
Evaluations of the labour and non-labour inputs for each fee category were conducted. Actual costs also included
administration from within the Planning Department, other departments and City support services related to items such as
expanding use of information technology systems, building maintenance and City Clerk s office, etc. Existing fees do not
recover these support services expenses.
Costs associated with policy work and Director of Planning or Council-initiated rezonings have not been included. These
costs are recovered through general revenues.
During the last comprehensive fee review a detailed analysis of the direct cost of handling and processing of various
application types within each fee category was undertaken. Since then, the Development and Building Review process has
examined the staff time involved, at a detailed level, in handling each application and prepared flow charts summarizing
City staff involvement. This has proven invaluable in the determination of City costs from a wide range of departments
involved in rezonings, subdivision approval, and development applications.
Current Cost Recovery: Table 1 summarizes the current costs and revenues related to all development control applications.
In terms of recovering direct handling and processing costs, when all application fees are combined, cost recovery is
approximately 77%. When pro-rated city support services and Community Services Group administration are included,
current cost recovery falls to 67%.
Table 1
Development Control Applications: Cost Recovery Analysis
COMMUNITY CITY TOTAL
PROJECTED DIRECT SERVICES SUPPORT TOTAL COSTS
REVENUE* COSTS ADMIN. SERVICES COST RECOVERED
$ $ $ $ $ %
Rezoning 1,270,000 1,807,000 18,000 265,000 2,090,000 61%
Subdivision 220,000 277,000 3,000 44,000 324,000 68%
Development 3,609,000 4,503,000 45,000 650,000 5,198,000 69%
Applications
TOTAL 5,099,000 6,587,000 66,000 959,000 7,612,000 67%
(ALL 3 PROCESSES)
* Note: In 1996, development control applications recovered $3.3
Million in revenues. For the purpose of this analysis, revenues
have been adjusted to include changes to fee schedules that
occurred in 1996, but were not fully reflected in the 1996 revenues
($900,000), as well as the subsidy to mega-project rezonings
($800,000).
Table 2
Proposed Cost Recovery Fee Increases
NECESSARY INCREASE IN FEE INCREASE TO MEET COST
REVENUES RECOVERY
Rezoning $820,000 65%
Subdivision $103,700 47%
Development Applications $1,588,000 44%
TOTAL (all 3 processes) $2,511,000 49%
Table 2 summarizes the increases necessary in each of the three
application categories. An overall increase of 49% is required to meet
cost recovery, with a 65% increase to rezoning fees, a 47% increase to
subdivision fees and a 44% increase to development application fees.
Appendix A presents the resulting proposed fees.
The projection of revenues from fee increases makes various assumptions
on the number of applications that will be processed. For the purposes
of this analysis the average number of applications over the last five
years has been used in the projection, as illustrated in Table 3 below.
However, if the number of applications falls short of historic trends or
the increased fees deter applications from being submitted, the proposed
fee increases could fail to deliver cost recovery. In this respect,
there is an opportunity to revisit the cost allocation model during the
next review and staff will report on various options to adjust the fee
schedule appropriately, if necessary.
Table 3
Average Number of Applications Processed Per Year: 1992 - 1996
Rezonings 29 private rezonings
2 mega-project rezonings
Subdivision 131
Development Applications 1300 DEs (Development Applications)(includes 300 -
400 minor amendments)
2200 DBs (Joint Development & Building Applications)
Rezoning Fees: There has been, in the last five years, an average of 29 privately-initiated rezoning applications
submitted per year, plus 2 mega-project rezonings. In addition, there has been an average of 21 rezoning applications
submitted, on instruction of Council, by the Director of Land Use and Development with no fees charged and costs
recovered through general revenues.
In order to achieve 100% cost recovery in the area of private rezonings, an additional $820,000 in revenues needs to be
generated, assuming the City continues the 50% subsidy from general revenues on mega-project rezonings. The direct costs
to administer rezonings are $1,807,000 for City staffing and direct departmental support. This increases by $283,000
when pro-rated City support services and Community Services Group administration are included.
Subdivision Fees: There has been in the last five years an average of 131 subdivision applications submitted per year.
A June 1992 Charter amendment led to a revised Subdivision Fee Schedule being established by Council in December, 1992.
In order to achieve 100% cost recovery in the area of subdivisions, an additional $103,000 in revenues needs to be
generated. The direct costs to administer subdivision applications are $277,000 for City staffing and direct
departmental support. This increases by $47,000 when pro-rated City support services and Community Services Group
administration are included.
In addition, a new fee is proposed for applications seeking to reclassify RS-1-zoned parcels to another classification
of minimum parcel width and area in order to enable subdivision. There have been an average of three such applications
per year since 1988.
Development Application Fees: There has been in the last five years an average of 1,300 development applications (DEs)
submitted each year, including some 300 to 400 minor amendments. Application numbers dropped 10% between 1995 and 1996.
In addition, there has been an average of 2,200 joint development/building applications (DBs).
In order to achieve 100% cost recovery in the area of development applications, an additional $1,588,000 in revenues
needs to be generated. The direct costs to administer development applications are $4,503,000 for City staffing and
direct departmental support. This increases by $695,000 when pro-rated City support services and Community Services
administration are included.
Since the last fee review development application costs have increased due to the expanded Tree and Landscaping Program,
the RS-5 Zoning District and refinements to the Secondary Suite Program. This is in addition to the factors noted above
in the Background.
Other programs such as the Development Information and Application Centre (DIAC), were initiated to improve service with
a majority of direct costs recovered. However, City support service costs have not been recovered.
City Assist Options: This report has reviewed current fees and associated costs of processing applications in order to
determine fee schedules which will achieve full cost recovery related to private applications. However, Council has in
the past provided assistance to certain categories, with revenue shortfalls recovered through property tax revenues.
1. Mega-project Rezoning Fees:
On May 2, 1991 Council adopted a 50% cost-recovery approach for mega-project rezonings. Should Council wish to
continue this approach, it would be providing an annual assist in the order of $600,000. Should Council wish to
eliminate the subsidy to mega-project rezoning fees this will require an increase of 100% to these fee
categories. CONSIDERATION D offers Council the option to remove this subsidy.
2. Tree Removal Permit Fees:
A separate staff report is being prepared based on experience with last year s amendments to the Private Property
Tree By-law and associated programs. In part, this report will address tree removal fees and cost recovery
considerations of the tree program. At present, a partial cost recovery fee is in effect for applications
seeking single tree removal.
3. Board of Variance Appeal Fees:
Council, on June 10, 1993, resolved THAT the Board of Variance be requested to report back on a fee schedule for
appeals to cover the costs of processing appeals . This report and a companion staff report are expected to be
forwarded shortly; therefore, appeal fees are not included in this analysis.
4. Non-Profit Society Related Fees:
In the May 1995 increases, Council opted to continue to subsidize the fees for development permits for day care
facilities run by registered non-profit societies. The proposed fee schedule includes a pro-rated fee increase
and retains this basic subsidy. Due to the relatively small number of these applications, the recovery shortfall
is nominal.
5. Maintenance of Heritage Building Fees:
Council, in June 1995, enacted a reduced fee for a permit for maintenance of heritage buildings in order to
encourage appropriate building conservation and to record changes made to the building. The proposed fee
schedule includes a pro-rated fee increase, and retains the basic subsidy. Given that there are approximately
three such applications per year, the recovery shortfall is negligible.
6. RS-5 Development Application Fees:
On October 24, 1996 Council approved revisions to the fee schedule for additional staff related to RS-5 zoning
application processing. However, it was acknowledged that the approved fee increases would yield approximately
$42,000, leaving a shortfall of $175,000. This will be recovered through the proposed fee increases, and
anticipated increases in RS-5 applications in 1997 as the RS-5 District Schedule is introduced into new areas.
CONCLUSION
Significant fee increases are proposed for development, rezoning, and subdivision applications, to fully recover costs.
The fee schedules recommended in Appendix A, include a realistic reflection of City costs.
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