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this presentation is brought to you bythe MF Oh a good day this is GaryScanlon from Watson associates todaywe're going to talk about bill 108 andthe changes that are being consideredfor the development charges Act risingfrom the provinces housing supply actionplan bill 108 more homes more choice Actwas introduced in the Ontariolegislature on May 2nd 2019 and receivedRoyal Assent on June 6 2019 an act toamend various statues with respect tohousing other development in variousother matters including schedule 3 ofthe bill development charges Act andschedule 12 to the bill the Planning Actthe focus of this presentation will beto recap the major changes to the DCAand the potential impacts onmunicipalities draft regulations withrespect to the development charges Actwere posted to the environmentalregistry On June 21st 2019 they providedfor a period of time for commentary andit closed on August 21st 2019 subsequentto that bill 138 planned to buildOntario together Act was introduced toamend a component of bill 28 to modifythe proposed collection timing of DCsfor commercial and industrialdevelopment we'll talk about this laterin the presentation but this is aproposed change and at the time ofwriting and it only received firstreading the development charges Actprovides for a number of services to becollected there are some exemptions thatare provided but with the changesthrough bill 108 they're looking toremove the soft services from thedevelopment charge these will be movedover to the new community benefit chargewhich will be imposed under the PlanningActthe eligible services which remain underthe development charges actor as followswater so which includes water supply thedistribution system and treatmentwastewater which includes conveyance andtreatment services stormwater fordrainage and control services related toa highway which are sidewalks roadsbridges etc the act still noteselectrical power however when theprovince provided for changes to the howmunicipalities or the privatization ofthe electrical sector for the most partit has been removed policing servicesfire protection servicesthe Toronto York subway extensiontransit services waste diversionambulance and other services to beprescribed changes to the eligibleservices studies may be included only tothe extent that they relate to theeligible services provided on theprevious slide this highlights aquestion of eligibility for things suchas planning studies for official planreviews zoning bylaws etc currentlythese are considered more of the softerservices and it's unclear whether theywhether they will be continued withinthis the development charges Act thedevelopment charge background study canstill be included and it is an eligiblecost currently there is a 10% mandatorydeduction for many of the softerservices as the soft services are nowbeing removed and being migrated to thecommunity benefit charge the 10%deduction has been removed as amandatory deduction the this applies towaste diversion and to ambulanceservices which are currently consideredby the Act as a softer service as wellthe development charge background studywhich currently has10% deduction will now be an eligiblefor 100% recoverythere's been new installment provisionsthat have been provided by this bill 108the changes provide that if you haverental housing institutional industrialand commercial development that you willpay your charge over six year over fiveyears in six equal installments withrespect to nonprofit housing you wouldpay in 21 payments over 20 years now if1you note the bottom bullet the province1has recently introduced bill 138 which1would provide that industrial and1commercial developments are removed from1this installment plan so they would go1back to paying their development charge1at the time of building permit the1development charge would be payable in1equal installments and it would be on1the earlier of the date of issuance of1the building permit under the building1code building code act authorizing1occupation the building and the date the1building is first occupied interest may1be charged on the installment payments1at a prescribed rate from the date the1DC would have been payable ie at1building permit issuance or AB1subdivision agreement when the1development charge amount is determined1for all developments proceeding by site1plan or requiring a zoning amendment the1development charge shall be determined1based on the charge in effect on the1date of the application so for example1if I was putting in an application for1site plan today the rates that are in1effect today would be the rates that1would be applied to my site plan1application the DC quantum would then be1frozen until 2 years from the date the1site plan application is approved or in1the absence of the site plan application12 years from the date the zoning1application was approved that can be1then any time horizon it moves from the1date of application and then once it's1approved is 2 years after the1of approval if the development is not1proceeding via the above planning1approvals - the amount is determined1payable upon the first building permit1being issued the developments paying in1installments as noted on the previous1slide the DC is payable in equal1installments beginning on the earlier of1the date of the issuance of a building1permit under the Building Code act1authorizing occupant occupation of the1building and the date the building is1first occupied additional dwelling units1the creation of an additional dwelling1unit is prescribed in prescribed classes1of residential buildings and ancillary1structures does not trigger development1charge currently they're providing that1the creation of a second unit in1prescribed classes of new residential1buildings and including the ancillary1structures will now be exempt from1development charges the current1situation is if I'm building a1single-family home and I'm also building1a an apartment in the basement both of1those units were would be charged under1the new legislation the secondary unit1would not be charged it is also proposed1within other existing residential1buildings the creation of an additional1unit comprising 1% of the existing units1would also be exempt from the1development charge some observation and1comments arising from this changes to1the eligible services moving the soft1services to the community benefit charge1framework may result in reduction of1revenue for municipalities at this1particular point the rules and1regulations surrounding the CBC have not1been advanced so it's unclear of the1potential impacts as a result the1removal of the 10% mandatory deduction1for those services that can continue it1would be a positive change in that you1would be allowed to collect additional1revenues for waste diversion1for ambulance services and for the DC1background studies the additional units1being exempt will provide for a1potential loss of revenue and it's1unclear whether those exemptions one's1grounded granted will affect1redevelopments into the future or not as1well under the current definitions thats1unclear what a road welling is has1referred to in the legislation does this1refer to other multiples such as stacked1or back-to-back townhouses or solely to1row housing this will be further defined1hopefully later payments and2installments this will create an2additional administrative work in2tracking the installment payments as2noted certain forms of developments will2pay in six equal installments and others2will pay in twenty one equal2installments which will have to be2tracked and managed municipalities may2need to place a notice on title of the2land to ensure that future landowners2are aware of these payments and the non2currently the nonprofit housing2development definition provided appears2to cover both new developments as well2as redevelopment we need to consider how2the application the DC credits would2then apply on redevelopments it is2unclear if the requirement to remain2nonprofit corporation or a rental2housing development is only for a period2of time or whether the municipality can2controls restrictions the observation2here is once the application is made for2the building permit and its declared as2a non-profit or a rental housing2what happens if within a year or two the2property flips to a another use2definition of institutional development2provides for long term care and2retirement homes currently in some2municipalities these2and so treated as residential for DC2purposes others would identify them as2non-residential it's unclear how these2will be treated given that there's no2defined rules with respect to2institutional when the DC amount is2determined this will limit the amount2that will be collected by the2development charge payment specifically2developments that are slow to proceed2from the agreement stage it will take2longer and there'll be a longer period2of time between the rate that is set and2the ultimate rate that is paid the2minister is not proposing to prescribe a2maximum interest rate that may be2charged on DC amounts that are deferred2or DC's that are frozen2hence the municipality will need to2consider what rates are to be used in2this regard is it just the DC indexing2amount is that the annual short-term2borrowing rates is that a long-term2debenture rate or is it the maximum2rates on unpaid taxes this will need to2be assessed by the individual2municipalities question as well should2it be consistency between the upper tier2and the lower tier municipalities ie2should they have the same interest rates2or should they be able to vary if the2interest rate selected is too high would2it then discourage paying in2installments and force these types of2developments for paying the whole amount2at the time of building permit summary2of impacts the above analysis provides2for the following observations cash flow2will be impacted by the extension of the2payment period for certain forms of2development ie rental housing2institutions nonprofit housing2municipalities will lose DC revenue by2the introduction of the additives2exemptions for second dwelling units and2for the freezing of the DC quantum for2certain development2it's ie site plan and zoning amendments2removing soft services from the DC and2requiring a separate study process to2recover those services will now add a2second process and hence add additional2cost to the municipality the minor2increase in revenue recovery resulting2from the removal of the mandatory 10% DC2reduction for certain services is a2minor positive that concludes our2presentation2you

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