June 21/06 Report - Part 1 of 3
Start time : 9:30 , Actual Start : 9:38 a.m. In Camera 1:54 p.m. (after item 6.3) Adjournment : 4:00 p.m.

(NOTE: This is a partial transcription.)

Attendance:

• Councillors Braden (out 1x for 2 min),
• Bruckler (out 1x for 2 min.),
• Collins (out 1x for 22min.),
• Mitchell (out 2x for 5 min, left at 1:02),
• Pearson (out 2x for 17 min, left at 1:53),
• Samson (Chair),
• Whitehead (out 1x for 2 min., left at 12:12)

Also present :

• Councillor McCarthy, Mayor DiIanni,
• Staff: J. Rinaldo , G. Peace, J. Spiler , S. Stewart , T. McCabe, C., Murray, C. Graham, P. Barkwell; G. Scandlan, Consultant from C. N. Watson Assoc.
• Media present:
  • Hamilton Spectator (McIntyre),
  • CHML (Mann
• CATCH: ( Roberts, McLean )

1. CHANGES TO AGENDA

Delegation Requests:

1. Duncan Glaholt, Solicitor on behalf of Lafarge Canada Inc. with respect to bid disqualification - tender for Red Hill Valley Project, Added as Item 6.3 (Carried)

2. John MacLennan, City of Hamilton appointee on Conservation Halton, verbal update - to speak at September 6 meeting. (Carried)

3. Mark Giavedoni, on behalf of McMaster University , respecting proposed amendments to the Development Charges By-law - added item 6.1.6 (Carried)

4. The following items were distributed at the meeting:

Item 8.4 2006 GST Reduction - Impact on User Fees

Item 8.5 Report 06001 on the HMRF/HWRF Pension Administration Committee

5. CONSENT ITEMS
(Mitchell/Whitehead) Carried (no discussion)

5.1 Minutes of the Advisory Committee for Persons
with Disabilities Meeting - May 2,2006

5.2 Tile Drainage Loan (Neeb) (FCS06066) (Ward 14)

6. PUBLIC HEARINGS/DELEGATIONS

6.1 Development Charges By-law 04-145 Amendments and GO
Development Charges By-law (FCS06063) (City Wide)

Councillor Mitchell served as chair of the Development Charges Stakeholders Committee and thanked all those who volunteered their time, along with many staff people, and looks forward to hearing their presentations today.

Development Charges Amendments slide presentation by Gary Scandlan , Consultant for C. N. Watson Assoc. covered the following:

Purpose of the amendment was primarily because of increases to water, sewer, storm water and parks development, which includes increase in land costs, additional projects, removal of some projects, actual vs. budgeted costs, updated benchmark estimates.

Included in his presentation were charts giving a summary of changes, and other charts showing itemized list of where changes to water projects are, changes to sewer projects (e.g. Woodward Avenue Wastewater Treatment Plant gross capital cost of $340,117,000 not included last time), changes to storm water projects, parks projects, recommended charges for both residential and non-residential, and a DC comparison with the 2004 by-law vs. the amendment, in both 2004 dollars and 2006 dollars.

Effective date of by-law is July 6, 2006.

Councillor Braden asks why surface transportation was not included. Joe Rinaldo states the rates had not changed substantially, when plans are finalized for GRIDS next year, the whole by-law will be opened up. Did not want to open up the by-law because that makes it subject to appeals. A resolution from this committee asked to look at Parks as well this time.

Braden asks about the Waterdown transportation issue "is there any chance that any of the new development can sneak under the wire and not be paying their full share of whatever the Waterdown transportation plan will eventually look like?" Rinaldo : "In terms that looks at the component on the Burlington side, there will be a Special Area Charge (SAC) will be put forward once Burlington Council decides on how to proceed on that part of it, and we have in fact, under agreements, collected funds in advance of the by-law. In terms of our side of it, we believe that the ??(monies?) we got right now should cover it and we'll do the refinement when we do the formal update on the GRIDS. . we're covered off." Braden : I don't want to get into detail, but what Joe's just saying is that the existing development charges that we have are going to cover those parts of the Waterdown transportation study within our municipal boundary. How could that be because we didn't include them before. Rinaldo : There are some projects that we have in there that we can replace . about $7 million, so we are able to do it on a preliminary review and that's why we didn't open it up. Braden requests he be sent details and Rinaldo answers that he will send an email to all members. Tim McCabe : - 2 subdivisions draft approved before started negotiating the Burlington share of the Waterdown road work - now MCT(?) Homes approved by the Ontario Municipal Board (OMB), negotiated a condition under the planning act to pay for what we anticipated it to be the SAC to cover our share of the Burlington Waterdown Road work - "Up Country" was the only question mark - didn't have an additional charge - since DCs are paid at building permit stage - building permit will be in the fall - fortunately for us, they came in with a revised draft, going to have similar condition that we did on the MCT Homes in advance of the SAC to the revised draft approval, so we don't expect any new building in Waterdown without them paying their fair share.

(0:22:53)

Councillor Collins refers to Hamilton being near the bottom of the graph of DCs. "We've been told time over time that there's a line up of investors waiting for shovel ready industrial land and wonder what opportunities exist to split the DC between greenfield and brownfield development. I'm not sure there are lineups of people ready to develop industrial properties. Having the lower rate according to the report, we're giving that to attract industries . I'm not sure whether that's a make or break issue for people who are looking at developing in this municipality. Joe Spiler does not understand the question re brownfields, and after Collins repeats Spiler responds by saying the ERASE program is in effect and that there is no distinction between the 2 kinds of development. Collins : When I'm looking at the chart, we're a lot lower than other municipalities and we've noted that it's for competitive reasons . and so we've been told there is a line up of individuals waiting for shovel ready industrial land. Does it make or break projects if we bump our DCs up to a point where we're near the top of the chart rather than near the bottom? Spiler states that Economic Development was a participant at DC staff meetings, and they have always said that lower DCs are a significant component of attracting industry. With phased in rate increases we'll be on par with other municipalities such as Guelph, but below Halton, Oakville, Mississauga, etc. - but it's up to Council to say what they want to charge for industrial DCs. Collins asks if they can be split so that new industrial parks or greenfield development would have a higher rate than those in the lower city. Spiler states it's up to Council's discretion and that the ERASE program may be expanded to the whole city boundary. He suggests that's something that staff could look at and offers to come up with some options for Council's consideration in the future. Collins : I would like to see what's available in that regard - no time lines, but would like to pursue it. Rinaldo reminds that industrial tax rates are much higher than everywhere else and is one of the factors in the low industrial DCs, but will look into the option for brownfields vs greenfields and will come back with a policy.

Councillor Whitehead referring to high industrial taxes, reminds them that with Maple Leaf it was the value of the land that attracted them, so "have to look at the whole piece", and refers to places where industry is attracted and have higher industrial DCs and that "it's a lot cheaper to purchase land . in the city of Hamilton" than it is anywhere else east of us". "Why are our industrial charges so low?" Rinaldo : "Historically we've always done that." Economic Development, part of their group says there is a need to do that, phase in the impact of the charges. "The phasing in is an option, it's outside the by-law. We can phase it in anyway you like." "In terms of tax rates, there's no question, with large industrial - we are better off, like Dofasco, Stelco, - smaller industrial we are marginally above, not much - a lot closer than before - will look at that as an option. Whitehead supports the concept that Collins raised - splitting DCs in regard to greenfield/brownfield.

Whitehead then asks why the by-law is not opened up to take advantage now to increase DCs, and mentions how high Oakville and Burlington DCs are compared to Hamilton. Rinaldo - more comprehensive review of DC by-law should be done after GRIDS completed. But significant changes justified their amending the by-law at this time, "we tried to limit it because you always have the exposure of appeal" if you open rather than amend. - looked at Parks and Rec (which Whitehead requested earlier), and states "we are charging the maximum we can . we are covering most of the components where we are able to increase the charge." - transportation only item not opened up - numbers overall looked ok. Whitehead has a whole litany of issues he wants addressed "now that we've opened it up" and has "some real problems" because no changes to DCs for recreation. "Why are there no changes there?" Scandlan - all the services are at their maximum level and explains. Whitehead says it's a "very contentious issue" - province involved in this issue - Rinaldo reminds him that the province was supposed to open up the DC Act last year (2005) but made a decision not to and that Hamilton and other municipalities have asked the province to make an amendment to the DC Act for Parks and Rec, and until the province opens up the DC Act, Hamilton is limited to what it can charge for those services, for which levels were set 10 years ago. Scandlan refers to changes and the chart which shows changes for outdoor parkland but none for indoor recreation.

Whitehead : - rec centres are outdated - new growth puts burden on existing rec centres . Scandlan explains that they are maxed out in what they can recover from the development community, but you can take money from one project and possibly move some of it to another, and they will look at it. Rinaldo confirms that they are charging the maximum possible. Whitehead : "I thought the whole principle behind DCs is to accommodate growth. Is that the principle?" Rinaldo : "That's the principle. Absolutely.(but) legislation prohibits us from increasing the charges." He adds that the DC Act will not be opened by the province before the fall of 2007.

Councillor Bruckler looks forward to the province opening up the DC Act to address the current needs. Asks about a large community park that had been identified for Stoney Creek in late 90's, disappeared "from the radar screens" and thinks it was put back in the budget - can't see it listed. Spiler informs that the park area people will be prioritising projects within the 10 year budget forecast and will be amended to include those projects and priorities.

Mayor DiIanni recalls at one time the spending of development charges money was discretionary, whereas now the province mandates that it be more specifically allocated and scrutinized. "When you look at the single detached comparison, you look at Hamilton, you look at where we are and where we want to be with this by-law, compared to Oakville and Burlington and so on. Why are they charging more and we're charging less?" Rinaldo reminds council that high growth areas such as Binbrook, Waterdown have surcharges of $4-5000 added to their DCs. "You have to look at the growth related component, and it's got to be reasonable, because it is subject to appeal (to Ontario Municipal Board). Every year we've been getting a little better at improving that, . if your capital budget deals with a lot of existing deficiencies, we cannot charge that to growth. If it's dealing with growth related projects then we have attempted to incorporate all our growth related projects in the past. The one we had the big issue with is we didn't have the wastewater plans ready last time. We didn't have any data that would substantiate what should have been allocated to growth. When we got the master plan we realized the differential was so large, we came to council with an amendment. If you look at budgets of growth related areas, GTA, Halton, Peel, their capital budget is considerably higher for growth related projects, so obviously they are going to have a larger impact - keep in mind that our development charges are relative to the property values within our community. DiIanni : . What you're saying to me is the number we eventually arrive at is tied to our gross capital budget plan, and the real impact that growth has on the community. So what's the validity in these comparisons, if they're apples and oranges? Rinaldo : "In my mind they're not (valid), but every time we do one . the first thing we get asked is 'how do they compare' . we follow the same allocation principles that is used by other Ontario municipalities, but in our case the capital budget has a greater component for dealing with existing deficiencies than it does for growth and that's part of why it reflects the lower numbers. DiIanni suggests a different chart would be more helpful - "that would help us reach a comfort level with decision making here, with a greater degree."

(0:48:48)

Councillor Mitchell : Regarding the pumping station at Mount Hope, stormwater getting into it, taking capacity away from development, how to fix that, it's an increased cost, on top of that that section of road is still owned by the province, it's inadequate, province wants to give it to us, we don't want it back if we got to bring it up to standards. If we got to build it it's going to cost a lot of money, and a lot of grief for me and the residents in the area for the airport for a big part of Hamilton's recovery is on that. Where in this process can we look at those figures? Can we use DCs to help correct that so that we can get this road back in our ownership so we can get services up there so we can have employment land in Mount Hope and with employment land comes housing development and so on. It's stopped dead. That's one of the biggest thorns in my side right now for Mount Hope area. Where does that fit into the DC by-law? We gotta solve that somehow, and those are increased costs to everybody.

Scott Stewart: "Split that into 2 categories, the pump station itself, the force main on the 2004 DC by-law, the road component, we're in negotiations now with the minister of transportation so they're not concluded yet. So that would be additional costs if we take on a road if we don't need it, but don't forget we got the cost of the force main. If we can just build the force main and that happens to be in the road allowance and we don't have to take on that road, that's covered in the DCs. We'll take a look at the road component but that would be over and above really what might be our requirement if we can just build the force main itself, in the road allowance." Rinaldo refers to GRIDS and states that if there's a growth rate component it will be looked at and included. Mitchell referring to employment and growth in the area, says it needs to be made a priority and asks Stewart if it's a priority in his department. Stewart mentions a meeting in 2 days with Ann ??. "If they're receptive to give us the road for free and all those things, there will be a deal done Friday afternoon."

Bruckler adding to former remarks about rec centres, says that Mississauga and Oakville would have a "much higher park and open space DC because of new growth, Mississauga having higher standards for recreation facilities because as new growth came along, they built those kind of facilities." Rinaldo explains their 10 year levels are much higher than Hamilton and "now they are allowed under DC Act to charge a much higher level." Hamilton does not have that and we are prohibited by legislation to do so."

Whitehead (53:06) Referring to chart below notices all the items that show no changes and asks why they have not changed. Spiler : - charging at or near capacity. Whitehead thinks it would be helpful to know what the capacity is in each item "so we would know how much movement we have." Rinaldo will provide a briefing on that this week.

Whitehead also asks for information that shows the differential between where our growth numbers are and where development charges are relative to ???. "I think that's a fair comparison to - all's that in front of us is the explanation Joe has provided." Mentions that Mississauga is "building parks first, and then completing the houses around them." He mentions 2 parks in Ward 8 (population 55,000) that are "sitting with no further development taking place. Is that a development issue or a policy issue?" Scandlan states that a developer can build the park first and "use it as a marketing tool. - you get the services faster - and working out well for them." Rinaldo states that on some of the big development projects - "we will look at doing the same thing here."

Spiler gives a powerpoint presentation summarizing the major issues which started the amendment process and a recap of staff's recommendations in the report. - current DC by-law expires July 2009 - major issues prompting this amendment -

1. Capital cost adjustments in water/wastewater and storm areas: e.g. higher stormwater land acquisition costs - originally used figure of $100,000/acre, adjusted to approximately $160,000-250,000/acre

2. Woodward wastewater plant expansion: 2006 capital budget, council approved $331 million for wastewater investment needs, so increases were required within a time frame from 2007 to 2013 ranging from $6 million in 2007 to $238 million in years 2010 - 2013.

Explanation of the expansion is as follows: for present population (508,000) the cost is $126 million, funded from taxes and included in this is a $46 million financing cost (interest). Up to year 2024 with an increase in population of 73,000, the financing will be $96 million funded from the proposed DC amendment. Other amounts are given for future growth and cost which will be collected through DCs some time in the future - $163 million.

Once GRIDS is completed a new DC by-law and background study will be initiated, with adjustments at that time.

3. Council decided in July 2005 to request staff to initiate a by-law amendment which involves a 50% reduction in DCs payable for student residence developments by McMaster.

4. DC amendment issues:

Outdoor Recreation projects have been updated for costs and new projects added.

Recommended residential DC rates increased and to be phased in: with 50% of the increase effective July 6, 2006 ($15,875) and the full rate starting Jan. 6, 2007 ($17,615).

Recommended that apartment developments be permitted to defer their DCs payable by a max of 5 years plus interest. Numerous financial incentives are already in place, plus a recommendation to include a permanent transition policy and a one-time policy for development under site plan control.

Industrial DC rates: recommend rate to be $2.58 sq. ft., increasing by $0.50 annually plus inflation.

Commercial/Institutional/Office DC rates:

current rate $9.36 sq. ft., recommend an increase to $9.62 sq. ft. Phase in recommended from $9.62 (60%) now to $12.82 (80%) July 6, 2007, to $16.03 (100%) as of July 6, 2008. Also a stepped rate policy for small retail be continued.

Recommend setting the DC deferral agreement interest rate at 5 year debenture rate (currently 5%) plus ¼% for administration. Current policy charges 6%.

Recommendations for storm water management pond DC reimbursement - limit the amount to the total amount identified in the DC study.

DC stakeholder Committee was reconvened in December 2005 and their comments are attached to the report under this item 6 above.

Bruckler : What period of time for deferral agreements. Spiler : 5 year maximum, pay anytime within that period. There's no set for annual payment period in there.

At this time Rinaldo explains about the sewage treatment plant and refers to a slide on it. He states that they allocated the growth related component by population. The build out rate for 2024, which is the period of the by-law, $96 million has been allocated, and $163 million allocated to post period benefit. When GRIDS is completed they will be in a better position to assess where the numbers should be allocated. By basing it on population, he feels it is a "fair compromise in terms of the wastewater plant." Because the plant is a significant cost to the city, it needs to be allocated properly "between growth, non growth, and post period benefit." Under the GRIDS process there will be a post period capacity, which refers to benefit beyond the 20 year period. "Whether we do it in GRIDS or not, we are required under the Development Charges by-law to not include it in the current calculations."

(1:17:38)

Bruckler asks about residential, 2 + bedrooms, how it works, and how it compares with other municipalities. Spiler : The DC currently is just over $10,000 per unit, 1 bedroom close to $6000. Close to Burlington, lower than Oakville, little higher than London. Bruckler : Do you anticipate a charge per bedroom? Spiler : Limited the 2+ bedroom to a maximum of 5. Over and above that for each additional bedroom "each resident gets charged a residential facility charge per unit on top of that." Previously there was no cap. Bruckler . commercial/institutional rates are $9.62 (sq. ft.) rising to $16.00. "Inflation would be over and above those rates?" Spiler : Yes. Bruckler : "I might look at a longer phase in period or see how we might address that particular situation . I have some concerns where this might take us. . adding inflationary costs annually which would pump these up higher than we're anticipating. Spiler : "We probably will be coming back to council . once GRIDS and master plan are established, probably before the period 2 years from July 6 when the full rate would be in effect." Rinaldo : Or if committee wishes to change it to 3 years phase in, gives you more time and flexibility, entirely up to committee.

Samson : So Councillor you could do that later on.

Whitehead : . residential charges, there's a surcharge for outlying areas, between $5000 and $7000 difference - I'm trying to understand how the DCs, the capacity, and it's history and all those things is set up, I'm trying to do it in the context of this surcharge. I take it that the developers were okay with that surcharge because we have obviously approved it. Spiler : Yes, and in Glanbrook it was for a specific capital project to bring water and sewer up there. The one developer front-ended those costs. What we're really doing is collecting a surcharge and refunding it to the developer that brought up those services. The same thing in Waterdown. Rinaldo states that both were approved by the previous regional council. Whitehead : . so for the sake of comparison we don't have to consider what's happening in Waterdown and Glanbrook because it's completely different piece in respect to DCs. Spiler : My opinion, the only developer that's not affected is the one receiving the payments back. The rest of the development community . have to put out $7000 more than if they had developed in another area. Rinaldo : It really should be factored in, in the case of Waterdown, the regional council made a decision to do a Special Area Charge for water/wastewater. They could have included that component in the general by-law just like in Glanbrook, they could have included that. So that was a policy decision.Region at that time had the option. Not unusual for that to be done, different way of financing a project. Whitehead : Hamilton is one of the top leaders in housing starts for the last 10 years - is that correct? Rinaldo : ". we had a fairly high growth but housing starts in Halton and Mississauga were at a much higher pace. Whitehead states stats Canada has Hamilton as number one in housing starts in last couple years. I don't know how you reconcile that. Rinaldo : probably was the CMA (CAN?) level which would have included Burlington.

Mitchell : ".the $25,000 charge in Binbrook would be higher than anywhere else on this graph of DC comparisons, $2000 higher than Oakville which was the highest. So that area was paying the highest and it was, as Joe said, to pay for 100% of the cost of the increase of that water and sewage. But those developers still have to pay the $18,000 into the general pot that everybody else does. So there's no money going to the water and sewers from the general pot, it's almost like paying twice. . there's inequity there . and on top of that, those poor residents, and Joe can answer this as I brought it up at the Stakeholders meetings, there's another inequity for that area, and that is the development charge at the time when it was Glanbrook was designed around one arena for 10,000 people . so now I'm looking at a part of my ward that's paying higher than anywhere else in the province of Ontario . it's not one arena for 10,000 people, it's now one arena for 22,000 people. So they're getting stung for more money . and the service level has been cut by half . so . looking for fairness and inequities, there's one huge inequity out there, both on the service level and the charges. And I've tried through this process to get that corrected . to no avail. But I hear about it everyday. . huge inequity for that former municipality.

(l:28:58)

Rinaldo : In terms of the arenas and the population factor, that was the factor that was used in Glanbrook. When we consolidated as a municipality we had no choice we had to use the average. As I said earlier, we cannot charge more, we are the maximum. In terms of the agreement re the SAC, the binding agreement that the Hamilton-Wentworth region entered into, that we would recover that from future development and we just continued that practice. I understand that was approved by regional council. We are legally ??? to collect that money, it's a question of whether or not we can allocate it across the whole city. We kept going on the same policy that was there before. So there's no question in terms of recreational facilities, we cannot provide the same level of service in the former township of Glanbrook that you're providing ??? amalgamation city . because of . legislation. Mitchell : Thank you, my community is learning to eat that inequity because they have no other choice." Mitchell continues that he likes the idea of a given area of this city paying what it costs to get services there. "Glanbrook is doing it in a fair and equitable way, it's the rest that may be looked at, where some developers aren't being paid for in a fair manner."

Braden : (01:30) Is there any reason why this city couldn't, at the request of the councillors, maintain the standard of one arena per 10,000 and have an area rated by-law like we have in Binbrook and like we have in Waterdown? Rinaldo : No. Braden : Why? Rinaldo : The legislation prohibits it. Braden : Why do we have it in Binbrook if the answer is no? Rinaldo : The 10,000 unit was calculated when Glanbrook was a separate township. Once you amalgamated you have to use the city wide average. Braden : You don't do that in Waterdown and Binbrook, what about ???

Rinaldo : For water and sewer it's a different story and we're talking about the arenas. In terms of culture and recreation services, you have to use the service standard. When a city gets amalgamated it gets averaged out. And there's no way around it. Braden : I don't wish to argue nor debate but can you send me an email to document that in the Act. Thank you.

Chair Samson notes there are no other questions and calls on registered speaker Don McLean.

See Part #2