1. Chatham-Kent Economics of Managed Growth March 6, 2012

2. 2 Presentation Outline  To overview the implications of growth from a municipal finance perspective  To provide a basis for consideration of future strategies to assist in long term decision making by Council  To assist Council in developing future policies to guide the preparation of operating and capital plans… understanding what choices are available, and the implications of those choices 2

3. 3 Comprehensive Review Establishes Objectives for the Official Plan:  Outline municipality’s intentions for location and direction of new development  Ensures mix of housing and new lot development  Establishes basis for financial planning of capital servicing needs with land use planning  Assist in forecasting future expenditures and provides a basis for considering revenues such as DC’s  Assist other agencies in planning (e.g. School Boards)  Assists developers and investors in private sector decisions 3

4. Assessing the Financial Impact of Development & Growth

5. Servicing Needs  Servicing needs will vary by municipality depending upon a number of factors: Service provided Levels of service provided Policies regarding how services are to be provided in the future Capacity of existing infrastructure to accommodate additional growth 5

6. Listing of Municipal Services 6 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 1.Services Related to a Highway1.1Arterial roads 1.2Collector roads 1.3Local roads 1.4Traffic signals 1.5Sidewalks and streetlights 2.Other Transportation Services2.1Transit vehicles 2.2Other transit infrastructure 2.3Municipal parking spaces - indoor 2.4Municipal parking spaces - outdoor 2.5Works Yards 2.6Rolling stock 2 3.Storm Water Drainage and Control Services3.1Main channels and drainage trunks 3.2Channel connections 3.3Retention/detention ponds 3.4Localized works 4.Fire Protection Services4.1Fire stations 4.2Fire pumpers, aerials and rescue vehicles 4.3Small equipment and gear 5.Outdoor Recreation Services (i.e. Parks and Open Space)5.1Acquisition of land for parks, woodlots and ESAs 5.2Development of area municipal parks 5.3Development of district parks 5.4Development of City-wide parks 5.5Development of special purpose parks 5.6Parks rolling stock 2 and yards 6.Indoor Recreation Services6.1Arenas, indoor pools, fitness facilities, community centres, etc. (including land) 6.2Recreation vehicles and equipment 2 7.Library Services7.1Public library space (incl. furniture and equipment) 7.2Library materials

7. Listing of Municipal Services (cont'd) 7 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 8.Electrical Power Services8.1Electrical substations 8.2Electrical distribution system 8.3Electrical system rolling stock 2 9.Provision of Cultural, Entertainment and Tourism Facilities and Convention Centres 9.1Cultural space (e.g. art galleries, museums and theatres) 9.2Tourism facilities and convention centres 10.Waste Water Services10.1 Treatment plants 10.2 Sewage trunks 10.3 Local systems 10.4 Vehicles 2 and equipment 11.Water Supply Services11.1 Treatment plants 11.2 Distribution systems 11.3 Local systems 11.4 Vehicles 2 and equipment 12.Waste Management Services12.1 Collection, transfer vehicles and equipment 12.2 Landfills and other disposal facilities 12.3 Other waste diversion facilities 13.Police Services13.1 Police detachments 13.2 Police rolling stock 2 13.3 Small equipment and gear 14.Homes for the Aged14.1 Homes for the aged space 15.Child Care15.1 Child care space 16.Health16.1 Health department space 17.Social Services17.1 Social service space

8. Listing of Municipal Services (cont'd) 8 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 18.Ambulance18.1 Ambulance station space 18.2 Vehicles 2 19.Hospital Provision19.1 Hospital capital contributions 20.Provision of Headquarters for the General Administration of Municipalities and Area Municipal Boards 20.1 Office space (all services) 20.2 Office furniture 20.3 Computer equipment

9. 9 Timing of Capital Expenditures 9

10. 10 Timing of Capital Spending  Depending on the particular service, capital spending to serve the development will occur at various times  The “Hard Services” expenditures (i.e. water, wastewater, storm, roads) are often made well in advance of, or during development, while the “Soft Services” are often incurred after building occupancy  Payment of DC’s (if collected) normally occurs at the time of building permit issuance 10

11. Growth Financing Practices in Ontario  Legislatively, municipalities in Ontario are required to use the Development Charges Act (DCA) to pay for growth infrastructure  Other Acts may also allow for minor contributions (e.g. the Planning Act provides for parkland dedication, site plan provisions provide for certain localized works, etc.)  For “Hard Services”, the DCA does allow for localized infrastructure to be built directly by the developer (see next slide) 11

12. General Approach in Ontario – Local Service vs. DC 12

13. Development Charges Purpose:  To recover the capital costs associated with residential and non-residential growth within the municipality  (Note that DC’s are not full cost recovery due to service restrictions, a number of exemptions, deductions and limitations) 13

14. DC – Simplified Concept  Generally DC is equal to all eligible growth costs during period divided by all growth during the period  Full cost recovery could be over the 10 or 20 year period and hence cash flow funding (i.e. debentures, developer agreements, etc.) may be required 14

15. Relationship Between Needs to Service Growth vs. Funding 15

16. 16 Given the Forecast Growth for CK, is Additional Servicing Needed?  The DCA addresses “development of the area” vs. the term “growth” 2(1) The council of a municipality may by by-law impose development charges against land to pay for increased capital costs required because of increased needs for services arising from development of the area  Given the amount, type and location of growth, the following provides which forms of services may be needed to service the future development

17. Listing of Potential Services Needed for Development in CK 17 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 1.Services Related to a Highway 1.1Arterial roads 1.2Collector roads 1.3Local roads 1.4Traffic signals 1.5Sidewalks and streetlights 2.Other Transportation Services 2.1Transit vehicles 2.2Other transit infrastructure 2.3Municipal parking spaces - indoor 2.4Municipal parking spaces - outdoor 2.5Works Yards(minor) 2.6Rolling stock 2 3.Storm Water Drainage and Control Services 3.1Main channels and drainage trunks 3.2Channel connections 3.3Retention/detention ponds 3.4Localized works 4.Fire Protection Services 4.1Fire stations (minor) 4.2Fire pumpers, aerials and rescue vehicles 4.3Small equipment and gear 5.Outdoor Recreation Services (i.e. Parks and Open Space) 5.1Acquisition of land for parks, woodlots and ESAs 5.2Development of area municipal parks 5.3Development of district parks 5.4Development of City-wide parks 5.5Development of special purpose parks 5.6Parks rolling stock 2 and yards 6.Indoor Recreation Services 6.1Arenas, indoor pools, fitness facilities, community centres, etc. (including land) (minor) 6.2Recreation vehicles and equipment 2 7.Library Services 7.1Public library space (incl. furniture and equipment) 7.2Library materials

18. Listing of Potential Services Needed for Development in CK (cont'd) 18 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 8.Electrical Power Services8.1Electrical substations 8.2Electrical distribution system 8.3Electrical system rolling stock 2 9.Provision of Cultural, Entertainment and Tourism Facilities and Convention Centres 9.1Cultural space (e.g. art galleries, museums and theatres) 9.2Tourism facilities and convention centres 10.Waste Water Services 10.1 Treatment plants 10.2 Sewage trunks 10.3 Local systems 10.4 Vehicles 2 and equipment 11.Water Supply Services 11.1 Treatment plants 11.2 Distribution systems 11.3 Local systems 11.4 Vehicles 2 and equipment 12.Waste Management Services 12.1 Collection, transfer vehicles and equipment 12.2 Landfills and other disposal facilities 12.3 Other waste diversion facilities 13.Police Services 13.1 Police detachments 13.2 Police rolling stock 2 13.3 Small equipment and gear 14.Homes for the Aged 14.1 Homes for the aged space 15.Child Care 15.1 Child care space 16.Health 16.1 Health department space 17.Social Services 17.1 Social service space

19. Listing of Potential Services Needed for Development in CK (cont'd) 19 CATEGORIES OF MUNICIPAL SERVICESSERVICE COMPONENTS 18.Ambulance 18.1 Ambulance station space(minor) 18.2 Vehicles 2 19.Hospital Provision 19.1 Hospital capital contributions 20.Provision of Headquarters for the General Administration of Municipalities and Area Municipal Boards 20.1 Office space (all services) 20.2 Office furniture 20.3 Computer equipment

20. Intensification and Potential Financial Impacts  Since the province has released its directions on future growth and intensification, initial observations on the potential impacts are emerging  Note that the impacts of intensification depends on a number of factors specific to the municipality including: Services and the quality/levels of service provided Capacity of existing infrastructure to accommodate additional growth changes in new legislated requirements vs. historic (i.e. need to retrofit to current standards) 20

21. Provincial Growth Policies Which Impact Infrastructure building compact, transit-supportive communities in designated greenfield areas reducing dependence on the automobile through the development of mixed-use, transit-supportive, pedestrian-friendly urban environments providing convenient access to intra- and inter-city transit planning and investing for a balance of jobs and housing in communities across the Ontario to reduce the need for long distance commuting and to increase the modal share for transit, walking and cycling encouraging cities and towns to develop as complete communities with a diverse mix of land uses, a range and mix of employment and housing types, high quality public open space and easy access to local stores and services directing development to settlement areas, except where necessary for development related to the management or use of resources, resource-based recreational activities, and rural land uses that cannot be located in settlement areas directing major growth to settlement areas that offer municipal water and wastewater systems and limiting growth in settlement areas that are serviced by other forms of water and wastewater services 21

22. Intensification vs. Greenfield Considerations - Water and Wastewater  There is a common perception that intensification can use existing services with little or no costs to the municipalities  At low levels of intensification within an area this may be possible, however as a rule, the services were never sized to accommodate significant levels of intensification  High levels of intensification may require expanding existing water/wastewater services at a high cost 22

23. Intensification vs. Greenfield Considerations- “Water and Wastewater”  Impact on the Municipality: Constructing mains is approx. 3 times more expensive in brownfield areas vs. greenfield areas If DC’s used, will require existing benefit deduction (so not full cost recovery projects) Greenfield normally requires an extension of the system where intensifcation may require replacement to long lengths of mains in existing areas Similar concerns for zonal storage, pumping, and treatment capacity as well i.e. can existing treatment locations handle the increased flows 23

24. Intensification vs. Greenfield Considerations - “Increase the modal share for transit, walking and cycling”  Provincial goal is to reduce reliance on Roads and use alternative means of transit  Impact on Municipality:  May provide for expanding roads for bike lanes, however large costs to remove and replace curbs, gutters, etc.  Building trails and bike paths through existing areas may be expensive (purchase of land), reconfiguring existing infrastructure to accommodate it  However, transit along existing corridors make certain routes more cost effective  If DC’s used, shift from 100% service (Roads) to 90% services (transit) – may also experience service standard issues which would limit transit cost recovery 24

25. Intensification vs. Greenfield Considerations - “high quality public open space ”  In regard to Parkland, higher density development may place pressure on municipalities to provide more parkland with more amenities  Intensification within existing areas will make it difficult to acquire more parkland – i.e. less dedications and more cash-in-lieu payments placing responsibility to acquire land on the municipality (brownfield land is also more expensive than greenfield)  DCA does not allow parkland purchases but will allow for development of parks 25

26. Intensification vs. Greenfield Considerations – “Stormwater Management”  Intensification will require more Quantity (and Quality) management infrastructure – i.e. less permeability causes increased stormwater run-off  May be difficult to re-engineer intensification areas  Greenfields sites easier and normally less expensive to build – most municipalities require stormwater infrastructure as a developer cost however intensification may require a broader municipal solution – potential cost impacts on taxes 26

27. Intensification vs. Greenfield Considerations - Conclusions  Current Provincial Goals present a potential for financial impact onto municipalities  Affordability and timing issues may arise without appropriate tools to assist municipalities – therefore may need to consider alternative funding  Need to recognize that DC’s will be needed at potential increased levels to afford the issues discussed herein  Municipalities should take a detailed look at the costs of servicing intensification, and the financial impacts arising from it in comparison to greenfield developments 27

28. Strategic Greenfield Development  Municipalities are challenged with servicing many areas at one time providing challenges to fund growth and non- growth costs  This may occur by either attempting to provide for growth in many communities at once, or by allowing for development to occur in a “wagon wheel” vs. a sequential phased development approach  Need to prioritize capital expenditures to maximize investment in growth  Consideration of location, mix of unit types, levels of affordability, amount of investment, etc. may be key in undertaking this evaluation 28

29. Questions? 29