Revising Industrial Development Related Charges (Impost Fees) in Kingston: Opportunities and Ways Forward RESEARCH PLAN/PARTNERSHIPS - Consultation with KEDCO, City of Kingston, City of Brockville, City of Hamilton & Ontario Chambers (Hamilton/Greater Niagara/Oshawa/London/Prince Edward County) INTRODUCTION

Kingston faces economic and fiscal challenges - an aging population and the City’s current reliance on the public sector creates a need to attract and grow private enterprise. This report will focus on deferring or “delaying” the Impost Fee portion of Development Charges with respect to industrial development and expansion. Kingston does not currently charge developers any fees other than these Impost Fees for industrial development. This is beneficial and attractive to developers and should be maintained after the 2014 review of DC’s. Further, a change in practice to include delaying payment of the Impost Fees would also prove attractive within an enhanced suite of incentives aimed at assisting with development in the city.

The payment of Industrial Impost Fees could potentially be delayed until the project is ready for occupancy/final inspection, rather than paying at the time of building permit issuance. In consultation with local authorities, there have been times where these “up-front” payments have hindered development/expansion of some businesses and caused potential employers to locate elsewhere.

If the City is to consider changing or revising its development-related charges (i.e. Impost Fees), a background study to identify growth related projects and determine how the charges are to be imposed needs to be conducted. We suggest the current study take into consideration a built-in safety net regarding collection and payment practices that will not see the municipality fall into a challenge of non-payment and delinquent payments from developers if they are granted a delayed plan. No new bylaw that threatens the City’s reserve funds or future infrastructure can work. This report will consider the options, show best practices from other municipalities, look at their benefits and shortcomings. It will provide results from those cities that have offered a progressive “suite” of development credits and deferrals to increase growth. This analysis is designed to start positive discussion with stakeholders about alternative measures to get Kingston in the competitive ring.

BACKGROUND

What are Development Charges? They are meant to recover a portion of costs associated with the additional infrastructure needed to service new development. These revenues are an important source of funds used by the City to finance capital investments required for a growing urban area.

The charges in the table below were effective as of September, 2013.

There are services to which development fees contribute. These include: roads, transit, parks and recreation, library, subsidized housing, police, fire, emergency medical services, development related studies, civic improvements, child care, health, and pedestrian infrastructure.

The impost charges or “connection charges” are separate from up-front DC’s and are used for assisting services, including: Related water, sanitary sewer, and storm water management.

City of Kingston bylaw wording on development charges and impost fees

The purpose for which development related charges are imposed by the city of Kingston is to assist in providing the infrastructure required by future development in the municipality by establishing a viable capital funding source to meet the City’s financial requirement. Basically, DC’s and impost fees build city reserves towards those future developments.

The legal wording which Kingston currently has established to collect DC’s and impost fees is:

City Treasurer’s Statement: “A financial statement is presented annually by the City Treasurer reflecting the activity of development charge and impost fee reserve funds, including expenditures, development related charge collections, interest earnings, funding transfers, borrowing, and landowner credit transactions. The City Treasurer’s annual statement is available through the office of the City Clerk and on the City’s website: www.CityofKingston.ca.”

“The City of Kingston collects development related charges pursuant to two by-laws: By-law No. 2009-136, as amended, authorized by subsection 2(1) of the Development Charges Act, 1997 (uniform city-wide charges); and Bylaw No. 2009-138, as amended, which imposes water and waste water fees under section 391 of the Municipal Act, 2001 within the Urban Service Area.”

The majority of the time these charges are collected as one payment at the time of building permit issuance. We are looking at delaying the payment of non-residential industrial impost fee payments over a period of time.

Development Related Charge Rules (Kingston) *Source By-Law 2009-136 A BY-LAW TO ESTABLISH DEVELOPMENT CHARGES FOR THE CITY OF KINGSTON, CITED AS THE “CITY OF KINGSTON DEVELOPMENT CHARGE BY-LAW 2009”

The rules for determining if a development charge is payable in a particular case, and for determining the amount of the charge, are as follows:

1. Development related charges apply to all lands in the City of Kingston. Water and waste water impost fees are applicable within the Urban Service Area only. (Urban service areas are those areas in and around existing communities which are most suitable for urban development and capable of being provided with a full range of urban services. The urban service area boundaries represent the outer limits of planned urban growth over a long-term planning period).

2. Development related charges are payable under the by-law(s) prior to issuance of a building permit. Impost fees are payable upon connection to the water or waste water system if a building permit is not applicable.

3c. the following industrial uses are exempt under city-wide development charges (By-law No. 2009-136 – pertaining to both DC’s AND Impost Fees.

• Industrial land uses – primary manufacturing – food processing *Source By-Law 2009-138

4. A reduction in development charges under the by-law(s) is allowed in the case of a demolition or redevelopment of a residential, non-residential, or mixed-use building or structure, provided that the building or structure was occupied within the prior five years or a demolition permit has been issued within five years prior to the issuance of a building permit for redevelopment of the lands.

5. The schedule of development charges will be adjusted annually as of September 29th each year, in accordance with the most recent twelve month change in the Statistics Canada Quarterly “Construction Price Statistics” (Ottawa Region).

Development Charge Fee Deferral: Pursuant to section 27(1) of the Development Charges Act, SO 1997, ch27, a party may request an arrangement with a municipality to defer payment of development charge fees. Section 27(1) provides:

Agreement, early or late payment

27. (1) A municipality may enter into an agreement with a person who is required to pay a development charge providing for all or any part of a development charge to be paid before or after it would otherwise be payable. (A summary of the municipalities that have elected to implement this provision in their DC bylaw is attached at the end of this report. **Source Lindsay Board, via Tim Wilkin (Kingston Economic Development Corporation).

THE POTENTIAL FOR CHANGE WITHIN A SUITE OF INCENTIVES

Chamber stakeholders have spoken to the Chamber to look into how the city may be able to revise and restructure their development related charges to better enable developers to incur a lower cost at the outset of their commercial and industrial projects. Below are some of the practices other municipalities have established regarding some alternative measures on collecting DC’s that could be considered by the City of Kingston in examining how to better encourage development.

Consultations have indicated that other municipalities are serious competitors in attracting employment growth and economic development due to their practice of freezing, waiving, reducing and phasing-in development charges over time for developers. The following examples explore some neighbouring regions’ practices and the pros and cons of each.

POSSIBILITY #1 FREEZING AND WAIVING DEVELOPMENT CHARGES FOR INDUSTRIAL DEVELOPMENT

Starting in 2009 to offset the impact of the economic downturn, the City of Brockville waived development charges for projects on industrial land. This was to show that the City was open for business and pro-development. Although this is a positive idea in attracting potential developers, any changes to collecting fees, which, in reality are land taxes used to support a community’s infrastructure and sustainability, can have negative consequences. It is not sustainable for any municipality to waive or freeze charges permanently for industrial development.

Brockville has revisited the issue annually but still has not collected Industrial Development Charges in almost 5 years. In the summer of 2013, Brockville city council voted for a $34,262 background study to be conducted before bringing back property development charges. The study is mandatory if the city wants to re-implement development charges. The contract was awarded to Watson & Associates at a rate of $27,320 plus disbursements estimated at $3,000 plus HST for a total cost of $34,262.

Source: Brockville Recorder & Times Wednesday, July, 2013.

If developers aren't paying those fees, they will inevitably have to pass the cost of the development charges onto the buyer through a higher price. It is like compounding interest on top of a mortgage.

Development charges are an “appropriate tax” when implemented correctly. It is a tax, but it's based on the premise of growth paying for growth. Without development charges, the specific municipal costs associated with the new development are paid by all taxpayers, rather than the ones who directly benefit from those municipal services.

When it comes to residential, the development charge as an upfront cost plays an important role, when the absorption rate for new home builds is high the impact of development charges being waived or frozen is not significant, however when absorption rate is low or flat then freezing or waving development charges for residential builds can be beneficial. In Belleville and Brockville, DC’s were suspended and waived since the economic slowdown in 2009.

However, as this has resulted in a few positive developments, these municipalities have now witnessed a drastic decrease in city coffers and, in some cases, witnessed city reserve funds run dangerously low.

The City of Kingston has wisely implemented the levies for infrastructure over the years, which has kept tax rate increases relatively low. Surrounding communities that have waived or exempted developers from paying DC’s now face challenges. No reserve funds and the possibility of new, much higher DC’s which will then negate any future possible growth. If Kingston is to pursue the delay and packaged suite of revised DC collection, it must flow correctly with existing tax levies already in place. Kingston will approach this from a position of strength.

Almost all area municipalities have development charges and it should be looked at as a cost of doing businesses when implemented correctly.

CONCLUSION: This option is NOT recommended as an option for Kingston.

POSSIBILITY #2 PHASING-IN DEVELOPMENT CHARGES (PRINCE EDWARD COUNTY EXAMPLE)

BACKGROUND

In 2008, in addition to phasing-in the introduction of residential DCs, Prince Edward County Council approved nonresidential DCs at only one-half the recommended rate in an attempt to stimulate employment growth; however, no offsetting revenue stream was established by funding through taxation annually. At the time Council resisted the inclusion of Water and Wastewater charges in the Development Charge in order to fully analyze the potential to collect for Water and Wastewater capital under a Municipal Act charge, a less restrictive method than allowed by the DC model.

In addition, Connection Charges (impost fees) were implemented in PEC in 2010, two years later, under the Municipal Act allowing the County to collect on “uncommitted excess capacity” previously built into the existing Water and Wastewater systems (in other words future growth has already been accommodated in these systems). 2010 saw 50% of the charge implemented and the approval of a five-year phase-in. Therefore, when percentage increases were indicated by the developer in his deputation, keep in mind that Connection Charges in 2013 are only at 75% of the full charge. The shortfall of collections in this case is being funded through the water and wastewater users in the water and sewer consumption rates until the full Connection Charge is reached in 2015.

IMPACT/RESULTS

One of the main structures to be built over the past 2 years is the new Prince Edward Country Innovation Centre. Opened in October 2011, the new PEC Innovation Centre is a $1.25 million, 15,000 sq. ft., 24 suite, tech-sector focused business acceleration facility that brings together private and public sector financing, mentorship, post-secondary educational institutions, and business advisory services in the former Tip of the Bay Hotel. The facility immediately attracted 8 residents that employ 32 young people with science, technology, engineering and mathematics backgrounds. FoodScrooge Ltd was the facilities first graduate having been purchased by Torstar Digital Ltd’s Wag Jag Ltd after only 6 month in operation. Daryl Kramp, Member of Parliament for Prince Edward–Hastings, noted a $150,000 investment from the Government of Canada’s Eastern Ontario Development Program (EODP). “The Prince Edward County Innovation Centre is strengthening the local economy by creating good jobs and also generating the interest of businesses wanting to locate here,” Kramp said.

Source: Countylive.ca

CONCLUSION: This option has moderate potential for Kingston.

The phase-in alternative, though attractive in the previous example, may complicate matters. It will also involve a phase-in period for “connection charges”, in addition to the existing development charge formula. Two fees; two formulas.

Developers favour the current impost fees which are already in place in Kingston. Although separate from the Development Charge fee, storm water and sewage fees are up front and enable developers to budget more quickly and focus on the overall development cost. What this report favours, is a more flexible formula with respect to Development Charges.

A phase-in of non-impost DC’s would be favourable because it is similar in theory to a deferral program whereby the developer only pays a certain up-front fee before obtaining a building permit. This allows Council in a municipality, in deciding whether to impose the fully calculated charge, or some reduced amount. Council must also consider the City's overall capital financing needs, its broader economic development and long-term financial planning objectives and the trade-off that an increase in the rates may have on the rate of development in the City, as well as the significance of such impacts.

Any consideration of this model would have to have checks and balances while phasing-in the change in the rates over a period of time, as well as by providing targeted relief to certain types of land development in the form of exemptions, incentives and other development charges policies.

POSSIBILITY #3 DELAYED PAYMENT OF FEES (CITY OF HAMILTON EXAMPLE)

BACKGROUND

Development charges are payable at the time of building permit issuance and are collected by the City of Hamilton Building Department. Deferrals are provided for all non-residential developments, apartment developments, and residential facility developments for up to a maximum of 5 years. Deferral is effected through an agreement which must be registered on title at the owner's expense. The deferral agreement is subject to interest charges and administration fees.

The City of Hamilton’s Development Charges by-laws allow the City to enter into agreements with individuals for deferring development charges on non-residential developments (including apartment buildings) for up to five years but may require the repayment to include interest. We will see later in the report that the five-year model has also been stretched at times to 10 years. This look at options within the report will consider how deferrals are indexed regarding non-residential development fees.

HOW THE DELAYED PAYMENT WORKS

Development Charges are payable upon building permit issuance and the rates payable are based on the rates in effect on the date of building permit issuance.

However, there is a transition policy in effect for developments nearing permit issuance. Under the transition policy, the rates in effect on the date of building permit application may be paid, provided that all of the following criteria are met:

• The permit application must be a complete application as per the requirements outlined by the Building Department.

• The permit must be issued within 6 months of the effective date of a rate increase.

• The permit must not be revoked after the date of a rate increase. ERASE Development Charge Reduction Program (DCR). Once an application has been approved under the ERASE RGP, they have the option of applying the costs of environmental remediation on that property against development charges payable for that property (after any demolition charge credits are applied). If the applicant chooses to exercise this option, the costs of environmental remediation applied against development charges payable will be deducted from eligible costs under the ERASE RGP.

FINANCIAL CONSIDERATIONS IN THE HAMILTON MODEL (What to Improve)

There is a level of risk associated with the deferral of Development Charges. Through deferrals, applicants receive their building permit and initiate construction without paying Development Charges. If the applicant files for bankruptcy or cannot complete the project during the deferred period, it will be difficult for the City to recoup the Development Charges deferred when the deferral is not 100% secured.

In the course of reviewing this policy in Hamilton, it was noted that 20 such agreements with deferrals ranging from $20,000 to $2.5 million were currently open. In a situation noted during the audit, the holder of one such deferred development charges agreement that had come due was not reminded of the payment until the day before it was due. This necessitated a request to Hamilton Council to change the repayment terms, affecting the flow of funds due to the City.

It was recommended that the Development Financial Officer at the City be assigned the responsibility of reviewing the due dates of the deferred development charges agreements monthly for the purpose of notifying Accounts Receivable to send notification of amounts due to the developer 45-60 days in advance.

Financial Planning & Policy has developed a letter issued each year to all developers with deferred development charge agreements to remind them of the due dates and outstanding balances. In addition, Accounts Receivable sends out invoices to the developers 30 days before amounts are due.

Deferral of development charges is based mainly on the premise that no development will take place on the subject lands within a reasonable timeframe (exception: affordable and special needs housing) and therefore, the requirement for additional infrastructure is delayed. In considering a new approach to collecting development charges, the City has to be careful with DC deferrals as it delays the receipt of revenue, thereby negatively affecting cash flows which may necessitate earlier borrowing.

There is also the risk associated with late or non-payment. The applicant to whom the deferral was granted may not be able to pay the sum in accordance with the repayment schedule established in the deferral agreement. The City does not have many measures available to ensure payment is received, other than legal action.

IMPACT/RESULTS

January 2013

There were close to $1.5 billion worth of building permits issued in 2012, which breaks the record set in 2010. The city also broke its record for the number of permits issued at 8,125. Each building sector came in at record figures, according to data released. Residential permits were close to $660 million, accounting for 60 per cent of the total. Institutional and government building produced more than $400 million in construction, an increase of 116 per cent over the previous year.

Industrial permits totaled $209 million, up 49 per cent. Commercial came in at $201 million, up 23 per cent. Building permits took a dip in 2011 to just over $731,000 a year after the city topped the billion-dollar mark for the first time.

Figures also released show 529 permits issued for a total value of $128 million. Residential made up 50 per cent of the total number of permits, valued at about $40 million. Commercial was 12 per cent or $9.7 million, industrial was 27 per cent or $22 million and government/institutional made up 8 per cent or about $7 million.

Among the permits issued were: a $26-million hotel at 40 Bay St. S. to Champlain Development Corp.; a retail shopping plaza at 1267 Barton St. E worth $7.6 million; construction of the new St. Ann School worth $9.5 million; an 8,600-square-foot home worth $3 million on Mineral Springs Road in Ancaster; and alterations to Maple Leaf Food’s food processing plant at 440 Glover Rd. worth close to $21 million

Source (Hamilton Spectator)

September 2013

Hamilton has topped the country in corporate construction projects for the second year in a row.

The city logged 35 corporate projects between April 2012 and March 2013, which edged out Quebec City with 34 and handily outdistanced Toronto and Edmonton, which tied for third at 22.

The rankings were produced by Site Selection magazine in its Canada's Best to Invest report. The Atlanta, Ga. publication is aimed at about 44,000 corporate site selectors. Hamilton also topped the rankings in 2011-2012 and was in second place behind Toronto in 2010-2011. "I think this shows the whole community is pulling in the same direction," said Neil Everson, the city's director of economic development. "They're all over the city, which is great, and they are across different industries, which are the diversity we've been pushing for the last 15 to 20 years."

A rough tally of investment comes in at more than $250 million, but Everson cautions that not every company attached a dollar figure to its project. According to the Conference Board of Canada, Hamilton's economic diversification index is 0.94 out of a possible 1, which is the best in Canada.

The city's submission to Site Selection says Hamilton gained approximately 1,070 jobs over the year.

The number of projects grew significantly across most cities on the list over the June 2011-May 2012 period last studied. Hamilton had 20 projects during that time. The city's Hamilton Calling program, which interviews and surveys city employers, found close to 65 per cent of 345 visited plans to expand in terms of job, facilities or investment in the next three years. Close to 95 per cent saw an increase in sales over the previous year and almost 70 per cent plan to introduce new products or services in the next two years.

To be eligible for inclusion in the Site Selection tally, projects must be at least a $1-million investment, result in 50 new jobs or be more than 20,000 square feet in area. Data is collected through building permits and from company representatives. It is independently verified by Site Selection staff.

Everson says the data will be vital to the city's marketing push as a corporate destination aimed at the GTA. "So when people say, 'why should I look at Hamilton?' There's a reason: because everyone else is."

The city's economic development department was also named among the 10 best in Canada.

Source (Hamilton Spectator)

CONCLUSION: This option has moderate to high potential for Kingston.

As mentioned in this report, the risk always exists in that it may in some cases be difficult to recover DCs that have been deferred. The alternative option is not to allow deferral of DC payments. This option carries less risk to Council, but does not promote any of the above benefits also highlighted. It is a case of “should we continue the status quo in Kingston, or take the necessary risk to promote the region on and “economic growth” basis?

Kingston has taken the necessary steps to include specific DC criteria that waive or defer as seen above in the food processing scenario. However, as proven in the figures and examples in this report, Kingston can and should at least consider the 5-year deferral (with interest) option for all commercial and industrial developments.

There have been discussions that an even more aggressive approach is made to ask commercial/industrial developers to only pay 25% of up-front DC’s upon receipt of a building permit. The risk in this, as stated, can also dilute the quality of work to ensue and a question as to payment as the development continues.

It is no coincidence that Hamilton has seen a drastic increase in its building permits since implementing delayed payments. It is also necessary to take into consideration that Hamilton basically had to undertake this method to tackle the negative effects of de-industrialization of its city. Kingston has been buffered from such a massive sector shakeup, but it is better to be proactive in the long haul rather than reactive in the short-term. Residential and commercial taxes hinge on such planning and pro-action.

POSSIBILITY #4 BROWNFIELD DEVELOPMENT CHARGES DEFERRAL POLICY (CITY OF OSHAWA EXAMPLE)

This opportunity advances the redevelopment of Brownfield sites by reducing the amount of up-front capital investment by the property owner while also protecting the City. Since there is a time delay between the remediation work and the payment of the Brownfields Redevelopment Grant, the Brownfields Development Charges Deferral Policy would enable the developer to leverage the value of the future grant and defer an equivalent value of current City development charges. The opportunity would be implemented as follows:

Step One – City Brownfields Redevelopment Grant Application. The property owner/developer would apply for a Brownfields Redevelopment Grant and submit detailed information on the eligible work and the cost to undertake the eligible work. City staff would review the application and determine the value of any future grant based upon the terms and conditions of the Brownfields Renaissance CIP. Staff would prepare a report to Development Services Committee and Council on the merits of the grant application.

Step Two – Assuming Council’s approval of the Grant application, the property owner/developer would enter into an agreement prepared by Legal Services to clarify such matters as the payout schedule for the City of Oshawa Brownfields Redevelopment Grant(s). This agreement could also provide for a deferral of applicable Development Charges by allowing the City’s Brownfields Redevelopment Grant(s) to be applied towards the City development charges, rather than being paid to the property owner.

Step Three – As part of the Agreement process, the property owner/developer could assign the total value of the City Brownfields Redevelopment Grant toward the payment of City of Oshawa development charges. For example, if the developer entered into an agreement with the City that would result in the property owner/developer receiving $300,000 in City Brownfields Redevelopment Grants, the developer could enter into a subsequent agreement to defer the payment of $300,000 in City

development charges, including interest, by redirecting the City Brownfields Redevelopment Grants to his/her development charge account. If the development charges exceed the value of the City Brownfields Redevelopment Grant, the developer would be responsible for the payment of the difference at time of building permit (unless deferred by another City development charge deferral policy). After entering into a Brownfields Redevelopment Grant Agreement and a Development Charge Deferral Agreement, the developer would apply for building permits for the redevelopment of the site.

Other City Development Charge Deferral Requests

The proposed Brownfields Development Charges Deferral Policy is directly linked to the City Brownfields Development Grant Program. This would not, however, preclude a brownfield property owner/developer that is not receiving a City Brownfields Redevelopment Grant or is only eligible for a small Redevelopment Grant, from requesting a deferral of City development charges pursuant to the Development Charges Act, 1997. Such deferral requests can be considered by Council on their own merits.

IMPACT/RESULTS

In Oshawa, City staff proposed that a Brownfields Development Charges Deferral Policy is considered a substantive incentive towards the redevelopment of brownfield sites. The benefit to the development community is that the future Brownfields Redevelopment Grants can be used to defer development charges allowing the development to proceed at the initial construction stage with less up-front capital investment required by the developer to pay City development charges. On balance, staff recommended that the City adopt a City Brownfields Development Charges Deferral Policy.

Another city subsidy has been revealed that helped convince Maple Leaf Foods to locate its new wiener factory in Hamilton. In Hamilton, their council approved giving the company $2.6 million to help “green” their Glover Road facility and achieve certification under the LEED program (Leadership in Energy and Environmental Design) at the silver level.

The staff report in Oshawa acknowledges this grant and other subsidies convinced Maple Leaf to choose Hamilton for its new facility over 23 other competing cities when the company decided to consolidate its operations and eliminate 1550 jobs in Kitchener, Toronto and other Ontario locations including its Brockley Avenue facility in Hamilton.

“The decision to locate this major investment in Hamilton was based on a number of factors,” states the Oshawa report. “They included: the cost of employment land; affordability of development charges; a DC deferral agreement; the city’s LEED program; Hamilton’s superior transportation infrastructure, its excellent, available labour force; but most of all, the city’s quality customer service and the ability to deliver on municipal actions to meet Maple Leaf Food’s established deadlines.”

The land price was less than a third of what the city paid for nearby acreage the month after the Maple Leaf deal was finalized. The company paid $170,000 an acre while the city forked out $585,000 an acre for land less than a kilometer away acquired to provide improved road access for the Maple Leaf facility.

The “affordability” of Hamilton’s industrial development charges apparently refers to a 56 percent discount that saved Maple Leaf $3.4 million and will have to be covered by property taxes. The city provided a ten year payment deferral of the remaining development charges.

Development charges, the report says, are collected by municipalities to help with the costs of expanding municipal services and are typically paid when a building permit is issued. The development charge deferral would help to reduce upfront costs for the developer, and the municipality collects the payment three to five years later, with interest.

A negative of the deferral system, which is used by York Region, Markham, Halton Hills, Hamilton, Vaughan and Muskoka District, is the impact on cash flow to the municipality. As well, it can also impact the ability to move ahead with other growth projects.

Conclusion: This option has moderate to high potential for Kingston.

If Kingston were to follow the Oshawa model, such a City Brownfields Development Charges Deferral Policy, this would advance a number of Kingston goals, such as impacting the City’s Community Strategic Plan (particularly elements related to sustainability) by managing growth and using land wisely through the encouragement of the development of brownfields sites.

At the moment, there is a subjective element to Kingston’s City Brownfields Development Charges Deferral Policy. It exists only to give council full discretion on whether or not the developer will qualify to be exempt or receive preferred grants/deferrals.

From the City of Kingston: The Development Charges and Impost Fees for a project can be significant. The Community Improvement Project Areas of the Brownfields Program are located in the urban areas of the City where the municipal infrastructure already exists for the development of eligible brownfield sites. Unlike greenfield developments, the development of these brownfield properties does not involve the extension of new urban infrastructure. However, older urban areas do often have concerns with respect to upgrading and/or replacing existing infrastructure, especially in order to accommodate increased densities. Therefore, relief from development charges and impost fees, either in whole or in part, will be at the sole discretion of Council.

The City of Kingston in September 2009 approved its new development charges (By-Law No. 2009-136) and new impost fees (By-Law No. 2009-138). These by-laws both recognize exemptions to the charges and fees by way of the following clause: “The Municipality may exempt lands from this by-law where the lands are designated in the City of Kingston Official Plan as part of the Community Improvement Area and the Municipality implements a Community Improvement Plan by by-law which includes the said lands.”

The City may consider following a more comprehensive, non-subjective model by removing the final decision by council. If a policy, like the one proposed and adopted in Oshawa were to be made, it would save time, offer a quick mechanism to change and promote a quicker, less bureaucratic development of brownfield sites.

OVERALL RECOMMENDATIONS Kingston basically has what could be described as a “Suite of Incentives” that is working to a certain extent. One main stumbling block not mentioned previously in this report is a continued delay of merging all the zoning and bylaws from pre-amalgamation and ensuring the City has a consistent set of rules, and this needs to be undertaken with some urgency.

The Sustainable City model offers a great deal of opportunity in developing brownfields, but also offers further options to add to the attraction of Kingston to potential developers. This is where the options in this report must be considered.

An advantage for Kingston is that it is a single-tiered city. This means that DC’s are only paid by the developer to the municipality without having to also pay a region. It makes proposed incentives and changes simpler to consider and implement.

Recommendation 1:

There are a number of blocks of serviced development land in Kingston which remain unused, but could potentially be with the proper delayed payment program. It makes it more attractive for those who cannot afford all the money “up front”.

We suggest the city continue to exempt developers from paying any Development Charges for non-residential industrial advancement. In addition, the Greater Kingston Chamber of Commerce encourages the City of Kingston to consider a delayed payment plan on Industrial Impost Fees to fast-track further development.

In order to promote growth in this situation, and improve the City’s revenue via increased rates and development charges revenue, it is recommended that developments be considered by Council on a case by case basis for deferral of payment of industrial development charges. The main benefits of the proposed approach can be summarized as follows:

• Unlocks development • Unlocks capacity (DC’s pay for the capacity within the area to be developed) • Creates growth in tax base for the City

It is also necessary to consider the appropriate risk assessment involved in deferred payments as highlighted in this report and implement the proper mechanisms to ensure payments are made in a timely manner and within a reasonable plan with prospective developers.

Recommendation 2:

The City of Kingston needs to follow recommendations outlined within the Mayor’s Task Force on Development. One of the issues contained within that document refers to the streamlining of city-wide bylaws that have not been tackled since amalgamation. This would be an important first step in creating the environment within which the City could begin to offer new incentives or practices with a view to increasing development. Any new bylaws must be easy to understand, remain generic and not limiting to existing businesses and developers.

IN CONCLUSION

• The Chamber’s goal with this report is to begin a positive conversation with the City and developers

• These recommendations are made within the current realities of the local economy and our continued high reliance on public sector employment. We at the Chamber are convinced that the status quo is unsustainable. Kingston’s present and future population cannot grow and prosper without a serious attraction of private sector jobs.

• We need to ask some basic questions - what is the municipality’s role in the attraction of development? How can we help it better assist its “outside” agencies who promote development?

• Deferred payment of Impost Fees is not a be-all, end-all solution. However, it offers the municipality an opportunity to increase its attractiveness for potential development.

• A growing body of evidence from jurisdictions/municipalities around the province is proof of the potential impact of implementing new development incentives such as delayed payment.

• This report is not intended as a criticism on current City administration or services. It is simply a mechanism to spark dialogue, with a goal to improve Kingston’s ability to attract business, be consistent in planning, and maintain infrastructure while preserving the tax base and reserve funds.