Body: Council Type: Document Meeting: Committee Date: 2020 Collection: Agenda Attachments Municipality: Frontenac County
[View Document (PDF)](/docs/frontenac-county/Item Attachments/Agenda Item/2020/August/Staff Presentation : Mr. Kelly Pender, Chief Administrative Officer, will provide the Committee with a Communal Services overview./Communal Services Overview.pdf)
Document Text
Communal Services Governance Task Force Inaugural Meeting August 27 th , 2020
Agenda • Introductions • Election of a Task Force Chair & Vice Chair • Objective of the Task Force • Role of the Consultant • Situational Overview • Work Completed to Date • Three Case Studies • Next Steps & Timelines • Group Discussion Communal Servicing - Governance Review Committee
Introductions & Election of Chair
Communal Servicing - Governance Review Committee
Objective of the Task Force Investigate the potential to develop a governance model that: Works for all municipalities Manages and spreads risk Increases negotiation strength Reduces duplication of efforts Develops a common model that can be marketed Shares in rewards and dividends Build communities
Communal Servicing - Governance Review Committee
Question: Are we better off tackling this problem together, or as 4 individual municipalities?
Role of the Consultant • The Consultant works for the Task Force members You will have direct access and be able to provide input and feedback throughout the process
• They will bring their experience to the table to look at best practices, pro forma budgets and opportunities • Their final recommendations will be a combination of Task Force input and best practice • Staff are a resource to the Consultant and the Task Force, but will not be leading the process Communal Servicing - Governance Review Committee
Situational Overview • Communal servicing is the future of rural development and growth in Ontario Rural linear development is expensive, is inefficient and creates environmental risk
• Current legislative framework is a deterrent for all but the largest municipalities • Spreading and sharing risk is the most efficient hedge on our investment (e.g., insurance, health costs, mortgages) • Progressive municipalities are finding ways to share risk, responsibilities and rewards Creating business units that add value and create revenue streams
Communal Servicing - Governance Review Committee
Situational Overview • Communal Services: • Provide better environmental protections • Encourage more walkable, liveable communities • Help retain vital community services such as schools, grocery stores and banks • Provides access to more affordable housing options • Increase tax assessment
Communal Servicing - Governance Review Committee
Situational Overview Applications for communal servicing:
- New subdivision development
- Community renewal & reinvestment
- Lakefront and back lot subdivisions
Communal Servicing - Governance Review Committee
Potential Development Options ONE A New Subdivision Developer Initiated MRA Required
ONE B Exist. Subdivision Developer Initiated MRA Required
ONE C Exist. Subdivision Prov. Initiated MRA Not Required
TWO Seasonal Development MRA Not Required
THREE Community Srv MRA Not Required
CAUTION Each example has multiple permutations and combinations that could result in a different outcome.
Communal Servicing - Governance Review Committee
Sample Tax Calculation Spreadsheet County of Frontenac Revenue and Tax Calculator
The purpose of this spreadsheet is to calculate the tax implications (Scenario Summary is based uppn Towship Only) and utility revenue for a site based to five different development types. All “tan” coloured cells are variables.
Unit Type Residential A Residential B Residential C Commerical A Commercial B
Assesses Value $ 200,000 $ 250,000 $ 300,000 $ 200,000 $ 300,000
Tx % TWP County Edu 0.894869% 0.182728% 0.161000% Tax Calculation (One Unit) TWP County Edu $ 1,790 $ 365 $ 322 $ 2,237 $ 457 $ 403 $ 2,685 $ 548 $ 483 $ 1,790 $ 365 $ 322 $ 2,685 $ 548 $ 483
Scenario One - Private Services
of Units
Unit Type 5 Residential A 3 Residential B 2 Residential C
Tx Revenue $ 21,029 $ Total Tx Revenue $ 29,107
4,294 $
Communal Servicing
- Governance Review Committee Scenario Summary
- Communal Services Land Investment $ $ Capital Investment $ $
$75.62
$80 $60 $40 $21.03
$15.44
$20
$4.29
$0 TWP
County
Scenario One
Scenario Two
Scenario Two - Communal Services
Total Tx for Ea. Unit Type Assessed Value TWP County Edu $ 200,000 $ 8,949 $ 1,827 $ 1,610 $ 250,000 $ 6,712 $ 1,370 $ 1,208 $ 300,000 $ 5,369 $ 1,096 $ 966
10 Units
Tx Revenue/Yr. One Thousands
Based Upon Central Frontenac 2018 Tax Rates. Source: 2018 FIR
200,000 Communal Services
(a) (b)
3,784
Tota
of Units
30 7 1 2
40 Units
Unit Type Residential A Residential B Residential C Commerical A
$ $ $ $
Assessed Value 200,000 250,000 300,000 200,000
TWP $ 53,692 $ 15,660 $ 2,685 $ 3,579
Tx Revenue $ 75,616 Total Tx Revenue $ 104,661
Scenario Summary - Communal Services Land Investment $ $ 200,000 Capital Investment $ $ 300,000 Communal Serv
How Much Time Do We Have? Project Bank/Timing
Project Summary
Marysville Secondary Plan Complete (2020) Implementation Planning/Grant Application (2021) Construction (2022)
OP Complete (2022) Potential Projects Inverrary, Battersea, Sydenham, Harrowsmith, Verona (2022+) Potential S/D development
NF
CF
SF
FI
Sharbot Lake School Site & Downtown – Grant & Study (2020-21) Construction (2021-22) Potential S/D and Waterfront Development VIA Rail Project
Communal Servicing - Governance Review Committee
Unknown – Potential S/D and Waterfront/ Backlot Development
)
The Impact of COVID • Is the COVID effect real? • Is it sustainable?
Communal Servicing - Governance Review Committee
Work Flow
Policy & Risk Framework
Governance
• •
•
One shared agency, or 4 individual municipalities? 4 equal shares? Or Weighted assessment? Or Number of Units? Dividend reinvestment
Later
80%
Now
• • • •
WSP report gives us a head start on other municipalities Official Plans Risk Management Responsibility Agreement
Systems Operation
• • • •
• • Communal Servicing - Governance Review Committee
Collective Operations or 4 individual municipalities? Contract (OCWA, UK Partner municipality) or In-house? Peer Review & Monitoring Reporting & Compliance Systems Approval Billing
Work Completed to Date • WSP Report completed: Provided policy framework Identified potential viable systems Establish a risk assessment model – individual systems or a collects of systems
Communal Servicing - Governance Review Committee
Financial Risk Model – Screen Shot County of Frontenac Communal Servicing Study - County Financial Risk Summary
2048
2045
2,000 1,500 1,000
500 2045
2048
2039
2042
2033
2036
2027
2030
2024
0 2018
2048
2045
2039
2042
2036
2030
2033
0
2,500
2021
50
Fees and Taxes per Unit (2017 $)
100
2027
2039
Annual Utility Fees & Taxes per Unit
Total Annual Utility Fees and Taxes
Total Residential Utility Fees Total Residential Tax Increase Total Commercial Tax Increase Total Commercial Utility Fees
Communal Servicing - Governance Review Committee
2042
Induced Development Property Tax Revenue
Total Reserve Fund Closing Balance
150
2033
Total Reserve Fund Minimum Balance
2036
Total Seed Funding Principle Owing
5
2030
2045
2048
2039
2042
2036
2030
2033
2027
2021
2024
2018
0.0
10
2024
0.5
15
2027
1.0
2018
1.5
20
2021
2.0
Induced Annual Tax Revenue (Thousands of 2017 $)
2.5
2021
m2 2017 $ 2017 $ % % 2017 $
25
2024
2,000 0.1669% 0.1676% 2.78
Units 2017 $ 2017 $ % % 2017 $
3.0
2018
Commercial Total Area of Commercial Units Initial Hookup Fee per Commercial Unit Estimated Stabilized Annual Utility Fee per Commercial Unit Existing Tax Rate (Commercial) New Tax Rate (Commercial) Annual Property Tax Increase Per Typical Commercial Unit
62 2,000 2,287 0.1669% 0.1676% 2.09
Annual Balance (Millions of 2017 $)
Residential Total Number of Residential Units Initial Hookup Fee per Residential Unit Estimated Stabilized Annual Utility Fee per Residential Unit Existing Tax Rate (Residential) New Tax Rate (Residential) Annual Property Tax Increase Per Typical Residential Unit
Induced Annual Tax Revenue
Minimum and Closing Reserve Fund Balances
Total Fees and Taxes (Thousands of 2017 $)
General Active Funding Option Catastrophe Prop. Tax Number of Phases 1 Phases Communal System Capital Costs 1,177,860 2017 $ Reserve Fund Balance at Lifecycle Close 1,657,600 2017 $ Potential Catastrophe Cost at Lifecycle Close 977,624 2017 $ Total Lifecycle Utility Fees Paid 3,813,800 2017 $ Total Lifecycle Incremental Property Tax Paid 1,017,300 2017 $ Total Lifecycle Hookup Fees Paid 124,000 2017 $ Lifecycle Developer O&M Obgliations 81,861 2017 $ Potential Induced Lifecycle Tax Revenue 524,713 2017 $ Estimated Lifecycle Payment Leakages 95,346 2017 $ Total Development Area 13.55 Hectares Steady-State Unit Cost for Water/Wastewater (No Connection Fee) 7.93 2017 $ / m3 Steady-State Utility Fee for Water/Wastewater (No Connection Fee) 6.27 2017 $ / m3 Estimated Steady-State Water Consumption (Full Development) 22,630 m3/year
Utility Fee per Occupied Residential Unit Annual Property Tax Increase Per Typical Residential Unit Utility Fee per Occupied Commercial Unit Annual Property Tax Increase Per Typical Commercial Unit
Risk Pooling – Vehicle Insurance • If you self insure one car, you need $5M in the bank in the event of a catastrophic accident • If you insure a million cars, you don’t need 1M x $5M to ensure for catastrophic accidents • Same theory holds for communal services. Municipalities currently hold all 100% assurance for each system This creates an unfair burden for the developer and home owner and deters developers
Communal Servicing - Governance Review Committee
Bad Example – Red Leaves Hotel
Communal Servicing - Governance Review Committee
Good Example – Rideau Lakes • Report for the Village of Delta • Funded by the RED program • Examined how to use communal servicing for renewal of rural villages and hamlets
Communal Servicing - Governance Review Committee
What are other municipalities doing?
Three Governance Case Studies Communal Servicing - Governance Review Committee
Oro-Medonte – Municipal Service Corp • Established: 2019 • Operates water treatment and distribution network (14 systems), communal waste treatment (7 systems), street lights • Services 2,500 households • 2019 Dividend: n/a
Communal Servicing - Governance Review Committee
Oro-Medonte – Municipal Service Corp • The Township is growing and our assets are aging. With these changes will come corresponding demands for increased environmental services. The MSC provides: Professional governance and management through skills -based boards of directors whose terms extend beyond the four-year term of elected officials Increased debt financing flexibility by allowing the Township to separate environmental services investments from other infrastructure investments Provides a vehicle for shared-service arrangements with other municipalities Full cost recovery for water, wastewater and communal tile services, street lighting and stormwater management facilities Ability to continue to deliver on the Environmental Services principles of safety, compliance, accountability, sustainability and continuous improvement
Communal Servicing - Governance Review Committee
Case Study – Lakeland Holdings • Established: 2001 • Regional service provider in Parry Sound Muskoka Services include – utilities, hydro generation, GIS, Internet, remote servers, street lights, water heaters, IT consulting
• Partners: Bracebridge, Burk’s Falls, Huntsville, Magnetewan, Parry Sound, Sundridge • 2019 Dividend: $4M Communal Servicing - Governance Review Committee
Case Study – Lakeland Holdings • MISSION Continually Grow the Company to Increase Shareholder Value • VISION Our company will … Provide a safe, productive working environment for all employees Provide our customers with safe, reliable and affordable products and services Operate profitably for shareholder dividend payment and value enhancement Strive for constant improvements in our working relationships with customers, suppliers and our communities Actively pursue profitable core business opportunities for the enhancement of shareholder value • GOALS Safety – Natural Environment - Reliability – Productivity – Profitability - Customer Satisfaction Adaptability - Business Opportunities
Communal Servicing - Governance Review Committee
Case Study – Elexicon Group (formerly Veridian) • Established: 2019 (as Veridan 2001) • Regional service provider in Central Ontario Services include: utilities, internet, fleet solutions, water metering, battery storage
• Partners: Ajax, Brock, Gravenhurst, Port Hope, Uxbridge, Belleville, Clarington, Pickering, Scugog, Whitby • 2017 Dividend: $198M
Communal Servicing - Governance Review Committee
Case Study – Elexicon Group (formerly Veridian) • Elexicon Group Inc. is an entrepreneurial endeavour focused on providing a wide range of energy solutions to customers. Elexicon Group is dedicated to expanding its energy service businesses and exploring new opportunities and ventures with strategic partners. Our portfolio of energy service businesses include: energy management and procurement consulting services; solar generation solutions; combined heat power (CHP) solutions; artificial intelligence and sub-metering; substation maintenance; EV charging stations, engineering, procurement; and, construction (EPC) of substation, power generation and energy storage projects. By sharing our collective knowledge and resources, we are able to help businesses unlock successes, seize opportunities and create a connected community of helping others.
Communal Servicing - Governance Review Committee
Case Study Comparison Est.
Oro-Medonte
Lakeland
Elexicon
2019
2001
2001
Partners
Single Municipality
6 Municipalities
11 Municipalities
Character
Rural – small communities – on the fringe of the GTHA
Rural – small communities
Rural/Urban Mix – small to medium sized communities
Portfolio
Focused: Primarily water, waste water
Diversified: Energy, telecommunications, consulting, lighting
Diversified: Primarily energy sector
Dividend
n/a
$4M (2019)
$198.44M (2018)
Community Shared risk, asset re- Shared risk, partner Shared risk, partner Benefit investment dividends, community dividends, community grant grant
Newest
Communal Servicing - Governance Review Committee
More Mature
Case Study – Lessons Learned • None of the three are a perfect proxy for Frontenac, however all provide lessons: • Primarily established to manage community assets, share risk and provide benefit • Requires a long-term perspective • Can implement entrepreneurial business models that municipalities can’t • Extend beyond municipal terms of council – managed by subject matter experts • Receive direction from partners, but not day to day control • Operations – can be contracted to municipalities or other entity. In-house expertise developed over time • This a proven model, with a new application Communal Servicing - Governance Review Committee
Timelines
Communal Servicing - Governance Review Committee
Next Steps • The health of our communities depends upon our ability to protect our environment, entice families, retain our youth and maintain/grow amenities such as schools and local services • Three questions: How do we prepare for the development pressures that are coming to Frontenac? Is this a challenge we wish to take on as a collective of four municipalities? If yes, what help do you need from a consultant? Communal Servicing - Governance Review Committee
Group Discussion
Communal Servicing - Governance Review Committee
