DocumentsBylawDec 6, 2022Pages 44–56
Staff Report: Bylaw No. 2106, Bylaw No. 2107 and Bylaw No. 2108 – Temporary Borrowing Bylaws (Centre Mountain Local Area Services)
Report seeking adoption of temporary borrowing bylaws (Nos. 2106, 2107, 2108) to permit the City to borrow for construction of Centre Mountain local area services (water and roadway works), with costs to be recovered by parcel tax on benefiting properties.
Key facts
- Subject: Centre Mountain Local Area Services (water service and two roadway LSAs: Residential Community Roadway and Business Park Community Roadway)
- Authorized borrowing amounts: Water Service up to $15.1 million; Residential Roadway up to $10.7 million; Business Park Roadway up to $20.2 million
- Repayment: Borrowing to be serviced by parcel tax levied only on properties within the Local Service Areas (no cost to general taxpayers)
- Area: Centre Mountain LSA comprises nine properties (examples: 3021 Sooke Rd, 3005 Sooke Rd, 2965 Sooke Rd, 3261 Woodruff Rd, 3301 Woodruff Rd, 3692 Pinetree Lane)
- Term references: Loan Authorization Bylaws previously adopted; temporary borrowing bylaws required to obtain external borrowing and avoid internal cash flow impacts
Staff Report to Special Council
DATE: Monday, December 5, 2022
DEPARTMENT: Finance
SUBJECT: Bylaw No. 2106, Bylaw No. 2107 and Bylaw No. 2108, Temporary Borrowing Bylaws adoption
INTRODUCTION
At the July 18, 2022 Regular Council meeting, Council adopted the following three bylaws related to the Centre Mountain development:
- Centre Mountain Water Service Loan Authorization Bylaw No. 2039, 2022;
- Centre Mountain Residential Community Roadway Loan Authorization Bylaw No. 2041, 2022;
- Centre Mountain Business Park Community Roadway Loan Authorization Bylaw No. 2043, 2022.
At the September 6, 2022 Regular Council meeting, Council gave the first three readings to:
- Centre Mountain Water Service Local Area Service Temporary Borrowing Bylaw No. 2106, 2022;
- Centre Mountain Residential Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2107, 2022; and
- Centre Mountain Business Park Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2108, 2022.
The purpose of this report is to seek Council adoption of Bylaw No. 2106, Bylaw No. 2107 and Bylaw No. 2108 to authorize the City to borrow the funds needed to cover the cost of providing these services as outlined in the Local Area Service Establishment Bylaws for Centre Mountain.
BACKGROUND
Local Area Services are widely used throughout the province by municipalities. This is especially true where the municipality wishes to provide a service to a localized area within the municipality, or where a localized area wishes to have a specific service, as it allows for the local government to impose the costs of the service only on those properties that are benefiting from the service rather than on the entire municipality-wide tax base.
For clarity, this report uses two acronyms that are very similar and often used interchanged but have a different meaning:
- LSA: Local Service Area – is the area for which the local service is being provided (the physical area); and
- LAS: Local Area Service – refers to the actual service, in this case roadway and water service.
The area referred to within this report as Centre Mountain, making up the area of the proposed Local Service Area, encompasses nine properties (3021 Sooke Rd, 3005 Sooke Rd, 2965 Sooke Rd, 2961 Sooke Rd, 3261 Woodruff Rd, 3301 Woodruff Rd, PID 030-095-891 not currently addressed, PID 030-095-905 not currently addressed, 3692 Pinetree Lane). Two of these properties make up the Centre Mountain Residential portion of this development. Six of the properties make up the Centre Mountain Business Park. The remaining property, 2965 Sooke Rd, is included in the water service area only as it is not serviced by the proposed road service but it will be serviced by the proposed water service.
This file dates back to 2016, at which time the District of Metchosin, Beecher Bay First Nation and the City of Langford discussed and developed a proposal to adjust the municipal boundary between Langford and Metchosin such that 380 acres of land was removed from Metchosin’s boundary and added to Langford. It is worth noting that this municipal boundary adjustment required the electoral consent of the electorate of both Metchosin and Langford, which were both obtained through an Alternative Approval Process (AAP). As part of the proposal, Metchosin, Beecher Bay Nation and Langford entered into a Reconciliation Agreement, which included the following items that have now all been completed:
- A tax sharing agreement for the lands transferred into Langford, wherein Langford, Beecher Bay Nation and Metchosin will share in the taxation revenue generated from the lands added to Langford in the proportions specified in the Agreement;
- A commitment that Beecher Bay would transfer Treaty lands (250 acres) to Metchosin for park purposes due to their significant open space and environmental values;
- An understanding that Beecher Bay would obtain an ownership interest in the development lands; and,
- A commitment that Langford Council would consider an amendment to the zoning of the development lands, coordinate with the Capital Regional District (CRD) to accommodate the proposed zoning within the Regional Growth Strategy, and deal with the provision of services to the development.
Subsequently, in 2017, the Province approved the municipal boundary adjustment and the CRD approved an amendment to the Regional Growth Strategy such that the lands added to Langford were included within the Urban Containment Boundary. It is worth noting that the CRD approval was at the full board level which indicates approval throughout the region and the significance of this historic land swap and reconciliation agreement between two municipalities and a First Nation.
Also in 2017, the City of Langford Council adopted the bylaws to amend the zoning and OCP designation of the land and a development variance permit (DVP) was issued to allow the subdivision of the lands with wells and septic services instead of municipal services and to allow overhead electric / telecommunications subject to the conditions of the permit.
In 2018, Development Permits were issued to allow land alteration on the industrial lands in accordance with the conditions of the development permit and in 2020 a Development Permit was issued to allow clearing for the first two phases of the residential lands in accordance with the conditions of the permit.
Some key points to consider related to this land swap and associated agreement:
- While the business park lands are permitted to be serviced with wells, the provision of CRD Water and a road connection between the residential and business park sites via the LSA will allow greater fire protection and emergency access. Furthermore, the provision of CRD Water will ensure water is not drawn from the aquifer for the purposes of providing domestic and fire flow water service to the development. There has been concern from surrounding residents in recent years regarding the potential impact to the aquifer should the business park indeed drill and draw from new wells, and the provision of piped water will eliminate this concern.
- A total of 370 acres of greenspace including the Treaty lands are protected, and these lands are primarily still within the District of Metchosin although 35 acres will be protected as part of the Residential subdivision. The Treaty lands could have otherwise been developed by Beecher Bay, so this component of the Agreement created an opportunity to obtain new regionally significant protected greenspace.
- The 2016 press release indicated that as many as 3,000-4,000 jobs are expected to be created by the business park, in addition to hundreds of jobs created during the construction and development phases.
- Beecher Bay Nation owns one of the business park development parcels, which, once built out, will create a needed sustainable revenue stream for the Nation in addition to the revenue generated by their share of the taxation.
- The Reconciliation Agreement was the first of its kind in BC between an urban municipality, a rural municipality and an indigenous community, representing a shared vision of job growth, environmental stewardship and First Nation prosperity.
COMMENTARY – THE BYLAWS NECESSARY FOR THE CENTRE MOUNTAIN LSA
A municipality has the authority to provide services such as water and sewer or business improvement to specific areas within its community. These local area services are paid for in whole or in part by local property owners in that area through local service taxes.
Local area services may be initiated either by owners of property in the proposed local area, or by the municipal council. In this case the Local Area Service was initiated by petition of 100% of the property owners.
There are four steps with regards to a Local Area Service:
- Local Area Service Establishment Bylaw
- Loan Authorization Bylaw
- Borrowing Bylaw
- Parcel Tax Bylaw
The following provides further information on each step.
Step 1
Each local area service must be established by bylaw to authorize imposing a type of property tax for the service within the local area. Once a Council has adopted the local area service establishment bylaw, the municipality is obligated to provide the service as set out in the establishment bylaw. The initial cost of providing the service is paid for by the municipality and 100% of that cost is recovered from the properties within the LSA by way of an annual parcel tax that is applied to property taxes of the LSA properties only. In most instances the municipality will borrow the funds to pay for the initial provision of the service with all principal and interest costs being borne by the LSA properties. In relation to the three Centre Mountain LAS’s, this step is complete.
Step 2
In order for a municipality to borrow funds there is a two-step process. Firstly, a loan authorization bylaw must be adopted by Council and approved through two separate processes by the Inspector of Municipalities of BC before it can be adopted and before the borrowing bylaw can come before Council. In this case, the two approval processes through the Inspector took from March 2022 through to end of August 2022. In relation to the three Centre Mountain LAS’s, this step is complete.
Step 3
Once the Loan Authorization Bylaw has been approved by the Inspector of Municipalities and the City has received the Certificate of Approval, the City can then proceed with the adoption of the Borrowing Bylaw. The Borrowing Bylaw must be adopted by Council in order for the City to be able to borrow funds externally. To date, the Borrowing Bylaws outlined in this report have received first, second and third readings. It is important to note that this step is critical in the process, as not adopting these bylaws would require these projects to be funded through an alternative source (e.g. taxation).
Step 4
Once the project is complete, the Parcel Tax Bylaw provides the mechanism by which the City is able to collect the costs of the service from only the properties within the Local Service Area and is only completed once the service established as the Local Area Service is provided, as such, it will be the subject of a future report to Council.
COMMENTARY – THE CENTRE MOUNTAIN LOCAL AREA SERVICES
The owners of the Centre Mountain properties mentioned above worked together with City staff and staff at CRD Water to determine the requirements for a connector road through the properties, as well as the requirements to provide water service to the properties (it is also worth noting that while not covered through a Local Area Service, these properties will also be connected to the municipal sewer system rather than septic systems).
Roadway Service
The cost of constructing the roads is the responsibility of the property owners. This could be done through the property owners building and paying directly and donating the infrastructure to the City, or, as approved in this instance, through a LAS, where the City will build the project, will borrow to pay for the project, and charge all costs associated with the project (including interest) to the specific property owners over a period of time, so there will be no financial impact of this project on the general tax payer. Once completed, the infrastructure will become City of Langford public roadways for the use and benefit of the public.
In order to better align the costs of the project to the residential portion and the business park portion, and to allow for the cleanest administration of the Local Service Area for the City when it comes to administering the parcel tax each year, two separate Local Service Areas for the roadway portion of the project have been established; Residential Community Roadway and Business Park Community Roadway.
Water Service
For the water service, the City of Langford does not own or operate the water service in this area, it is owned and operated by the Capital Regional District through the Juan de Fuca Water Service. As with the Roadway LSA’s, all costs associated with this project will be borne by the properties listed in the LSA, with no financial burden at all on the general property taxpayer. The City will borrow funds for the construction of the water service, the City will manage the construction of the project and then turn the ownership, operations and maintenance of the infrastructure over to the CRD. The City will then, through parcel tax, collect from the owners of the properties in the Local Service Area the costs associated with the project; therefore, there will be no cost to the general taxpayer.
COMMENTARY – SUMMARY
The Local Area Service Bylaws were adopted on February 22, 2022, which establishes the commitment of the City to construct the identified service on behalf of these properties and that the cost of these services would be collected by way of Parcel Tax that will be applied only to the properties included within the Local Service Area. Furthermore, Step 2, the Loan Authorization Bylaw has also been approved by Council. What remains is Step 3, which is the adoption of the actual borrowing bylaw to allow the City to borrow the funds required to fund the cost of providing the services.
As previously stated, not adopting the borrowing bylaws would not relieve the City of its obligations to construct these projects, rather, the City would be required to cash flow these projects through an alternative revenue source (e.g. taxation) until such time as the funds are collected from the property owners over a period of 20 years. If the City were to have to cash flow these projects, not through borrowing, it would significantly impact the ability to provide any other services to the community.
FINANCIAL IMPLICATIONS
Water Service
Bylaws No. 2038 and No. 2039 give the City the authority to borrow up to $15.1 million for a 25-year term to construct the water service and to recover the annual debt servicing costs by a parcel tax levied on the properties in the Local Service Area. None of these costs will be borne by the general taxpayer. This borrowing, while entirely serviced and paid for by the property owners within the Local Service Area, will be factored into the City’s liability servicing limit.
In addition to all costs associated with the $15.1M being the responsibility of only the properties within the LSA, any costs above the $15.1 million to be borrowed would be the responsibility, immediately, of only these property owners.
Residential Community Roadway
Bylaws No. 2040 and No. 2041 give the City the authority to borrow up to $10.7 million for a 25-year term to construct the roadworks within the residential portion of the project and to recover the annual debt servicing costs by a parcel tax levied on the properties in the Local Service Area. None of these costs will be charged to the general tax payer. This borrowing, while entirely serviced and paid for by the property owners within the Local Service Area, will be factored into the City’s liability servicing limit.
In addition to all costs associated with the $10.7M being the responsibility of only the properties within the LSA, any costs above the $10.7 million to be borrowed would be the responsibility, immediately, of the property owners.
Business Park Community Roadway
Bylaws No. 2042 and No. 2043 give the City the authority to borrow up to $20.2 million for a 25-year term to construct the roadworks within the residential portion of the project and to recover the annual debt servicing costs by a parcel tax levied on the properties in the Local Service Area. None of these costs will be charged to the general taxpayer. This borrowing, while entirely serviced and paid for by the property owners within the Local Service Area, will be factored into the City’s liability servicing limit.
In addition to all costs associated with the $20.2M being the responsibility of only the properties within the LSA, any costs above the $20.2 million to be borrowed would be the responsibility, immediately, of the property owners.
Further to the approval by the Inspector of Municipalities of the Loan Authorization Bylaw, the City must then adopt a Borrowing Bylaw in order to be able to borrow the funds required to fund the construction of the service agreed to and authorized through the Local Area Service Establishment Bylaw. Given the timelines, with some delays in getting the initial approval from the Province, the City is in a situation where the Borrowing Bylaws have to date received the first three readings but have not received adoption. Without adopting the Borrowing Bylaw, the City will still be required to construct and pay for the works identified in the LAS, however, the City would have to pay for it internally (through taxation) as the borrowing bylaw is required in order to obtain external borrowing.
The City does not currently have the necessary funds to fund this project internally, which is why the plan has been to borrow externally since the inception of the LAS establishment. As stated throughout this report, all costs associated with the borrowing of these funds to pay for the services are borne by the property owners within the Local Service Area, not the general taxpayer. Failure to adopt the borrowing bylaws would impact the general taxpayer in the short term as the City would be required to commit most, if not all, of our available funds to this project rather than spend them on other projects in the foreseeable future.
Therefore, Bylaw No. 2106, Bylaw No. 2107 and Bylaw No. 2108 would give the City the authority to borrow $15.1 million, $10.7 million, and $20.2 million respectively to cover the cost of the projects.
It is important to note that while these bylaws authorize the temporary borrowing of the full amount in the Loan Authorization Bylaws, only the amount required to pay actual costs of the projects will be borrowed.
Also, and as noted above, the interest cost for the temporary borrowing are a cost of construction chargeable to the project. Once the project is complete, the principal and interest payments required to retire the debt will be the sole responsibility of the properties within the three Local Service Areas, Centre Mountain Water Service, Centre Mountain Residential Community Roadway and Centre Mountain Business Park Community Roadway and will be recovered through imposition of a parcel tax, applied to property taxes, on those properties.
The imposition of the parcel tax through property taxes allows the City to have all of the collection powers and remedies as with property taxes (i.e. tax sale).
These projects are included in the 2022-2026 Five-Year Financial Plan.
LEGAL IMPLICATIONS
Community Charter (s. 179) requirements for long term debt have been satisfied with the approval of Bylaw No. 2039, Bylaw No. 2041 and Bylaw No. 2043.
Community Charter (s. 181) requirements for temporary borrowing under a loan authorization bylaw will be satisfied with the adoption of Bylaw No. 2106, Bylaw No. 2107 and Bylaw No. 2108.
OPTIONS
Option 1
THAT Council adopt:
- Centre Mountain Water Service Local Area Service Temporary Borrowing Bylaw No. 2106, 2022;
- Centre Mountain Residential Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2107, 2022; and
- Centre Mountain Business Park Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2108, 2022.
OR Option 2
THAT Council does not adopt the temporary borrowing bylaws No. 2106, 2107, and 2108 and fund these projects through taxation.
SUBMITTED BY: Michael Dillabaugh, CPA, CA, Director of Finance
Concurrence:
Donna Petrie, Senior Manager of Business Development and Events
Concurrence:
Will Ying-udomrat, Manager of Legislative Services
Concurrence:
Matthew Baldwin, MCIP, RPP, Director of Planning and Subdivision
Concurrence:
Michelle Mahovlich, P.Eng, P.Geo, Director of Engineering and Public Works
Concurrence:
Marie Watmough, Deputy Director of Corporate Services
Concurrence: Braden Hutchins, Director of Corporate Services
Concurrence:
Darren Kiedyk, Chief Administrative Officer
Letter of Support (excerpt)
February 7, 2022
Mayor and Council
City of Langford
877 Goldstream Avenue
2nd Floor
Victoria, BC V9B 2X8
Dear Mayor and Council,
DISTRICT OF METCHOSIN
File No. 0400-10
RE: Centre Mountain Water Service Local Area Service Establishment Bylaw No. 2038, 2022
The District of Metchosin Council supports the provision of CRD Water service to the Centre Mountain Residential Development and the Centre Mountain Business Park for the following reasons:
- The protection of Aquifer 606 which has limited productive capacity and is relied upon by approximately 40 percent of Metchosin properties.
- To further the Reconciliation Agreement between Metchosin, Langford and Beecher Bay (Scia'new) First Nation.
Please contact me should you require further information.
Mayor
CITY OF LANGFORD
BYLAW NO. 2106
A BYLAW AUTHORIZING THE TEMPORARY BORROWING OF FIFTEEN MILLION ONE HUNDRED THOUSAND DOLLARS ($15,100,000.00) PENDING THE SALE OF DEBENTURES
WHEREAS it is provided by Section 181 of the Community Charter that the Council, where it has adopted a loan authorization bylaw may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw;
AND WHEREAS the Council of the City of Langford has adopted Bylaw No. 2039 cited as "Centre Mountain Water Service Loan Authorization Bylaw No. 2039, 2022", authorizing borrowing for the construction of the Centre Mountain Water service, together with associated and consequential water system improvements, in the amount fifteen million one hundred thousand dollars ($15,100,000.00);
AND WHEREAS the sale of the said debentures has been temporarily deferred;
NOW THEREFORE the Council of the City of Langford in open meeting assembled, enact as follows:
The City of Langford is hereby authorized and empowered to borrow upon the credit of the City of Langford, a sum not exceeding fifteen million one hundred thousand dollars ($15,100,000.00).
The form of obligation to be given as acknowledgement of the liability shall be promissory notes bearing the corporate seal and signed by the Mayor and Treasurer.
The money so borrowed shall be used solely for the purposes set out in said Bylaw No. 2039.
The proceeds from the sale of the debentures or so much thereof as may be necessary shall be used to repay the money so borrowed.
This bylaw shall be cited as “City of Langford Centre Mountain Water Service Local Area Service Temporary Borrowing Bylaw No. 2106, 2022”.
READ A FIRST TIME this 6th day of September, 2022.
READ A SECOND TIME this 6th day of September, 2022.
READ A THIRD TIME this 6th day of September, 2022.
ADOPTED this day of , 2022.
MAYOR
(Certified Correct)
CORPORATE OFFICER
CITY OF LANGFORD
BYLAW NO. 2107
A BYLAW AUTHORIZING THE TEMPORARY BORROWING OF TEN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($10,700,000.00) PENDING THE SALE OF DEBENTURES
WHEREAS it is provided by Section 181 of the Community Charter that the Council, where it has adopted a loan authorization bylaw may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw;
AND WHEREAS the Council of the City of Langford has adopted Bylaw No. 2041 cited as "Centre Mountain Residential Community Roadway Loan Authorization Bylaw No. 2041, 2022", authorizing borrowing for the construction of highway works to construct the Centre Mountain Residential community roadway, together with associated and consequential highway improvements, in the amount ten million seven hundred thousand dollars ($10,700,000.00);
AND WHEREAS the sale of the said debentures has been temporarily deferred;
NOW THEREFORE the Council of the City of Langford in open meeting assembled, enact as follows:
The City of Langford is hereby authorized and empowered to borrow upon the credit of the City of Langford, a sum not exceeding ten million seven hundred thousand dollars ($10,700,000.00).
The form of obligation to be given as acknowledgement of the liability shall be promissory notes bearing the corporate seal and signed by the Mayor and Treasurer.
The money so borrowed shall be used solely for the purposes set out in said Bylaw No. 2041.
The proceeds from the sale of the debentures or so much thereof as may be necessary shall be used to repay the money so borrowed.
This bylaw shall be cited as “City of Langford Centre Mountain Residential Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2107, 2022”.
READ A FIRST TIME this 6th day of September, 2022.
READ A SECOND TIME this 6th day of September, 2022.
READ A THIRD TIME this 6th day of September, 2022.
ADOPTED this day of , 2022.
MAYOR
(Certified Correct)
CORPORATE OFFICER
CITY OF LANGFORD
BYLAW NO. 2108
A BYLAW AUTHORIZING THE TEMPORARY BORROWING OF TWENTY MILLION TWO HUNDRED THOUSAND DOLLARS ($20,200,000.00) PENDING THE SALE OF DEBENTURES
WHEREAS it is provided by Section 181 of the Community Charter that the Council, where it has adopted a loan authorization bylaw may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw;
AND WHEREAS the Council of the City of Langford has adopted Bylaw No. 2043 cited as "Centre Moutain Business Park Community Roadway Loan Authorization Bylaw No. 2043, 2022", authorizing borrowing for the construction of highway works to construct the Centre Mountain Business Park community roadway, together with associated and consequential highway improvements, in the amount twenty million two hundred thousand dollars ($20,200,000.00);
AND WHEREAS the sale of the said debentures has been temporarily deferred;
NOW THEREFORE the Council of the City of Langford in open meeting assembled, enact as follows:
The City of Langford is hereby authorized and empowered to borrow upon the credit of the City of Langford, a sum not exceeding twenty million two hundred thousand dollars ($20,200,000.00).
The form of obligation to be given as acknowledgement of the liability shall be promissory notes bearing the corporate seal and signed by the Mayor and Treasurer.
The money so borrowed shall be used solely for the purposes set out in said Bylaw No. 2043.
The proceeds from the sale of the debentures or so much thereof as may be necessary shall be used to repay the money so borrowed.
This bylaw shall be cited as “City of Langford Centre Mountain Business Park Community Roadway Local Area Service Temporary Borrowing Bylaw No. 2108, 2022”.
READ A FIRST TIME this 6th day of September, 2022.
READ A SECOND TIME this 6th day of September, 2022.
READ A THIRD TIME this 6th day of September, 2022.
ADOPTED this day of , 2022.
MAYOR
(Certified Correct)
CORPORATE OFFICER
