Proposed Harmonization of Development
Related Engineering Fees for the City
of Toronto, Works and Emergency Services Department
The Strategic Policies and Priorities Committee recommends the adoption of the
Recommendation of the Budget Committee embodied in the following communication
(February 22, 1999) from the City Clerk:
Recommendation:
The Budget Committee on February 19, 1999, recommended to the Strategic Policies and
Priorities Committee, and Council, the adoption of report (February 1, 1999) from the
Commissioner of Works and Emergency Services, wherein it is recommended that:
(1)authority be granted to the Works and Emergency Services Department to standardize
and continue applying engineering fees for development related engineering services, as
shown in Schedule "A" of this report; and
(2)the appropriate City officials be authorized and directed to take the necessary action to
give effect thereto.
The Budget Committee reports, for the information of the Strategic Policies and Priorities
Committee and Council, having requested that the Commissioner of Works and Emergency
Services to report to the Strategic Policies and Priorities Committee at its meeting of February
23, 1999, on the following:
(a) whether the engineering fees are cost recoverable;
(b) what an appropriate fee would be;
(c) how to phase-in the engineering fees; and
(d) why the design and contract administration fees are substantially lower that what was
charged in the past.
Background:
The Budget Committee on February19, 1999, had before it a communication (February 10,
1999) from the City Clerk, advising that the Works and Utilities Committee on February 10,
1999, recommended to the Budget Committee the adoption of the report (February 1, 1999)
from the Commissioner of Works and Emergency Services, wherein it is recommended that:
(1)authority be granted to the Works and Emergency Services Department to standardize
and continue applying engineering fees for development related engineering services, as
shown in Schedule "A" of this report; and
(2)the appropriate City officials be authorized and directed to take the necessary action to
give effect thereto.
(Communication dated February 10, 1999, addressed
to the Budget Committee from the City Clerk)
Recommendation:
The Works and Utilities Committee on February 10, 1999, recommended to the Budget
Committee the adoption of the report dated February 1, 1999, from the Commissioner of
Works and Emergency Services respecting proposed harmonization of development related
engineering fees for the City of Toronto, Works and Emergency Services Department.
(Report dated February 1, 1999, addressed to the
Works and Utilities Committee from the
Commissioner of Works and Emergency Services)
Purpose:
To standardize engineering fees for development related engineering services applicable to the
Works and Emergency Services Department.
Funding Sources, Financial Implications and Impact Statement:
Sources, Financial Implications and Impact Statement: Continued revenue source for the
Department, dependent on rate of development and growth; estimated at approximately
$400,000.00 - $500,000.00 annually, based on current rate of development.
Recommendations:
It is recommended that:
(a)authority be granted to the Works and Emergency Services Department to standardize
and continue applying engineering fees for development related engineering services, as
shown in Schedule "A" of this report; and
(b)the appropriate City officials be authorized and directed to take the necessary action to
give effect thereto.
Background and Discussion:
The engineering sections of the Works Departments of the former municipalities within the
City of Toronto have a range of engineering fees charged to developers for various services
related to municipal works for their development applications. It is proposed to standardize
the fees and eliminate the discrepancies among the fees and services.
The engineering services for which the proposed charges would apply include review of
development applications for their servicing requirements and their impact on City
infrastructure. All costs associated with development related works, including cost of
engineering services, are being borne by the developers and not the taxpayers. The
engineering services, in addition to review, include design and contract administration of
infrastructure works required for the development applications.
In setting up the proposed engineering fees, the fees charged by the former City of Toronto
municipalities as well as the neighbouring GTA municipalities have been assessed and
compared. Engineering fees charged by private consulting firms have been studied.
Development industry representatives and the Urban Development Institute have also
provided input. Most of the fees are based on a percentage of the construction cost of the
proposed municipal infrastructure works. The proposed engineering fees for the City, as
shown in the attached Schedule "A", are competitive when compared with those charged by
other municipalities in the GTA region as well as by the private sector. For example, the
engineering review fees charged by other GTA municipalities are in the range of 3 to 7
percent of the construction cost of the required municipal works whereas our proposal
recommends 3 percent. Design and contract administration fees charged by GTA
municipalities and private engineering consultants are in the range of 10 to 25 percent of
construction cost whereas our proposal recommends 16.5 percent. The existing fee structure
of the former City of Toronto municipalities is shown as Schedule "B". For comparison, fees
charged by the other GTA municipalities are also shown as Schedule "C". As can be seen, the
proposed standardized fee structure for the new City of Toronto compares favourably with
those of the neighbouring municipalities.
The revenue potential for the proposed engineering fees chargeable to the developers will be
mostly dependent on the rate of development and growth as the main potential client will be
development applicants. Based on the current rate of development, revenue is estimated to be
in the $400,000.00- $500,000.00 range annually. It should be understood that this projection is
not new revenue but based on engineering fees already being collected at present by the
former municipalities in the City of Toronto. Approximately $100,000.00 annually is
collected by the former Metro office under the Ministry of Environment Transfer of Review
Program for Water and Sewer Works. The remaining $300,000.00 to $400,000.00 is the
estimated annual revenue being collected by the six former municipalities based on 1998
development levels. These figures were much lower in the early 1990's and higher prior to
1989 reflecting the variability in the rate of development.
It is proposed to start applying the new engineering fee structure for new development
applications and to maintain existing fee structure of the former municipalities for
applications already in process.
It is intended that engineering fees received from the developers will be retained in the
Technical Services Division of this department and will be used to offset costs incurred by the
department. The recommended fees may change depending on development review
procedures and staffing levels still to be finalized.
Conclusions:
The City should continue charging fees for development related engineering services such as
engineering review, design, contract administration and inspections. The proposed fees are
competitive when compared with those charged by other municipalities in the GTA region as
well as by the private sector. The proposed engineering fees are a revenue source for the
Department, estimated at approximately $400,000.00 - $500,000.00 annually, based on the
current rate of development.
Contact Name and Address:
Raffi Bedrosyan, P. Eng.
Manager, Development Services, District 3
Tel. No. 416-395-6307
Fax No. 416-395-0349
E-Mail: rbedrosy@city.north-york.on.ca.
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Schedule "A" - Proposed Fee Schedule
(1)Development Related Works
|
Type of Work
|
Proposed Fees |
Method &
Timing
of Payment |
| (a) |
Subdivision Applications:
Review of engineering design drawings
(up to three submissions or as directed by
Commissioner), review of subdivision
agreement, part-time inspection and spot
checks, final inspection and assumption.
Review of engineering design drawings
exceeding three submissions, full time
inspections, if required, and at the
discretion of the Commissioner.
Review of subdivision proposal revised
after engineering submissions. |
3
percent
of total
estimated
construction
cost of
municipal
works.
2.20 x
hourly
rate *
Additional 1
percent
of total
estimated
construction
cost of
revised
municipal
works. |
Cash.
1.5 percent
prior to
first
engineering
submission, balance
upon
execution
of
subdivision
agreement
or start of
construction,
whichever
comes
first.
Cash upon
invoice.
Cash with
the first
engineering
submission
of revised
plan. |
| (b) |
Re-zoning Applications, Land Division
Applications, Site Plan Applications for
Development Related Proposed Municipal
Works: |
|
|
|
Design by City.
|
5.5
percent
of
estimated
construction
cost. |
Cash, prior
to
Development
Agreement. |
|
Contract administration by City,
or |
11.0
percent
of
estimated
construction
cost. |
Cash, prior
to
Development
Agreement. |
|
Design and contract administration by
developer's consultant, Engineering review
by City. |
3
percent
of
estimated
construction
cost. |
Cash, prior
to review.
|
|
Inspection, special studies as required. |
2.20 x
hourly
rate* |
Cash, upon
invoice. |
|
* Hourly rate based on salary of assigned staff , multiplied by a
factor, as recommended by the Professional Engineers for Ontario for
consulting services.
|
| 2.
|
M.O.E. Approval Under Transfer of
Review Program for Water and Sewer Works |
|
Type of Work |
Proposed Fees |
Method &
Timing of
Payment |
|
City review fee. |
2
percent
of
estimated
construction
cost
over
and
above
any
departmental
fees. |
Cash, prior
to review. |
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Schedule "B"
Existing Fee Structure of Former City of Toronto Municipalities
The Strategic Policies and Priorities Committee also submits the following report
(February23,1999) from the Commissioner of Works and Emergency Services:
In response to the specific questions of the Budget Committee related to the above-mentioned
report dated February 1, 1999, our comments are as follows:
No, the fees are not based on cost recovery as they are dependent on highly fluctuating
economic growth and development activity levels. In high level development periods, the
collected fees will exceed the costs of engineering staff salaries and other expenses, while in
low level development periods, the fees will not be sufficient to cover all costs. As an
example, in the former municipality of North York, the total development related engineering
fees were about $400,000 in 1997 and $650,000 in 1998, exceeding the development staff
salaries, however, the fees collected in the early 1990's were much lower.
The appropriate engineering fee is a fee based on competitive levels with those charged by
other GTA municipalities and by private sector engineering consultants. The proposed
development engineering fees are deemed appropriate based on comparisons with private and
public sectors.
The development related engineering fees can be monitored, reviewed and compared on a
regular basis and adjustments made towards full cost recovery.
Some of the former municipalities used to charge a 7 percent or higher overhead, over and
above the usual 15 percent design and contract administration fees. The resultant 22 percent or
higher fees were deemed very high and non-competitive, compared to private sector
consultant fees which are in the 10 percent to 18 percent range. As a result, when there was a
need to design and construct some development related works, the developer invariably
preferred and also pressured the municipality to use a private sector consultant, instead of City
staff. With the proposed 16.5 percent design and contract administration fee, the City is in a
position to undertake more development related engineering works in-house and to generate
more engineering fee revenues.
