CITY OF PITT MEADOWS COUNCIL IN COMMITTEE REPORT To: Chief Administrative Officer File No: 6650-01 From: Deputy CAO & Director of Bylaw/Policy No: N/A Operations and Development Services Date: February 5, 2013 Subject: National Association of Industrial and Office Properties (NAIOP) Office Development Cost Survey Results 2012 RECOMMENDATIONS: THAT Council: A. Receive into the record the report dated February 5, 2013 from the Deputy CAO and Director of Operations and Development Services; OR B. Other. CHIEF ADMINISTRATIVE OFFICER’S COMMENTS: PURPOSE: To provide Council with a summary of the results of the 2012 National Association of Industrial and Office Properties (NAIOP) survey (Vancouver Chapter). BACKGROUND: Each year NAIOP conducts either an Office or an Industrial Development Scenario survey to determine development costs and approval times for development applications, and invites Greater Vancouver and Fraser Valley municipalities to participate. NAIOP then ranks the municipalities according to the results of the survey, and publishes the information on their website and in a printed circular. This information is available to municipalities, developers, and to the general public. #109938v1 - NATOP 2012 6650-01 2 In 2012, the survey was based on an Office Development Scenario. Municipalities were provided with a development application proposal for a two storey 50,000 square foot Class B office building that included rezoning, subdivision, development permit and building permit requirements. DISCUSSION: In this scenario, out of the twenty municipalities surveyed, the City of Pitt Meadows ranks fourth lowest in municipal development fees, as illustrated in the table below. This is the same ranking as the 2010 NAIOP survey results. Municipal Development Fees 732,401 67Z275 Richmond _,54’,083 Abbotsfocd —-.—— 467,111 377929 coquillan, Mission ! —372986 City of Noth Vancouver 371375 West Vancouver — 369.636 LanIey (City) ! ToisRip of Langley DistnctotNof2iVancouve 285,263 277,372 tutae Ridge W 267.000 0elt — 248,707 Chilltwaclf 221,609 New Westnvnster • 204,571 Pitt Meadows PoMoy 174,079 Crtof’MteRoclc 171,124 — 148,228 Bumaby I I $0 $400,000 $600,000 5200,000 Cost 1$) The next table identifies the percent change in fees per municipality from the 2010 to the 2012 scenario. According to this table, fees in Pitt Meadows have increased by 5% since the previous survey was completed, from $195,031 in 2010 to $204,571 in 2012. Increases were identified for subdivision fees, servicing agreement fees, sewer hook up fees (estimate only), water hook up fees, development permit fees, and rezoning fees. #109938v1 NAIOP 2012 6650-01 3 In 2011 Council adopted Development Application Fee Bylaw No. 2482, 2011. The bylaw was based on a comprehensive fee analysis, which reviewed the cost effectiveness of the existing fees at that time in relation to the time required to process development applications, and compared existing and proposed fees to those of other municipalities in the Lower Mainland. Adjustments to the development application fees were intended to more accurately reflect the cost of processing these applications. In the response to the 2012 survey, staff included an estimate for the actual hook up costs for sewer and water, however, these are fees not charged to the developer by the City. The developer would be required to install and pay for these separately, with a municipal inspection only. In previous years staff did not include this estimate, therefore the increase in engineering fees is likely attributed to this inclusion. Percentage Change 2010 to 2012 / 38% ‘flOOcNeI 1% Pdmnd 0% SLJTTy Tosh aLaney Coquam -12% - cildNthv3ncouw 0% DsIIacfNc%th VaflcC,r -12% ---—- Pa1Coqlt13m P Ma4eRid0e Dea P cach ‘ I 40% NewW2inster 5% Pit Meds p -15% Port Moody P City of Vi1r Ro ‘ I I -30% 0% 10% 20% 30% 40% 00% 80% % Change #1 09938v1 NAIOP 2012 6650-01 4 NAIOP also compared municipal fee increases to the Consumer Price Index (CPI) from 2001 to 2012. Pitt Meadows’ increase is slightly more than approximately 5 times the CPI rate of 1.79%, however this is comparable to other local municipalities that have experienced higher growth since 2001. Annual In crease Compared to CPI from 2000 (1.79%) 000% 2JJ0% 4.00% 6.00% 8.00% 10.00% 1200% 14.00% 16.00% 18.00% 20.00% % Increase Pitt Meadows ranks third in municipal approval times, at 150 days for an application such as the office development scenario proposed. The City shares this ranking with Maple Ridge, Richmond, Port Coquitlam, Burnaby, and Delta. Staff notes that in the printed circular the timing for Maple Ridge is 540 days, however this was due to an error in their survey response whereby it was not clearly identified that the rezoning, subdivision, and development permit applications could be processed concurrently, thereby shortening process time. Attachment A, a printout of the electronic version of the survey results, has been adjusted with the correct 150 day timing. Overall, in Pitt Meadows, there was no change in the time estimated to process the application from 2010 to 2012, and the City has maintained its third place ranking from 2010. #109938v1 NAIOP 2012 6650-01 5 Municipal Approval Times City ci White Rock West Vancouver 244i 210 150 I- Township of L..., 90 I I I I I I 0 50 100 150 200 250 300 350 450 SUMMARYICONCLUSION: The results of the 2012 survey show that the City is competitively placed within the Lower Mainland for development fees and approval times. While there has been a modest increase in fees, Pitt Meadows’ ranking has remained relatively unchanged in comparision to the other municipalities. Respecifully submitted, Anne Berry Subdivision Coordinator & Director of Operations and Development Services #109938v1 NMOP 2012 - 6650-01 6 ATTACHMENTS: A: NAIOP Regional Office Development Cost Survey — Fall 2012 #109938v1 ATTACHMENT A PROMOTIONAL SUppLEMENT VANCOUVER CHAPTER 13th annuaL Regional OFFICE M ETRO VANCOUVER CHAPTER Development Cost Survey Fall 2012 2012 Highlights The Vancouver Chapter of the Commercial Real Estate Development NAIOP will be acknowledging the Association (NAIOP) is pleased to present the 2012 edition of their municipalities that have excelled in creating environments positive to business Commercial Development “Report Card” creation. The 3 categories of awards are: Most Improved – The most improvement compared he Vancouver Chapter of to previous survey results 2012 NAIOP VANCOUVER/BIV Most Fiscally Responsible Tthe Commercial Real Estate COMMERCIAL REAL ESTATE AWARDS OF EXCELLENCE – Cost increases kept in line Development Association (NAIOP) VwithANCOUVER overall inflation CHAPTEis pleasedR to present the 2012 edition Most Business Friendly of their Commercial Development – Implementation of policies to support “Report Card” the creation of new job spaces Economic growth continues at The awards will be presented at the a measured pace with the US fall October 18th breakfast meeting elections approaching and the local office market appears to have taken This year’s winners are: a pause in the first half of the year by Most Improved (Joint award) – Port posting roughly 100,000 square feet Moody and the City of Surrey – these of negative absorption with a vacancy cities recorded an overall drop in rate of 7.5%. costs of 18% and 19% from the The pause may be well justified previous survey results in 2010 as the market awaits what is sure Most Fiscally Responsible (Joint to be an active period for the City’s Award) – City of North Vancouver local brokerage and interior design and West Vancouver – these cities community, with the introduction have managed to limit cost increases of a combined 1.0 million square to a rate that is below the average feet of new product scheduled for rateGREATER of inflation since VANCOUVER the survey’s CHAPTER Office Lease winner for 2012: Containers on Terminal Columbia College, 428 Terminal Ave., Vancouver inception in the year 2000 completion in the downtown core by 2014. Suburban markets continue Most Business Friendly – City of to struggle with the five key local Chilliwack – In 2011 City Council submarkets experiencing vacancy rates established an Industrial Revitalization Tax of 10% to over 19%. Exemption program wherein Construction of new industrial buildings with a value of In 2001 when the Office Survey construction in excess of $1 million (or an was started, the vacancy rate was alteration/addition of an existing industrial roughly 9% and in 2002 roughly 1.0 building with the same value), can qualify million in new product was brought to save on industrial property taxes for five into the market. By late 2002, the years with this new industrial incentive. vacancy rate shot up to 14% and it Some Positive was 3 years before it again dipped Highlights to Note: below the 10% mark. We’ll see soon enough if history repeats itself. As • Two municipalities managed to an old Chinese proverb states: May keep their cost increases below the rate of inflation over the 12 we live in interesting times. We hope year period from 2000 to 2012 you find this years survey informative • Four municipalities had no cost increases and we look forward to continuing to Office Development winner for 2012: Broadway Tech Centre Bldg. #4 since the last survey in 2010 and 7 provide this service for many years to municipalities reduced costs from come. 2% to just under 20% during this The Survey, which is distributed time period. This represents the best to 20 communities within the Lower provide its membership and the result in the survey’s 12 year history. Index • Business to Residential Tax ratio’s Mainland, requires each municipality business community as a whole have remained relatively static to identify the costs and processing with a reference tool that quantifies Survey Scenario .......................... 3 since 2010 with roughly half of times associated with the parameters the costs and processing times Market Beat - Office Report ......