Orillia Extends Moratorium on Development Fees

Posted on Friday March 08, 2013
Construction Site

Industrial developers doing business in the City of Orillia will continue to get a break.

Orillia City Council has extended a moratorium on Industrial Development Charges until June, 2017, following the success the city has experienced waiving the fees over the past three years.

The collection of development charges is used to cover growth-related costs of municipal infrastructure, which paves the way for future development.

In June 2010, Council instituted a three-year moratorium on industrial related development charges to encourage development in the local manufacturing sector. The moratorium was set to expire in June 2013.

Council originally voted to extend the moratorium to the end of 2013 in order to consider the future of the incentive during its 2014 budget deliberations. As part of its 2014 budget process, Council voted to extend the life of the moratorium until June, 2017.

Industrial developers doing business in the City of Orillia will continue to get a break.

Orillia City Council voted this week to extend a moratorium on Industrial Development Charges for one year, following the success the city has experienced waiving the fees over the past three years.

The collection of development charges is used to cover growth-related costs of municipal infrastructure, which paves the way for future development.

In June 2010, Council instituted a three-year moratorium on industrial related development charges to encourage development in the local manufacturing sector. The moratorium was set to expire in June 2013.

“People have asked was it worth it,” said Economic Development Committee chair Councillor Michael Fogarty. “I think the numbers speak for themselves. This is an initiative definitely worth continuing.”

A total of five local companies have taken advantage of the industrial development charge moratorium to date.

Among them were two of the city’s largest manufacturers, Kubota Metal Products and CCI Thermal Inc.

CCI doubled the size of its plant, from 50,000 square feet to 100,000 square feet, at a cost of $2.5M.

Kubota has built a new $12.4M, 40,000-square-foot plant to develop a product used in the manufacturing of ceramic brake pads.

These two industrial developments are expected to lead to between 30 and 50 new industrial jobs.

Officials from both Kubota and CCI credited the Industrial DC Moratorium for their companies’ decisions to expand their operations.

Prior to the DC moratorium, the value of industrial building permits in Orillia during 2010 was $180,000. The value of industrial building permits in 2009 was $1.28M.

Since the Industrial DC Moratorium has been in place, more than $7.4M in industrial building permits have been issued in the City of Orillia.

The increased payroll at Kubota and CCI Thermal is estimated to be approximately $2M annually.

Increased taxes from the developments during the DC Moratorium are estimated to be approximately $100,000 annually.

The one-year Total Direct Return on the DC Moratorium is estimated to be approximately $7.7M. The Total Direct Return over five years is estimated to be approximately $10.5M.

Using an accepted economic development multiplier formula, it is estimated the Total Indirect Return, or spinoff to the local economy, in the first year will be approximately $15M.

Over five years, the Total Indirect Return is estimated to be approximately $21M.

A surplus of $925,000 in the City’s prepaid Development Charges Fund has been used to fund the program. The DCs forgiven as part of the three-year moratorium have totaled approximately $464,000. The balance in the prepaid DC Fund will be used to fund the extension of the program.

City Council will consider eliminating Industrial DCs all together during upcoming budget deliberations this summer.

“The competition to attract new development and encourage the growth of existing businesses, particularly in the industrial sector, has put increased pressure on communities to develop creative strategies and initiatives,” said Manager of Economic Development Dan Landry. “Research shows commercial and residential growth has a tendency to follow a stronger industrial base. Also, industrial development tends to result in higher numbers of employees generally earning higher levels of income.”

Landry added the spending power of these employees creates a trickle-down effect in the local economy, driving demand for commercial and residential related services.

The City’s Economic Development Committee researched and discussed the benefits of extending the moratorium and concluded a focus on relieving industrial development charges over commercial and residential charges represents a higher and more cost-effective return on investment potential.

The DC Moratorium will continue to be promoted as a feature to attract new industry to the City.

For more information, contact:

Dan Landry
Manager of Economic Development
City of Orillia
705-325-4900
Dandry@orillia.ca