Mayor Dave Augustyn’s Column for Monday, 11 September 2017
Despite assurances that Town Council, staff, and professional advisors followed all appropriate laws and policies when dealing with a parkland over-dedication in East Fonthill, persistent questions still exist in the community. My column this week, therefore, explains how and why this type of special transaction occurs.
The award-winning East Fonthill Secondary Plan calls for a community park near the intersection of Wellsping Way and Summersides Boulevard and along-side a watercourse. Since it didn’t own all of this land, the Town had to ultimately acquire some property.
To acquire the parkland, the Town followed the Planning Act and the Town’s Parkland Dedication Bylaw and used funds exclusively from Pelham’s Parkland Dedication Reserve. (The Town did not use property tax funds to acquire this park.)
The Planning Act provides options for how a municipal council can acquire parkland and/or “cash-in-lieu” of actual land in new developments.
When a developer proposes a residential subdivision or builds a house, the Planning Act allows a Town to take 5% of the land from the new subdivision for public parkland, or to take a cash percentage of the land value (instead of actual property).
In the case of a cash-in-lieu allocation in Pelham, the Town requires a payment of 5% of the value of a serviced building lot at the “day before the of issuance of the building permit.” To determine this value, a developer or builder provides the Town with an accredited real estate appraisal for the land or for the subdivision.
As time goes on and other homes or businesses are built nearby, the property values increase and, therefore, the parkland payments increase.
Towns must deposit these cash-in-lieu-of-parkland funds into a segregated fund called the Parkland Dedication Reserve.
Sometimes, an overall community plan calls for a park that is larger than an individual property owner is legally obligated to provide – larger than 5% of the land the developer owns or plans to develop. In that case, the owner must give a “parkland over-dedication.”
A parkland over-dedication must be valued in the same way as a cash-in-lieu-of-parkland payment. In Pelham, therefore, an accredited real estate appraiser must value the over-dedication at the “day before the of issuance of the building permit.” Then, the Town uses funds from the Parkland Dedication Reserve to pay for the parkland. (Again, no property taxes are used for this purchase.)
Just as the value of building lots increase over time and as development occurs, the valuation for excess parkland also increases as nearby development occurs; it makes sense and costs less, therefore, to value and purchase parkland early and before the construction of nearby homes or businesses.
In the case of the 3.3 acres of East Fonthill parkland, the Town peer reviewed a 2015 accredited real estate appraisal and negotiated a parkland over-dedication value of $3.6 million. Since the local real estate market increased by as much as 20% since the time of the appraisal, the Town saved parkland funds by negotiating this transaction two years ago and before recent nearby construction.
The Town paid for this land from the Parkland Dedication Reserve. As new houses and businesses are constructed in the East Fonthill area and property values increase, builders and developers will have to contribute 5% of those increasing values to pay for this park and other parklands.
Negotiating the parkland over-dedication early and before rising property values, makes fiscal sense. And, getting re-payed for that parkland by builders as property values increase will provide value-for-money for the Town over the long run.
You may contact Mayor Dave at email@example.com or read past columns at www.pelhammayordave.blogspot.ca.