Fiscal Impact Assessment Great Blue Heron Casino Revenue. Township of Scugog

Transcription

1 Fiscal Impact Assessment Great Blue Heron Casino Revenue Township of Scugog March 20, 2017

2 Contents Page 1. Introduction Terms of Reference Approach Great Blue Heron Casino Introduction Great Blue Heron Casino and M.S.I.F.N. Reserve Lands Impact on the Township of Scugog s Operating Budget Introduction Operating Expenditure Implications Operating Revenue Implications Capital Analysis Lifecycle Costs Direct Casino and Reserve-Related Capital Costs Roads: Fire: Parks and Recreation: Allocation of Proportionate Share of Costs to O.L.G. and M.S.I.F.N Share of Costs Based on Current State Share of Costs Based on Proposed Casino Expansion Observations and Conclusions

3 Page Introduction 1.1 Terms of Reference and Background There is presently an approved casino located within the reserve lands of the Mississaugas of Scugog Island First Nation (M.S.I.F.N.) located in the northern part of the Township of Scugog ( the Township ) and as such, requires the use of Township services to access, maintain, and protect the casino property and reserve lands. The Great Blue Heron Casino features table games, slot machines, tournaments, and dining opportunities. In 2000, the M.S.I.F.N. entered into an agreement with the Ontario Casino Corporation (O.C.C.) to allow 450 slot machines at the Great Blue Heron Casino. As part of this arrangement, the O.C.C. required the M.S.I.F.N. to share a portion of its casino revenue with the Township of Scugog (30% of M.S.I.F.N. s 5% share of gross revenue (Host Community Share)). The M.S.I.F.N. was also required to share revenue with the Region of Durham (10% of the M.S.I.F.N. s 5% share (Host Community Share)). This contribution was to, in part, compensate for any increased infrastructure and operating costs for Township services such as road maintenance, winter control, fire protection, etc., due to an inability to collect these costs through taxation. This revenue is used, in part, as a reduction to property tax levies (ranging annually from $1.10 million to $1.85 million over the past 10 years) and the residual is being used predominantly for funding capital projects. The Ontario Lottery and Gaming Corporation (O.L.G.) has recently included the Great Blue Heron Casino in the Greater Toronto Area (G.T.A.) Gaming Bundle and has reached an agreement with the M.S.I.F.N. The Township was excluded from these discussions which were undertaken over a two-year period and as such, the new agreements exclude the Township from receiving gaming revenues to pay for the cost for Township services. A letter to the Township from the O.L.G. dated July 26, 2016 provides that the O.L.G. will assume responsibility for funding of municipal services and will make a payment equal to the payment from M.S.I.F.N. to the Township in 2015 ($1.1 million) for an interim period of one year. Following the interim period, the O.L.G. would negotiate a fee for service arrangement with the Township. This arrangement does not consider the broader impacts of the cost of providing municipal services and would result in a financial loss for the Township. Further, it is unclear what is meant by fee for service agreement and how the costs would be charged to the Casino.

4 Page 1-2 Subsequent to the correspondence from O.L.G., the Township received a letter from the M.S.I.F.N. which noted that the present Revenue Share Agreement (June 29, 2013) between the Township and the M.S.I.F.N. would be terminated. At this time, the termination of the agreement will provide no revenue to the Township for services provided to the M.S.F.I.N. Reserve. Termination of the agreement may suggest a potential discontinuation of services provided to the Reserve lands. The Township has requested that Watson & Associates Economists Ltd. undertake a fiscal analysis of the present cost of providing services on a 24/7 basis to both the M.S.I.F.N. reserve and the O.L.G. casino. Further, a discussion regarding the impacts on Township services of a potential expansion of the casino is included. Also, an analysis is presented on the impacts of the M.S.I.F.N. providing their own municipal services (i.e. Fire services, Roads services, Parks and Recreation services, etc.). 1.2 Approach The approach utilized in this analysis is consistent with the methodology devised by the firm and used for over 30 years to evaluate fiscal impact for more than three dozen landowners, the Ministry of Municipal Affairs, the Ontario Land Corporation, Canada Mortgage and Housing Corporation (C.M.H.C.), and municipalities such as Oakville, Burlington, Halton Hills, Caledon, York Region, East Gwillimbury, Collingwood, Durham Region, Pickering, Haldimand-Norfolk, Halton Region, Georgian Bay Township and others. Essentially, the methodology involves an operating and capital cost analysis. The operating cost analysis involves calculating the revenues and expenditures attributable to the existing development and are estimated on a proportionate basis. That is, revenue and expenditure dollars are assigned by distributing the operating cost and revenues on a per capita and per employee basis. The capital cost analysis considers the inventory of infrastructure owned by the Township and allocates the annual using up of the asset over its useful life.

5 Page Great Blue Heron Casino 2.1 Introduction This chapter of the report describes the matters most relevant to a fiscal impact assessment land use, building area, number of residents, and employees associated with the M.S.I.F.N. reserve lands and the casino. 2.2 Great Blue Heron Casino and M.S.I.F.N. Reserve Lands The casino, located on the M.S.I.F.N. reserve lands, within the Township of Scugog employs approximately 1,100 people. These employees utilize Township roads to access the casino, and other Township services as required. The M.S.I.F.N. Reserve has approximately 90 people and 40 employees on the reserve lands. Table 2-1 provides for the population and employment associated with the O.L.G. casino and M.S.I.F.N. reserve lands. Map 2-1 provides aerial maps of the casino property and the reserve lands in relation to their geographic location on Scugog Island. Table 2-1 Summary of Population and Employment Summary of Associated Population and Employment Township of Scugog MSIFN Reserve Lands OLG Casino Population 21, Employment 8, ,100 km of Roads

6 Page 2-2 Map 2-1 Great Blue Heron Casino and MSIFN Reserve Lands Aerial Maps Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

7 3. Impact on the Township of Scugog s Operating Budget 3.1 Introduction Page 3-1 This chapter examines the proportionate share of the Township s operating budget that can be attributed to the O.L.G. Casino and M.S.I.F.N. reserve lands. This is done by examining the revenue and expenditure implications separately, and then together with reference to net operating position. Additional analysis has been carried out, as well, to include capital costs that can be attributed to the O.L.G. Casino and M.S.I.F.N. lands (see Chapter 4). 3.2 Operating Expenditure Implications Table 3-1 summarizes the Township s Revenue Fund or Operating Fund transactions for 2015 (based on the Township s Financial Information Return (F.I.R.)). This represents a simple model of the Township s financial position for the operating fund and provides the structure of the financial impact analysis contained in this chapter. Table 3-2 modifies the operating expenditures shown in Table 3-1 by netting Interest on Long Term Debt, External Transfers, and Amortization from the total. The debt charges are for sunk investments, and are netted off for the operating analysis (this is considered later in the capital analysis). The external transfers can vary significantly from year to year and relate largely to capital expenditures and general reserves, which are addressed separately in this analysis. Further, amortization is an accounting allocation which seeks to capture annual replacement costs. As this is based on historic costs, a separate analysis on capital expenditures (based on future replacement cost) is conducted later in this report. It is therefore appropriate to remove these classes of expenditures from the spending base, before determining incremental loss and/or average operating fund spending levels per capita and employee. Table 3-3 allocates the Township s existing operating expenditure components between the needs of residential development and non-residential development (i.e. industrial, commercial and institutional), based on differences in the amount of such development within the Township and the need for particular types of services in each case. The expenditure allocation is then presented on a per capita/per employee basis.

8 Table 3-1 Township of Scugog Summary of Consolidated Expenditures, Revenues, and Tax Rates 2015 (FIR Data) ( 000 s $) Page 3-2 General Levy 1. GROSS EXPENDITURES 1.1 General Government 2, Fire 1, Inspection and Control Emergency Measures Roadways & Winter Control 9, Street Lighting Marina Storm Sewer System Litter Parks 1, Recreation Programs Recreation Facilities 2, Libraries Museums Planning and Zoning Commercial and Industrial Residential Development 0.0 Total Gross Expenditures 20, REVENUES 2.1 Payment in Lieu of Taxes Unconditional Grants 1, Specific Grants Other Municipal Grants and Fees User Fees and Service Charges 1, Licenses, Permits, Rents etc Tax Penalties/Interest and Fines Investment Income & Donations Deferred Revenue Earned Gaming and Casino Revenue 1, Other 1 (3.1) 2.12 Donated Tangible Capital Assets (Surplus) / Deficit 2,172.0 Total Revenues 8,726.7 NET EXPENDITURES 11, PROPERTY TAXATION 11,284.7

9 Table 3-1 con t Township of Scugog Summary of Consolidated Expenditures, Revenues, and Tax Rates 2015 (FIR Data) ( 000 s $) Page 3-3 General Levy Market Tax Weighted Assessment Ratio Assessment 4 CALCULATION OF TAX RATES Weighted Assessment (000's) 4.1 Residential Assessment (RT) 2,832, ,832, Residential - Farm Awaiting Development (R1) Multi-Residential Assessment (MT) 15, , Commercial Assessment (CT, CH, ST, XT, ZT) 201, , Commercial Vacant Assessment (CU, CX, XU, ZU) 14, , Office Building Assessment (DT) 4, , Industrial Assessment (IT, IH, JT) 31, , Industrial Vacant Assessment (IU, IK, IX) 4, , Pipeline Assessment (PT) 9, , Parking Lot Assessment (GT) 1, , Managed Forest Assessment (TT) 11, , Farmlands Assessment (FT) 350, , Total Weighted Assessment (000's) 3,476, ,930, Residential Tax Rate (RT) % Residential - Farm Awaiting Development (R1) % Multi-Residential Tax Rate (MT) % Commercial Tax Rate (CT, CH, ST, XT, ZT) % Commercial Vacant Tax Rate (CU, CX, XU, ZU) % Office Building Tax Rate(DT) % Industrial Tax Rate (IT, IH, JT) % Industrial Vacant Tax Rate (IU, IK, IX) % Pipeline Tax Rate (PT) % Parking Lot Tax Rate (GT) % Managed Forests Tax Rate (TT) % Farmlands Tax Rate (FT) % Source: Tow nship of Scugog 2015 Financial Information Return 1 Other revenues include sale of land & capital assets, sale of publications, equipment, etc., and gain on sale on non-tca land

10 Page 3-4 Table 3-2 Township of Scugog Summary of Net Operating Expenditures for $ Category Total Gross Expenditures Interest on Long Term Debt External Transfers Amortization Net Operating Expenditures 1.1 General Government 3,124,416 (6,496) 47, ,146 2,810, Fire 1,921, ,024 1,738, Inspection and Control 593, , Emergency Measures 34, , Roadways & Winter Control 9,161,388 19,114-3,259,984 5,882, Street Lighting 270, , Marina 5, , Storm Sewer System 46, , Litter 18, , Parks 979, , , Recreation Programs 243, , Recreation Facilities 1,973,397-54,058-1,919, Libraries 906,937 (59) - 72, , Museums 234, , Planning and Zoning 326, , , Commercial and Industrial 171, , Residential Development TOTAL 20,011,447 12, ,160 4,168,574 15,729,154 Source: Tow nship of Scugog 2015 Financial Information Return Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

11 Page 3-5 Table 3-3 Township of Scugog Average Cost per Capita and Employee 2015 $ 1. Expenditures Category Total Net Residential Cost Non-Residential Cost Operating Share Per Share Per Expenditure % $ Capita % $ Employee 1.1 General Government 2,810,664 70% 1,967, % 843, Fire 1,738,149 70% 1,216, % 521, Inspection and Control 593,424 70% 415, % 178, Emergency Measures 34,670 70% 24, % 10, Roadways & Winter Control 5,882,290 70% 4,117, % 1,764, Street Lighting 270,501 70% 189, % 81, Marina 5,701 70% 3, % 1, Storm Sewer System 46,163 70% 32, % 13, Litter 18,018 70% 12, % 5, Parks 611,301 95% 580, % 30, Recreation Programs 243,970 95% 231, % 12, Recreation Facilities 1,919,339 95% 1,823, % 95, Libraries 834,684 95% 792, % 41, Museums 234,288 95% 222, % 11, Planning and Zoning 314,904 70% 220, % 94, Commercial and Industrial 171,088 0% % 171, Residential Development 0 100% % TOTAL 15,729,154-11,851, ,877, Scugog only With First Nation With First Nation and OLG 2015 Population Estimate 21,601 73% 21,691 73% 21,691 70% 2015 Employment Estimate 8,160 27% 8,200 27% 9,300 30% Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

12 Page 3-6 Table 3-4 Township of Scugog Operating Expenditures (2015 $) Expenditure Category RESIDENTIAL NON-RESIDENTIAL Net Expenditure Allocation Net Expenditure Net Expenditure Allocaiton Net Expenditure per Capita Recast per Employee Recast 1.1 General Government % % Protection to Person and Property Fire % % Inspection and Control % % Emergency Measures % % Transportation Services Roadways & Winter Control % % Street Lighting % % Marina % % Environmental Services Storm Sewer System % % Litter % % Recreation and Cultural Services Parks % % Recreation Programs % % Recreation Facilities % % Libraries % % Museums % % Planning and Development Planning and Zoning % % Commercial and Industrial - 100% % Residential Development - 100% % - TOTAL Source: Tow nship of Scugog 2015 Financial Information Return Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

13 Page 3-7 Table 3-4 assesses each of the Township s key service components, to determine how the operating costs are likely to be impacted, based on the characteristics and location of the reserve lands and the casino. Generally, when considering the impact of new development, the Growth Share % column reflects any variation from the current overall average per household expenditure level, which is called for the proposed development. For instance, if the average existing expenditure for a service is $100 per household, economies of scale or other efficiencies, may indicate that service costs for the growth increment alone are likely to be lower than average, say 90% (or $90 per capita), while being unaltered for the base population. For this analysis, an even distribution of costs is sought across all existing developments. These percentage attributions are used to compute average incremental operating costs per capita and per employee, which is reflected in the Net Expenditure column. The per capita and employee expenditure averages are utilized, subsequently, to estimate the expenditure associated with the M.S.I.F.N. reserve lands and the Great Blue Heron Casino. Based on the analysis provided in Table 3-4, the estimate of annual expenditures has been undertaken. Table 3-5 provides for the per capita and per employee amount multiplied by the population and employees associated with the casino as provided in Table 2-1. The total line provides for the product of this calculation.

14 Page 3-8 Table 3-5 Township of Scugog Operating Expenditure Summary 2015 $ CATEGORY Cost Per Capita Cost Per Employee Incremental Expenditures (2015 $) MSIFN Reserve Lands OLG Casino 1. Expenditures 1.1 General Government ,790 99, Fire ,291 61, Inspection and Control ,489 21, Emergency Measures , Roadways & Winter Control , , Street Lighting ,135 9, Marina Storm Sewer System , Litter Parks ,541 3, Recreation Programs ,015 1, Recreation Facilities ,978 11, Libraries ,470 4, Museums , Planning and Zoning ,321 11, Commercial and Industrial , Residential Development TOTAL , , Operating Revenue Implications Table 3-6 sets out the 2015 non-tax revenues for the Township as outlined in Table 3-1. The table distinguishes the revenues by service-specific revenues in section 2.1 (defined as being directly related to individual programs) and those being of a general nature (section 2.2).

15 Page 3-9 CATEGORY Table 3-6 Township of Scugog Operating Revenue Summary 2015$ Ontario Conditional Grants Canada Conditional Grants Other Municipalities User Fees and Service Charges Other Municipalities - Total Revenue - Tangible FIR 2015 Capital Assets 2. Revenues 2.1 Service Specific Non-Tax Revenues General Government 5, , ,521 Fire ,044 45,043-55,087 Inspection and Control ,118-12,118 Emergency Measures Roadways & Winter Control ,224-94,224 Street Lighting Harbour 48,334 Storm Sewer System Litter Parks ,927-32,927 Recreation Programs 59,496 12, , ,180 Recreation Facilities 27, , ,374 Libraries 65,257 1,538-62, ,269 Museums 23,494 3,465 46,437 Planning and Zoning 15, , ,979 Commercial and Industrial Residential Development Provincial Offences Act (POA) , , Other Non-Tax Revenues Payment in Lieu of Taxes 45,715 Unconditional Grants 1,346,410 Gas Tax 630,000 Other Municipal Grants and Fees 52,641 User Fees and Service Charges Licenses, Permits, Rents etc. 349,037 Tax Penalties/Interest and Fines 670,706 Investment Income & Donations 152,084 Deferred Revenue Earned - Gaming and Casino Revenue 1,121,518 Other 20,605 TOTAL 195,426 17,081 52,641 1,772,858-6,304,992 Source: Tow nship of Scugog 2015 Financial Information Return 1 Other revenues include sale of land & capital assets, sale of publications, equipment, etc., and gain on sale on non-tca land NON-TAX OPERATING REVENUES (2015 $) Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

16 Table 3-7 presents the various revenue items allocated between residents and employees in a similar manner as Table 3-3. Page 3-10 Table 3-8 assesses the 2015 non-tax revenues as to those which may be related to the O.L.G. Casino and M.S.I.F.N. reserve. Generally, any unconditional grants and subsidies have been eliminated and the residual amounts are assessed as to their applicability to the Casino and M.S.I.F.N. lands. Table 3-9 then determines the non-tax revenue associated with the population and employment figures provided in Table 2-1.

17 Page 3-11 Table 3-7 Township of Scugog Non-Tax Operating Revenue Summary Average Revenue Per Capita and Employee 2015 $ 2. Revenues CATEGORY 2.1 Service Specific Non-Tax Revenues Residential Share Revenue Per Non-Residential Share Capita % $ % $ General Government 148,521 70% 103, % 44, Fire 55,087 70% 38, % 16, Inspection and Control 12,118 70% 8, % 3, Emergency Measures - 70% % - - Roadways & Winter Control 94,224 70% 65, % 28, Street Lighting - 70% % - - Harbour - 70% % - - Storm Sewer System - 70% % - - Litter - 70% % - - Parks 32,927 95% 31, % 1, Recreation Programs 241,180 95% 229, % 12, Recreation Facilities 942,374 95% 895, % 47, Libraries 129,269 95% 122, % 6, Museums - 95% - - 5% - - Planning and Zoning 217,979 70% 152, % 65, Commercial and Industrial - 0% % - - Residential Development - 100% - - 0% - - Provincial Offences Act (POA) 42, % 42, Other Non-Tax Revenues Total Net Operating Revenue1 Payment in Lieu of Taxes 45,715 70% 32, % 13, Unconditional Grants 1,346,410 70% 942, % 403, Gas Tax 630,000 70% 441, % 189, Other Municipal Grants and Fees 52,641 70% 36, % 15, User Fees and Service Charges - 70% % - - Licenses, Permits, Rents etc. 349,037 70% 244, % 104, Tax Penalties/Interest and Fines 670,706 70% 469, % 201, Investment Income & Donations 152,084 70% 106, % 45, Deferred Revenue Earned - 70% % - - Gaming and Casino Revenue 1,121,518 70% 785, % 336, Other 20,605 70% 14, % 6, TOTAL 6,304,992-4,720, ,584, Population Estimate 21, Employment Estimate 9,300 1 Other revenues include sale of land & capital assets, sale of publications, equipment, etc., and gain on sale on non-tca land Revenue Per Employee

18 Page 3-12 Table 3-8 Township of Scugog Non-tax Operating Revenues - (2015 $) RESIDENTIAL NON-RESIDENTIAL REVENUE CATEGORY Net Revenue per Capita Growth Share % Net Revenue Recast Net Revenue per Employee Growth Share % Net Revenue Recast 2.1 Service Specific Non-Tax Revenues General Government % % 4.79 Fire % % 1.78 Inspection and Control % % 0.39 Emergency Measures - 100% % - Roadways & Winter Control % % 3.04 Street Lighting - 100% % - Harbour - 100% % - Storm Sewer System - 100% % - Litter - 100% % - Parks % % 0.18 Recreation Programs % % 1.30 Recreation Facilities % % 5.07 Libraries % % 0.69 Museums - 100% % - Planning and Zoning % % 7.03 Commercial and Industrial - 100% % - Residential Development - 100% % - Provincial Offences Act (POA) - 100% % - Other Non-Tax Revenues - 100% - - 0% - Sub-total Other Non-Tax Revenues Payment in Lieu of Taxes 1.48 n/a n/a - Unconditional Grants n/a n/a - Gas Tax n/a n/a - Other Municipal Grants and Fees 1.70 n/a n/a - User Fees and Service Charges - n/a - - n/a - Licenses, Permits, Rents etc % % Tax Penalties/Interest and Fines % % Investment Income & Donations % % 4.91 Deferred Revenue Earned - n/a - - n/a - Gaming and Casino Revenue n/a n/a - Other 0.66 n/a n/a - Sub-total TOTAL Source: Tow nship of Scugog 2015 Financial Information Return 1 Other revenues include sale of land & capital assets, sale of publications, equipment, etc., and gain on sale on non-tca land

19 Page 3-13 Table 3-9 Township of Scugog Non-Tax Operating Revenue Summary 2015 $ CATEGORY Revenue Per Capita Revenue Per Employee MSIFN Reserve Lands OLG Casino 2. Revenues 2.1 Service Specific Non-Tax Revenues General Government ,269 Fire ,958 Inspection and Control Emergency Measures Roadways & Winter Control ,344 Street Lighting Harbour Storm Sewer System Litter Parks Recreation Programs ,002 1,430 Recreation Facilities ,917 5,577 Libraries Museums Planning and Zoning ,733 Commercial and Industrial Residential Development Provincial Offences Act (POA) Other Non-Tax Revenues Payment in Lieu of Taxes Unconditional Grants Gas Tax Other Municipal Grants and Fees User Fees and Service Charges Licenses, Permits, Rents etc ,464 12,386 Tax Penalties/Interest and Fines ,813 23,804 Investment Income & Donations ,401 Deferred Revenue Earned Gaming and Casino Revenue Other TOTAL ,723 68,288 1 Other revenues include sale of land & capital assets, sale of publications, equipment, etc., and gain on sale on non-tca land

20 Page Capital Analysis 4.1 Lifecycle Costs Table 4-1 provides for an analysis on the anticipated annual capital costs associated with Township services. These annual capital costs are calculated based on the annual replacement cost of the Township s current assets and split between residential and non-residential categories based on a population-to-employment ratio currently in the Township. Note, for recreation and library services, a 95-to-5 ratio was utilized which provides for nominal usage by employees in the Township. This results in an annual per capita and per employee cost. These costs are included in the proportionate share calculations in Chapter 5. Table 4-2 provides for the calculation of operating and capital costs for roads related to the reserve lands. The operating costs related to roads and streetlights provided in the Township s 2015 F.I.R. are divided by the total kilometres of roads (both in the Township and in the M.S.I.F.N. lands) to calculate an operating cost per km of road. This is then multiplied by the kilometres of roads related to the reserve to determine the operating cost of roads related to the reserve. The capital costs for roads is calculated using the annual replacement cost of the roads and related assets in the Township s inventory. This is then divided by the total kilometres of Township roads to obtain the capital cost per km of road. The cost per km of road is then multiplied by the km of roads related to the reserve lands to calculate the capital cost of the roads related to the reserve. These costs are included in the proportionate share calculations in Chapter 5.

21 Page 4-2 Buildings Land Improvements Vehicles and Equipment Table 4-1 Township of Scugog Annual Asset Replacement Costing 2015 $ Roads Storm Sewers Storm Ponds Marine Service Area Fire Services 107,505 3, , ,617 72% 28% Recreation 918, ,419 1,284,317 95% 5% General Government 199,808 58, , ,788 72% 28% Library 238,584 17, ,800 95% 5% Public Works 27,736 30, , ,692 30,662 17, ,999 1,015,528 72% 28% Bylaw 12,207 12,207 72% 28% Roads 6,595,200 6,595,200 72% 28% Total 1,492, , ,401 6,595, ,692 30,662 17, ,999 9,887, Note: Roads costs based on replacement costs and km identified in Township 2014 DC Study Annual Replacement Costs Street Lighting Total Res% Non-res % Per capita Per Employee Table 4-2 Township of Scugog Roads Costs within Reserve Lands 2015 $ Roads based on KM Operating Capital Total Roads Cost 6,152,791 6,595,200 12,747,991 Total km of Roads Roads cost per km 14,733 16,008 30,741 km of Roads in Reserve Cost of Roads within Reserve 82,654 89, ,458 *Capital Road Km relates to Twp roads only whereas operating costs are combined Watson & Associates Economists Ltd. H:\Scugog\2016 Great Blue Heron FI\Report\Final Report\2017 Fiscal Impact -

22 Page Direct Casino and Reserve-Related Capital Costs The following provides an overview of the capital needs and commentary on the impact of the casino and reserve lands on Township services: Roads: The operating and capital costs identified in Chapter 5 of this report are probably realistic costs if the service was provided by the M.S.I.F.N. itself. While a snow clearing contract could adequately address the annual winter maintenance needs, annual maintenance and repair to the roadways could be expensive if purchased through a private contractor. A service contract may also be considered with the Township. Fire: This is an essential service which must be provided to both the benefit of the M.S.I.F.N. and the O.L.G. For comparison purposes, the Rama Fire Rescue Service presently has a fire station (approximately 6,000 sq. ft.) with a value of about $1.8 million, three major vehicles (aerial ladder, pumper and rescue unit) with a value of $1.9 million, and a department of 33 full time staff who are on a 24-7 basis. The Chippewas of Rama First Nation spend over $7 million in operating costs for Fire and Police Services, of which about 75% of these costs would be related to the fire service. For the M.S.I.F.N. to provide this service to its present O.L.G. facility and its residents, the service would need at a minimum, two vehicles (perhaps a pumper and tanker). Capital costs for these vehicles would be about $750,000. A fire station would also be needed which would be no less than 3,000 sq.ft in size. The construction cost, along with furnishings and other equipment, would be in the range of $1 million. Note as well that, should the casino be expanded and a hotel included, an aerial truck would also be required ($1 million) along with a further fire station expansion ($300,000). As for operating costs, a basic service would see 2-3 full time staff with a minimum of 30 part time fire fighters. Annual costs for just the staffing (response pay, benefits, training, etc.), would be at least $600,000. Other operating costs (for the facilities and vehicles) would probably add at least $250,000. Should the O.L.G. expand significantly, the service may eventually move to full time staffing. A 24-7 operation would probably require 25 full time firefighters at a cost of about $2.5 million.

23 Page 4-4 Parks and Recreation: The M.S.I.F.N. Reserve has access presently to the Township recreational facilities along with a variety of recreational programs. Providing equivalent levels of service is probably not possible given the costs vs. the scale of the population. It is recognized that the M.S.I.F.N. presently has a community hall where some programming could occur. Some direct cost would be experienced in order to provide programing at the level provided by the Township. M.S.I.F.N. residents presently also have access to soccer, baseball and hockey leagues. These services may not be possible to provide directly and would probably have to be purchased directly from the Township.

24 Page Allocation of Proportionate Share of Costs to O.L.G. and M.S.I.F.N. 5.1 Share of Costs Based on Current State Table 5-1 summarizes the foregoing analysis provided in Chapter 3 and 4. This table calculates the operating expenditures, including lifecycle costing and non-tax revenues to provide for the net annual financial position. Based on the results provided in Table 5-1, the estimated annual costs related to the M.S.I.F.N. reserve is $268,371 and the estimated annual costs related to the O.L.G. is $714,232. The calculations provided herein present a proportionate allocation of service costs on an overall average basis (cost and revenue per employee and per capita). This methodology is reasonable for many services such as roads, as all patrons, employees, delivery trucks, etc. utilize the full road system in proceeding to and from these lands. This approach however, may understate the costs for other services such as fire. Response statistics kept by the Township of Scugog Fire Department identify that in 2015 the Fire Department responded to 581 calls (including calls to assist other municipalities). Of this, there were 88 calls directly to the island, most of which related to the O.L.G. on the reserve. There was: one emergency incident and three motor vehicle collisions at the casino; two emergency incidents and one motor vehicle collision occurred on the reserve lands; and 81 motor vehicle collisions on arterial roads on the island. Of the total responses for 2015, the calls to the island area accounted for approximately 15% of the total annual calls. As the gross expenditure for Fire Services in 2015 was approximately $1.9 million (Table 3-2), this amounts to approximately $280,000 in net costs (including a deduction for the relative share of user fees and service charge revenue). This amount is higher than the average proportionate share amount related to fire as calculated in Table 5-1 (approximately $90,000). Further, the fire statistics kept by the Fire Department indicate that the number of calls in 2015 (88), increased by 13% in 2016 to 99 calls. This would increase the fire-related expenditures further.

25 Page 5-2 Table 5-1 Township of Scugog Allocation of Proportionate Share of Costs to OLG and MSIFN 2015 $ Reserve Related OLG Related Summary Assumption Costs Costs Population 90 Employment 40 1,100 Cost Sharing of Township Costs Operating Costs Per capita ,173 - Per Employee , ,656 Annual Capital Costs Per capita ,008 - Per Employee , ,864 Total Costs 108, ,520 Less: Operating Revenues Per capita ,239 - Per Employee ,483 68,288 Total Revenues 12,723 68,288 Net Cost 95, ,232 Add Direct Costs for Servicing Roads (5.6 km) within Reserve Operating 82,654 Capital 89,804 Subtotal 172,458 Total 268, ,232

26 Page Share of Costs Based on Proposed Casino Expansion It is noted that, the O.L.G. may expand the casino facility which would include additional gaming space, the addition of a hotel, and potentially other activities. While the existing O.L.G. facility and the M.S.I.F.N. reserve may be able to compensate for a potential loss of service provided by the Township, there are other matters which would also need to be addressed should the O.L.G. facility seek to expand the casino operations along with the addition of a hotel and other possible venues, including the need for secondary access to Scugog Island and expanded fire services. Secondary Road Access: Presently there is only one access in and out of the island. An environmental assessment was undertaken in 2007 by TSH Consulting Ltd. This study noted the following key issues: o Rapid growth - traffic volumes have increased steadily over the years. A significant increase has been experienced since the opening of the Great Blue Heron Charity Casino. Table 4-3 on page 19 of the study shows that traffic volumes on Highway 7A West of Island Road have increased 22.5% from 1996 (when the Casino opened) to 2002 and volumes on Highway 7A East of Island Road have increased 13% over that same period. Further, the study notes that a traffic volume growth rate of 3% per annum would be a conservative estimate for future horizon years. o Strategic consideration related to lack of alternative access to most parts of the Island - due to growth there are increased concerns that one route serving Scugog Island may pose a serious risk to public safety and may hinder emergency response to the entire Island, when the intersection or any section of Island Road between Highway 7A and Pine Point Road is closed. The study considers the continued growth on the island and recommends a new south connection between Hwy 7A and Head Road and a new north connection between Ma Brown Road and Pine Point Road. Further, modifications to Hwy 7A to accommodate a left turn lane and an extension of Reader Road would be required. In total, the cost for the road construction would be approximately $3.6 million and the cost for property acquisition would be approximately $120,000. In total, approximately 2.5 km or road works would need to be constructed.

27 Page 5-4 As noted in Section 5.1, there are numerous collisions on the arterial roads in the area. A number of these calls annually block all access to the island causing potential health and safety risks to patrons, residents, and employees. The road works for this secondary access were identified in Chapter 3 and include: a new south connection between Hwy 7A and Head Road; a new north connection between Ma Brown Road and Pine Point Road; modifications to Hwy 7A to accommodate a left turn lane; and an extension of Reader Road. In total, the cost for the road construction would be approximately $3.6 million and the cost for property acquisition would be approximately $120,000. Debt charges for this project (funded over 10-years) would cost the Township approximately $375,000 annually. In total, approximately 2.5 km of road works would need to be constructed. Direct operating costs with these additional roads are expected to be approximately $75,000 per year, plus debt and annual lifecycle costs. Fire Services: It is expected that with the addition of the multi-storey hotel, along with additional venues, additional fire equipment would be required. The capital costs related to the expanded fire services would include: a new aerial truck; and an expansion/modification to the fire station to allow the new truck to be housed in the fire station. In total, the cost for the new aerial truck would be approximately $1,000,000 and the cost of an expanded fire station would be approximately $300,000. In addition to the capital costs for fire, it is expected that additional operating costs would arise. The following provides an estimate of various annual costs related to an expansion to the fire services: Annual lifecycle costs for the new vehicle, based on 20-year useful life - $50,000 Annual debenture payments to pay for the initial capital cost - $100,000 Operating costs for 2-4 additional full-time firefighters and for the new truck - $250,000 - $450,000.

28 The above estimates an additional $400,000 to $600,000 in annual expenditures. Other: Page 5-5 It is expected that there would be a broad impact on certain Township services, should the Casino wish to expand. Given the potential size of the expansion and the added need for public safety, the expansion would require, at a minimum, building permits, site plans, and municipal inspections (building and engineering), all of which would result in additional operating costs to the Township. These costs may be partially offset by fees and charges.

29 Page Observations and Conclusions The Township of Scugog presently has an approved casino located within the reserve lands of the Mississaugas of Scugog Island First Nations, and as such, Township services are directly impacted by the casino. For compensation of Township services rendered, the M.S.I.F.N. historically provided a share of casino revenues to the Township. As noted earlier, the O.L.G. has recently entered into an agreement with the M.S.I.F.N. which would effectively remove the present funding provided to the Township from the M.S.I.F.N. The O.L.G. have indicated a possible desire to enter into a new agreement, whereby the O.L.G. will provide the Township funding on a fee for service basis. If taken literally, this type of arrangement only looks at the direct cost of providing specific services to the Casino (e.g. fire calls, etc.) but ignores the broader impact on Township services and ensuring the service is available 24/7 to service the casino. In regard to cost recovery for Reserve related costs, a funding agreement also needs to be entered into with the M.S.I.F.N. Based on the Township s interpretation of fee for service basis, an analysis of the operating and capital costs on the Township has been undertaken with regard to the casino and reserve lands (including direct and broader impacts). Based on the proportionate analysis, the operating and capital costs (including lifecycle costs) equate to an annual cost of approximately $270,000 for the reserve lands and $714,000 for the casino. In considering the direct responses to this area by the fire department, it is observed that these costs would be higher by another $200,000. Most of this impact would be attributed to the O.L.G. facility (i.e. 90% or $180,000) with the residual $20,000 attributed to the Reserve. Also discussed in this report, is the potential for the O.L.G. to expand the casino operations. This would create additional demand on Township services which would create additional expenses. Secondary road access to Scugog Island would need to be constructed and developed, at approximately $3.7 million and would have to be recovered from the casino, or the M.S.I.F.N. Annual operating and lifecycle costs would be approximately $175,000. Further, as the Casino expands its operations and constructs a hotel and other venues, the annual expenditures incurred by the Township for fire services are expected to increase by approximately $600,000 to cover the cost of lifecycle and debt for new assets, along with operating cost for the new vehicle, and cost for two to four additional full-time firefighters. The analysis sets out the costs of operating the casino and servicing the reserve lands to the Township. These costs must be funded through property taxes, a payment from

30 Page 6-2 the M.S.I.F.N., or through a share of revenues of the casino being provided to the Township. If the Township were to receive the expenses from the M.S.I.F.N. or through revenue sharing, the cost of the services to the M.S.I.F.N./casino would be approximately $1.2 - $1.4 million annually for the services presently provided. Based on the potential expansion to the casino, the costs would increase to approximately $2 million annually. Based on the proportionate analysis, the operating and capital costs (including life cycle costs) equate to an annual cost of $270,000 for the M.S.I.F.N. and $714,000 for the casino. In considering the direct responses by the fire department, these costs should be further increased by $20,000 for the M.S.I.F.N. and $180,000 for the casino. In total, the current annual municipal service cost to the M.S.I.F.N. is $290,000 and the municipal service cost to the casino is $894,000. The analysis further identifies road and fire service costs related to an expansion of the casino and estimates municipal service costs would increase to approximately $1.67 million annually. If the M.S.I.F.N. wishes to provide these direct services on their own, it would cost approximately $1.2 million annually, but would also cost approximately $5.5 million dollars in capital expenses related to setting up a fire service. A further $3.7 million in capital would be required should the O.L.G. expand operations and the operating costs of the fire service alone, could increase to approximately $2.5 million annually. The M.S.I.F.N. may be able to provide the bare-minimum amount of services at nearly the same cost as the Township, however, the Township is able to provide a broader, more robust service due to economies of scale.