Canada: Recent Parkland Levy Refund Decision Highlights Recourse For Developers

Last Updated: May 16 2013
Article by Adrian Frank

A recent decision issued by the Ontario Municipal Board highlights an opportunity for developers who feel they have been overcharged for parkland dedication fees in Ontario. Given the size of many developments, cash-in-lieu of parkland dedication fees can run into the millions. The ability to challenge the underlying appraised property value and receive a refund of some of these fees may therefore materially impact a project's bottom line.

Parkland Dedication, Cash-in-Lieu Payments and Payment in Protest

On November 27, 2012 the Board issued a decision ordering the City of Toronto to refund $318,376.68 plus interest to Pinnacle International (Adelaide Street) Limited. The money had been paid as cash-in-lieu of parkland dedication as part of a redevelopment of Pinnacle's property at 295 Adelaide Street West (the southwest corner at John Street). The property had been rezoned to permit 43 storeys, with 40,785 sq. m. of residential development and 1,067 sq. m. of commercial space. A dedication of parkland is normally required for residential development in Toronto; however, in light of the small size of the site, the City had opted to receive the dedication as cash-in-lieu.

In order to determine the necessary payment, the City hired a land use appraiser. Pinnacle's site was appraised at $38 million, resulting in a parkland dedication fee of $3,758,664.68. Pinnacle paid this amount in protest on January 27, 2012, signaling its disagreement with the City's valuation. This was based in part on the significant difference between the City's appraisal and Pinnacle's own appraisal, which valued the property at $31.58 million. Pinnacle therefore filed an appeal of the valuation with the Board, requesting a refund of $665,074.28 (including 6% interest).

The case was argued before a two-member panel of the Board, comprising Vice Chair Norman C. Jackson and Member Blair S. Taylor, on October 30 to 31, 2012. Our firm represented Pinnacle with respect to this appeal. The case focused primarily on two issues: first, the criteria used by each valuator to include or exclude various comparable properties for direct comparison valuation; and second, the methods and data sets chosen to adjust for changes in market conditions over time.

Planning Evidence

In order to determine which criteria (and therefore properties) were most relevant, the parties entered extensive planning evidence on the nature of each comparable property. Three properties in particular—101 King Street East, 42 Charles Street and 103-11 Bathurst Street—were the subject of much debate during the hearing.

Pinnacle's planner argued that these three properties used by the City's appraiser were not appropriate for comparison. In his view, these buildings were subject to different policies under the City's Official Plan and zoning by-laws. Furthermore, their distance from the Pinnacle site and different neighbourhood contexts made them unsuitable for direct comparison. For example, the Bathurst Street property is subject to the West Precinct policies in an adopted official plan amendment to the King-Spadina Secondary Plan (not yet in force), while the Pinnacle site is in the East Precinct.

The City's planning witness argued that the City's comparable properties were entirely appropriate for comparison. In his view, notwithstanding their differing contexts and locations, these properties were subject to many of the same planning criteria and policies as Pinnacle's subject site. The King and Charles buildings are located within Mixed-Use Areas which allowed condominium development, while the Bathurst building is in a Regeneration Area—each of these reflecting the nature (if not the specific designation) of the Pinnacle site.

After weighing this evidence, the Board determined that the King and Charles buildings were not appropriate comparables given their Mixed-Use designations under the Official Plan. The Bathurst site was also deemed inappropriate due to its different built form, and the differences in planning policies between the East and West Precincts in the area's Secondary Plan.

Valuation Evidence

With the appropriate comparable properties chosen, the Board next considered how best to determine the value of the subject property, based on the various data sets and valuation trends available. The evidence presented by each valuator included a number of sales spanning over a decade, including transfers of both entire sites and parts of assemblies. In reviewing the evidence provided by each consultant, the Board noted a number of concerns with the methodology and assumptions provided. The Board determined that estimates provided by Pinnacle, ranging from $61 to $78 per square foot of ground floor area, had not been clearly adjusted for time and other contingencies. While the City's estimated values made adjustments for time and other factors, ranging from $71.78 to $90, the Board noted that these adjustments were presented without source or detailed explanation as to their origin or determination.


Ultimately, the Board adopted four comparable properties presented by Pinnacle, and adopted a time adjustment for the values provided by Pinnacle's appraiser on input from the City's appraiser. The Board noted that a time-adjusted average value for all of Pinnacle's comparable properties would be $72.80, and that the smaller set of comparables resulted in a value of $82.80. The Board averaged these numbers to arrive at a ground floor area per square foot value of $77.80, and a refund of $318,376.68. Pinnacle was found to be entitled to interest as well, at a prime rate of 3% from January 2012 to the date of actual payment. This decision represents one of the largest cash-in-lieu refunds ordered from a municipality to date.

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