Canada: Case Comment: Marjerrison v Ottawa (City), Ontario Municipal Board

In November 2016, the Ontario Municipal Board (the "Board") issued a decision that reflects a growing trend of disputes concerning development charges in Ontario.1, 2, 3 The issue in this case turned on whether the municipality acted properly in imposing significant costs on a developer as a condition of approving the development. The Board sided with the developer finding that the municipality had improperly required that the developer pay for road works and a multi-use path as part of obtaining approval for the development, and the municipality has been ordered to pay approximately $4 million to that developer.

In agreeing with the developer, the Board provided important commentary on the statutory provisions that impact development charges, including the Planning Act, the Development Charges Act, and the impact of by-laws enacted pursuant to those Acts. One important aspect of this case is the strict interpretation of holding by-laws, which limit the use a developer can make of a property until certain conditions are met and the holding by-law is lifted. This decision marks the first time the Board has ordered a municipality to comply with the strict wording of a holding by-law.

The ruling also reinforces important principles concerning site plan approvals – by-laws through which a municipality ensures that no development can take place until site plan approval is obtained. The Board reinforced the principle that municipalities cannot use site plans to hold developers accountable for the cost of works that do not stem directly from the proposed development. Municipalities must fund these works using other mechanisms.

Background

This case was brought by several appellants. However, this case comment refers only to the appeal brought by Colonnade Development Inc. ("CDI"). CDI brought an appeal against the enactment of a particular by-law, (the "DC By-law") and a by-law lifting a holding provision.

Development Charges

The Development Charges Act ("DCA") sets out the parameters under which municipalities may charge development charges on new development through a development charges by-law.

Section 2(1) of the DCA provides as follows:

(1) The council of a municipality may by by-law impose development charges against lands to pay for increased capital costs required because of increased needs for services arising from development of the area to which the by-law applies.

(5) A development charge by-law may not impose development charges with respect to local services described in clauses 59 (2) (a) and (b).

Section 59 of the DCA reads as follows:

(1) A municipality shall not, by way of a condition or agreement under section 51 or 53 of the Planning Act, impose directly or indirectly a charge related to a development or a requirement to construct a service related development except as allowed in subsection (2).

(2) A condition or agreement referred to in subsection (1) may provide for,

(a) local services, related to a plan of subdivision or within the area to which the plan relates, to be installed or paid for by the owner as a condition of approval under section 51 of the Planning Act;

(b) local services to be installed or paid for by the owner as a condition of approval under section 53 of the Planning Act.

To be valid, a development charges by-law must be supported by a development background charges study ("DCBS").4 A development charges by-law must be renewed every five years, and supported by a DCBS. The study sets out the justification for a development charges by-law, and in the case of Ottawa's DC By-law, included a list of projects which were to be funded by development charges. When a new development charges by-law is passed, it is subject to appeal to the Ontario Municipal Board.5 The Board found in order for the DC By-law to be upheld, there must be "a connection between the development charge imposed and the DCBS, which supports the ultimate by-law enacted by municipal council."6

Holding By-laws

When a zoning by-law is passed under section 34 of the Planning Act, council of the local municipality may attach a holding symbol to specify the use to which lands, buildings or structures may be put at some time in the future.7 The applicable section of the Act, section 36, provides:

36(1) Holding provision by-law

The council of a local municipality may, in a by-law passed under section 34, by the use of the holding symbol "H" (or "h") in conjunction with any use designation, specify the use to which lands, buildings or structures may be put at such time in the future as the holding symbol is removed by amendment to the by-law.

36(2) Condition

A by-law shall not contain the provisions mentioned in subsection (1) unless there is an official plan in effect in the local municipality that contains provisions relating to the use of the holding symbol mentioned in subsection (1).

Holding symbols may limit the uses for lands, buildings or structures, until the holding provision set forth in the holding by-law is removed. For this reason, developers must seek to have holding symbols removed to enable them to proceed to use the lands. To do this, the developer must bring an application to council for an amendment of the by-law. On these applications, developers must demonstrate that the provisions of the holding by-law are met.

If council refuses an application to remove the holding symbol or fails to make a decision, the applicant has the right to appeal that decision to the Board.8 Holding by-laws are subject to appeal when passed, when an application to remove the holding provision is refused, or when there is a non-decision on application to remove the holding provision. However, there exists no explicit mechanism to appeal the conditions of the lifting of a holding by-law. For example, in the present case, the conditions for lifting a holding by-law included reliance on a traffic study that the appellant disagreed with.

Notwithstanding the inability to appeal such conditions, in this case, the Board clarified the limits on the City's authority to refuse an application to remove a holding symbol. More specifically, the Board emphasized that the City cannot unilaterally change the requirements that have been clearly established in the holding by-law; so long as those requirements have been met, the holding symbol must be removed.9

Site Plan Control

One way that municipalities control development is through "site plan control," under s. 41 of the Planning Act. Municipal councils can enact by-laws designating areas as "site plan control areas", so long as this is consistent with the official plan.10 Once an area is designated as such, no one can develop in that area unless the council of the municipality or the Board provides approval. Specifically, they must approve one or both of the parameters for plans and drawings set out in s. 41(4).11

A municipality with a site plan control by-law has the power to impose conditions on a developer before approving the plans and drawings referred to above. The Act is very specific as to which conditions a municipality may impose. The municipality has the right to impose conditions on the owner listed in section 41(7) of the Act, being to:

(a) provide to the satisfaction of and at no expense to the municipality any or all of the following:

1. Subject to the provisions of subsections (8) and (9), widenings of highways that abut on the land.

2. Subject to the Public Transportation and Highway Improvement Act, facilities to provide access to and from the land such as access ramps and curbings and traffic direction signs.

3. Off-street vehicular loading and parking facilities, either covered or uncovered, access driveways, including driveways for emergency vehicles, and the surfacing of such areas and driveways.

4. Walkways and walkway ramps, including the surfacing thereof, and all other means of pedestrian access.

4.1 Facilities designed to have regard for accessibility for persons with disabilities.

5. Facilities for the lighting, including floodlighting, of the land or of any buildings or structures thereon.

6. Walls, fences, hedges, trees, shrubs or other groundcover or facilities for the landscaping of the lands or the protection of adjoining lands.

7. Vaults, central storage and collection areas and other facilities and enclosures for the storage of garbage and other waste material.

8. Easements conveyed to the municipality for the construction, maintenance or improvement of watercourses, ditches, land drainage works, sanitary sewage facilities and other public utilities of the municipality or local board thereof on the land.

9. Grading or alteration in elevation or contour of the land and provision for the disposal of storm, surface and waste water from the land and from any buildings or structures thereon;

(b) maintain to the satisfaction of the municipality and at the sole risk and expense of the owner any or all of the facilities or works mentioned in paragraphs 2, 3, 4, 5, 6, 7, 8 and 9 of clause (a), including the removal of snow from access ramps and driveways, parking and loading areas and walkways;

(c) enter into one or more agreements with the municipality dealing with and ensuring the provision of any or all of the facilities, works or matters mentioned in clause (a) or (d) and the maintenance thereof as mentioned in clause (b) or with the provision and approval of the plans and drawings referred to in subsection (4).

(c.1) enter into one or more agreements with the municipality ensuring that development proceeds in accordance with the plans and drawings approved under subsection (4);

(d) subject to subsection (9.1), convey part of the land to the municipality to the satisfaction of and at no expense to the municipality for a public transit right of way.12

However, the power to impose conditions does not authorize a municipality to require that financial contributions be made for works off-site that are not connected to the development, nor does it authorize conditions about matters unrelated to the immediate access to or requirements of the site.13

The CDI Appeal

CDI purchased 15 Colonnade Road (the "CDI Property") in 2000 for the purpose of developing that property. The CDI Property is located at the western end of Colonnade Road. Subsequently, CDI developed a nearby property on Colonnade Road for a Canada Post facility.

At the eastern end of the street is 81 Colonnade Road, which is owned by affiliates of Ashcroft Homes (the "Ashcroft Property"). The Ashcroft Property was purchased for the purposes of developing a residential subdivision. Ashcroft was not a party to the appeal before the Board, and did not make any submissions, however it was a party to a cost sharing agreement with CDI, and to a subdivision agreement with the City.

The Purchase of the CDI Property

The National Capital Commission ("NCC") previously owned the properties that became the CDI Property and the Ashcroft Property. In 2000, the NCC had discussions with the then City of Nepean about selling the property, leading the former City of Nepean to adopt Holding By-law No. 105-2000 (the "Holding By-law")14.

Before the City of Nepean passed the Holding By-law, it entered into a memorandum of understanding with the NCC. Many of the parameters in the Holding By-law mirrored provisions in the memorandum of understanding. This memorandum of understanding included clarification that the City of Nepean was obliged to provide access for the CDI Property to Colonnade Road and to construct a recreational pathway at its own cost. The recreational pathway was never constructed by the City of Nepean (or subsequently by the City of Ottawa).

The Holding By-law provided that the "H" designation would only be lifted upon the following:

  • Submission of a Transportation Impact Study ("TIS") to the satisfaction and approval of the City;
  • An agreement being entered into between the City and the owners of the properties regarding cost sharing and implementation of a schedule for construction of road infrastructure improvements generated by development of the subject property, as recommended by the TIS and approved by the City; and
  • The submission and approval of a site plan application to the satisfaction of the City. [emphasis added]

Ashcroft commissioned a TIS in 2005, for the purposes of satisfying the Holding By-law, which recommended a road widening on Merivale Road (which was east of the CDI Property). The study stated that most of the traffic relating to the Ashcroft Property and the surrounding area would be background traffic projected out to 2013. The study recommended a road widening on Merivale Road and Colonnade Road.

In compliance with the Holding By-law, CDI and Ashcroft requested that the City enter into a cost sharing agreement to fund road works to address the potential traffic issues. However, despite the clear wording of the Holding By-law, the City refused to enter into the cost-sharing agreement.

There was evidence before the Board demonstrating that in 2005 the City recognized that the Merivale Road intersection was at capacity, but the City did not have the money to pay for it and required the works to be constructed by Ashcroft as a condition of approval.

In 2014, CDI applied to the City for development approvals and building permits under the Planning Act and Building Code Act in order to construct an automobile dealership.

As a condition of providing approval, the City required CDI to construct various works, including substantial road modifications and multi-use path. The road modifications were divided into two extensive phases on the basis of 2005 TIS commissioned by Ashcroft. CDI contested the requirements for the extensive road modifications and the building of a multi-use path because they were not connected to the development.

The City required CDI to enter into a road modification agreement. CDI was required in Phase 1 to do substantial road modifications to the Colonnade Road North and Merivale Road intersection and Colonnade Road between Merivale Road and 15 Colonnade Road. For Phase 2, the City was requiring CDI to do substantial additional road modifications to:

(a) Colonnade Road between Merivale Road and the Colonnade Road South intersection;

(b) Colonnade Road North and Colonnade Road South intersection; and

(c) New signalized intersection from Colonnade Road North to 15 Colonnade Road.

The total cost of these road modifications are in the range of $4,000,000. CDI requested the City to include the road modifications works in the DCBS and the DC By-law. The City did not include the Phase 1 and the Phase 2 Works for development charge recovery in the City of Ottawa 2014 DCBS.

The City took the position that CDI had to fund this work themselves as a condition of receiving the City's approval for their developments. Ashcroft did not agree to pay for the road widening work. When this happened, the City took the position that CDI had to fund the entire project in order to receive approval for its development. Otherwise, the development would be unable to proceed. The Board viewed the City's failure to participate in the cost sharing agreement troubling as "this was clearly contemplated and anticipated at the time of the enactment of the holding by-law."15

Under tremendous economic pressure and under protest, CDI entered into various development agreements with the City, which the City stated obliged CDI to construct the Phase 1 and 2 works.

The Board's Decision

The Holding By-law

Noteworthy in this Board decision is the strict interpretation of the Holding By-law. The Board was "particularly troubled" by the City's refusal to participate in the cost sharing agreement for the road works at issue as it was clearly contemplated and anticipated at the time of the Holding By-law's enactment.

The Holding By-law's conditions stated that the works to be constructed had to be generated by the development. As the Phase 1 and 2 works were not works "generated by the development" they were not properly made a condition of lifting the holding by-law. Weaving the concepts of direct causation for development conditions, and the strict terms of a holding by-law the Board found:

[41] ... While the Board recognizes and acknowledges that municipalities work under extreme budgetary constraints and are always looking for ways to reduce its financial obligations with respect to the provision of services to its residents, it is nevertheless not fair and reasonable under the DCA to force additional costs onto the backs of individual landowners as part of their developments, particularly where the works required by the City will be of general benefit. The City and in this case, had indicated in the past, that it would share part of the costs. [emphasis added]

This case should alert municipalities as to their obligations under holding by-laws. Though municipalities may face budget constraints, they are expected to follow the conditions set in the holding by-laws that they construct. The Board refused to allow the lifting of the Holding By-law to be used as a "blank cheque". More importantly, the Board found a way to deal with the absence of an appeal process for holding by-laws in the Planning Act.

Site Plan Approval

The Board in this case also linked its decision to the powers of a municipality under section 41 of the Planning Act.

[39] The Board also finds that the meaning of "generated by the development" for the purposes of the holding by-law and what a municipality is permitted to require a developer to do at site plan are the same. The traffic engineers agree that the Phase 1 and 2 works are not "generated by the development as required by the holding by-law. Capacity issues on roads are not an owner's responsibility at the site plan approval stage. [emphasis added]

At the site plan approval stage, pre-existing capacity issues on roads are therefore not an owner's responsibility. First, the Board discussed how the City had passed off works as a development approval condition that were not directly necessary due to the proposed development. The Board also found that the work, divided into phases as a condition of approval for the development applications, were works that fell within what was contemplated in the project list of the and therefore should have been development charge eligible. The road widening was also within the policies under DCBS.

The Board drew the conclusion that:

[35] ... the Phase 1 and 2 works are off site the property (15 Colonnade Road) and were not included in the project list by the City because it was its intention to make the owner to pay for such works when it applied for site plan approval. Where the municipality lacks the lawful authority to require the works to be carried by the developer as a condition of site plan approval, it should include such works in the DC or pay it out of general revenues.[emphasis added]

Summary

The Board ordered that the City pay CDI roughly $4,000,000 out of DC By-law revenues or general revenues.

This case should alert municipalities as to the difference between collecting funds through development charges, and the inability to work around this method by making works not directly linked to the proposed development a condition for approval. Municipalities may not use the site plan approval process to obtain more than what can be provided for in s. 41 of the Planning Act.

Finally, municipalities are granted a breadth of power under the Planning Act. Along with this power, municipalities should be mindful of their obligation to act fairly and reasonably. In this particular case, the Board found:

[55] Municipalities must always act fairly and reasonably in its administration of legislation under which it has authority. It did not do so in this case when it required CDI to construct and pay for works that related to existing problems on the road system that were its responsibility.

Footnotes

1 Michael Polowin is a partner at Gowling WLG's Ottawa office, practicing in the area of municipal law, which includes land use planning and development charge disputes. Michael is the head of Gowling WLG's Municipal Practice Group.

2 Roberto Aburto is a lawyer at Gowling WLG's Ottawa office, practicing in the area of municipal law, which includes land use planning and development charge disputes. Roberto is a long-time member of the Ontario Bar Association's Municipal Section Executive.

3 Michelle Cicchino is an articling student in Gowling WLG's Ottawa office.

4 Development Charges Act, s. 10.

5 Development Charges Act, s. 13.

6 The Decision at para. 7.

7 Planning Act, RSO 1990, c. P .13, s 36(1).

8 Planning Act, RSO 1990, c. P .13, s 36(3).

9 The Decision at para 52.

10 Planning Act, RSO 1990, c. P .13, s 41(2).

11 Planning Act, RSO 1990, c. P .13, s 41(4).

12 Planning Act, RSO 1990, c. P .13, s 41(7).

13 First City Shopping Centre Group v Gloucester (City) (1990), 25 OMBR 91 (OMB), aff'd 27 OMBR 457 (Gen. Div.).

14 The Holding By-law was later incorporated into City of Ottawa's Comprehensive Zoning By-law No. 2008-250, following the amalgamation of the City of Nepean and the City of Ottawa.

15 The Decision at para 41.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
13 Jul 2017, Seminar, London, UK

This seminar will provide an update on the key developments in patent litigation in the UK in life sciences in the last 12 months including an in-depth look at the FKB v AbbVie litigation and what that means for the life sciences sector.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.