As municipalities desperately look for new sources of revenue, section 37 of the Planning Act has received more attention. That section provides that in exchange for facilities or services (such as public art or community benefits), municipalities may allow developments to exceed the maximum height and density standards permitted by the applicable zoning bylaw. To exercise this authority, the municipality's official plan must include provisions which permit height and density increases.
In the recent decision of 1477677 Ontario Ltd. (Baywood Homes) v. Toronto (City), the Ontario Municipal Board (the "Board") refused to impose a section 37 contribution in the amount of $260,000 in exchange for a development of approximately 3,858 square meters over and above the as-of-right zoning permissions. In doing so, the Board confirmed that section 37 benefits must be grounded in fair, clear, transparent, predictable and specific requirements that are set out in the municipality's official plan and which are not arbitrary in their application. A developer of land should, therefore, know in advance what will be expected by way of section 37 benefits if increases in height and density are approved.
In this case, the Board found that there was no framework set out in the municipality's official plan or in any other planning documents or reports to municipal council to explain how the requested $260,000 amount was calculated. Therefore, the Board was not satisfied that the municipality had set out "specific, fair, transparent and predictable requirements in its Official Plan as to when, where or how much and for what purpose a contribution will be required under section 37 by a developer of land".
Also of note, in holding that no section 37 payment would be imposed, the Board found that the subject lands were situated in an area where additional density was expected.
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.
