After much consultation by the Province (and just as much speculation by industry folks), the features of the new community benefits, development charges ("DCs") and parkland dedication legislative framework have been confirmed.
On September 18, 2020, the Province proclaimed into force the remaining amendments that Bill 108, which received Royal Assent on June 6, 2019 as the More Homes, More Choice Act ("Bill 108"), and Bill 197, which received Royal Assent on July 21, 2020 as the COVID-19 Economic Recovery Act ("Bill 197"), made to the Planning Act and the Development Charges Act, 1997. The various changes proposed and enacted under Bill 108 and Bill 197 were discussed by our Municipal & Land Use Planning Group here, here and here. The Province also made a new Regulation under the Planning Act, Ontario Regulation ("O. Reg.") 509/20, setting out the prescribed information with respect to the new community benefits charge ("CBC") authority under section 37 of the statute and the amended parkland dedication provisions under section 42.
The new framework is, in large part, intended to provide more certainty and predictability regarding the costs of development. For example, gone will be the days of negotiating "section 37 agreements". These precarious legal instruments will effectively be replaced with a set maximum "cap" amount that may be imposed as a CBC, detailed below. While the ability to impose a CBC is broader than the previous section 37 regime – the trigger for a CBC mirrors the trigger for DCs, whereas section 37 benefits could only be imposed when an increase in height or density is being approved – it should be easier for proponents to determine the approximate or estimated costs of a project at the outset of same, rather than having to wait until much later. Furthermore, new CBC and parkland dedication by-law appeal rights will provide proponents with additional avenues for engaging in and seeking to influence the development process.
This article provides a high-level overview of the pertinent aspects of the new CBC authority and amended parkland dedication provisions, including the content of new O. Reg. 509/02, under the Planning Act and the amended DC provisions under the Development Charges Act, 1997. The Province has given municipalities until September 18, 2022 to implement the legislative and administrative changes necessary to transition to this new framework.
Community Benefits Charges
Section 37 of the Planning Act now authorizes a municipality to "impose community benefits charges against land to pay for the capital costs of facilities, services and matters required because of development or redevelopment." This section does not include an itemized list of what "facilities, services and matters" may be charged for, nor does O. Reg. 509/20. In this sense, the CBC authority is broad. It may be used to impose charges for services listed under the Development Charges Act, 1997 and/or parkland. However, the framework precludes a municipality from charging for the same matter twice using different mechanisms.
The maximum amount of a CBC "shall not" exceed four percent (4%) of the value of the lands in question as of the "valuation date". The valuation date is the day before the date the first (or only) building permit is issued in respect of the development or redevelopment in question. Municipalities may accept in-kind contributions in satisfaction of all or part of an amount owing under a CBC. The value of an in-kind contribution would be deducted from the total amount owing. However, the value assigned to the in-kind contribution is ultimately assigned by the municipal authority. There is no mechanism to force a municipality to accept a specific value for a proposed in-kind contribution.
If a land owner is of the view that an amount imposed by a municipality as a CBC exceeds the maximum amount permitted under the statute, they may make the payment under protest and submit an appraisal attesting to the value of the land within the prescribed timeframe of 30 days. If the municipality does not provide its own appraisal within 45 days, the land owner's appraisal is deemed to be correct and the land owner may be entitled to a refund. If the municipality does properly provide an appraisal, and the values determined under each of the two appraisals are within five percent (5%) of one another, the land owner may be entitled to a refund in accordance with the applicable provisions of the statute. If the value determinations exceed that percentage, a third and final appraisal will be obtained within 60 days and in accordance with the applicable provisions of the statute to settle the matter.
The CBC authority is limited in certain respects. Some forms of development and redevelopment are "excluded" from the imposition of CBCs. These include buildings with fewer than five storeys and/or 10 residential units. Other prescribed types of development are excluded in accordance with O. Reg. 509/20. These include development or redevelopment for long-term care homes, retirement homes and hospice uses, specified uses by certain post-secondary institutions and otherwise.
O. Reg. 509/20 also includes provisions on the following prescribed matters: the information that must be included in the CBC strategy that a municipality is required to prepare before passing a CBC by-law; notice requirements for the passing of a CBC by-law; the minimum interest rate that would apply to a refund provided by a municipality in the event of a successful appeal of a CBC by-law to the Local Planning Appeal Tribunal (the "Tribunal"); and the reports that a municipality must provide annually to the public regarding the new "special account" for CBC revenue.
Transitional matters are set out in the new section 37.1 with respect to by-laws passed under section 34 of the Planning Act that include any requirement to provide facilities, services or matters under the now former section 37 (i.e. an existing zoning by-law or zoning by-law amendment that imposes section 37 benefits). The applicability of these provisions will depend on the particular aspects of a given case. We recommend having any specific section 37 agreement requirements reviewed by a member of our Group for an opinion on the applicability of these transitional provisions.
Two omnibus pieces of legislation and one global pandemic later, the parkland dedication requirements under section 42 of the Planning Act remain relatively unchanged. A municipality may still require that land be conveyed to it for park or other public recreational purposes as a condition of development. The amount of land to be conveyed will continue to be determined in accordance with the "standard rate" or an "alternative rate" provided by the applicable parkland dedication by-law. Although Bill 108 proposed to repeal the alternative rate option, it was saved by Bill 197.
New aspects of section 42 include the establishment of a right of appeal (and corresponding appeal process) from a municipality's decision to adopt a parkland dedication by-law or an amendment to same that provides for an alternative rate. O. Reg. 509/20 also includes: notice requirements for the passing of a parkland dedication by-law; the minimum interest rate that would apply to a refund provided by a municipality in the event of a successful appeal of an applicable by-law to the Tribunal; and requirements pertaining to the reports that a municipality must provide annually to the public regarding the "special account" for specified parkland revenues.
Section 42 contains no transitional provisions, but given that where the Province landed on this issue roughly approximates where they started, there is not really anything to transition from or to when it comes to parkland dedication.
Municipalities may now only impose DCs for those services specifically listed in subsection 2(4) of the Development Charges Act, 1997:
1. Water supply services, including distribution and treatment services.
2. Waste water services, including sewers and treatment services.
3. Storm water drainage and control services.
4. Services related to a highway as defined in subsection 1 (1) of the Municipal Act, 2001 or subsection 3 (1) of the City of Toronto Act, 2006, as the case may be.
5. Electrical power services.
6. Toronto-York subway extension, as defined in subsection 5.1 (1).
7. Transit services other than the Toronto-York subway extension.
8. Waste diversion services.
9. Policing services.
10. Fire protection services.
11. Ambulance services.
12. Services provided by a board within the meaning of the Public Libraries Act.
13. Services related to long-term care.
14. Parks and recreation services, but not the acquisition of land for parks.
15. Services related to public health.
16. Child care and early years programs and services within the meaning of Part VI of the Child Care and Early Years Act, 2014 and any related services.
17. Housing services.
18. Services related to proceedings under the Provincial Offences Act, including by-law enforcement services and municipally administered court services.
19. Services related to emergency preparedness.
20. Services related to airports, but only in the Regional Municipality of Waterloo.
21. Additional services as prescribed.
The above is a "closed list", meaning that only the services listed in subsection 2(4) of the statute may form part of a DC by-law. That being said, a municipality is not compelled to use DCs to charge for these services. A municipality may elect to impose CBCs instead. However, as noted above, the framework precludes a municipality from charging for the same service twice as both a DC and a CBC.
Certain development is excluded from the imposition of development charges, such as when the only effect of the development is to enlarge an existing dwelling unit (i.e. a low-scale renovation). An exemption also applies to the creation of a second dwelling unit in "prescribed classes of proposed new residential buildings" and subject to certain restrictions. Municipalities remain at liberty to prescribe additional exclusions through their individual DC by-laws.
Transitional matters are set out in new section 9.1 regarding the status of existing DC by-laws and other related matters. As with the CBC transitional provisions, the specific applicability of these provisions will depend on the DC by-law in question. We recommend referring any specific inquiries to a member of our Group for an opinion on the applicability of these transitional provisions.
The next step in the implementation of the new CBC regime will be for municipalities to undertake their CBC studies in accordance with the prescribed requirements under section 2 of O. Reg. 509/20. From there, municipal staff will need to bring forward a CBC by-law for public review and comment. Once a CBC by-law is passed by Council, it may be subject to appeal. "Any person or public body" may appeal a CBC by-law to the Tribunal. Any appeals from a newly-enacted CBC by-law will be the first of their kind, though some guidance will likely be available from prior Tribunal decisions on DC by-law appeals, given the similarities between the two.
Municipalities will also need to bring forward either new DC by-laws or amendments to their existing DC by-laws to ensure their by-laws comply with new subsection 2(4) of the Development Charges Act, 1997. "Any person or organization" may appeal a DC by-law or a DC by-law amendment to the Tribunal.
Finally, on parkland dedication, the new appeal right from the passage of parkland dedication by-laws will give affected stakeholders a direct route to the Tribunal. Those involved in the eight-year parkland saga in Richmond Hill can likely attest to how a more direct route to potential resolutions was needed. However, with an easier appeal route, more appeals are likely to come.
The more things change...the more they stay the same!
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.