July 12, 1999
To:Policy and Finance Committee
From:Commissioner of Urban Planning and Development Services
Subject:Further Report on Section 37 of the Planning Act in the Context of Development Charges
Purpose:
To respond to your Committee's request for a further report respecting Section 37 of the Planning Act in the context of
development charges.
Source of Funds:
Not applicable.
Recommendation:
That this report be received for information.
Executive Summary:
Council has a broad responsibility to provide social stability, a high quality of life and a good environment in order to
sustain economic growth. This is not a simple goal which can be achieved over night with simple solutions. A community
as diverse as the new City of Toronto must equip itself with as many tools as possible to address the complicated issues
confronting the City as it strives for economic growth, but the list of available planning tools is short.
Council is considering the implementation of development charges as a city-wide, highly structured tool to address
growth-related demands placed on it by new development. As Development Charges have a targeted purpose, Council
must find other means, short of raising taxes, to address and finance existing service deficiencies and other municipal
objectives. The only significant planning tool available to the City is the ability to secure facilities and financial
contributions pursuant to Section 37 of the Planning Act.
Section 37 is a separate tool, distinct from development charges in that it relates only to securing public benefits in
exchange for increases in height and/or density negotiated with developers as part of the planning approval process.
Section 37 is a tool with few legislated requirements and which can be targeted by Council to address local and city wide
planning objectives. Development charges are regulated by the Province to only be used in relation to new demands for
services arising from new growth. It is important to keep in mind some key facts about Section 37:
-has been available since 1983 to secure public benefits in exchange for increases in height and/or density.
-has been used in former Metro municipalities in limited manner e.g. only 2.5% of 1997/98 development applications in
former City of Toronto and North York involved Section 37.
-is the only instrument available to secure affordable housing ($19 million and land for an estimated 6000 social housing
units secured in former City of Toronto).
-is a key planning tool which helps to achieve a wide range of other community benefits e.g. daycare facilities, Hockey
Hall of Fame, Design Exchange, heritage preservation, parks.
There are common interests and areas of agreement between the City and the development industry about the use of
Section 37 and development charges. These include: the prevention of duplication of charges for the same specific services
and the simplification and clarification of policy to increase certainty by clearly setting out when the tool is to be used,
what public benefits it can be used for, the financial impact attached to the provision of the public benefits, and how
accountability will be assured. Staff is committed to working with the development industry and other stakeholders in
formulating the new Section 37 policies quickly.
This report presents a series of general principles which will form the basis of future discussion around Official Plan
policies and implementation guidelines. These principles respond to the concerns with Section 37 which have been raised
during the consideration of the development charges matter.
Background:
In a report dated June 11, 1999 to the Policy and Finance Committee meeting of June 24, 1999, the Commissioner of
Urban Planning and Development Services reported on a number of matters including:
(a)the differences between Development Charges and Section 37 of the Planning Act;
(b)the past implementation of Section 37;
(c)the future proposed relationship of Section 37 to Development Charges;
(d)preliminary principles of Official Plan policies regarding Section 37 agreements; and
(e)the use of Section 37 prior to the new Official Plan provisions coming into effect.
At its meeting of June 24, 1999, your Committee requested that the Commissioner of Urban Planning and Development
Services report on the following:
(a)in consultation with other City officials, on ways of simplifying and clarifying the application of Section 37
Agreements;
(b)as to whether there are any specific agreements related to Development Charges within the former Municipalities, i.e.,
Port Union Agreement Village Area (Port Union Road and Lawrence Avenue);
(c)on the programs and facilities that can be funded through the new Development Charges Act as well as what may be
funded by Section 37 and restrictions to each; and
(d)on the regime to be put in place so that the development industry would have certitude in being able to measure the
City's expectations.
The purpose of this report is to respond to these specific requests in the context of the information provided in the June 11,
1999 report referenced above.
Comments:
1.INTRODUCTION
From the June 24th requests of the Policy and Finance Committee noted above and subsequent discussions held with
representatives of the development community, the concerns which are most apparent are: that Section 37 contributions
would provide or pay for services specifically funded through development charges (i.e. duplication of charges); that the
process requires simplification and clarification; and that the development industry requires more certainty about the City's
expectations.
This report presents general principles which will form the basis of future discussion with the development industry and
other stakeholders around Official Plan policies and implementation guidelines, including interim guidelines which can be
employed during the transition period between the existing regulatory environment and the new Official Plan. These
principles respond to the concerns with Section 37 which have been raised during the consideration of the development
charges matter.
2.FUNDING SERVICES AND FACILITIES THROUGH DEVELOPMENT CHARGES AND SECTION 37
2.1Development Charges
Development charges must be determined in a very structured manner in accordance with a formula set out in the
Development Charges Act and the accompanying Regulations. The general intent of development charges is to ensure that
new growth largely pays for itself and that the capital costs of services attributable to new development are not borne by
the existing community. The types of services for which a development charge may be imposed or not imposed are also set
out in the legislation. The services which are proposed to be funded through the draft Development Charge By-law are
listed in Table 1 attached to this report.
Examples of services not eligible to be included in the calculation of, or to receive funding from, development charges, are:
heritage preservation, cultural or entertainment facilities (except libraries), park land acquisition, public hospitals, waste
management, municipal administration headquarters, and tourism facilities.
Examples of services which could be funded through development charges, but which for various reasons are not proposed
to be funded through the proposed Development Charge By-law are:
GO Transit facilities, daycare, electrical power service facilities, and social housing.
The development charge calculation cannot include, and development charge funds cannot be directed to, the capital costs
of any new or upgraded services provided to the existing community or the capital costs of any services provided for new
growth at a level of service above the average level across the municipality for the 10 years preceding the background
study.
2.2Section 37
Unlike development charges, Section 37 is a planning tool with few legislated requirements for its use. It enables a
municipality to secure the provision of city-wide, community-wide and/or local public benefits. Such public benefits are
not restricted to new development only, nor to specified types of services. Appendix A contains some examples of the
previous implementation of Section 37 in the City. The range of possible public benefits allows the furtherance of key
municipal planning objectives, including a very significant one in today's context: the City's affordable housing strategy.
Without Section 37, the City's affordable housing strategy would be severely hindered.
An important distinction between development charges and Section 37 is that Section 37 can be used to meet existing
needs or deficiencies in a community, because its use is not restricted in legislation to facilities or services for new
development. It is emphasized that City Council has few alternate means of funding services to satisfy an existing
community need or deficiency other than through the use of Section 37, with the capital budget being the main alternative.
The June 11th report outlined the key aspects of the use of Section 37 including the legislative authority, the use of
agreements to secure benefits and the principles embodied in the various planning instruments of the new City.
In summary, a fundamental principle in operationalizing the use of Section 37 in the context of development charges is that
no duplication of charges should occur, meaning that the same specific service should not be paid for more than once by
the development industry. Following this principle and based on the above discussion, it can thus be seen that Section 37
may be used to secure public benefits which:
-address service needs or deficiencies in the existing community;
-are facilities, services or matters which cannot be, or have not been, funded by development charges; or
-represent the municipal share of funding for facilities or services which are only partially funded through development
charges.
2.3Comparison of Limitations of Development Charges and Section 37
Table 1, attached to this report, illustrates the facilities, services and matters which are proposed to be funded by
development charges, and those which cannot be, or are not being, funded through the Development Charge By-law and
for which it is proposed that Section 37 be used to secure them. If City Council should decide not to use Section 37, then a
number of public benefits could not be secured, and the City's ability to achieve certain important objectives such as the
affordable housing strategy would be seriously hindered.
3.GENERAL PRINCIPLES GOVERNING FUTURE USE OF SECTION 37
The use of Section 37 is a valuable planning tool, but its credibility rests on a rigorous and disciplined approach. Rules
governing its use are required to be included within the Official Plan and in implementation guidelines adopted by Council.
Without such rules, the tool will fall into disrepute and its effectiveness would spiral downward. The general Section 37
policies currently contained in the former City of Toronto Official Plan were developed in a different economic
environment, and in an era of no development charges, for what is now the central core of the new City of Toronto. There
is now a need to revisit the quantum in light of the new economic environment, in the context of city-wide development
charges, and in light of the variations in the characteristics of development activity across the entire City. Clear, concise
and simple rules would provide:
-Clarity and certainty for the development industry and the public;
-Equity and fairness as between developers;
-Simplicity and ease of implementation; and
-Transparency and thus credibility.
Staff will fast-track the formulation of the guidelines for the city-wide use of Section 37 in consultation with the
development industry and other stakeholders. Building on our experience to date, the following are the general principles
which will form the basis of such discussions.
3.1When Section 37 is to be used
-Project must meet test of good planning, and in the context of a significant density increase, good planning includes a
net community benefit.
-Establish reasonable, fair minimum thresholds for development size and density increase for the use of Section 37 that
make sense City-wide.
-Density increase to be generally approved by way of an Official Plan Amendment and rezoning (i.e. Section 37 not
generally used for rezoning only).
3.2What public benefits are to be secured
-Clearly defined list of potential public benefits which does not overlap with specific services funded through
development charges.
-Clear rules regarding priorities and apportioning among City-wide, local off-site, and on-site public benefits.
-Public benefits generally consist of capital facilities and funding for capital facilities.
3.3Value of public benefits
-Cost of public benefits should generally be a consistent percentage of the value of the increase in density; the percentage
attributed to off-site benefits would be lower than the percentage attributed to on-site benefits.
-Clearly defined, fair and expedient procedures for determining value of density increases.
3.4Accountability for public benefits secured
-Regular (e.g. annual) reporting on status and disposition of public benefits secured.
-Reserve accounts will be created for cash contributions.
4.RESPONSE TO OTHER ISSUES
4.1Area-specific agreements respecting development charges
The Commissioner of Urban Planning and Development Services was also requested to report on whether there are any
specific agreements related to development charges within the former municipalities, i.e., Port Union Agreement Village
Area (Port Union Road and Lawrence Avenue). There are numerous agreements in the former municipalities which include
provisions for development charges and staff resources are not available to review all agreements entered into by the
former municipalities.
With respect to the Port Union Village Area, Carma Developers Limited entered into a Subdivision Agreement with the
former City of Scarborough dated June 22, 1995 which provided for certain matters including park development to be
undertaken by the developer. The agreement provides a credit for the cost of the improvements undertaken by the
developer against development charges to be paid, and in accordance with the requirements of the Act, the credit will
continue to be honoured. The agreement does not, however, provide that the development charges collected must be
expended in the Port Union Village Area. Council will determine the expenditure of development charge monies by
determining the priority of the capital projects described in the background study based on its approval of the capital
budget.
4.2Public art program
The City's public art requirements have also been cited by the development industry as being another charge or levy on
development. A public art program is currently operational in the former City of Toronto, and is implemented
independently of development charges, parks contributions, and Section 37 public benefits. It is only related to Section 37
insofar as Section 37 agreements are sometimes used as the instrument to secure the public art obligation. The public art
program is not implemented only in an official plan amendment or rezoning situation, but also in site plan applications
where the minimum project size threshold (20,000 m2) is exceeded. Public art is not a charge or levy but a commitment
from the developer to enhance the development by integrating public art.
Conclusions:
Section 37 is a key planning tool which helps to achieve a wide range of community benefits. The tool can be targeted by
City Council to address local and city-wide planning objectives. In future, it will be implemented in conjunction with
development charges in a coordinated manner. A rigorous and disciplined approach to the use of Section 37 will provide
greater clarity and certainty, be fair to all parties, be simple to implement, and be transparent. Clear, concise and simple
rules governing its use will provide credibility and accountability. There will be no duplication of charges through the
coordinated implementation of development charges and Section 37. Whereas general principles governing the future
implementation have been set out, more detailed Official Plan policies and implementation guidelines will be established
in consultation with the development industry and other stakeholders.
Contact Name:
Peter Langdon - Metro Hall
Telephone:(416) 392-7617
Fax:(416) 397-4080
E-mail:plangdon@toronto.ca
Reviewed by:
Paul J. BedfordJames Ridge
Executive Director and Chief PlannerActing Commissioner of
City Planning DivisionUrban Planning and Development Services
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APPENDIX A
Examples and Discussion of Section 37 Public Benefits
(a)Affordable housing
Provision of affordable housing is an important City objective. City Council has already approved the use of Section 37 to
secure contributions to the Capital Revolving Fund for Affordable Housing. Section 37 is also used to secure replacement
rental housing in situations where demolition of existing rental housing is proposed under the new Official Plan provisions.
A distinction will be made with respect to the "value" of the benefit that the City secures in the context of the replacement
of rental housing. In securing such replacement housing, Council is simply maintaining an existing resource and meeting
the Council objective of "no net loss" of the affordable stock. In the former City of Toronto, Section 37 has been used to
secure land for an estimated 6000 social housing units and approximately $19 million in contributions for social housing.
Council has recently approved the use of the remainder of this fund (approximately $10 million) to seed the Capital
Revolving Fund for Affordable Housing.
(b)Heritage preservation
Heritage preservation and restoration is another important City objective which can be furthered through use of Section 37.
The Ontario Heritage Act is not as strong as many would like in its ability to preserve designated historical buildings, and
can only deal with preservation as opposed to restoration. Section 37 can be used to secure both preservation and
restoration, and can also deal with buildings of historical significance which are not designated under the Ontario Heritage
Act. This public benefit is usually, but not always, an on-site benefit. Previous examples of developments where Section 37
has been used to secure heritage preservation and restoration include BCE Place (Hockey Hall of Fame) and the
Gooderham and Worts mixed use development among many examples in the former City of Toronto, and the Lambton
Tavern site in former York.
(c)Daycare facilities
Daycare facilities have been secured in the former City of Toronto through Section 37 to the extent of 537 spaces, 329 of
which have been constructed to date. The former Scarborough and North York have also used Section 36/37 to fund
daycare facilities. Such facilities can be located either on-site or off-site. Previous examples of developments where
Section 37 has been used to secure daycare facilities include: Canada Life, BCE Place, Eaton Centre, Waterpark Place, and
Scotia Plaza.
(d)Parks and open space and related improvements
Acquisition of land for parks and open spaces, and funding for improvements to parks and open spaces, have also been
secured through the use of Section 37. Park land acquisition cannot be funded through development charges, so there is no
conflict there. Acquisition of park or open space lands, or securing of funding for improvements thereto, through Section
37 is not a substitute for parks contributions under Section 42 (Parks Levy By-laws). Rather, it is a supplement to the use of
Section 42 for those communities which have been recognized by City Council as being parks deficient or where a special
capital project not listed in the development charge Background Study has been approved by City Council.
(e)Other cultural or institutional facilities or local improvements
Section 37 may also be used to secure rare, unique opportunities for special cultural or institutional facilities which arise
due to the peculiar characteristics and objectives of a development proposal. Examples are the Hockey Hall of Fame in
BCE Place, and the Design Exchange. In addition, where City Council has recognized an existing community deficiency,
or approved a special community project which is not on the list of capital projects in the development charge Background
Study, directly related local improvements or funding therefor can be secured through Section 37.
TABLE 1
Facilities, Services and Matters to be Funded Through Proposed Development Charge By-law and Provided or Funded
Under Proposed Use of Section 37 of Planning Act
| Development Charge By-law
(related to new growth only)
FOR ALL DEVELOPMENT
APPLICATIONS AS PER PROPOSED
DEVELOPMENT CHARGE BY-LAW |
Use of Section 37 of the Planning Act
(related to new growth and/or existing
community deficiencies)
ONLY FOR DEVELOPMENT
APPLICATIONS IN EXCHANGE FOR
INCREASES IN HEIGHT AND/OR
DENSITY |
|
|
| Fire facilities
Roads and related costs
Sanitary sewers
Storm water management
Water supply and water mains
Library facilities and materials
Parks improvements
Community centres and arenas
Transit
Development related studies |
Affordable housing
- Capital Revolving Fund contributions
- Replacement rental housing as a result of
demolitions
Heritage preservation and restoration
Child care facilities
Park land acquisition over and above Section
42 contributions
Park/open space improvements for the
existing community and over and above
Section 42 contributions, where existing local
deficiencies have been recognized by City
Council
Other cultural or institutional facilities or
local improvements e.g. Hockey Hall of
Fame, Design Exchange |
