What is Section 42?

Toronto’s planning tool for acquiring new parkland is through land dedications, or cash-in-lieu of parkland paid as a condition of development or redevelopment, as enabled by Section 42 of the Planning Act.  Section 42 sets out a standard rate for parkland dedication of a maximum of 2 percent of the land area for commercial or industrial development and a maximum of 5 percent of the land area for residential development.  Section 42 also permits municipalities to set their own Alternative Parkland Dedication Rates (within limits set by the Planning Act) to enable the City to require parkland as a condition of development and redevelopment.

 

The City’s current approach to Alternative Parkland Dedication Rate

In Toronto’s Parkland Acquisition Priority Areas the City requires land dedications or cash-in-lieu payments based on the Alternative Parkland Dedication Rate. The alternative rate applies only to the residential component of new developments.  The City’s current alternative rate is based on a “site size and cap” approach set out in the below table.

Parkland dedication rate (land)

0.4 hectares per 300 units

Cash-in-lieu of parkland dedication (cash)
  • Maximum dedication of 10% of site area for sites less than 1 hectare (2.47 acres)
  •  10% site value for sites less than 1 hectares (2.47 acres)
  •  Maximum dedication of 15% of site area for sites between 1-5 hectares (2.47-12.35 acres)
  •  15% site value for sites between 1-5 hectares (2.47-12.35 acres)
  • Maximum dedication of 20% of site area for sites over 5 hectares (12.53+ acres)
  •  20% site value for sites than 5 hectares (12.35+ acres)

 

How the City uses Section 42’s Alternative Rate

The City can require developments to pay cash-in-lieu (CIL) of parkland dedication if the site is not suitable for parkland on-site.  This is often the case with very small development sites where a land dedication would result in a small park of limited function, or if the provision of the park would inhibit development on the rest of the site.  Small sites less than one hectare (2.47 acres) make up approximately 90 per cent of development sites in the City’s Centres.

 

The amount of cash-in-lieu is determined based on overall development site value, and capped.  The majority of sites in the City’s growth areas hit the cap, which is at 10 per cent of development site value.

Once a project has hit the cap, the project does not pay more parkland contributions, regardless of the density or number of new residential units in the project.  The image, below shows how the current cap, based on land value, does not relate to the number of units (or parkland demand) generated by growth.

 

Sec42 factsheet pic

The first 5 per cent of cash-in-lieu payments (in the case of residential development) and 2 per cent (in the case of non-residential development) are allocated locally and city-wide according to the City’s Cash-in-Lieu Allocation Policy, as shown in the table below.  The CIL payments received in excess of 5 per cent are used to acquire or develop parkland or facilities in the vicinity of the development.

 

City’s Cash-in-Lieu Allocation Policy:

 

Cash-in-lieu Allocation

(5% or below)

Alternative Rate Cash-in-Lieu Allocation

(above 5%)

City-wide

District

Land acquisition

25%

acquire parkland throughout the City

25%

acquire parkland within the District

Acquire parkland accessible to the area in which the development is located

Improve parks within the vicinity of the development

Park development

25%

develop and upgrade parks and recreation facilities throughout the City

25%

develop and upgrade parks and recreation facilities within the District

 

The City is reviewing the Alternative Parkland Dedication Rate

The current rate is over 10 years old and has not kept pace with development intensity. Today, Toronto’s alternative rate is one of the lowest of the province’s larger municipalities.  The City has the ability within the current legislative framework to update the alternative parkland dedication cash-in-lieu rate to reflect Toronto’s parkland need.

Since the rate was approved in 2005, city-wide average residential densities have increased by 205 per cent by project and the average units per hectare by project have increased by 254 per cent.  This intensity generates increased parkland demand.  Growth is paying for a diminishing share of the cost to meet the need generated by higher density development.  This study identifies the need to update the alternative rate.

 

Outcomes of the review of Section 42

All areas of the city will benefit from a rate that is reflective of today’s development environment.  An increase in cash-in-lieu payments will enable the City to purchase more parkland and investment in more parks improvements local to the development site and across Toronto. The City has the option to set city-wide or local area rates, which would match the boundaries of local plans and be responsive to specific development contexts.

The report is recommending that city staff update the Alternative Parkland Dedication Rate for cash-in-lieu of parkland for Secondary Plan areas including the Downtown and Yonge-Eglinton; consider the options presented in the report to inform the upcoming Parkland Strategy; consult with the development industry and other relevant stakeholders; and consider the findings, in the review of the Official Plan’s Parks and Open Space Policies.

 

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Media contact: Bruce Hawkins, Strategic Communications, 416-392-3496, bruce.hawkins@toronto.ca