Further Report on Proposed Use of Funds Generated from

Cash-in-lieu of Parkland Dedication

The Urban Environment and Development Committee recommends that the joint report (March 17, 1999) from the Commissioner of Economic Development, Culture and Tourism and the Commissioner of Urban Planning and Development Services be adopted as an interim policy pending the adoption of a further report from the Commissioners on an adjustment to the policy which would build in initiatives for acquiring parkland in park deficient areas of the City.

The Urban Environment and Development Committee submits the following joint report (March 17, 1999) from the Commissioner of Economic Development, Culture and Tourism and Commissioner of Urban Planning and Development Services:

Purpose:

The purpose of this report is to respond to City Council's November 12, 1998 request for a joint report from the Commissioners of Economic Development, Culture and Tourism and Urban Planning and Development Services respecting the use of funds received by the City from cash-in-lieu of parkland dedication requirements associated with development applications.

Funding Sources, Financial Implications, and Impact Statement:

Financial Implications relate to the use of funds received by the City from cash-in-lieu of parkland dedication in conjunction with development applications.

Recommendations:

It is recommended that:

(1)the Chief Financial Officer and Treasurer be authorized to establish a city-wide reserve fund for cash-in-lieu of parkland collected by the City;

(2)as of January 1, 1999, funds accruing from revenues for cash-in-lieu of parkland be allocated in the Capital Budget Program for the years 2000 and 2001, as follows:

(a)50 per cent for the purpose of acquisition of land for park purposes:

(i)of this amount, half of these funds (25 per cent of the total) to be retained to acquire land for park or open space purposes in the district where the funds are generated and deficiencies have been identified; and

(ii) the remaining half of this amount (25 per cent of the total) to be allocated on a city-wide basis to purchase land for park or open space purposes in other areas of the City where deficiencies have been identified; and

(b)50 per cent for the development and upgrading of parks and recreation facilities:

(i)of this amount, half of these funds (25 per cent of the total) to be retained for the development and upgrading of parks and recreational facilities in the district where the funds are generated and deficiencies have been identified; and

(ii) the remaining half of this amount (25 per cent of the total) to be allocated for the development and upgrading of parks and recreational facilities on a city-wide basis, in areas where deficiencies have been identified;

(3)the Budget Committee be advised with respect to Council's action resulting from this report;

(4)this report be forwarded to each Community Council as a communication item; and

(5)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference:

At its meeting of October 28, 29 and 30, 1998, City Council struck out Clause No. 4 in Report No. 3 of the Economic Development Committee and referred this Clause to the Commissioner of Economic Development, Culture and Tourism and the Commissioner of Urban Planning and Development Services, with a request that they submit a joint report thereon to Council, through the appropriate Committees.

Comments:

Both the September 8, 1998 report of the Commissioner of Economic Development, Culture and Tourism and an earlier report (March 30,1998), to the Budget Committee, entitled, "Parkland Dedication and Cash-in-lieu of Parkland Funds" recommended criteria for allocating revenues obtained from cash payments in-lieu of parkland conveyances for approval of development applications. These criteria were as follows:

(1)that any outstanding cash-in-lieu of parkland dedication payments relating to developments which had obtained planning approval but had not yet received building permits, be allocated for local expenditures, provided the payments were received by December 31, 1998; and

(2)as of January 1, 1999, funds accruing from revenues for cash-in-lieu of parkland dedication be allocated through the budget process and restricted as follows:

(i)50 per cent for the purpose of acquisition of lands for park purposes, on a city-wide basis, having regard to both local and city-wide priorities; and

(ii)50 per cent for the development and upgrading of parkland and parks and recreation facilities on a city-wide basis, having regard to both local and city-wide priorities.

At its November 12, 1998 meeting, Council did not adopt this recommendation, but referred this matter to both the Commissioners of Economic Development, Culture and Tourism and Urban Planning and Development Services for a joint report.

Difficulties with Current Allocation of Cash-in-lieu Funds:

The criteria for the use of cash-in-lieu revenues obtained in 1998 was largely based on the historic allocation of these funds by the six former municipalities that comprise the City of Toronto. Accordingly, the 1999 Capital Works Program included projects in the former municipalities that were offset by cash-in-lieu funds generated in those municipalities.

This system was manageable for the 1999 Capital Budget due to the availability of cash-in-lieu reserve monies in some of the former municipalities to fund earlier identified projects, as well as, fund new projects. However, this system is unworkable over the longer term, particularly for the implementation of large scale projects that have a city-wide draw, such as city -wide parks. It will also hamper our ability to achieve the goal of service harmonization in stable areas that are identified as being deficient in park and recreational infrastructure but which cannot generate sufficient revenues from development projects.

There are differing views on how these funds could be allocated. Some Councillors, who are experiencing growth in their Wards, would like to retain some or all of this money in their Wards to finance park land acquisition and/or recreational facility development to meet the needs of their existing and future residents. Others, particularly those in relatively stable areas that are deficient of park land or recreational facilities, would like to achieve service harmonization through some redistribution of these funds to areas that have historically been under serviced.

There are several inherent problems with allocating all of these revenues within the Wards in which they are generated. Some slower growing Wards may never be able to generate enough funds from development or redevelopment to buy parkland or provide recreational amenities to meet the needs of their communities. Any projects in these areas would have to compete for other Capital Budget funds. Others may be able to generate enough funds to provide small park and facility improvements, such as new playground equipment or water spray pads, but not enough to fund larger projects, such as district parks, community centres or indoor pools, which may be deemed as high priority needs for the area.

Additionally, many of these larger projects serve communities outside the Wards in which they are located, so more pooling of these resources is needed to ensure better access and use of these facilities, in order to achieve the City's goal of service harmonization for all of its residents. A primary goal of amalgamation is to share resources and avoid duplication of services. This goal can only be achieved through some pooling of these monies both at the local and city-wide level.

It is recognized that areas that are experiencing rapid growth through intensification or green field development will require retention of some of these cash-in-lieu funds in order to provide adequate services to meet the needs of existing and future populations. Rather than retaining a portion of these funds in the Ward in which they are generated, which in many instances, would restrict their use to smaller scale projects or create duplication, it would be much more cost effective and beneficial to retain a portion of these funds for pooling within the district ( East, West, North, and South ) in which they are generated, for either the acquisition of new parkland (if it is determined that there is insufficient parkland in that district) or the development of park and recreational facilities that have been identified as priority items in the Capital Budget.

The East District would include all of the Wards within the Scarborough and East York Community Council jurisdictions. The West District would include all of the Wards within the boundaries of the Etobicoke and York Community Councils, while the North District would include all of the Wards within the North York Community Council jurisdiction and the South District would encompass all of the Wards within the Toronto Community Council boundaries.

This money could be spent annually or left to accumulate for future land acquisition, park upgrading or recreational facility projects, as determined by the needs of the district - East, West, North and South - which would be identified by both staff and the local Community Councils. For example, in the East District, both staff and the Scarborough and East York Community Councils would determine the local priority projects in that district, based on needs assessment studies. These projects would be identified and prioritized in the Capital Budget process.

We are recommending that the remainder of these funds be allocated on a city-wide basis in order to facilitate larger scale projects, which may be of city-wide significance, such as a waterfront park system or which may serve several communities and possibly more than one district, e.g. a large community centre. The city-wide pool of funds could also be used to achieve service equalization opportunities, such as, the acquisition of new park land or the development of recreation facilities in relatively stable areas where the needs are greatest.

In some cases, projects could receive funding allocations both from district and city-wide sources, if they have city-wide significance, serve more than one district or provide services in a high priority area that has been identified as under serviced. (City-wide projects would be identified by studies and would be reviewed through the Capital Budget process).

Some pooling of funds would be beneficial to all as opportunities and efficiencies may be maximized both at the local (district-wide) level and at the city-wide level. Community Councils in each district would also have a greater role in determining how these monies are spent locally.

Policy Framework

A brief overview of the parkland dedication and cash-in-lieu mechanisms available to the City are presented below, along with an update on the development of a new city-wide Parkland Dedication By-law . The policy context upon which longer term criteria will be developed for determining how cash-in-lieu of parkland revenues will be allocated is also outlined.

Parkland Dedication By-law:

Section 42 of the "Planning Act" gives the City the authority to require either a parkland dedication or a cash-in-lieu payment for the subdivision, severance, development or redevelopment of land. Implementation of Council's policy regarding parkland dedication is accomplished through the enactment of a Parkland Dedication By-law and through policies and procedures related to the implementation of the By-law.

At present, the existing Parkland Dedication By-laws of the six former municipalities are still in effect. Staff are currently working towards the harmonization of these by-laws into one city-wide Parkland Dedication By-law. At its meeting of July 29, 30 and 31, 1998, City Council adopted the report of the Commissioner of Economic Development, Culture and Tourism (July 9, 1998) which recommended principles for inclusion in a Parkland Dedication By-law.

The City Solicitor, in consultation with staff in the Departments of Economic Development, Culture and Tourism and Urban Planning and Development Services, is currently preparing a draft city-wide Parkland Dedication By-law that will harmonize all of the provisions of the existing parkland dedication by-laws and will include exemptions that are currently permitted in these by-laws. This draft by-law will be submitted to the appropriate Standing Committees in April or May of this year.

New City-wide Official Plan:

Staff in Urban Planning and Development Services and Economic Development, Culture and Tourism are also working together to develop policies and criteria in the new Official Plan that will identify growth areas and any parkland deficiencies, based on current and future population projections. The Plan will include policies to protect and manage the City's green space system, including environmentally sensitive lands, ravines, valleys, waterfront corridors, utility and rail corridors, public rights-of-way, etc. and creating or restoring links between elements of the green space system, including other public and privately owned green spaces. Some of the studies that will be undertaken in the development of Official Plan policies pertaining to open space and recreation amenities include:

-development of new City of Toronto parkland objectives;

-review of Official Plan parkland standards (both quantitative and qualitative);

-identification of open space and parkland deficiencies:

-review of land use implementation tools and criteria for use;

-review of open space, parkland and recreational amenity policies.

Community Centre Needs Assessment Study:

Staff in the Economic Development, Culture and Tourism Department are also conducting a Needs Assessment / Feasibility Study of new community centres in five areas of the City that have been identified as deficient in recreational facilities. A report on the results of this study, which will include recommendations on the feasibility of these facility requirements, will be submitted to the the Economic Development Committee by late summer, 1999.

As a result of these assessments, more detailed funding allocations can be determined in the Capital Budget Program. Upon completion of this work, other areas of the City will be reviewed in terms of deficiencies in park and/or recreational facilities.

Land Acquisition Strategy:

In addition, staff in the Departments of Economic Development, Culture and Tourism and Urban Planning and Development Services are working towards the development of a city-wide land acquisition strategy, in conjunction with the Toronto Regional Conservation Authority and others, which will include criteria for the acquisition of land for park, conservation and natural heritage open space areas. This study will be completed in the last quarter of 1999.

All of these efforts will assist us in developing a five year Capital Works Program and refining our allocation of cash-in-lieu funds to maximize the provision of park and recreational services in priority areas where needs have been identified.

Next Steps

The process of developing the new Official Plan for the City will involve incorporating the results of the various needs assessment studies and the land acquisition strategy that will provide a clear policy framework for identifying servicing opportunities and priorities that could be included in the development of the five year Capital Budget. These Official Plan policies will be based on population growth projections, desired service levels and identification and prioritization of areas in need of parkland and/or recreation facilities. The Plan will include strategies for fulfilment of the goals of service harmonization and the expansion, protection and enhancement of the City's open space system.

Proposed Interim Criteria for Use of Cash-in-lieu Payments

Interim Solution:

As a guiding principle, all new funding either for parkland acquisition or for major park and recreational facility developments should require the approval of needs assessment studies, based on an inventory of existing parks and recreation facilities. This work will take some time to complete, so in the short term, it is recommended that interim criteria be established for how this money should be allocated in 1999 for the 2000 and 2001 Capital Budget Programs. These criteria would take into account the need to provide sufficient parkland and recreational facilities in areas where new growth is occurring, as well as, providing this infrastructure in areas of the City that have been identified as under serviced at the time of amalgamation. In this way, it is anticipated that over time, the goal of service equalization throughout the City can be achieved.

In order to provide a system that is fair and equitable to all areas of the City, including those areas where growth is occurring, as well as, stable areas which are identified as being under serviced in terms of parkland and recreational facilities, the following revised criteria are proposed for how cash-in-lieu funds should be allocated. These interim criteria will be embodied in the proposed Capital Budget program for the years 2000 and 2001, until all of the needs assessment studies are completed.

As of January 1, 1999, funds accruing from revenues for cash-in-lieu of parkland be allocated in the Capital Budget Program for the years 2000 and 2001, as follows:

(a) 50 per cent for the purpose of acquisition of land for park purposes:

(i) of this amount, half ( 25 per cent of the total) of these funds to be retained to acquire land for park or open space purposes in the district where the funds are generated and deficiencies have been identified; and

(ii)the remaining half of this amount (25 per cent of the total) to be allocated on a city-wide basis to purchase land for park or open space purposes in other areas of the City where deficiencies have been identified; and

(b)50 per cent for the development and upgrading of parks and recreation facilities:

(i)of this amount, half (50 per cent) of these funds to be retained for the development and upgrading of parks and recreational facilities in the district where the funds are generated and deficiencies have been identified; and

(ii)the remaining half of this amount (50 per cent) to be allocated for the development and upgrading of parks and recreational facilities on a city-wide basis, in areas where deficiencies have been identified.

The above noted interim criteria are intended to balance the need to provide parkland and recreational services in areas of the City where new growth is occurring and which are not adequately serviced, with the need to equalize the service provision in those areas that have been historically under serviced and have been identified as priority areas. In an effort to ensure fairness and equity across the City, these interim criteria would be reviewed on an annual basis by staff and any deviations would be reflected in the Capital Budget reports submitted for the years 2000 and 2001, in order to ensure that any high priority needs or unique opportunities are addressed appropriately.

More permanent criteria will be developed for the five year Capital Budget Program, once all of the aforenoted studies and plans are completed. At that time, a report on these criteria will be submitted for consideration by the appropriate Standing Committees.

Other Revenue Sources

Development Charges:

An additional source of revenue for the development of park and recreational facilities may become available if a Development Charge By-law is enacted by City Council. This by-law would be subject to the provisions of the "Development Charge Act", 1997, which stipulates that only charges for net capital costs due to increased service needs resulting from growth can be applied. Eligible charges include capital costs to: improve land; acquire, lease, construct or improve buildings or structures; acquire, lease or improve facilities; costs to conduct studies associated with capital projects eligible for development charges; and pay interest charges on money borrowed to pay for the aforementioned costs.

However, there are restrictions on how this money can be spent. While this money can be pooled city-wide, it must be spent on specific growth related projects and cannot be used for the acquisition of new parkland, except as part of a project development site, e.g. for a recreational complex or community centre. There are also restrictions on the calculation of need and the level of service that the City wants to provide. The service level for each service cannot exceed the average level that was provided by the municipality over the last ten years. This average service level may be lower than the desired service level that Council would like to achieve in the future.

Therefore, although a Development Charge By-law would provide an additional source of revenue to offset some of our park and recreational servicing costs related to growth, there are certain restrictions in the calculation of the charges and the use of these funds. Because the needs of existing populations cannot be included in the calculation of a development charge, the goal of service equalization in older, relatively stable areas cannot be fulfilled by this funding mechanism.

A joint study on development charges is currently being conducted by the Chief Financial Officer, in conjunction with the Commissioners of Urban Planning and Development Services, Works and Emergency Services, Economic Development, Culture and Tourism, Corporate Services and the City Solicitor. A report is expected to be submitted to the appropriate Committees later this spring.

Section 37 Agreements:

Section 37 agreements provide another source of revenue for certain types of development applications. Section 37 of the "Planning Act", RSO 1996, authorizes the City to include policies in the Official Plan that would enable it to pass by-laws to increase the height or density of development in return for certain facilities, services or benefits.

Section 37 agreements are only applied in securing parkland benefits that are in excess of what can be secured through the use of Section 42 provisions. Although these types of agreements have been very successful in obtaining benefits for the City, the number of these agreements may fluctuate from year to year, depending on market forces and are, therefore, quite variable as a revenue source.

Conclusions:

The proposed interim criteria for the allocation of cash-in-lieu payments for parkland are needed to determine the Capital Budget process for the year 2000 and 2001. This proposal is both fair and equitable and recognizes the need to provide parkland and recreational facilities in growth areas that require this infrastructure, along with the need to raise services levels in stable areas where deficiencies have been identified and prioritized.

The new Official Plan's reinvestment policies and priority goal setting will guide the five year Capital Budget process in sustaining, improving and enhancing the quality of life of the residents of the City, which will include a review of the interim funding criteria for land acquisition and facility development at both the district-wide and city-wide levels. Upon completion of the Official Plan process and the various needs assessment studies for parks and recreational facilities, these interim criteria will be reviewed and updated, as needed.

Contact Names:

Frank Kershaw Barbara Leonhardt

392-8199 392-8148

Diane Stevenson Ann-Marie Nasr

395-6065 392-0402