On February 27, 2014, the City of Toronto Planning and Growth Management Committee (the “Committee”) received a Report from the Chief Planner and Executive Director, City Planning recommending revisions to the City’s Section 37 Implementation Guidelines (the “Guidelines) and other changes in the City’s approach to Section 37 benefits.
Many of the recommendations were the result of a study conducted by Gladki Planning Associates for the City completed in January 2014 (the “Study”) that included consultations with City staff, councillors and the development community. The changes are intended to improve clarity, consistency and transparency in the process related to Section 37 benefits.
Under Policy 5.1.1 of the City’s Official Plan (“OP”), Section 37 benefits must bear a reasonable planning relationship to the increase in the height and density of the proposed development, including, at a minimum, having an appropriate geographic relationship to the development. There is currently no policy direction regarding what constitutes an “appropriate geographic relationship”.
The Committee made the following recommendations:
1. City Council amend the Implementation Guidelines for Section 37 of the Planning Act, attached as Attachment 2 to the report (February 10, 2014) from the Chief Planner and Executive Director, City Planning by adding:
“An appropriate geographic relationship exists if one or more of the following criteria are applicable:
a. The contributing development is located within the catchment area of the facilities being constructed or improved as a community benefit;
b. The contributing development is located within the community or neighbourhood that benefits from the provision of the community benefits;
c. The occupants of the contributing development will have the opportunity to use the facilities being constructed or improved;
d. The contributing development will benefit from the provision of the community benefits, possibly through increased value, or enhanced marketing or business opportunities."
2. City Council direct the Chief Planner and Executive Director, City planning to continue to consider the incorporation of base and maximum densities and a schedule of community benefits related to increasing density through a quantitative formula when updating Secondary Plan policies and/or site specific and area Official Plan policies for areas of the City as appropriate.
3. City Council request the Chief Planner and Executive Director, City Planning to prepare public education materials that explain the City’s process for securing Section 37 community benefits.
4. City Council request the Chief Planner and Executive Director, City Planning to prepare an annual report summarizing the previous year’s achievements regarding Section 37 community benefits.
5. City Council request the Chief Planner and Executive Director, City Planning to report to the Planning and Growth Management Committee on an Official Plan policy whereby when lands designated as Employment Area are proposed to be converted to residential uses as a result of future Municipal Comprehensive Reviews the value of the increase in residential density is captured as a Section 37 public benefit.
6. City Council reiterate its request to the Province to introduce new language under Section 37 of the Planning Act that enables municipalities to establish a value-based formula or quantum approach for the use of Section 37.
7. That the Chief Planner and Executive Director, City Planning report to the Planning and Growth Management Committee on a protocol for how the City will deal with funds, secured through Section 37 and/or Section 45 agreements, that are unspent or in respect to which the originally intended purpose is no longer appropriate; the report to include guidelines on how the agreements are drafted to avoid this problem in the future.
Appropriate Geographic Relationship
Currently, the Guidelines reflect the OP policy stating that there must be a “reasonable planning relationship” between the secured community benefits and the increase in height and/or density for the contributing development requiring at a minimum an “appropriate geographic relationship”.
Apart from expressing a preference for on-site or local area benefit, the Guidelines are silent as to what constitutes an “appropriate geographic relationship”. Recommendation 1 is intended to improve clarity and provide direction with the expectation that the added criteria will more closely tie benefits to the community that is impacted by the increased density.
Standardized Valuations and Base Densities
Recommendation 2 reflects the Study’s recommendation that the City explore alternative approaches to valuation of section 37 contributions including, adoption of a standardized valuation approach. This would replace the current case by case negotiation process that can lead to inconsistent outcomes. The consultation revealed that the current process often leaves parties to the negotiation unclear of what is expected from them.
One such approach would be a per square metre charge applied to the increase in buildable area, differentiated for different parts of the City, based on land appraisals updated annually. Both the Study and the Report noted that this approach requires further study.
Another approach is the incorporation in Secondary Plan and site/area specific OP policies of base and maximum densities and a specific schedule of community benefits related to increased density. Base densities are currently in effect for the North York Centre Secondary Plan area. Staff is directed to continue considering base densities and, in addition, begin considering maximum densities in appropriate cases when developing new Secondary Plan and site/area specific OP policies.
The Report did express concern that absent express statutory authority, standardized valuation approaches could be interpreted as constituting an illegal tax. Recommendation 6 seeks legislative changes to the Planning Act to ensure standardized approaches are not found to be an illegal tax in future litigation.
Such changes have already been suggested by the City as part of its response to the Provincial Review of Land Use and Appeal System consultation where it requested that the Province amend the Planning Act to allow municipalities to establish a value-based formula under Section 37.
Annual Reports, Public Education
Recommendations 3 and 4 seek to further improve transparency, predictability and accountability through an annual report summarizing the City’s Section 37 achievements for the previous year and preparation of public information explaining the City’s process. In the short term, additional resources will be dedicated to monitoring and reporting of Section 37 benefits to ensure timely implementation in the manner intended.
Employment Land Conversions
Recommendation 5 is an additional recommendation made by the Committee not identified in the Study or Report. Currently, there is no provision for capturing Section 37 benefits when lands are converted from employment to residential use through a Municipal Comprehensive Review despite the resulting increase in density and land value. Staff are asked to report back to the Committee regarding an Official Plan policy that would allow the City to capture public benefits at the time employment lands are converted.
Reallocation of Section 37 Funds
The study identified as a concern the time lag between securement and receipt of funds as a hindrance to the effectiveness of Section 37 benefits. Funds paid at the time a Building Permit is issued, sometimes many years after the funds are secured, may no longer be useful as originally intended. In such cases, a by-law amendment is normally required to reallocate the funds.
To avoid this problem, staff routinely include a standard clause in all Section 37 agreements that enables the City to reallocate funds that remain unspent three years after a development is approved, provided the funds are directed to a benefit that represents a reasonable planning relationship to the original application. Recommendation 7 is an effort to develop a protocol to ensure that funds requiring reallocation are spent appropriately.
Council will consider the recommendations on April 1, 2014.