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Recent Amendments to Ontario’s Development Charges Regime

Jan 12, 2016

The Bill 73 (Smart Growth for Our Communities Act, 2015) amendments to the Development Charges Act, 1997 (the “DCA”) came into force on January 1, 2016, together with O. Reg. 428/15.  O. Reg. 428/15 amends O. Reg. 82/98, the General Regulation made under the DCA.

According to a letter from the Ministry of Municipal Affairs and Housing (“MMAH”) to stakeholders, the legislation aims to “help municipalities recover more costs for growth-related infrastructure” and “enhance transparency and accountability”.[1]  Some of the main components of the Bill 73 amendments to the DCA are outlined below.

A table comparing the sections of the DCA before and after Bill 73 is available on our website.

RECOVERING MORE COSTS FOR GROWTH-RELATED INFRASTRUCTURE

The Bill 73 amendments to the DCA, together with the recent amendments to O. Reg. 82/98, have opened the door for municipalities to increase the amount of capital costs that can be recovered through development charges for municipal infrastructure relating to waste and transit services.

Waste Diversion

Prior to the Bill 73 amendments, subsection 2(4) of the DCA included a list of services for which a development charge by-law could not impose development charges.  The list of ineligible services included the “provision of waste management services”.

Bill 73 removes the list of ineligible services from subsection 2(4) of the DCA, and provides that the services that are ineligible are those that are prescribed as ineligible services for the purposes of subsection 2(4).[2]  Ineligible services for the purposes of subsection 2(4) of the DCA have been prescribed in new subsection 2.1(1) of O. Reg. 82/98.

Unlike subsection 2(4) of the DCA as it read prior to Bill 73, the list of ineligible services in subsection 2.1(1) of O. Reg. 82/98, as amended, refers to the “provision of landfill sites and services” and the “provision of facilities and services for the incineration of waste”[3], and not to the “provision of waste management services”.  The Government has indicated that this amendment allows municipalities to use development charges to help fund waste diversion.[4]

Transit Services

Bill 73 has added transit services to the list of services in subsection 5(5) of the DCA that are exempt from the 10 per cent capital cost reduction further to paragraph 8 of subsection 5(1).[5]

Bill 73 also introduces a new section 5.2 that provides that the historic 10-year average level of service set out in paragraph 4 of subsection 5(1) does not apply to a prescribed service for the purposes of section 5.2.[6]  Rather, the estimate for the increase in the need for a prescribed service is the planned level of service over the 10-year period immediately following the preparation of the background study.[7]

O. Reg. 82/98 has been amended to include a new section 6.1 that, among things, provides that “all transit services” are prescribed services for the purposes of section 5.2 of the DCA.[8]  Subsection 6.1(2) of O. Reg. 82/98, as amended, sets out the method and criteria to be used to estimate the planned level of service.[9]

The amendments to the DCA and O. Reg. 82/98 relating to transit services significantly increase the capital costs that could be recovered through development charges for new transit initiatives.

TRANSPARENCY AND ACCOUNTABILITY

According to the Government, a number of the Bill 73 amendments to the DCA were introduced to make the development charges system more predictable, transparent, and accountable.[10]  The potential implications of the amendments and new requirements will need to be assessed once they begin to be applied together with amended O. Reg. 82/98.

Development Charge Background Study

Section 10 of the DCA includes a new requirement that a development charge background study be made available to the public at least 60 days prior to the passing of the development charge by-law.[11]  The development charge background study is required to include an asset management plan prepared in accordance with subsection 10(3) of the DCA.[12]

Subsection 8(2) of O. Reg. 82/98, as amended, identifies what has to be included in any background study that incorporates the cost of transit services.  Subsection 8(3) of O. Reg. 82/94, as amended, identifies what has to be included in the asset management plan if a municipality proposes to impose a development charge in respect of transit services.

Reporting Requirements

Prior to the Bill 73 amendments, subsections 43(1) and (2) of the DCA only required the treasurer of a municipality to give the council a financial statement relating to development charge by-laws and reserve funds, including, for the preceding year, the opening and closing balances and transactions relating to the reserve funds.  Bill 73 also requires that the statements identify all assets whose capital costs were funded under a development charge by-law during the year and the manner in which any portion of the capital cost not funded under the by-law was or will be funded.[13]  The statements should also be made available to the public.[14]

Multiple Building Permits

New subsection 26(1.1) of the DCA provides that if a development consists of one building that requires more than one building permit, the development charge is payable upon the first building permit being issued.

Bill 73 also introduces subsection 26(1.2) in response to comments raised during the consultation process regarding the interpretation of the words “one building”.  New subsection 26(1.2) provides that if a development consists of two or more phases that will not be constructed concurrently and are anticipated to be completed in different years, each phase of the development is deemed to be a separate development for the purposes of section 26.[15]

These provisions may have implications for some municipalities which have development charge by-laws with different payment provisions.

No Additional Levies

The Bill 73 amendments to the DCA include a provision that specifically provides that a municipality shall not impose a charge, directly or indirectly, related to a development or a requirement to construct a service related to development except as permitted by the DCA or another Act.[16]  This provision is intended to close the door on “voluntary” payments that may be sought by municipalities outside the legislative framework.



References:

[1] MMAH letter to Stakeholders, December 18, 2015.

[2] Subsection 2(4), Development Charges Act, 1997, as amended by Bill 73.

[3] Subsection 2.1(1), O. Reg. 82/98, as amended by O Reg. 428/15.

[4] MMAH News Release, Ontario Passes Legislation to Promote Smart Community Growth, December 3, 2015; MMAH Backgrounder, Changes to the Development Charges Act and Planning Act, December 3, 2015; MMAH letter to Stakeholders, December 18, 2015.

[5] Subsection 5(5), Development Charges Act, 1997, as amended by Bill 73.  Prior to Bill 73, subsection 5(5) only included the Toronto-York subway extension.

[6] Subsections 5.2(1) and (2), Development Charges Act, 1997, as amended by Bill 73.

[7] Subsection 5.2(3), Development Charges Act, 1997, as amended by Bill 73.

[8] Subsection 6.1(1), O. Reg. 82/98, as amended by O. Reg. 428/15.

[9] Subsection 6.1(2), O. Reg. 82/98, as amended by O. Reg. 428/15.

[10] See the documents referred to in note 4 above.

[11] Subsection 10(4), Development Charges Act, 1997, as amended by Bill 73.

[12] Subsections 10(2)(c.2) and (3), Development Charges Act, 1997, as amended by Bill 73.

[13] Subsection 43(2)(b), Development Charges Act, 1997, as amended by Bill 73.

[14] Subsection 43(2.1), Development Charges Act, 1997, as amended by Bill 73.

[15] Subsection 26(1.2), Development Charges Act, 1997, as amended by Bill 73.

[16] Subsection 59.1(1) of the Development Charges Act, 1997, as amended by Bill 73.

Author(s): Sharmini Mahadevan

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