Changes in Developing Our "New Normal"?

Written By Andrew Jeanrie, Robert Blunt and Giovanna Campagna

On July 8, 2020, the Ontario government gave first reading to Bill 197—COVID-19 Economic Recovery Act, which aims to create jobs and stimulate economic activity. Of particular interest to the development industry, three schedules to the Omnibus Bill tweak the land use planning regime from last year's Bill 108. Bill 197 received Royal Assent on July 21, 2020.

New Community Benefit Charges and s. 37 of the Planning Act

Schedule 17 of the Bill amends sections 37 and 37.1 of the Planning Act to further amend them as it relates to the community benefit charges against land to pay for the capital costs of facilities, services, and other development related costs by by-law after preparing a communities benefits charge strategy. Community benefit charges may include the costs of development charges on eligible services or parkland, but those costs are only recoverable once.

The community benefit charges will be the most flexible tool available to a municipality, one that can fund almost any municipal service—provided the costs are not being recovered elsewhere and provided the project is a higher density residential development.

Additional amendments to the Planning Act will result in the following:

• Community benefit charges may not include certain capital costs intended to be funded under a development charge by-law or the special account for parkland under s.42.
• The community benefits charge will not apply to:
  • Development of a proposed building or structure with fewer than five storeys at or above ground;
  • Development of a proposed building or structure with fewer than 10 residential units;
  • Redevelopment of an existing building or structure that will have fewer than five storeys at or above ground after the redevelopment;
  • Redevelopment that proposes to add fewer than 10 residential units to an existing building or structure; or
  • Such types of development or redevelopment as are prescribed in a future regulation.
• Owners of lands under development will also be able to provide “in kind” community benefit contributions where an agreement is made with a municipality.
• The community benefit charges by-law can be appealed to the LPAT, which would be a challenge of the by-law itself.
• In addition, the application of the by-law to a specific project where the landowner believes that the charge exceeds the maximum allowable charge can be appealed (essentially a dispute over the property valuation).
• The maximum allowable charge will be set by regulation at a future date.
• All by-laws with s.37 provisions will continue to be addressed under the current S.37 provisions, not a community benefit charge.

Revised Parkland Dedications

Parkland dedication is reverting back to something closely resembling the current system, not the complete replacement that was proposed under Bill 108.

The government notes that this policy change reflects the importance of having large public spaces, like parks, that have been a vital to the public throughout the duration of the COVID-19 outbreak and addresses concerns around the Bill 108 proposal which municipalities indicated would have led to less parkland. Bill 197 proposes the following. However, unlike the existing parkland regime, the Planning Act is being amended to clearly provide for checks on the alternative parkland standards that municipalities can enforce in response to judicial interpretations of the previous regime that appeared to prohibit parkland by-law appeals:

• A rate for parklands calculations will be imposed, and section 42 will once again allow alternative rates to be set out by by-law.
• Parkland rates set out by by-law can be challenged by appeal to the LPAT.
• Municipalities must update their parkland by-laws within two years.
• The Bill limits the LPAT's powers in section 42 challenges but it remains an improvement on the existing situation.
• Successful appeals will lead to a refund.
• As with the new community benefits charge, the new parkland policies will not apply to developments that are subject of a by-law under the existing s.37.

Impact on the Development Charges Act, 1997

The Planning Act and the Development Charges Act, 1997 are further blended by the Bill to provide for a more cohesive practice of funding development charges with community benefit charges.

Bill 197 expands the definition of recoverable development charges previously set out in Bill 108. Bill 108 limited the development charges that would be recoverable to "hard" services, like water and wastewater services, electricity, policing, and such other services. Previously considered "soft services", Bill 197 expands that definition to include social services like childcare, affordable housing, long-term care, and emergency preparedness. The stated reason for these changes is to allow municipalities to recover 100 percent against community services that require more attention and support in the COVID and post-COVID environment. With the expansion of these services comes the elimination of the 10-percent discounting. Clearly, the new changes will result in higher development charges than would have occurred under Bill 108.

One positive in the Bill is that it retains the potential exemption from DCs for a “second dwelling unit” in a “prescribed class” of residential dwelling. While the regulation prescribing the class of residential dwelling is still outstanding, this could allow for some interesting projects, particularly with “soft infill” or medium density greenfield.

Other Considerations

• Municipalities can continue under the current regime until two years after proclamation date and a new section 33.1 of the Planning Act provides transitional rules for reserve funds established by upper-tier municipalities for services for which a development charge can no longer be imposed.
• Minister's zoning orders are being expanded to allow for inclusionary zoning. Traditionally, the MZO was a tool very rarely used. The amendments reflect the desire to fast track development where there is complexity and provincial interests. The Bill will allow for a new power for ministerial approval of site plans.
• Encouraging business as usual, municipal councils, and local boards can meet electronically. Electronic participation and proxy voting facilitates elected officials to vote in matters in case they are ill or must self-isolate.
• The Bill also amends the provisions relating to a provincial facilitator, making the position permanent. The Provincial Facilitator is an advisory role related to growth, land use planning, and provincial interest that has been in place in various capacities for decades.
• Amendments to other statutes included the Building Code Act, Environmental Assessment Act, the Drainage Act and the Public Transportation and Highway Improvement Act.