Growth Funding Tools: Key Provisions That Toronto Developers, Stakeholders Need to Know

On August 15, 2022, Toronto City Council adopted a series of by-laws to bring into effect the following growth funding tools (“GFT”):

• By-law 1137-2022 (Development Charges By-law) (the “DC by-law”);
• By-law 1139-2022 (Community Benefits Charge By-law) (the “CBC by-law”); and
• By-law 1144-2022 (Parkland Dedication By-law).
  

This bulletin provides a high-level overview of the key provisions that developers and other stakeholders in the development industry should be aware of.

For additional background, the Municipal and Land Use Planning Law Group has written on this topic on previous occasions here (September 25, 2020), here (April 14, 2022), and here (April 25, 2022) leading up to the adoption of the GFT by-laws.

As of the date of this bulletin, the statutory appeal period has expired and the City Clerk’s office has advised that the CBC by-law, DC by-law, and Parkland Dedication By-law have been appealed to the Ontario Land Tribunal. We note, however, that an appeal does not stay the effect of the respective by-laws, meaning the by-laws, as adopted, are applicable until such time the Tribunal, on an appeal, directs that it be repealed or amended.

Community Benefits Charge By-Law

• The CBC by-law applies to the whole geographic area of the City of Toronto.
  
• The CBC by-law requires all development or redevelopment of a building or structure with five or more storeys and that adds 10 or more residential units to pay a community benefits charge (“CBC”).
  
• The following types of development or redevelopment are exempted from payment:

• a “Housing Now Development”;
• a project with less than 10,000 square metres of residential gross floor area for which a rezoning application or site plan application was filed and deemed complete by the City of Toronto prior to August 15, 2022; and
• as stipulated in Ontario Regulation 509/20, a long-term care home, a retirement home, a hospice, certain premises used by the Royal Canadian Legion, certain post-secondary institutions, and certain residential premises used by a not-for-profit corporation.
  

• The amount of the CBC payment is four per cent of the land value on the day before the day the first building permit is issued in respect of the development or redevelopment.
• For projects to be completed in phases, the amount of CBC payable for each phase will be four per cent of the value of the land attributable to each phase.  
• The value of certain gross floor area in a project is excluded from the calculation of land value. 
• CBC is payable prior to the issuance of the first building permit issued for the development or redevelopment.
• City Council may permit an owner of land to provide an in-kind contribution in lieu of a CBC payment, in whole or in part. Note that there is currently no guidance provided in the by-law on how the City will value these in-kind contributions. There is also no dispute mechanism in the by-law for the valuation of in-kind contribution.
• The City of Toronto staff report on the CBC by-law notes that further work on implementation of the CBC regime will be brought to City Council in 2023.
  

Development Charges By-Law

• The newly adopted development charges (“DC”) rates will be phased in over a two-year period. The next residential and non-residential rate hike will occur on May 1, 2023, and again on May 1, 2024, in accordance with Schedules A-2, A-3 and B-1 of the DC by-law. 
  
• There are two exceptions to the rate hikes:
  
  • For development containing inclusionary zoning units, the DC rates will remain at the current rate in accordance with Schedules A-1 and B-2 of the DC by-law and will not be subject to the rate hike. 
    
  • For purpose-built rental units, the DC rate will also remain at the current rate in accordance with Schedule A-1 of the DC by-law and will not be subject to the rate hike.

• The DC rates set out in the Schedules will be adjusted for indexing on May 1, 2023, and annually thereafter on May 1 of each subsequent year.
  

Parkland Dedication By-Law

• There is little change to parkland dedication rates in the new Parkland Dedication By-law from its predecessor. Although City staff released a draft by-law earlier this year that proposed a new model of calculating parkland based on density, the Council-adopted version of the by-law maintains the current model of land and cash calculations – i.e., taking a percentage of land (or cash-in-lieu) based on the size of the development site, net any conveyances for public road purposes.
• There are new provisions with respect to transit-oriented community (“TOC”) lands as required by Bill 109 (see here for a detailed article on Bill 109). These include the following rates:
  

• For TOC land that is five hectares or less, the dedication will be five to 10 per cent of the development site, or under 10 per cent of the value of the site for cash payments; and
  
• For TOC land that is greater than five hectares, the dedication will be five to 15 per cent of the development site, or under 15 per cent of the value of the site for cash payments.

• The staff report, endorsed by City Council, recommends a phased approach to the consideration and implementation of a new alternative parkland dedication framework, including continued engagement on the proposed density-based parkland dedication approach through early 2023 and in anticipation of a final report to City Council in the second quarter of 2023.
  

Should you have any questions respecting the GFT by-laws generally or the application of the GFT by-laws to a specific development site, please contact a member of our Municipal and Land Use Planning Group and we would be pleased to discuss with you.