The City of…

The City of Mississaugastrongly supports provincial aims to create more housing, a greater mix of housing and efforts to make home ownership and renting more affordable. The City further supports the government’s commitment to reduce red tape and make it easier to live and do business in Ontario.

Mississauga has some concerns, however, that many of the implementation mechanisms proposed as part of the Plan and the Bill may not support these objectives. Rather, these changes could negatively impact residents, create additional red tape and inadvertently slow down housing coming to market. The City also questions how housing affordability is improved by assisting developers with commercial and industrial developments, as proposed through proposed changes to the development charges regime.

Staff have undertaken a review of the Plan and the Bill. Key areas of interest are set out below by major topic area.

1. Housing Supply Vs. Housing Affordability

Housing supply in general is not a major issue in Mississauga as the city has over 20,000 zoned residential units awaiting development. However, the City does have a significant affordable housing supply problem. Bill 108 aims to address housing affordability by reducing planning approvals timelines and various development-related fees imposed for new infrastructure. However, there is nothing in the legislation that requires developers pass along these savings to new homebuyers or tenants.

As noted in the recent report prepared by N. Barry Lyon Consultants and presented to General Council at its meeting of May 1, 2019 developers will price housing at the maximum level the market will support. Any increases/decreases in fees do not affect the sale price of units (the scope of the report was on owned homes and not rental units). Additionally, lost revenue from reduced charges could lead to higher property taxes or reduced services, which increases the cost of housing.

1.1 Impacts on Planned Housing Incentives

Staff are in the process of developing a Community Improvement Plan and financial incentive program for affordable forms of housing. Bill 108 has the potential to lower development-related charges across all land uses (residential, industrial, retail, institutional) and all housing affordability categories. This could leave less tax funding available for the City to offer incentives specifically targeted for affordable housing. Also, limiting inclusionary zoning to community permit and transit station areas will reduce opportunities to create affordable housing city-wide.

1.2 Mississauga’s Response:

a) The forthcoming regulations should require any reduction to charges be passed directly to future home owners and renters.

b) The province should consider expanded municipal revenue tools for incentives, simplified inclusionary zoning and tax reforms as outlined in the City’s Housing Strategy. The City would like to see the incentives specifically target affordable and missing middle housing.

2. Community Benefit Charge

Of all the proposed changes, the community benefit charge could be the most significant.

In the current Planning Act, “Community Benefits” are known as bonus zoning, applying to sites that see height and density increases, beyond planning permissions. The developer contributes a portion of the land value uplift to help off-set the impact of this unexpected and increased development. The Bill is proposing that the term “Community Benefit” include: Section 37 contributions, soft services development charges (e.g. library, recreation and parks, and other services traditionally subject to the statutory ten per cent deduction under the Development Charges Act, 1997); and parkland dedication requirements. The legislation indicates the amount of the charge will be capped as a prescribed percentage of the value of the lands, rather than a per-unit type of charge. If the cap reduces what the City is able to collect, there could be impacts on the tax base or service levels.
The financial impact of this community benefit charge is unknown, as the Province has not released its regulation that will set the cap and associated interest rates. Nor has it provided direction on how it would be administered – a set average across the city or though individual land appraisals with each development. Staff will monitor the regulations and determine the impact on DCs and parkland contributions.

2.1 Land Value Does Not Correlate With Soft Services Provision

The city has concerns that land value is the basis for calculating the community benefits charge, as land value is not correlated to the provision of soft services. Land values vary significantly across the city and have a limited link to people and jobs. For example, a formerly contaminated site next to a highway may have a lower land value than an ideal development site on the water. However, a development with 1,000 people in each scenario is likely to have similar servicing needs.

A land value based approach may be appropriate for the acquisition of land for parks, community centres and libraries. However, the construction costs of these facilities are static and would be more equitably collected on a per person/unit basis.

2.2 Conflict Around Land Appraisals Are Common

Delays, costs and conflicts could be incurred through an appraisal process Land valuations for high density development are often contentious and subject to frequent change as supply becomes constrained. If there are disputes on the value of lands, this could result in delays in calculations and add cost to the process.

The City also seeks clarity on who would absorb these costs i.e. would the City or the builder pay for and commission the appraisal?), and what the processes would be for managing disagreements. Disputes over land valuation as part of Section 37 agreements are already common, but will be intensified with an expanded scope of Section 37 and the amount of money under consideration.

2.3 Soft Services and Parks Support Complete Communities and Affordability

If the proposed changes result in a loss of revenue, the City would have to make difficult decisions on how to allocate funds between services. The community benefit charge also considers regional soft services such as EMS, social housing, long-term care and childcare. Currently the allocation between services is prescribed based on service levels, which is a better methodology. It is unclear how these funds would be allocated to the regional soft services. Caps for both lower- and upper-tier municipalities may need to be established.
Library collections will no longer be eligible for funding through the Community Benefit and this growth-related cost will become a burden on the tax base.

2.4 Mississauga’s Response:

a) Additional time to comment on Bill 108 once the regulations are completed would allow the City to understand and comprehensively analyze the full impact of the proposals, including the cumulative financial impacts.

b) Further consultation with the City (along with other municipalities) on any draft regulations associated with proposed Bill 108 would be recommended

c) Population, housing units, employment and gross floor area drive the need for municipal services. A charge based on these metrics is more equitable than land value for services unrelated to land.

d) This Province should consult further with municipalities before enacting a cap, and ensure this cap supports revenue neutrality from the existing legislative framework.

e) Further, clarification of the appraisal process is required.

3. Administration of Development Charges

Bill 108 proposes to change the administration of DCs. Currently, DCs are payable at the time of issuance of the first building permit, based on the DC rates in effect at that time.

Bill 108 proposes that DC rates be determined at an earlier stage in the development approval process either at site plan application date, or at the time an application for zoning by-law amendment is submitted for those buildings that are not subject to site plan approval. There will be a reduction in DCs collected for those sites, where an application is submitted and the applicant does not proceed with building in the short term. For example, in greenfield developments where communities take a number of years to build out.

3.1 More Effort and Complexity to Administer Development Charges

The proposed changes would substantially increase the amount of effort required to administer DCs. The City does not currently have the staff or technological resources in place to support the proposed changes. The Province should delay any proposed changes to allow for proper planning to make these major transitions and set up these new processes. Chart 1, below, compares the existing and proposed methods.

(see attachment for table)

Under the current administrative framework, there is frequently one point in the process where the City must engage the developer/applicant in relation to development-related costs. Under the proposed system the City will need to engage the developer/applicant up to 10 points in the process, as well as organize and potentially fund a land appraisal. The City requests that the current administrative framework be maintained.

City staff will need to transform current business processes if the proposed changes are implemented. It will be a major administrative burden to collect DCs in six installments and keep track of interest owed. This may require the use of additional agreements registered on title, which will incur additional costs and administration. The City will be challenged to track applicants/businesses over many years, particularly if a business goes bankrupt, is sold or moves. The proposed changes create an active administrative and enforcement role by municipalities that does not currently exist.

It is further noted, calculations of DCs at the site plan application stage is premature as generally the City is not yet sure of proposal details, as internal uses of the building are often not finalized. This is almost always the case for speculative employment buildings. A further administrative burden will be added if the use of a building changes over the period that DCs are being collected.

3.2 Support For Secondary Suites Exemption

Mississauga supports that DCs for new secondary suites be statutorily exempt, so long as the regulation is clear and prevents unintended units from qualifying (e.g. stacked townhouses).

3.3 Mississauga’s Response:

a) Maintain current calculation and payment dates for all uses except rental housing.

b) Ensure the Housing Supply Action Plan reduce the administrative burden on municipalities.

c) Any proposed changes should include a transition period to allow for operational changes and staff training.

4. Planning Act Appeals

The Bill will return to many of the practices of the former Ontario Municipal Board. These changes will lessen the strength of Council's planning decisions and the City’s planning framework. For example, parties can once again introduce fresh evidence and call and examine witnesses at hearings. Moreover, the consistency and conformity standard of review and 2-stage hearing process have been eliminated. This will allow LPAT to overturn Council’s decision for any planning reason. Community participation will continue to be limited to written submissions at LPAT hearings for participants.

4.1 Heritage Matters Appealable to LPAT

The proposed changes would also make Council's decision to designate and permit alterations to heritage properties appealable to LPAT instead of the Conservation Review Board. It is unclear whether the Conservation Review Board will continue to have any authority or jurisdiction going forward.

4.2 Shorter Timelines for Decision Making will Impact Quality Planning Outcomes and Community Participation

The Bill proposes to reduce decision making timelines for Official Plan Amendments, Zoning By-law Amendments and subdivision applications that are shorter than even pre-Bill 139 timelines. These reduced timelines are not sufficient to allow for staff and agency review, and public consultation. It will be difficult for the Province’s commenting agencies to meet the shortened deadlines. Often times, an applicant will refine the application once the agency comments have been received and a public meeting has been held. Sometimes the applicant will engage in a series of meetings with the community to resolve issues. It has also been our experience that applicants will take longer to resubmit a proposal than it takes for the City and agencies to comment. The reduced timelines have the potential to negatively impact applicants in their efforts to resolve issues, and together with the expanded powers of the LPAT on appeal, have the potential to undermine the municipal planning decision-making process.

It is noted that times for development approvals are only one factor in affordability. For example, the Zoning By-law was amended in the mid-1990s to allow unlimited height and density within the downtown core. Nothwithstanding that services were available and a large percentage of the land was vacant, two decades later the area is still not built out.

(see attachment for table)

4.3 Mississauga’s Response:

a) The significantly shorter timelines impact community participation, reduce the ability to refine development applications and have the potential in increase the LPAT caseload.

b) The proposed changes potentially give rise to three streams of LPAT appeals. Without the transition regulations, the impact on staff resources and potential outcomes will be uncertain. Municipalities should be consulted in the development of these regulations.

c)Currently, LPAT does not have expertise in matters relating to heritage. Adjudicators with expertise in heritage matters should be appointed

d) Mississauga has realized substantial efficiencies through its E-Plans system. The Province (through the Housing Supply Action Plan) could support the modernization of the approvals process with this type of technology.

5. Inclusionary Zoning and Major Transit Station Areas

It is proposed that inclusionary zoning be limited to areas where the minister requires a community planning permit and major transit station areas. The City supports bringing houses to market quicker, but is concerned that the proposals may inadvertently create new and additional barriers and delays. It may also undercut the City’s abilities to provide incentives for affordable housing.

The proposed changes enable the Minister to require the use of a community planning permit in specified areas, such as major transit station areas (Mississauga has 63) and provincially significant employment zones. Once a community planning permit by-law is in effect, planning approvals in these areas would be fast tracked to 45 days. It is not clear how proactively the province would use this power, however these requirements could increase pressure on planning staff. There is also limited expertise in Ontario to develop community planning permits for high density, mixed use developments and it can be time consuming to implement.

5.1 Mississauga’s Response:

a) The City’s Housing Strategy identified broad use of inclusionary zoning, and proposed restrictions on this tool undermine the City’s ability to offer related incentives and deliver affordable housing.

b) The municipality should decide which tools to use to accelerate growth in major transit station areas, based on local conditions.

c) A 45 day window is not a feasible window to assess development applications in a community planning permit area.

d) Due to almost all of Mississauga’s employment areas being identified as a provincially significant employment zone, the City will be unable to benefit from the opportunity to advance some employment area conversions in major transit station areas. This will limit the City’s ability to realize Council approved planning strategies to advance redevelopment in these areas. See Appendix 3.

e) To speed up development, the City would be highly supportive of the Province creating a regulation to enable conditional zoning to quickly pre-zone lands. The City also requests that the Province re-instate inclusionary zoning municipality-wide.

6. Environmental Protections

As part of the Plan, changes have been proposed to several pieces of environmental legislation, including modifications aimed to streamline the Municipal Class Environmental Assessment processes, promoting beneficial reuse of excess soil, streamlining and standardizing conservation authorities’ role in municipal planning to speed up approvals and creating more transparent rules on protecting species at risk and their habitat

6.1 Mississauga’s Response:

a) Changes to way that endangered species are classified could impact cities ability to protect natural heritage system, as the Act previously provided strong justification to protect key habitats in Mississauga.

b) The City is supportive of many of the proposed changes to the Conservation Authorities Act, but seeks greater clarity on how MOU's be reviewed. Appropriate transition should be provided. The City relies on our Conservation Authority partners for natural area conservation (tree canopy expansion, invasive species management, habitat restoration and stewardship programs). These are all considered "non-core" services in the Plan.

c) Changes to excess soil regulations could impact costs of delivering some municipal projects (e.g. new requirements around soil testing could increase costs, but could reduce costs around disposal). The City has requested additional clarification.

d) The City would support the Housing Supply Action Plan streamlining processes with commenting agencies in order to expedite approvals.

A detailed breakdown and assessment of the proposed changes are included in Appendix 1 - see attached file.

Financial Impact

The changes identified in the proposed Bill 108 may have significant financial impact for the City. The full cost and administrative burden cannot be determined without additional details that will be found in the regulations, when these are released. The following analysis is based on currently available detail.

The City currently collects funds through DCs and CIL-Parkland as well as Section 37, and allocates these funds to relevant projects during the annual budget process. Based on the 2019 approved budget and current revenue projects, the City is projecting $575M in revenues from DCs (excluding Stormwater) and CIL-Parkland for the 2019-2028 period.

These revenues flow through the City’s Reserve Funds to ensure the City can develop its various services, such as parks, recreation facilities, transit and roads. The 2019-2028 capital program planned to be funded from these revenue sources (including funding already in reserve funds) is shown below.

Section 37 funds are not projected as they are determined on a very individual basis, and spending is specifically based on what is collected. The City collected $2.7M in Section 37 funding in the past year.
The potential impact of Bill 108 differs for different streams of funding within DCs and CIL. The following provides a discussion of anticipated impacts, assuming implementation of the new model in 2020.

7.1 DC Hard Services Revenues Collected at Building Permit

The major change proposed for DC Hard Services Revenues for non-rental residential units is that the rates paid for these DCs will be determined at the time of site plan application rather than when the DCs are paid, at building permit approval. Site plan approval can occur notably earlier than building permit approval, and the DCs collected by the City will not benefit from indexing between these two points in time. Assuming an average one-year delay between these two points in time, and taking into consideration lost interest on collected revenues, the City would be impacted by $7M over 10 years.

7.2 DC Hard Services Revenues Collected in Installments

DCs payable for rental, industrial and commercial units will be now be payable over six installments, with prescribed interest. In addition to the increased administrative burden this will cause, the impact on cashflow will be significant. On average, about $10M annually is anticipated from this revenue source. Now, this payment will be spread out over 6 equal annual payments. There will be a cumulative loss of interest of approximately $5M over the 2019-2028 period. Furthermore, the delayed cashflow will result in either a delay in the implementation of capital projects, increased debt and associated cost to accommodate the loss of cashflow, or an increased pressure on the taxpayer.

7.3 Current DC Soft Services and CILs Collected Through Community Benefit Charge

As noted above, the City is anticipating $174M in DC soft services revenue and $116M in CIL-Parkland revenue, for a total of $290M. Details of how the Community Benefit Charge will impact the City’s projected revenues are unknown, but even a 10% reduction would result in a $39M loss of revenue over the 10-year period, after factoring in lost interest. This loss would result in either a delay in the implementation of capital projects, increased debt and associated cost, or an increased pressure on the taxpayer. Every 10% reduction the Community Benefit Charge might have on revenues equates to a 0.8% pressure on the taxpayer.

7.4 Operating Budget Pressures

There will be staffing and technological pressures arising from the increased administration around the proposed changes, but these cannot be determined in the absence of regulations. Library collections (currently budgeted at $90,000 annually) will no longer be eligible for DC funding, and would have to be funded through the tax base.

Conclusion

The Bill, as proposed, has limited alignment with the City’s housing Strategy, and could potentially undermine the City’s ability to advance some of the key initiatives to incentivize affordable housing. Further, the Bill may actually reduce the City’s ability to build complete communities.

Some of the key observations include:

a)There is no evidence that any of the savings to be achieved through the Bill will be passed on to the new home owner or renter.

b) The potential opportunity for the City to require affordable housing in new development through inclusionary zoning is significantly more restricted, as it will be limited to areas where the minister requires a community planning permit and major transit station areas.

c) The Bill does not address key issues of housing affordability which includes the supply of appropriate sized housing and affordability.

d) Based on initial evaluations, significant losses in DC revenues as well as increased administrative pressures are anticipated.

e) There is a level of uncertainty with the financial and service impacts that the revised community benefits charge will have.

f) With shortened timelines, there will be reduced opportunity to engage community and to resolve issues that arise through development application

g) With the removal of consistency and conformity test for development applications, there is the potential for more appeals to Council decisions

Overall, the Housing Supply Action Plan and the Bill seek to transform Ontario’s land use planning system. However, the Province has not yet released detailed regulations to clarify how these broad and sweeping changes would be implemented. The comments in this report have been made in absence of the proposed regulations or information regarding transition.

City staff are requesting that the Province provide greater clarification, consult further and extend time for municipalities to provide feedback on all aspects of Bill 108. City staff will continue to advise Council of how the changes proposed as part of Bill 108 will impact the Mississauga from a financial, environmental and community building perspective, as these details are available.