Re: Proposed New Regulation…

Re: Proposed New Regulation Pertaining to the Community Benefits Authority Under the Planning Act (ERO #019-0183)

Thank you for the opportunity to review and comment on the above noted Environmental Registry of Ontario posting. The following comments are provided by Region of Peel staff as input into the proposed regulation under the Planning Act as a result of Bill 108 – the More Homes, More Choice Act, 2019. This letter provides staff level comments. If additional comments are provided through a Regional Council resolution, they will be forwarded to Ministry staff for further consideration.

The Region supports the goals of the Housing Supply Action Plan to make housing more affordable and to provide increased housing choice for Ontario residents. However, it is not clear how the changes proposed through Bill 108 and the above-noted regulation make progress towards this goal. Regional staff have assessed the proposed changes and are concerned that they may have the reverse effect and negatively impact housing supply.

The proposed changes could jeopardize the Region’s ability to maintain the “growth pays for growth” principle and ensure the burden of paying for growth does not fall on existing taxpayers. As outlined in previous correspondence to the Province on Bill 108 and reiterated in the comments being provided on the proposed changes to O. Reg. 82/98 under the Development Charges Act, the changes may result in reduced municipal credit scores, debt capacity and the possibility of stranded debt, leading to a combination of increased property taxes and utility rates, and in turn, potential reductions in the services and infrastructure required to support growth.

Should upper tier municipalities not receive the community benefits charge (CBC) for soft services, Regional staff project an exposure of $37 million (down from $48 million as a result of the inclusion of paramedics as a chargeable DC service), between 2020 and 2031, due to the migration of soft service DCs to the new CBC regime.

The details of these and other previously noted concerns are outlined in the letter from the Region of Peel dated June 1st, 2019 and attached as Appendix 1 for reference.

Community Benefits Charge Recommendations:

Regional staff have identified the following matters of concern or areas where clarification is requested on the proposed new regulation pertaining to the community benefits authority:

Community Benefits Formula

In the letter from Minister Clark to the Heads of Council dated June 7, 2019, the Minister advises that one of the goals of the community benefits approach is to maintain municipal revenues at the level collected through development charges for discounted soft services, density bonusing and parkland dedication.

As the formula for collecting the CBC is proposed to be based on a different methodology than was previously in place, it is not clear how the Province can state with certainty that implementing this new system will result in similar revenues for parkland, community facilities, and Regional soft services.

The Region is supportive of the Province’s further consultation with municipalities before finalizing the community benefits formula. It is critical that any formula and cap implemented for the CBC result in equivalent funds to those previously collected through development charges for soft services provided at the Regional and local level, as well as parkland funding.

To achieve this outcome, it is recommended that both upper and lower-tier municipalities be authorized to pass community benefits charge by-laws, or alternatively the Regional requirements must be included in local community benefits charge by-laws.

In establishing the formula and cap, the Province must sufficiently provide funds for soft services at both the Regional and local level, as well as parkland funding.

The cost of developing, monitoring and implementing the CBC program will be high, and will likely require additional internal capacity. It is recommended that municipalities be able to recover the additional costs associated with administration of the CBC regime.

Community Planning Permit System

As proposed, the CBC cannot be collected in an area subject to a Community Planning Permit System (CPPS), regardless of whether the CPPS includes conditions requiring community facilities or services.

It is recommended that the regulation provide flexibility by specifying that a community benefits charge by-law cannot be assessed for any in-kind value (facility or service) that is acquired through the implementation of a CPPS. This would eliminate the ability for the CBC to assess a charge of a facility or service already accounted for in a CPPS.

Further, it is recommended that the regulation not include any geographic limitations on where funds collected through the CBC can be used. Municipalities require the flexibility to direct funds as they see appropriate to support their programs and services and to benefit areas of greatest need. As currently proposed, a CBC can not be charged within areas subject to a CPPS. The regulation should not include any limitations on spending CBC funds within a CPPS area. From a Regional standpoint, CBC funds for soft services must extend across the Region to provide funding for Transhelp (the Region of Peel’s paratransit service), shelters, etc. In addition, funds collected for soft services within a CPPS should be permitted to be directed outside of the CPPS area for the same reasons identified above.

Inclusionary Zoning

ERO posting #019-0181 proposed to make housekeeping changes to amend O. Reg. 232/18: Inclusionary Zoning to remove the restrictions and prohibitions in respect of the municipal authority under section 37 (Increased Density) with inclusionary zoning.

It is recommended that the housekeeping changes not include limitations or restrictions on the use of inclusionary zoning by municipalities. Permissions should be included that allow for a more flexible approach to inclusionary zoning that enables municipalities to develop policies that reflect local needs. In addition, municipalities should continue to have the option to collect CBCs when inclusionary zoning units are being provided based on specific municipal circumstances.

Transition

It is recommended that the date for transition to the CBC be a minimum of two years from the filing of the regulations to allow municipalities to properly plan for an orderly change, obtain clarity regarding the potentially significant financial impacts of the removal of soft services from the Development Charges Act, implement land appraisal processes and prepare community benefits charge by-laws.

Regional staff support the recommendation of the local municipalities that the repeal of the alternative parkland rate in the Planning Act should not occur prior to the transition to a CBC approach.

Exemptions from Community Benefits

The proposed regulation lists several exemptions from the CBC, including the development of long-term care homes, retirement homes, and non-profit housing. It continues to be the position of the Region that the discretion to exempt developments from development charges should be with Municipal Councils and a similar approach is requested with the new CBC.

It is therefore recommended that exemptions from the CBC not be provided through the regulation and that Municipal Councils be given the authority to consider and provide exemptions.

Should the list of uses exempt from the CBC be maintained in the final regulation, then the following changes are requested:
• That the exemption be limited to non-profit developers of these facilities;
• That the list of exemptions only include non-profit purpose built rental housing.
If non-profit home ownership housing is to be included in the exemption, the municipalities could lose the ability to collect the CBC at the development stage with no guarantee that the housing will remain affordable over the long term.

Appraisals for Community Benefits

Staff has also identified concerns about the administrative burden created by the appraisals process. Given the number of appraisals that may be required under the proposed regulation, the payment of the CBC could be delayed until long after building permit issuance. Further, land values can vary considerably over short periods of time, which may create uncertainty and disputes regarding the calculation of the CBC.

In order to standardize appraisals, Regional staff recommend that the regulation include a requirement that all appraisals must be completed by appraisers holding the Accredited Appraiser Canadian Institute (AACI) designation from the Appraisal Institute of Canada (AIC), and all appraisals must conform to the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP).

The regulation should also clarify that in the event a landowner does not agree with the initial CBC, the cost of any appraisals required by the owner and/or the municipality shall be at the expense of the landowner.

As proposed, should the municipality not agree with the landowner’s appraisal, a 45-day window is provided for the municipality to provide an appraisal. It is anticipated that there will be a significant number of developments requiring appraisals and therefore it is recommended that this window be extended to 60 days.

The regulation should provide direction on coordination of appraisals between the upper and lower tier municipalities in two-tier environments (such as Peel) to ensure owners receive a single, consistent opinion of land value.

The regulation should provide a clear dispute resolution mechanism as to how the third appraisal will be used to resolve the differing opinions of land value, particularly if that third appraisal is intended to arbitrate a solution.

Excluded Services for Community Benefits

As proposed, the regulation excludes some services, such as cultural or entertainment facilities, hospitals, administration offices, landfill sites, etc. from the community benefits charge.

It is recommended that no limits be placed on the facilities, services or matters for which community benefits can be charged. This would provide municipalities with the flexibility to incorporate local needs into the CBC strategy.

It is recommended that municipalities be provided the flexibility to charge CBCs for cultural or entertainment facilities, tourism facilities, hospitals, and administration offices.

We look forward to continuing to work with the Province to increase housing supply and address the issue of housing affordability in Peel Region and across Ontario. Regional staff would be pleased to discuss any clarifications or provide additional comments as required.