The City of Kitchener is…

The City of Kitchener is thankful for an opportunity to provide comments and questions related to the regulatory proposal with relation to the More Homes, More Choices Act (Bill 108). Kitchener generally sees the changes as positive and reasonable, but has significant concerns and questions about portions of the proposal. In an effort to provide input in an orderly manner, Kitchener’s input is organized by the seven regulatory matters raised in the proposal.

1.Required Content of a Community Benefit Charge Strategy

•Kitchener believes the stated requirements are reasonable as they seem consistent with information required for a DC Study.
•Do CBC strategies have a term limit, like the 5-year term for DC by-laws?
•Do upper-tier and lower-tier municipalities both have to complete a CBC Strategy? If an upper tier enacts a CBC and the lower tier does not, is the lower tier prohibited using the parkland land dedication tool in the Planning Act?
•What are the requirements of the required Park Plan? Kitchener’s 2010 Park Strategic Plan includes an assessment of the existing and targeted provision of parkland expressed in hectares per person. It is planned to be updated by the end of 2021. Could the 2010 Park Strategic Plan meet the requirement to enact a CBC?
•Will the regulations limit CBC funded services to existing service levels? If this is the, case then CBCs would not add significant municipal flexibility (a stated objective of the new framework) as they cannot be used to establish new or improved services. If an existing service level cap approach is applied, why is it necessary to cap CBC to a percentage of land value? The CBC should incorporate a cap based on existing service levels, or based on land values, not both.

2.Services Eligible to Be Funded Through Development Charges

•Kitchener is in favour of the proposed changes to reintroduce a number of “soft” services to DCs and making all DC services fully recoverable. These changes will help ensure growth does a better job of paying for growth.
•Will there be any transitional provisions regarding existing DC by-laws that do not reflect “soft” services being fully recoverable? (i.e. will a municipality need to complete a brand new DC study to get the benefit of this change?)
•Where do growth-related studies (e.g. City-wide growth plans prepared by Planning) and cemeteries belong in the DC/CBC regime? Kitchener recommends both of these services be added to DCs.
•Kitchener also recommends moving parking from CBC to DC.

3.Percentage of Land Value for Determining a Maximum Community Benefits Charge

•Staff understand that the Planning Act as amended by Bill 108 and Bill 138, provides for CBCs to be collected in some locations, for example through infill development, and for 5%/2% to be taken in accordance with section 51.1 (1) through plan of subdivision so long as CBCs are not applied where the section 51.1(1) power is used. It is further understood that if the section 51.1(1) power is used, either cash or land can be taken at the 5%/2% rate. The proposal appears to conflict with the legislation. Please confirm our interpretation.
•Kitchener is in favour of flexibility to remain with Parkland Dedication or move to CBC regime, or to use a blended approach
•If a blended approach is not possible, could a CBC by-law apply geographically only to the built up areas of the City, and allow the parkland dedication regime to continue in greenfield portions of the municipality?
•If the upper-tier municipality goes to CBC, is the lower-tier municipality required to go to CBC as well?
•It appears that moving to the CBC regime will significantly increase community benefit charges to commercial/industrial development, whose rate could increase from 2% to 15% (upper-tier and lower tier combined rate), when it could be argued that they don’t directly benefit from the services funded by the CBC.
•Requiring evaluation for every project is concerning. It would increase costs for municipalities to hire appraisers, and will add time to the development approvals process. Are there enough appraisers in Ontario to support the CBC regime? Permitting a set value by development typology and location would assist in this regard and save on appraisal costs that will ultimately be born by taxpayers and developers.
•When parkland is taken through plans of subdivision the 5% or 2% is calculated based on the gross area of the subdivision. Given the timing of appraisal, Kitchener understands that the CBC charge would be based on the appraised value of net developable lands. In this way the 5% and 2% are not directly comparable. Is this understanding correct?
•The proposal provides for parkland to be provided in lieu of a CBC if mutually agreeable to the developer and municipality. If CBC is determined and paid prior to building permit, how can this value be used to secure land through the draft plan of subdivision, a decision that typically precedes building permit issuance by 5-10 years?
•If the municipality and developer cannot agree, how will parks be established in new greenfield neighborhoods?
•Will existing draft approved plans that include park blocks be allowed to register after a CBC by-law is in place? If so, will developments on these lands be subject to CBCs?
•The four above noted concerns could be addressed by the blended approach described earlier.
•In order to assess the impact of the proposed regulations, staff conducted a retrospective analysis of the cash in lieu of parkland required for 167 site plan applications received by the City over the last three years. It compared the cash in lieu collected in the current regime against the maximum 10% that could be collected under a CBC regime Land taken through plans of subdivision were not included in this analysis (it is assumed the City will to use the blended approach discussed earlier). Over these 3 years, the City has required $8.6 million in lieu of parkland. If a 10% Community Benefit Charge were applied to these same applications, $4.8 million would have been required, a 44% reduction. Revenue neutrality for municipalities was a stated objective of the Province in designing the regulations. The CBC maximum land value percentage for lower tier municipalities would need to be at least 20% to approach revenue neutrality with cash in lieu of parkland. This approach would however more than double the impact on non-residential development that do not primarily benefit from parks. A higher maximum rate of 25% would allow the municipality to design a CBC with different rates for residential and non-residential development while maintaining revenue neutrality.
•This 25% does not account for forgone revenue and community benefits secured through section 37 bonusing. An additional 5% of land value may approach revenue neutrality with this tool. The City recommends a maximum CBC percentage of 30% for lower tier municipalities.

4.Timeline to Transition to the New Community Benefits Charge Regime

•Kitchener is in favour of the proposed change, which allows more time than originally contemplated when moving to the CBC (one year from regulation coming into effect versus January 1, 2021).
•Kitchener recommends extending the timeframe further to be at least two years from the regulation coming into effect. There are a small number of consultants that will be familiar with this kind of work, so their resources will be in high demand and a one-year window seems quite small for the number of CBC Strategies that will likely be undertaken. Further, some municipalities may want to align their DC by-law and CBC Strategy, which would put an additional limit on consultant availability.
•If a municipality does not transition to the CBC within the allotted timeframe, does that mean they can never move to the CBC?
•If a municipality transitions to the CBC, could they ever go back to parkland dedication instead?

5.Community Benefits Charge By-law Notice

•Kitchener believes the stated requirements are reasonable as they seem consistent with the requirements for a DC Study.

6.Minimum Interest Rate for Community Benefits Charge Refunds Where a By-law Has Been Successfully Appealed
•Kitchener believes the stated requirements are reasonable as they seem consistent with DCs.

7.Building Code Applicable Law

•Kitchener is in favour of the proposed change as it will require developers to pay CBCs before a building permit is issued.