The following is a written…

The following is a written submission filed on behalf of Argo Development Corporation (“Argo”) concerning the proposed regulatory matters pertaining to the community benefits charge (“CBC”) authority under the Planning Act, the Development Charges Act and the Building Code Act, 1992. The relevant ERO number is 019-1406.

Argo is a leading land development company with more than 25 years of experience in the Greater Toronto Area. Argo has worked extensively with upper and lower tier municipal authorities, primarily in Halton and Peel on numerous greenfield development and intensification projects yielding a variety of densities. Argo has also often partnered with other major development companies to deliver award-winning communities. Argo is a member and supporter of BILD.

Argo has monitored with interest the changes sought to be made to the Planning Act and the Development Charges Act through Bills 108 and 138. Argo generally supports the goals and objectives of the incoming CBC regime, which is to replace the unpredictable processes of bonus zoning (i.e. section 37) and parkland dedication (i.e. section 42 and 51.1) with a clear, consistent process that will set reasonable expectations for both the private and public sectors when it comes to funding community benefits through growth and new development. However, there are elements of the proposed CBC system, as disclosed through the Province’s regulatory posting, that require amendment prior to finalization.

The previous Liberal-led Provincial government used the Growth Plan for the Greater Golden Horseshoe, as well as a series of Provincial mandates towards intensification and density, to effectively dictate the residential housing market for a number of years. In particular, within the GTA, the goal of the previous government was to limit opportunities for new low-rise, lower-density development through the use of artificial constraints on land supply and directives to build higher and higher densities – even where the market did not support such built forms.

While Argo supports efforts to curb urban sprawl, the effect of the previous government’s mandates was to create a high premium for lower-density development, thereby eroding affordability and choice. Argo is pleased to see that the current government has a different approach to growth management – one that seeks to protect what is important, but which also encourages planning to address the demands of the relevant market. If a buyer wants to purchase a single-family home, telling that buyer that there are plenty of mid-to-high rise units is not an effective answer. To truly address issues of availability and affordability, opportunities must exist to develop in accordance with market demands – including the creation of low-density product where appropriate.

The primary problem with the current proposals for CBC implementation is that they work at cross-purposes to the current government’s goal for a land use planning regime that is responsive to market demand. Even if provincial policy frameworks are changed to encourage more variety within greenfield and built-up areas, these frameworks are rendered ineffective if the financial burden on developing lower-density product is significantly increased. Unfortunately, this is exactly the effect the CBC regime, as currently proposed, will have on companies like Argo and its major development partners.

According to projections undertaken by BILD (with the assistance of Altus Consulting), implementing the CBC regime as currently proposed will result in a net decrease in development costs associated with higher-density built forms. But the regime will equally cause a significant net increase (50%-70%) in development costs associated with lower-density built forms, depending on the relevant municipality. This disparity will work directly against the current government’s affordable housing mandates and will instead continue to direct the residential market toward higher density forms consistent with the previous government’s policy initiatives. In short, without pairing policy changes with financial incentives, the policy changes will ultimately not have the desired effect on the housing market.

As a specific example for the Province’s consideration, Argo would suggest that the Province look closely at greenfield residential subdivision development. This type of development is not typically the subject of section 37 bonusing heights or density, so the major community benefit cost sources are development charges and parkland dedication, the latter of which is currently capped at 5% or 1 ha for 300 units (or 1 ha for 500 units if paying cash-in-lieu of land). The current proposal for CBCs is to have a cap of 15% (10% lower-tier; 5% upper-tier; 15% single-tier) tied to the value of the land being developed immediately prior to first building permit. This is a significant increase in costs to the residential subdivision developer (5% vs 15%), as well as a significant change to the valuation date (CBC = day before building permit; s. 51.1 parkland = day before draft plan approval) with minimal reductions to the associated development charges to offset the new costs.

To address this inequity, Argo proposes that the Province consider a lower CBC cap for lower-density development (closer to the ranges that exist for parkland dedication today). In addition, Argo proposes that the calculation of the CBC occur based on the value of the land the day before draft plan of subdivision approval (when developer costs are more certain and builders can start putting new product to market) as opposed to the day before first building permit. Both of these options would lower the new financial burden on lower-density residential subdivision development and result in a community benefits system that works with the Province’s stated goals of increasing affordability and market choice.

Finally, as the Province is no doubt aware, new residential communities are successfully planned and executed because of a high-level of cooperation amongst development companies. These companies are often asked to come together to collectively share the burden of community benefits such as parks, schools and natural heritage protection. This collective cooperation between the developers and municipal authorities is formalized in complicated Master Parkland Agreements and similar cost-sharing mechanisms. It would benefit both the municipalities and the development communities if existing obligations for cost-sharing (including parkland) were to be exempted from the incoming CBC regime. The Province is already proposing to grandfather developments that are approved with section 37 obligations and/or s. 51.1 parkland requirements. The rationale behind this grandfathering is to ensure existing commitments made between municipalities and private developers are not disturbed by the changeover to the CBC regime. Argo submits that existing commitments between private developers concerning matters covered by the CBC regime should equally be grandfathered.

Argo thanks the Province for the opportunity to add its voice to the chorus of feedback from the development community concerning the issues with the proposed CBC regime. Should any representative of the Province wish to ask questions of Argo (being a prime example of a successful GTA development company), Argo would be please to respond.