At the last KPRI (Kingsway Park Ratepayers Inc.) a local ratepayer’s organization meeting I was trying to explain Section 37 of the Planning Act to the Directors and participants present. It was then I was volunteered to write a brief explanation of Section 37 for the KPRI members, to be included in the next KPRI newsletter.
Originally I thought it would be a snap as I was somewhat familiar with it and felt that I understood it. After a lot of research I have come away with more questions than answers and realized I did not understand the nuances of this piece of Legislation Section 37 of the Planning Act was legislated by the Ontario Government (1990) authorizing municipalities to increase height and density of their proposed development in return for a negotiated financial benefit to the impacted community by the developer. This could include art, parks etc.
One must keep in mind that the Developer’s contribution is over and above the cost of upfront capital known as Impact Fees or Development Levies charged by the Municipalities to cover the costs of improving roads, infrastructure etc.
The problem with this Section is that there is no set formula for calculating the amount of the cash or equivalent contribution that the Developer must pay for this added value granted under this section to the Project. Historically the City of Toronto has been able to secure between 10% and 20% of the increase in land value. The target at the onset was an amount equal to 30 % of the increased land value. Only in North York Centre area have the City been able to capture 100 % of the increase in Value. Currently, City Staff appraises the land and calculates the increase of the Land Value to determine what the Section 37 contribution by the Developer and benefit to the Community should be, and does so behind closed doors.
There is a lack of clarity in the Legislation that offers limited guidance to the Municipalities and therefore gives Ward Councillors considerable discretion in negotiating and allocating these benefits. The Developers play an unpredictable game of “let’s make a deal” with the local City Councillor. And, other than in North York Centre, seldom has the percentage reached or recommended the 30 %. The setting of priorities for determining the contribution should be one arrived at by input from City Staff, the Local Community and the Ward Councillor. Too may times the deal is made privately by the Ward Councillor and the Developer, ignoring City Staff and the Local Community.
Who- and by what means is the matter negotiated and who determines the validity of the Neighbourhood enhancement? An Art Contribution of Heaven and Earth, a monumental sculpture by John McEwen on The Queensway in Etobicoke, was paid for by Cineplex Odeon under a section 37 agreement. I always thought it was part of the design of the Development. It’s built at the entrance to the Theatres and is within the property. Is this considered an enhancement to the affected Community?
This payment in lieu of may be attractive to some neighbourhoods and may result in compromises being made. Obviously, one of the dangers in this approach is that the Development may be so poorly planned for the neighbourhood that it probably should not have been permitted or built in the first place.
As the majority of increased densities are negotiated in the Yonge Street corridor and the City’s downtown area, there’s a lot of money and benefits contributed by Developers for these select neighbourhoods. Perhaps, as Mayor John Tory has suggested this money should be pooled and used towards Affordable Housing, Transit and Infrastructure. How many parks, monuments, and art and streetscape contributions do you need with all of these Section 37 contributions pouring into one densely populated area?
Many Section 37 benefits are simply paid in cash, to be allocated to projects at a later date by the Local Councillor. Obviously the question is; where is this money for the local Ward kept? (It should be held in reserve fund account), is there some transparency? Can anyone know what the balance is at any one time? If the money collected was earmarked by the previous Councillor for a certain project, and he or she loses the next election, is the money spent at the discretion of the next elected Councillor?
In short, it’s obvious that this Legislation desperately needs revamping; it needs a standardized system of evaluation for any increased density that Developers obtains, and should address all increased density of residential high rise buildings- not just ones of 10,000 sq.metres or more. Legislation should apply across the board to any increases of land value. When someone goes from building a dozen town houses where there were two single family homes it should also apply when the zoning is changed to a higher land value, regardless of the end use.
Society needs Builders and Developers. If it was not for them, we would be all living in huts. Section 37 has a purpose and if the system was standardized it would make life easier with all those involved including the Developers, the neighbourhood and those new neighbours that may end up being the Buyers of these new Residential homes. The Developers could factor in this cost at the outset and reduce an element of risk and the expense and time required to “lobby” the Local Councillors.
More of this money should go into REAL improvements to the Local Community and thus reduce the costs to the City for Parks and street enhancement. Too many times money goes to pay for frivolous Art or streetscape that benefits only a few or have little or no neighbourhood impact whatsoever.
Sources: www.toronto.ca/section 37
Aaron A. Moore “Trading Density for Benefits” IMFG
Toronto Star Section 37 – Edward Keenan
Toronto Sun – Simon Kent