Item - 2015.EX5.7

The Executive Committee recommends that:

1.  City Council indicate its support of the principle that "growth should pay for growth" and that this principle continue to be the main objective of the Development Charges Act, 1997.

2.  City Council endorse the proposed amendments to the Development Charges Act, 1997 that

a.  add transit to the list of services that are not subject to a mandatory 10 percent reduction;

b.  allow the use of a planned level of service for prescribed services; and

c.  allow development charge recoveries for waste diversion.

3.  City Council urge the Province to broaden the application of development charges further by

a.  eliminating the mandatory 10 percent reduction to eligible costs;

b.  deleting the list of ineligible municipal services; and

c.  considering further amendments that enable uniform, region-wide collection of development charges for GO Transit and Metrolinx Capital Expansion projects.

4.  City Council request the Province to:

a.  delete section 6 of draft Bill 73 that makes development charges payable upon the first applicable building permit being issued;

b.  delete section 2 (3) of draft Bill 73 that would allow the Province through regulations to mandate the use of area-specific development charges; and

c.  review appeal provisions of the Development Charges Act, 1997 so as to allow the Ontario Municipal Board to increase the amount of a development charge if a development charge by-law is appealed. 

5.  City Council forward the report (April 8, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer to the Minister of Municipal Affairs and Housing, the Municipal Finance Officers' Association of Ontario, the Association of Municipalities of Ontario, and Greater Toronto and Hamilton Area (GTHA) municipalities contributing to GO Transit/Metrolinx.

On March 5, 2015, the Province tabled draft Bill 73 to amend the Development Charges Act, 1997 (the "DCA"), and the Planning Act. The purpose of this report is to provide Council with an assessment of the draft legislative and pending regulatory amendments to the Development Charges Act and to recommend an appropriate response. A report from the Chief Planner and Executive Director, City Planning, providing information and recommendations with respect to the proposed Planning Act changes will be considered by Planning and Growth Management Committee at its May meeting.

The legislative review is welcome and timely.  It has been 18 years since the current Development Charges Act was implemented.  Staff supports the principle that growth should pay for growth and agrees that this objective should continue to be the main principle underlying the Development Charges Act.  Unfortunately, the Development Charges Act, in its current form, does not uphold this principle due to the exclusion of key services from Development Charges, the 10 percent statutory discount for some services and a historical service level cap, amongst other things. Council has requested the Province to amend the legislation and correct these deficiencies a number of times over the years.

Bill 73 goes part way toward addressing some of Council's requests for amendments to the Development Charges Act by:

-  permitting the use of forward-looking service levels to determine maximum eligible costs as opposed to average service levels over the past ten years (subject to regulation for each designated service);

-  exempting transit from the mandatory 10 percent reduction (but leaving other services subject to the reduction); and

-  proposing to remove waste diversion from a list of services for which Development Charges recoveries are prohibited (and moving the list to regulation, where further additions or deletions could be implemented without legislative amendment)

Other proposed changes, both legislative and regulatory, would affect the administration of municipal by-laws. Some of these, such as changing the timing of Development Charges collection, or authorizing the government to require consideration of area specific charges, could have negative financial implications for municipalities, and Toronto in particular due to the predominance of condominium infill in Toronto.

The Province proposes to establish a working group of key stakeholders to provide advice on complex issues needing further consideration prior to the enactment of the bill and the issuance of regulations, which is likely not to occur before the end of the year.

The Deputy City Manager and Chief Financial Officer recommends that Council indicate its support for proposed changes that expand the scope of development charges, and encourage the Province to go further in accordance with previous Council requests. Staff also recommends that Council indicate its opposition to changes that would have the effect of advancing the timing of Development Charges collection, or dictating the use of area specific development charges, whether now or in the future.  Furthermore, staff recommends that Council support additional changes to facilitate a uniform, region-wide development charge for Metrolinx, and a review of the appeal provisions of the Development Charges Act.