Item - 2021.EX20.4

The Executive Committee recommends that:

1. With respect to rental, institutional and non-profit housing developments that are subject to the new mandatory instalment payments over five and 20 years pursuant to section 26.1 of the Development Charges Act, 1997, City Council:

 
a. amend the Interest Policy previously adopted by City Council pursuant to section 26.1 (7) of the Development Charges Act, 1997, to provide that:

 
i. interest will be applied at the Canadian Bank Prime rate plus three percent; and

 
ii. the Policy will be effective on February 8, 2021, and applies to building permits issued on or after that date;

 
b. authorize the Chief Financial Officer and Treasurer, in consultation with the Chief Building Official and Executive Director, Toronto Building and the City Solicitor, to enter into agreements, in a form satisfactory to the City Solicitor, to provide for interest charges at the City's cost of capital plus half a percent where financial security is provided based on the general terms and conditions in Attachment 1 to the report (January 13, 2021) from the Chief Financial Officer and Treasurer, and including any amendments to previously executed agreements, as necessary, relating to the payment of development charges;

 
c. authorize the Chief Financial Officer and Treasurer, in consultation with the Chief Building Official and Executive Director, Toronto Building and the City Solicitor, to enter agreements, in a form satisfactory to the City Solicitor, to allow the option for the early payment of development charges at the time of building permit issuance based on the general terms and conditions in Attachment 2 to the report (January 13, 2021) from the Chief Financial Officer and Treasurer, and including any amendments to previously executed agreements, as necessary, relating to the payment of development charges; and

d. authorize the Chief Financial Officer and Treasurer, in consultation with the Chief Building Official and Executive Director, Toronto Building and the City Solicitor, to enter into agreements, in a form satisfactory to the City Solicitor, to further defer the payment of development charges for non-profit long-term care homes for as long as they remain a non-profit long-term care use and based on the general terms and conditions in Attachment 3 to the report (January 13, 2021) from the Chief Financial Officer and Treasurer, including any amendments to previously executed agreements, as necessary, relating to the payment of development charges provided that amendments to any agreements do not result in financial impacts to the non-profit long-term care home, and City Council direct that, where financial impacts do exist, the Chief Financial Officer and Treasurer be required to bring the matter before City Council for approval.

 
2. City Council authorize the Chief Financial Officer and Treasurer, in consultation with the Chief Building Official and Executive Director, Toronto Building and the City Solicitor, to make such administrative amendments to the general terms and conditions in Attachments 1, 2 and 3 to the report (January 13, 2021) from the Chief Financial Officer and Treasurer, as necessary, to give effect to Recommendations in 1.b., c. and d. above.

 
3. City Council extend the Interest Policy previously adopted by City Council pursuant to Section 26.2 (3) of the Development Charges Act, 1997 pertaining to the "frozen" development charges such that the policy applies to any Site Plan and Rezoning Applications received, and any building permits issued, after November 1, 2020 and City Council direct the Chief Financial Officer and Treasurer to review the Interest Policy as part of the City's comprehensive Development Charges By-law update.

4.  City Council authorize an amendment to the development charges deferral agreement for the Imam's clergy residence, Site Plan Application 12 113963 ESC 44 SA, on the lands currently known as 4640 Kingston Road, Scarborough, Ontario, to remove the requirement for financial security.

The Executive Committee:

1.  Directed the Chief Financial Officer and Treasurer to report directly to the February 2 and 3, 2021 meeting of City Council on a scan of other municipalities in the Greater Toronto Area and region with respect to what methods these municipalities are utilizing to obtain security as part of the development charges process.

The City currently imposes development charges based upon a bylaw that was approved by Council on April 18, 2018.  Subsequently, in December 2019, the Province introduced changes to the legislation that altered how development charges are calculated and collected. The changes, effective January 1, 2020, require development charges to be determined earlier, at planning application, and in the case of rental, institutional and non-profit housing, for the charges to be collected later, in annual instalments over five or 20 years beginning at occupancy. 

To mitigate the financial impact of these changes on the City, in December 2019 and January 2020, Council adopted interest charges to apply to the development charges "frozen" at planning application and to the new instalment payments, as permitted by Provincial legislation. 

This report recommends timeline updates and modifications to Council's interim development charges policy. These changes are intended to bridge City policies until there is an opportunity to undertake a comprehensive review of the bylaw, which is expected to be completed in spring 2022. 

In particular, Council's interest policies applicable to the mandatory instalments payments are proposed to be updated to prime plus three percent where no financial security is provided and the City's cost of capital plus half a percent where financial security is provided.  Delegated authority is sought that would allow staff to collect development charges earlier, at building permit, instead of in instalments, and where a developer wished to pay at that time.  The development charges applicable to non-profit long-term care development is proposed to be deferred until there is a change of use such that it no longer is a non-profit long-term care home.  Finally, Council's interest policy for the development charges "frozen" based on the date of planning application would be extended.  This is needed because the policy currently only applies to development applications received before November 1, 2020 and permits issued before November 1, 2021.

Staff will continue to monitor the effects of the changes to legislation and bring forward recommended adjustments to policies for Council consideration, as may be deemed necessary.