Item - 2022.EX34.2

City Council considered Items EX34.1, EX34.2 and EX34.3 together.

The Executive Committee recommends that:

1. City Council adopt the Community Benefits Charge By-law in Attachment 1 to the report (June 27, 2022) from the Chief Financial Officer and Treasurer, and the Chief Planner and Executive Director, City Planning.

2. City Council authorize the City Solicitor to make such stylistic and technical changes to the Community Benefits Charge By-law as may be required.

3. City Council endorse the Community Benefits Charge Strategy dated April 2022 and Community Benefits Charge Strategy Addendum dated June, 2022 included as Attachments 2 and 3 to the report (June 27, 2022) from the Chief Financial Officer and Treasurer, and Chief Planner and Executive Director, City Planning.

4. City Council approve the establishment of a Reserve Fund Group named "Community Benefits Charges Reserve Fund Group" in Appendix C, Schedule 12 – Planning Act Obligatory Reserve Funds in the City of Toronto Municipal Code Chapter 227, Reserves and Reserve funds, the purpose of which is to hold funds for Community Benefits Charges, with separate accounts consisting of the original Section 37 Reserve Fund to be renamed "Community Benefits – Original Section 37 Reserve Fund" and the new "Community Benefits Charges Reserve Fund", with policies and criteria set out in Attachment 5 to the report (June 27, 2022) from the Chief Financial Officer and Treasurer, and Chief Planner and Executive Director, City Planning.

5. City Council approve the establishment of an obligatory reserve fund named "Community Benefits Charges Reserve Fund" in Appendix C, Schedule 12 – Planning Act Obligatory Reserve Funds in the City of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds, the purpose of which is to hold funds from Community Benefits Charges with criteria set out in Attachment 5 to the report (June 27, 2022) from the Chief Financial Officer and Treasurer, and Chief Planner and Executive Director, City Planning.

6. City Council amend the fee schedule Municipal Code Chapter 441, Fees and Charges, Appendix C, Schedule 11, is amended by deleting the Fee Description in Reference 18, which currently reads "Appraisal Fee for Parks Levy Calculation - Base Fee", and replacing it with "Appraisal Fee for Parks Levy Calculation and/or Community Benefits Charge - Base Fee".

7. City Council amend Municipal Code Chapter 441, Fees and Charges, Appendix C, Schedule 11 by deleting the Fee Description in Reference # 19, which currently reads "Appraisal Fee for Parks Levy Calculation – Variable", and replacing it with "Appraisal Fee for Parks Levy Calculation and/or Community Benefits Charge - Variable".

8. City Council amend Chapter 442, Administration of Fees and Charges by adding the following new Section:

A. All appraisals of land value shall be carried out under the direction of the Executive Director, Facilities and Real Estate and shall be determined in accordance with generally accepted appraisal principles.

B. The cost of any appraisal undertaken by the City shall be paid for by the owner.

C. The cost of any appraisal required pursuant to subsection 37(38) of the Planning Act shall be paid for by the owner.

D. The value of the land shall be determined as of the day before the day of issuance of the first building permit in respect of the development.

9. City Council request the Chief Financial Officer and Treasurer to report back to Council through the City's budgeting process on the cost of growth compared to actual revenues collected through the community benefits charge by-law in order to determine whether the community benefits charge maximum rate is sufficient to ensure that growth pays for growth.

10. City Council request the Province of Ontario to amend the current Section 37 of the Planning Act to permit the municipality to enter into with the owner one or more agreements dealing with the provision of in-kind contributions of facilities, services or matters as permitted under subsection (6), and that any agreement entered into may be registered against the land to which it applies and the municipality is entitled to enforce the provisions thereof against the owner and, subject to the provisions of the Registry Act and the Lands Titles Act, any and all subsequent owners of the land.

11. City Council direct the City Solicitor to take all available steps to ensure that as many zoning by-laws containing Section 37 contributions are adopted by Council or approved by the Ontario Land Tribunal prior to the adoption of the community benefits charge by-law as possible, if in the City Solicitor's discretion the appropriate legal mechanisms are in place to secure the provision of the Section 37 benefits. 

The Province of Ontario introduced legislative changes to the Planning Act and Development Charges Act which necessitates the City to review and update of three of its growth-related funding tools (GFTs):

- Development Charges (DC);

- Community Benefits Charge (CBC); and

- Alternative Parkland Dedication Rate.

This report is one of three being presented concurrently to City Council for consideration and recommends a CBC bylaw and strategy in compliance with provincial legislation. The recommended approach incorporates feedback from consultation with various stakeholders and city staff.

The Community Benefits Charge (CBC) is set out in the new Section 37 provisions of the Planning Act replacing the current authority to permit increased height and/or density in return for the provision of a benefit or cash contribution ('Density Bonusing'), which expires on September 18, 2022. The new Section 37 authorizes a municipality to collect Community Benefits Charges (CBCs) against land to pay for the capital costs of facilities and services required as a result of development or redevelopment. The City is required to enact a Community Benefits Charge (CBC) bylaw, supported by a Community Benefits Charge (CBC) strategy, before it can collect Community Benefits Charges (CBCs).

The Community Benefits Charge (CBC) applies a maximum standard rate to developments that have at least 5 storeys and 10 or more residential units, provided they are not exempt by statute or bylaw, the latter of which may be determined by Council. Previously, Section 37 Density Bonusing was determined on a site by site negotiation, guided by Official Plan policies and Council adopted guidelines. The new Section 37 Community Benefits Charge is based on the appraised value of the land and restricted so that the charge cannot exceed four percent of land value at the time a building permit is issued.

Based on an assessment of applications in the City’s development approval pipeline and projected land values, it is anticipated that the changes to Section 37 will result in the City collecting significantly less revenues than the current Section 37 Density Bonusing approach, notwithstanding that the Community Benefits Charge (CBC) may apply to a wider range of developments. While the intention of growth-related funding tools (GFTs) is that growth should pay for growth, the four percent cap for the Community Benefits Charge (CBC) is not sufficient to fully offset Community Benefits Charge (CBC) eligible growth-related capital costs. Based on the growth forecast, the City anticipates it will recover an average annual amount of $70 million each year over the next 10 years through Community Benefits Charges (CBCs), before the proposed exemptions and transition discussed in the report. However, the Community Benefits Charge (CBC) Strategy estimates the City will require upwards of $2.3 billion in Community Benefits Charge (CBC) eligible net costs over the same 10 year timeframe as a result of eligible development. This leaves the City with a remaining funding gap of almost $1.6 billion.

A municipality may by bylaw collect Community Benefits Charges (CBCs) against land to pay for the capital costs of facilities, services and matters required because of development or redevelopment in the area to which the by-law applies. Accordingly Community Benefits Charges (CBCs) can be used to fund a broad list of services and facilities as outlined in the Community Benefits Charge (CBC) Strategy in Attachment 2. Each year, the City must allocate or spend at least 60% of the special account, where all Community Benefits Charge (CBC) funds are collected and held. To ensure compliance with this requirement, allocation to specific capital projects and initiatives will be reviewed and recommended through the annual budget process.

The Community Benefits Charge (CBC) approach recommended by staff also provides additional incentives for affordable housing programs by exempting in the Community Benefits Charge (CBC) Bylaw both Housing Now developments, including market units and Affordable Housing units secured through a municipal housing facility agreement from a Community Benefits Charge (CBC) payment. In addition, complete applications for residential development in the City's development pipeline that are less than 10,000 square metres will not be subject to the Community Benefits Charge (CBC). The above policies that advance City priorities and protect development projects in the pipeline are estimated to further reduce anticipated Community Benefits Charge (CBC) revenues initially by about $36 million annually.

To authorize use of the new Community Benefits Charge (CBC) authority by September 18, 2022, which is the expiration of the current Section 37 Density Bonusing regime, this report recommends adoption of a Community Benefits Charge (CBC) Bylaw; endorsement of the Community Benefits Charge (CBC) Strategy; amendments to the Municipal Code to include the Community Benefits Charge (CBC) appraisal fee; and establishment of the legislatively required Community Benefits Charge (CBC) reserve fund. In the next phase, further work on implementation, including allocation and resourcing, will continue and will be brought to City Council in 2023.