Item - 2024.EX11.3

The Executive Committee recommends that:

1. City Council determine that the Development Charges By-law have been properly applied to the development project located at 615 Kennedy Road.

2. City Council dismiss the complaint dated July 12, 2023, with respect to 615 Kennedy Road filed pursuant to Section 20 of the Development Charges Act, 1997.

3. City Council authorize City Staff to defend any appeal of City Council’s decision or non-decision to the Ontario Land Tribunal.

The Executive Committee held a statutory public meeting on January 30, 2024, and notice was given in accordance with the Development Charges Act.

This report responds to a complaint filed pursuant to Section 20 of the Development Charges Act, 1997, relating to a development project located at 615 Kennedy Road in Scarborough.

The development project consists of a 10-storey residential apartment building containing 215 dwelling units with two levels of underground parking. The complainant, 615 Kennedy Road Inc., objects to the amount of development charges determined in relation to permit issuance. The complainant applied for a building permit on December 21, 2021 to construct the development. A building permit for the development could not be issued as the proposed construction did not comply with all applicable law. The Building Code Act, 1992 (the “Act”) provides that a Chief Building Official must issue a building permit unless the proposed construction will contravene the Act, the building code or any other applicable law. However, the Act provides that the Chief Building Official may issue a conditional permit for any stage of construction, where the proposal complies with certain applicable laws and where it is the opinion of the Chief Building Official that an unreasonable delay in construction would occur should a conditional permit not be issued. Community Benefits Charges is applicable law for the purpose of issuance of a conditional building permit. The issuance of a conditional permit is at the sole discretion of the Chief Building Official pursuant to the Act.

The complainant requested a below grade conditional permit for the development on June 14, 2022, as the proposed construction still did not comply with all applicable law as required by the Act.   In accordance with City Council’s  conditional permit policy 2016.EX11.7, as further amended by 2023.EX1.6, the complainant entered into a Section 27 Development Charges Agreement with the City executed on April 24, 2023 (Section 27 Agreement).

The Section 27 Agreement stipulates that development charges are determined based on the “higher of” rates on the By-law in effect on the date of issuance of the first building permit or if applicable, rates frozen at site plan or rezoning application. The Section 27 Agreement only deals with the amount and timing of payment of development charges. Other applicable law requirements must be satisfied in order for a building permit to be issued. In respect of this application, the rates are determined by the By-law rates in effect on the date of first building permit issuance. In addition to development charges, the complainant was required to remit payment of a Community Benefits Charge. Pursuant to Article VI of Toronto Municipal Code Chapter 415 (Development of Land), where a Community Benefits Charges payment is required, this payment must be received prior to issuance of the first building permit.  The Development Charges By-law, requiring the payment of development charges and the Community Benefits Charge By-law, requiring the payment of Community Benefits Charges are applicable law for the issuance of a building permit, including a conditional building permit, under the Act.

While development charges were paid by the complainant, they did not submit payment of the Community Benefits Charges prior to the May 1, 2023 development charges rate increase and, consequently, the building permit was not issued prior to that date. By the time the Community Benefits Charges was paid, the amount of development charges were recalculated based on the new rates in effect at the time, and payment of the difference was requested pursuant to the Section 27 agreement executed by the owner and the City to issue the permit.  The complainant takes the position that they were not informed of the requirement to pay the Community Benefits Charges prior to the permit being issued, and since they paid development charges prior to May 1, 2023, they should not be subject to the increased rate.

According to their complaint, they relied solely on the terms of the Section 27 agreement which only speaks to the requirement to pay the development charges to issue the permit. They claim they were advised of the requirement to pay the Community Benefits Charges at the end of the business day on Friday, April 28, 2023, and there was not enough time for them to send the wire transfer before May 1st. The complainant is not taking issue with the application of the Development Charges By-law, but attempting to indirectly attack the application of applicable law in issuing a Building Permit respecting the payment of the Community Benefits Charges through a section 20 complaint. There is no error in applying the Development Charges By-law.

City staff have reviewed the complaint and are of the opinion that the Development Charges By-law was applied properly, and no error was made in determination of the applicable development charges. The complainant was aware of the requirement to pay the development charges and Community Benefits Charges in full at permit issuance prior to the May 1st increase and staff made several efforts to assist the complainant to ensure that the permit could be issued as it complied with all other applicable law.  This included expediting the appraisal of the site within two weeks to facilitate the calculation of the Community Benefits Charges which generally requires approximately six weeks to complete. Several communications were made between staff and the complainant over email and phone advising that the Community Benefits Charges payment must be made to issue the permit. Ultimately, the Community Benefits Charges payment was made on May 1st and development charges had to be recalculated due to indexing.

The Development Charges By-law provides the timing of calculation and payment of development charges to be determined by applying the rates in effect on the date that the building permit is issued. Prior to May 1st, the amount of development charges was determined to be $6,106,283.90. As the permit was not issued before May 1st due to the outstanding Community Benefits Charges payment, the development charges was recalculated and an additional $2,039,501.57 was requested by Toronto Building for permit issuance. To date, the complainant has not remitted further payment for development charges nor have they requested that the conditional permit be issued.  As such, the conditional building permit has not been issued. Since there was another rate increase on August 15, 2023, the development charge was recalculated again. Currently, the complainant would have to pay $2,548,547.92 to have the permit released. Furthermore, since a long period of time has passed and the requested permit is not an as-of-right permit, but rather, a request for a conditional building permit, the owner would have to demonstrate to the Chief Building Official that an unreasonable delay in construction still exists prior to issuing the permit.  Development charge rates are not a criteria for the consideration of issuing a conditional permit.

This report recommends that the complaint be dismissed. A decision or a non-decision of Council to dismiss the complaint may be appealed to the Ontario Land Tribunal. This report was prepared in consultation with the (Acting) Chief Building Official and Executive Director, Toronto Building and the City Solicitor.