Item - 2025.PH21.3

The Deputy City Manager, Development and Growth Services recommends that:

1. City Council amend the City of Toronto Municipal Code, Chapter 441, Fees and Charges, Appendix C - Schedule 13, effective July 1, 2025, substantially in accordance with the revised fee schedule as found in Attachment 1 to this report.

2. City Council request the Chief Planner and Executive Director, City Planning, in consultation with the Executive Director, Development Review Division, to include any recommendations related to Minor Variance and Consent application fees, in accordance with the approach identified in the 2024 Operating Budget for City Planning, in a report on the Committee of Adjustment Service Delivery Model Review in Q3 2025.   

3. City Council request the Executive Director, Development Review Division, to undertake a comprehensive review of the Site Plan Control application review process and report back to Council by Q3 2026 with an updated service standard and fee schedule for Site Plan Control applications. 

4. City Council authorize the Executive Director, Development Review Division, to implement an Application Fee Policy, effective July 1, 2025, substantially in accordance with Attachment 10 to this report.

5. City Council authorize the City Solicitor to introduce the necessary Bills to give effect to City Council’s decision.

6. City Council authorize the City Solicitor to make such stylistic and technical changes to the amendment to the City of Toronto Municipal Code as may be required.

7. City Council authorize the Deputy City Manager, Development and Growth Services to take all necessary actions to implement Council’s decision.

8. City Council direct the Deputy City Manager, Development and Growth Services to undertake a comprehensive development application fee review and report back to Council on a regular four-year cycle, in accordance with the City's User Fee Policy.

Through the processing of development applications, the City's development review service shapes how the city grows and delivers services necessary to successfully promote and manage growth. This service is critical in maintaining Toronto's position as a world-class city by supporting the delivery of new housing supply; transit projects; healthcare facilities; innovation, manufacturing and industrial facilities; landmark projects; and critical infrastructure that support our social and economic prosperity, growth and cohesion.

The City of Toronto's development review service continues to navigate significant legislative change as well as market and geopolitical uncertainty. To address resultant changes in development and application processing trends, the City is focused on transforming its organizational structure and processes, with the goal of expediting the review of all development projects, especially those that deliver new affordable and purpose-built rental homes and support economic growth and job creation.

Municipal Code Chapter 441, Fees and Charges, Appendix C, Schedule 13 sets out the City's fees for processing development applications. Fees are intended to recover the cost of services provided by all divisions engaged in the development review process. The current development application fee schedule came into effect on September 1, 2022.

As directed by Council and in accordance with the City's User Fee Policy, City staff (together with consultants KPMG and Watson and Associates Economists) undertook the 2024 Development Application Fee Review (the 2024 Review). Detailed findings of this review are provided as Attachments 2 -10. Subject to Council approval, the recommended fee schedule included in Attachment 1 to this report will come into effect on July 1, 2025.

The recommended fee schedule enables full cost recovery for the processing of development applications, except for Site Plan Control, Minor Variance, and Consent applications, which account for approximately 60 percent of the estimated cost increase. Additionally, it streamlines and simplifies development application fees, reduces cost for many major application types, and makes fees more predictable. For applicants, this means that some fees will decrease, some will not change, and some will increase. Specifically, new proposed fee structures will, among other things:

- Simplify the calculation method for Official Plan Amendment/Zoning By-law Amendment, Zoning By-law Amendment, and Site Plan Control applications by introducing a single, uniform multiplier that applies to both residential and non-residential gross floor area;

- Reduce Zoning By-law Amendment application fees for most scales of mixed-use development and set a maximum cap of $715,000 ($743,600 including the 2025 Cost of Living Adjustment) for all Zoning By-law Amendment applications;

- Support housing development by reducing combined Official Plan Amendment/Zoning By-law Amendment application fees for most scales of mixed-use development and setting a maximum cap of $800,000 ($832,000 including the 2025 Cost of Living Adjustment) for all combined Official Plan Amendment/Zoning By-law Amendment applications;

- Support all scales of housing development with the City shouldering the majority of the cost increase for Site Plan Control applications while the Site Plan process is re-engineered in 2025 (i.e., staff recommend only 25 percent of the estimated cost increase be passed on to applicants); and

- Implement a new Plan of Condominium process and application fees which remove an estimated $800,000 of annual processing costs associated with application circulation and review, with savings to be passed on to applicants.

In addition to the above, the City of Toronto is committed to continuous improvement and has already seen significant improvement in the development review process as a result of ongoing organizational and process improvements. Notably, for all major development application types (including combined Official Plan Amendment/Zoning By-law Amendment, Zoning By-law Amendment and Site Plan Control applications), review times have improved by over 80 percent when compared to the previous 5-year average.

Over the course of 2025 and as outlined in this report, the Development Review Division, working with internal and external partners, will continue to focus on systemic improvements to the development review process. This includes:

- Developing standard operating procedures (SOPs) and clearly identifying application requirements for each application type to enhance predictability, reduce cost for applicants and improve efficiency in the process leveraging a Lean Six Sigma methodology;

- Providing staff with training and tools (including a library of standardized comments) to ensure more consistent and timely interpretation and application of regulatory frameworks;

- Developing new service standards to provide predictability and improve service delivery for all stakeholders in the development review process;

- Improving communication between the City and all parties involved in the development review process through both digital and analog methods;

- Developing consistent streaming and prioritization criteria to expedite applications that propose significant new affordable and purpose-built rental housing and support economic growth and job creation such as new industrial and manufacturing facilities;

- Introducing new technology tools and enhancing existing tools to support improved workflows, efficiencies and performance tracking between City staff and applicants;

- Establishing Key Performance Indicators (KPIs) to measure performance and publicly track and report on performance; and

- Improving complement management to ensure a dynamic allocation of staff resources across community planning districts to address fluctuations in application volumes as they arise.

In tandem with these tangible actions to streamline processes and expedite development approvals, the City of Toronto continues to make significant financial investments to stimulate housing development. This includes City Council's approval of the Rental Housing Supply Program and its various streams which provide:

- Capital funding and an exemption from development charges, parkland dedication fees, community benefits charges and the waiver of planning application and building permit fees for eligible affordable rental projects;

- Deferral of development charges payable for up to 5,600 purpose-built rental units for as long as they remain rental;

- Implementation of a new Multi-Residential Property Tax subclass which provides a 15 percent property tax reduction for new purpose-built rental developments for a 35-year period; and

- Deferral of development charges for eligible multi-unit ownership/condominium projects with a minimum of 5 percent units as affordable rental or ownership (interest free and at June 2024 rates for four years).

As the City advances policy and program initiatives to address the housing crisis, including new or expanded incentive programs, findings from the 2024 Review illustrate a need to further investigate and evolve how the City funds the development review service in ways that recognize and balance the inherent tension between the provision of a critical public service and provision of service for a fee.

Following implementation of the recommended fee schedule, staff recommend returning to a four-year cycle for the next comprehensive review, as supported by the City's User Fee Policy.

Overview: Development Application Volume and Fees

Development Application Volume

The City's development review service processes an average of 460 applications per year (calculated over five years, including 2017-2020 and 2023 data). In the first quarter of 2025 (January to March), a total of 113 applications were submitted to the City. This volume aligns with the average annual volume estimate used in the City's cost model and represents a 66 percent increase in application volume over the same period last year.

Development Application Fees

In aggregate, the 2024 Review found the City's average annual processing cost of development applications (excluding Committee of Adjustment applications) is approximately $80. 1 million based on the 2024 cost of development review services, as illustrated in Table 3. This represents an increase in processing cost of approximately $12.9 million (or 19 percent) since the 2021 Review. Currently, the City's fee schedule generates average annual revenues of approximately $62.8 million, which means it recovers approximately 78 percent of processing costs. This leaves an estimated gap in average annual revenue of approximately $17.3 million for 2024 (see Attachment 5). It should be noted that the actual gap is determined and reconciled annually based on actual application volumes and corresponding actual fee revenues.

The recommended fee schedule (see Attachment 1) is designed to "close the gap" and achieve full cost recovery for the processing of development applications, with the exception of Site Plan Control, Minor Variance, and Consent applications (addressed separately, below), based on the 2024 cost of development review services. Note that Attachment 1 includes application fee values that reflect the findings of the 2024 Fee Review, cost adjusted to 2025 dollars (i.e., a 4 percent cost of living adjustment has been applied).

The City divisions that participate in the development review process receive a revenue allocation, based on their level of effort, that represents cost recovery (detailed in Table 3). While corporate and divisional organizational structures have changed since 2022, the 2024 Review reflects a status quo organizational structure to ensure alignment with the 2025 Operating Budget. Organizational structure change and any impacts will be reflected through the City's 2026 Budget process. Through the 2026 Budget process, adjustments to revenues and costs will also be made to account for Council-approved initiatives that impact full cost recovery, including expanded incentive and waiver programs to support affordable housing development (e.g., Rental Housing Supply Program).

If approved, the new fee schedule will be effective July 1, 2025. The impact of the new fee schedule is described above in aggregate terms; however, under the Planning Act, the processing costs for each application type must be addressed individually. Changes to fees, based on the current cost to deliver the service, may vary depending on the type, size and complexity of an application. This means that some fees will decrease, some will not change, and some will increase.

Fees categorized as "full cost recovery" under the City's User Fee Policy will automatically be adjusted for inflation on January 1 of each year.

Site Plan Control Application Fees

As a result of the 2021 Review, Council approved a 24 percent reduction in Site Plan Control application fees. The 2024 Review showed that the City's current fee schedule recovers approximately 51 percent of the full cost of Site Plan application processing.  Since 2022, legislative change and an increase in staff level of effort to process Site Plan applications contribute to an average annual revenue loss of approximately $19.1 million for this application type (see Attachment 5). To achieve full cost recovery for average annual processing costs of approximately $38.9 million, the City would have to considerably increase fees for all Site Plan Control applications, regardless of size or type (i.e., residential, non-residential, mixed use).

In 2025, the City is undertaking a comprehensive review of its Site Plan Control application review process, leveraging a Lean Six Sigma methodology to streamline review activities with the goal of reducing processing costs and simplifying the fee schedule. As Recommendation 3 indicates, staff expect to report back to Council with an updated service standard and fee schedule for Site Plan Control applications by Q3 2026. Until that time, staff recommend less than full cost recovery for Site Plan Control application review, with 25 percent of increased average annual processing costs (approximately $4.8 million) recovered through fees. This approach requires 75 percent of increased average annual processing costs to be recovered from alternative sources of funding (approximately $13.7 million), which will be managed through non-application-based revenues, when necessary. Attachment 1 to this report reflects the recommended approach. Attachment 6 to this report includes a summary of existing Site Plan control application fees, an option for full cost recovery based on the findings of the 2024 Review, and the recommended option to recover 25 percent of increased processing costs from fees.

Committee of Adjustment Application Fees

In June 2022, City Council adopted the recommended fee schedule resulting from the 2021 Fee Review except for recommended increases to Minor Variance and Consent application fees. The 2021 Fee Review recommended a 42 percent increase in Minor Variance application fees and a 58 percent increase in Consent application fees. The recommended fee increase reflected increased staff level of effort for circulation and commenting on applications. Holding fees steady at 2021 levels resulted in an average annual under-recovery of approximately $5.33 million in processing costs.  

To comply with the City's Corporate Strategic Plan objective of financial sustainability, through the 2024 City Budget process, Council considered a plan to restore Committee of Adjustment application fees to the levels recommended through the 2022 Fee Review over a period of three years (2024-2026).

On April 1 2024, the City implemented a 10 percent increase to both Minor Variance and Consent application fees. Cost of Living Adjustments (4 percent in 2025) were applied as usual to Committee of Adjustment fees on January 1, 2025.

The 2024 Review shows that the cost of processing Minor Variance and Consent applications has increased since the 2021 Review, resulting in an average annual under-recovery of approximately $13.0 million. Through the upcoming Committee of Adjustment Service Delivery Model Review (anticipated in Q3 2025), staff may recommend further changes to Minor Variance and Consent application fees, as well as organizational structure, process and technology improvements that impact Minor Variance and Consent application fees. Committee of Adjustment fees will be reconsidered through a follow-on Fee Review.  

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the information as presented in the Financial Impact section.