Up until now, developers have been able to input the costs of existing bonusing by-laws (i.e., development charges and parkland by-laws) into their pro forma when the amount has been finalized. However, these amounts have been dependant on individual ward councillors, whom have been given great amounts of discretion by their municipalities. The result has been varying amounts of charges and a degree of unpredictability, even for adjacent lots.
The new community benefit charges regime provides certainty to these exercises and the development process.
Ontario Regulation 509/20 ("O Reg 509/20) came into force under Ontario's Planning Act on September 18, 2020 to support the implementation of community benefit charges ("CBCs") under the new Section 37 of Ontario's Planning Act, permitting local municipalities to impose CBCs against land to pay for the capital costs of facilities, services and matters incurred from development and the effective population growth.
CBCs are a charge in the development process that is distinct from development charges. This is an important addition to legislation for developers since no building can be constructed on the land proposed for development or redevelopment unless payment of the CBCs have been made.
Although there are limitations on the types of developments that are captured, the CBC is a sweeping tool that municipalities can use to fund almost any municipal service. A municipality is not prevented from imposing a CBC with respect to land for park or other public recreational purposes or with respect to the services listed in subsection 2 (4) of the Development Charges Act, 1997 (the "CBC and development charge.
Municipalities do not have to implement a CBC by-law right away - the existing Section 37 remains in effect until the earlier of when the municipality passes a CBC by-law or September 18, 2022.
The imposition of a CBC by-law is limited to lower and single tier municipalities. A CBC may not be imposed with respect to a development of a propose building or structure with few than 10 residential units or fewer than five storeys. There are also several exemptions in O Reg 509/20, including long-term care homes, retirement homes, non-profit housing and post-secondary institutions.
In order for a CBC to be imposed the development or redevelopment must require one of the following:
- the passing of a zoning by-law or of an amendment to a zoning by-law under section 34;
- the approval of a minor variance under section 45;
- a conveyance of land to which a by-law passed under subsection 50 (7) applies;
- the approval of a plan of subdivision under section 51;
- a consent under section 53;
- the approval of a description under section 9 of the Condominium Act, 1998; or
- the issuing of a permit under the Building Code Act, 1992 in relation to a building or structure.
Quantum of CBCs
O Reg 509/20 caps the CBC at four per cent of the value of land on the date of the first building permit (the "Valuation Date"). For any dispute over the value of the land, Section 37 has implemented a set of appraisal provisions. O Reg 509/20 sets out the following timeframes for the appraisals when in dispute:
- Payment under Protest: If the owner of land is of the view that the amount of the CBC exceeds the amount permitted, the owner shall pay the charge under protest and within 30 days provide the municipality with an appraisal of the value of the land as of the Valuation date.
- Municipality Appraisals: If the municipality disputes the value of the land identified in the appraisal provided by the owner, then within 45 days they must provide the owner with an appraisal of the value of the land as of the Valuation Date.
- Owner's Choice of Appraiser: If the appraisals differ by an increment greater than 5%, the owner is able to select an appraiser from the municipality's preferred list (which must contain at least three appraisers) who will provide an appraisal within 60 days.
Owners of lands under development can make an agreement with a municipality to provide for an "in kind" CBC. Put another way, an owner may provide the specific service the municipality is trying to fund through CBCs in place of payment.
A Municipality's CBC Strategy
Municipalities are required to have a CBC strategy in place that sets out what facilities, services and matters will be funded using the CBCs. The requirements of the strategy are set out in section 2 of O Reg 509/20:
- include estimates of the anticipated amount, type and location of development and redevelopment with respect to which community benefits charges will be imposed;
- include estimates of the increase in the need for facilities, services and matters attributable to the anticipated development and redevelopment to which the community benefits charge by-law would relate;
- identify the excess capacity that exists in relation to the facilities, services and matters referred to in clause (b);
- include estimates of the extent to which an increase in a facility, service or matter referred to in clause (b) would benefit existing development;
- include estimates of the capital costs necessary to provide the facilities, services and matters referred to in clause (b); and
- identify any capital grants, subsidies and other contributions made to the municipality or that the council of the municipality anticipates will be made in respect of the capital costs referred to in clause (e).
Lastly, it should be noted that CBC by-laws can be appealed to the Local Planning Appeal Tribunal. Similar to the Tribunal's powers on charges under the DCA, it cannot increase a CBC, make it payable, or change exemptions but it can dismiss the appeal, repeal or amend the by-law or order the same to be done by the council of the municipality.
For now, the two year transition period continues to tick. Any transition to develop a new CBC system within this time frame will be challenging for a municipality as it must consider how this would be integrated with development charges and parkland by-laws.
For developers, it is wait-and-see approach as the existing by-laws and agreements will not be repealed until September 18, 2022 or a system is put into place. For large developers handling projects in multiple municipalities it may be difficult to keep up with the changes.