Item - 2018.EX30.3

The Executive Committee:

1.  Referred input received through the statutory public meeting to the Interim Chief Financial Officer for consideration, and directed the Interim Chief Financial Officer to undertake further stakeholder consultation and report to the April 17, 2018 meeting of Executive Committee on the results.

2. Directed the Interim Chief Financial Officer, as part of the stakeholder consultation process, to consult further with:

a.  university and colleges, with the object of minimizing the impact arising from the proposed Development Charges By-law on delivering student housing;

b. the rental sector, with the objective of minimizing the impact through a special rental housing phase-in or deferral program and a new development charge category for that sector;

c. the Chief Planner and Executive Director, City Planning on how the Development Charges By-law review aligns with the in-progress review of permissions for laneway suites within Toronto and East York District, further to the July 4, 5, 6, and 7, 2017 direction from City Council (Item TE25.108); and

d. the Director, Affordable Housing Office, on a review of predicted impact of the proposed Development Charges By-law on the Home Ownership Assistance Program, specifically with regards to access to affordable home ownership opportunities.

3.  Requested the Interim Chief Financial Officer to report on the possibility of continuing the exemption for non-profit housing as part of his further report.

4.  Requested the Interim Chief Financial Officer to review the possibility of a pilot project in Mount Dennis to provide development charge relief or other incentives to private investment in Neighbourhood Improvement Areas and to report back to the Executive Committee in conjunction with the final report on development charges.

The Interim Chief Financial Officer gave a presentation on City of Toronto 2018 Development Charges By-law Review.

The Executive Committee held a statutory public meeting on January 24, 2018 and notice was given in accordance with the Development Charges Act, 1997.

This report tables the 2018 Development Charges (DC) Background Study and proposed DC bylaw for consideration at statutory public meeting in accordance with the Development Charges Act, 1997 (Development Charges Act) and as part of the Development Charges bylaw review consultation process. 

Prior to tabling this Study and bylaw, staff held four consultation meetings with key industry stakeholders beginning in June 2017, and undertook a series of technical review meetings with Building Industry and Land Development Association (BILD) and their respective consultants on the DC Study calculations beginning in November.  Meetings with ratepayer groups including two evening general public information sessions have also been scheduled in January 2018. 

The consultation process is ongoing and helps ensure that stakeholders understand the Development Charges Study methodologies and assumptions in calculating the proposed charges and that the stakeholder input is considered through the review process. Staff are committed to continuing consultation on key technical and policy matters with the land development industry and other stakeholders before a final bylaw is presented to Council for adoption.

Development Charges help fund essential growth-related infrastructure in numerous City programs. The Development Charges Act requires that a municipality update its Development Charges bylaw every five years, or sooner, in order to continue to levy Development Charges.  The City's current Development Charges bylaw came into effect on November 1, 2013 and must be replaced with a new Development Charges bylaw prior to its expiry on October 31, 2018 if Council wishes to continue to collect Development Charges. 

The Development Charges Background Study calculates costs that can be recovered through Development Charges based on the City's capital plans and other assumptions in accordance with the prescriptive requirements of the Development Charges Act.  The calculated Development Charges rates, as set out in the Background Study, represent the maximum charges that can be imposed.  These increases (approximately 97 percent, on average, for residential uses and 110 percent on non-residential uses) over current levels reflect updated capital programs, revised growth forecasts and updated Development Charges Background Study calculations.

Increases of this magnitude are due to increased expenditure plans, particularly in programs such as transit, affordable housing, and for major new development areas like Port Lands, along with increasing land and construction costs. 

Development Charges do not fully fund the cost of growth-related capital infrastructure. Statutory constraints limit the City's ability to recover the full cost of growth from Development Charges.  As such, a portion of the cost of growth is funded from the City's property tax base and user fees.  

The proposed bylaw continues many of the current policies including exemptions for industrial uses and non-ground non-residential floor area (i.e. exemptions for office uses).  Exemptions for non-profit housing is now governed independently through the City's Open Door program and has been removed from the bylaw. The exemption for employment uses that qualify for the City's Imagination, Manufacturing, Innovation and Technology (IMIT) Financial Incentives Program has been removed, given its limited impact compared to the property tax incentive.  All Development Charges exemptions reduce revenue for growth related programs, requiring instead funding directly through other City revenues.

Transition provisions that phase-in the implementation of rate increases have been considered by Council in the past.  Such provisions can mitigate the potential impact of a Development Charges rate increase on projects already in the development pipeline. The proposed bylaw does not currently include transition provisions as these will be considered pending input received at the public meeting and further consultation with stakeholders.  Various options on transition are described in the body of the report.  Like exemptions, transition provisions have financial implications for both the City and land developers.

This report recommends that the input received through the public meeting be referred to staff for a further report to the March 19, 2018 meeting of Executive Committee. Staff will continue dialogue and consultation with industry and other stakeholders following the statutory public meeting.  Any necessary adjustments to the Development Charges rates and policies will be made and incorporated into the final amended Development Charges Study and proposed bylaw for consideration of Committee and Council.