Item - 2018.EX33.3

The Executive Committee recommends that:

1.  City Council enact the development charges by-law attached as Appendix 1 to the report (April 3, 2018) from the Interim Chief Financial Officer.

2.  City Council adopt the Development Charges Background Study, dated January 9, 2018, as amended by the Addendum dated April 6, 2018, including the development-related capital program and asset management plan contained within, subject to annual review through the City's normal capital budget process and ongoing asset management strategy.

3.  City Council adopt the following recommendations for the purposes of complying with the Development Charges Act, 1997:

a.  City Council determine that no further public meeting is required pursuant to section 12 of the Development Charges Act, 1997.

b.  City Council express its intent that the future excess capacity identified in the Development Charges Background Study, as amended, shall be paid for by the development charges contemplated in the Development Charges Background Study, or other similar charges.

c.  City Council adopt the Transit development charges capital program, as included in the Development Charges Background Study, as the planned level of service, and in doing so, indicate that it intends to ensure that the increase in service for transit will be met.

d.  City Council, after having considered the use of more than one development charge by-law to reflect different needs for services in different areas, determine that the charges be calculated on a municipal-wide uniform basis.

4.  City Council authorize the Chief Building Official and Executive Director, Toronto Building continuing to require applicants seeking conditional below grade-permits to enter into a development charges deferral agreement, in accordance with the general terms and conditions in Appendix 2 to the report (April 3, 2018) from the Interim Chief Financial Officer and in a form acceptable to the Interim Chief Financial Officer and City Solicitor.

5.  City Council authorize the Director, Affordable Housing Office, in consultation with the Interim Chief Financial Officer, to administer the City Purpose-built Rental Development Charges Rebate Program, in accordance with the general terms and conditions in Appendix 3 to the report (April 3, 2018) from the Interim Chief Financial Officer and enter into appropriate agreements, in a form acceptable to the Interim Chief Financial Officer and City Solicitor.

6.  City Council direct the Director, Affordable Housing Office, in consultation with the Acting Executive Director, Corporate Finance and the City Solicitor, to report to the June 25, 2018 meeting of the Affordable Housing Committee with program details to enable the conversion of the Home Ownership Assistance Program from a program funded through the development charges reserve fund for Subsidized Housing (XR2116) to a development charges deferral program.

7.  City Council approve the establishment of an obligatory reserve fund account named "Development Charges - Shelter Services" in Schedule 11 of City of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds ("Chapter 227"), the purpose of which is to provide funding for shelter services capital projects, with the following criteria:

a.  Shelter, Support and Housing Administration shall have primary responsibility for the account;

b.  the initial financial contribution is $0.00;

c.  the funds are provided from development charge collections;

d.  the funds are withdrawn in accordance with the Capital Budget process; and

e.  the fund is reviewed every five years.

8.  City Council request the Interim Chief Financial Officer to report back on potential geographically based development incentives in conjunction with the consideration of the Planning Framework Study for the Mount Dennis neighbourhood.

9.  City Council request the Province to increase the Provincial development charges rebate program for non-luxury purpose-built rental housing and review provincial policies to support the creation of new purpose-built rental housing.

10.  City Council authorize the City Solicitor, in consultation with the Interim Chief Financial Officer, to make such housekeeping, technical and minor amendments to the by-law as necessary to give effect to the recommendations contained herein.

11. City Council direct that the confidential information contained in Confidential Attachment 1 to the report (April 3, 2018) from the Interim Chief Financial Officer remain confidential in its entirety as it pertains to litigation or potential litigation, including matters before administrative tribunals, affecting the municipality or local board.

The Executive Committee:

1.  Requested the Interim Chief Financial Officer, in consultation with the Chief Planner and Executive Director, City Planning, to report directly to City Council on April 24, 2018 to eliminate the development charges for secondary dwelling units as outlined the Proposed Development Charges By-law in Appendix 1 to the report (April 3, 2018) from the Interim Chief Financial Officer.

2. Held a statutory public meeting on January 24, 2018 and notice was given in accordance with the Development Charges Act, 1997.

At the statutory public meeting held on January 24, 2018, Executive Committee referred the input received at the public meeting to the Interim Chief Financial Officer and directed staff to conduct additional stakeholder consultations and report on certain other matters to the April 17, 2018 meeting of Executive Committee. This report provides the results of the additional consultation and recommends the adoption of a revised development charges by-law and Background Study.

Technical revisions to the Development Charges Background Study, arising primarily through further discussions with consultants retained on behalf of the Building Industry and Land Development (BILD) Association and internal review by the City's own consultants, have resulted in a 9 percent reduction to the proposed calculated residential and non-residential development charges rates presented in January 2018. 

This report recommends adoption of a number of important policies incorporated in the recommended by-law. These include:

i)  A schedule of updated charges that will, when fully implemented, almost double the City's development charges revenue to help offset the cost of growth.

ii)  New support for non-luxury purpose-built rental housing to mitigate the impact of the rate increases.

iii)  New support for scattered rental in newly constructed laneway, garden and other second suites, reducing the applicable charge in some cases by almost $50,000 per unit by applying the apartment rate to all land development meeting the definition.

iv)  Timing of payment of development charges to occur upon issuance of first building permit once rate increases are fully phased-in.

v)  Continuation of development charges exemptions for lands owned by and used for college and university purposes.

vi)  Continuation of the industrial and office exemptions (with the exception of the ground floor) pending further study.

Other recommendations outside the by-law are expected to address concerns regarding the rate impact on home ownership assistance programs and on certain areas of the City.

The proposed by-law attempts to strike an appropriate balance between revenue optimization, City Council long term planning and economic development objectives, and due consideration of the potential impact on the land development and construction industry.

Development charges are calculated on a cost recovery basis and represent the maximum charges that can be imposed under provincial legislation. This report recommends development charges that are notable increases over current levels and are primarily the result of updated capital programs.  Upon full phase-in, these increases are expected to generate approximately $240 million per year in additional development charge revenues, helping to support services that are required to accommodate growth.

Almost 40 percent of the residential charge is related to funding transit.  The charge and related revenue for investments in affordable rental housing will increase by 270 percent compared to the 2013 by-law.  While the City's rates are increasing, Toronto's rates remain competitive with the rates in growing municipalities in the surrounding region, reflecting the need for capital investment to provide services as a result of growth.

On behalf of the land development industry, Building Industry and Land Development Association has indicated that it will not appeal the by-law nor support actions of its independent members to appeal if Council adopts the recommended rates, phase-in strategy and the balance of the proposed by-law largely as presented in January.