February 13, 2015
Author: Leor Margulies
The development industry scored a huge victory a few weeks ago when the OMB rendered its decision capping parkland dedication fees in Richmond Hill’s Official Plan to 25% of the maximum amount otherwise allowed under the Planning Act.
Under the Planning Act, a municipality may charge up to either 5% of the land value of the development or 1 hectare per 300 units of density being created on the development lands for a parkland dedication fee. The City of Toronto has long recognized that utilizing the maximum amount under the Planning Act for high rise developments, would effectively stall any development and has come up with a reasonable parkland dedication fee that is based on a sliding scale of 10% to 20% of the site value, depending on its relative size.
Municipalities in the 905 areas, which have long been the bastion of low density development, have resisted putting any caps on parkland dedication fee for higher density projects rendering them substantially higher than in Toronto and making many high-rise projects uneconomic. All this, in the face of provincial policy to intensity built up areas. Municipalities like Richmond Hill and Oakville have thumbed their noses at affordable housing, saying that the market has demonstrated that higher cost houses in those municipalities sell well and they are not interested in creating housing that is affordable. Those people that can’t afford houses in their municipalities will have to simply go elsewhere.
For instance, applying the maximum parkland dedication fee under the Planning Act to the particular high-rise project that was appealed in Richmond Hill, would have resulted in a dedication fee equal to the entire land value of the entire parcel, a ludicrous result. Drilling down to a per unit basis would result in the amounts being approximately $37,500 per unit. In the City of Toronto a similar amount for an equivalent parkland dedication fee would be no more than 20% of the land value.
It has long been an open legal issue as to whether or not the OMB has the ability to put a cap on the parkland dedication fee otherwise chargeable by a municipality under the Planning Act. The Ontario Court in May 2014 declined to opine on an OMB decision which had declared that it did have such jurisdiction, in an application by Richmond Hill, until such time as there was a By-law or Official Plan being contested.
The appeals by Elgin Bay Corporation and Zamani Homes (Richmond Hill) Ltd. gave the OMB the opportunity to exercise its purported jurisdiction. It decided to cap the Richmond Hill Official Plan policy to 25% of the maximum amount after assessing similar policies of other municipalities. This ended up reducing the potential rate per unit from $37,600 to the maximum of approximately $9,000 per unit.
The Town of Richmond Hill is considering whether or not it will be bringing an appeal to Divisional Court, yet again to ensure that affordable housing is not an option in its town.
It should be noted that this appeal was supported by BILD, both in principle and from its pocketbook. The fight to cap parkland dedication fees in the 905 area has been a significant battle for BILD and this decision represents a tremendous victory for all of the development industry and consumers alike.
The Board also directed the municipality that when the actual By-laws are implemented under that maximum of 25%, the fee should be structured on a declining basis, such that the higher the density of the site, the lower the actual cap should be.
Good news for new home purchasers for sure. Other 905 cities, beware ! The days of exorbitant parkland fees are hopefully coming to an end.