THE COMMERCIAL REAL ESTATE DEVELOPMENT ASSOCIATION

A strong voice for CRE

Update, September 2020

The Government of Ontario recently made several changes in Bill 197, COVID-19 Economic Recovery Act, 2020 that are relevant to the land use planning, building and development sectors. See the full article for an overview of the following five key areas of the bill that NAIOP members should be aware of, as they make significant changes to the Minister of Municipal Affairs and Housing’s authority and powers. 

• Changes to the Building Code
• Enhanced Minister’s Zoning Orders
• Provincial Land and Development Facilitator
• Changes to the Environmental Assessment Act
• Transit-Oriented Communities

The full text of the bill, which received Royal Assent in July and is in effect, can be found here.

Building Code

The Building Code was amended to allow for regulations under the Act to made by the Minister, rather than the Lieutenant Governor General in Council.

This will allow the Code to be amended quickly to respond to emerging and immediate issues (e.g. COVID-19 recovery), assist with cross-country regulatory harmonization and bring the Code in line with how changes are made to the Fire Code (also by Ministerial regulation).

 

Enhanced Minister’s Zoning Order (MZO)

The Minister has been provided with enhanced powers under an MZO, including the authority to:

  • Remove municipal use of site plan control
  • Require agreements between municipalities and proponents concerning site plan matters
  • Require inclusionary zoning (affordable housing requirements, including ability to require a municipality and landowner to enter into an IZ agreement)) and
  • Amend enhanced Minister’s Zoning Orders without being required to first give notice

The Greenbelt Area is exempted from enhanced MZOs.

These changes are meant to speed up the planning approvals process for strategic developments.

 

Provincial Land and Development Facilitator

The Bill permanently established the office of the Provincial Land and Development Facilitator (PLDF) and provided authority to the Minister to appoint the Facilitator.

The PLDF is currently a short-term advisory body that provides objective confidential and independent advice to the Minister.

The goal is to have the PLDF support the province on growth, land use and other matters, including Provincial interests (e.g. protection of ecological systems/natural areas, adequate provision of affordable housing and employment opportunities, and the management of natural resources).

Through the PLDF, the government will take a leadership role in working collaboratively with both municipalities and stakeholders to explore all opportunities to stimulate the economy.

 

Modernizing the Environmental Assessment Act

Following consultations, 8 amendments were made to the Environmental Assessment Act.

These changes make the level of assessment proportional to the level of impact on the environment and update class environmental assessments so they are more focused on projects with medium impacts, such as building a new wastewater treatment plant.

The Ministry is developing regulations and business process improvements to implement these changes.

The regulations will focus on:

    • Developing the Project List for comprehensive EAs (currently posted for comment – ERO posting 019-2377)
    • New streamlined assessment project list and processes
    • Sectoral Terms of Reference
    • Expiry date exemptions
    • Deadlines

 

Transit-Oriented Communities

The Transit-Oriented Communities Act 2020 will:

  • Streamline land assembly through exemptions from Hearings of Necessity for four subway projects (Ontario Line, Yonge North Extension, Scarborough Subway Extension, Eglinton Crosstown West Extension).
    • Instead, the Province will establish an alternative process for receiving and considering comments about expropriations from landowners
  • Allow the Province to capture value from these projects through new commercial arrangements
    • Under this program the Province will partner with third parties and municipalities to deliver transit stations integrated with communities

The City of Toronto is reviewing its Non-Residential Development Charges (DC) Policy. The City is considering changes that will significantly affect our industry. We have outlined in this article the City’s initial proposals, our response and the time frame for the review. We will share further information as it is available.

Toronto’s Current Non-Residential DC Policy

  • As background, non-residential development in Toronto currently pays approximately $40 square/foot in DCs.
  • However, as a policy decision, the City exempts all floors above and below the ground floor in a non-residential/non-industrial development from paying DCs.
  • This means that commercial development only pays DCs on the ground floor.

City’s Proposals

The City is considering changes to this DC exemption policy that will have a significant impact on our industry. Some of the potential changes under consideration include:

  • Increasing DCs to 50% of the full charge (~$20 square/foot) on the total square footage – all floors – no exemptions;
  • Increasing DCs to 100% of the full charge (~$40 square/foot) on the total square footage – all floors –no exemptions;
  • Redefining warehouse uses as non-industrial and charged the non-residential rate.

The City has retained Hemson Consulting to undertake the background study work on these proposals.

NAIOP Greater Toronto Chapter’s Response

  • NAIOP has been actively engaging with City Staff and political decision makers on this issue, along with its partners at REALPAC and the Financial District BIA.
  • We have been clear that these proposed changes will have a very negative impact on economic growth and development in the City and additional consultation and analysis is necessary.
  • NAIOP is working closely with its industry colleagues on a strategy to push back on these proposals, including the commissioning of an economic impact study on the City’s proposed changes.

Time Frame

  • Staff were initially targeting January 2020 to report to Executive Committee.
  • However, following our engagement, City Staff have decided to delay their report until March 25, 2020.
  • City Staff agree that further time is necessary to better understand the concerns we have raised with respect to the policy proposals and to better understand the impacts. This will allow us and our industry association colleagues time to review Hemson’s still-to-be-released report and provide our own analysis of the proposal’s impacts.
  • Further consultations with City Staff, Hemson and other industry stakeholders will be scheduled in January and February.

Next Steps

NAIOP will continue to work with City Staff, Hemson and other industry stakeholders on this issue moving forward. We will provide further updates for Greater Toronto Chapter members as we have more information.

With nearly 1300 members, NAIOP Greater Toronto is a leader in public policy issues municipally and provincially. Working independently and in collaboration with a coalition of real estate industry organizations, we are recognized as an important voice for the commercial real estate industry. NAIOP is advocating on issues of importance to our membership, including the following …

Community Benefit Charges Consultation – Bill 108

NAIOP is actively participating in the Community Benefit Charges Consultation process to help determine the formula to be used to calculate this new charge. Bill 108 introduced Community Benefit Charges as a single charge to replace the “soft services” component of development charges, Section 37 density bonusing, and, the alternative parkland dedication rate. This charge, once determined, will impact the fees developers pay across the Province. The province is expected to ask for additional public feedback on its proposals later this fall. NAIOP will continue to advocate strongly in support of the commercial real estate industry throughout this process.

King-Parliament Secondary Plan Review

Toronto Planning Staff have presented their proposed Secondary Plan for the King-Parliament Area. The plan’s key objectives are to enhance employment, maintain the area’s diverse physical heritage and character and improve and expand parks and the public realm. These proposals will significantly impact the commercial development industry. The finalized Secondary Plan and updated zoning by-law is expected to be brought to Council in April 2020. NAIOP is participating in the consultation process to ensure that the plan incorporates commercial realities.

Peel Region Vacant and Excess Land Class Review

Peel Region is undertaking a review of the appropriateness of its vacant and excess land sub class property tax reduction program for commercial and industrial properties. NAIOP submitted a letter as part of the review in favour of maintaining the program and attended the consultation meetings. NAIOP is concerned that reducing or eliminating this program would create additional pressure to rezone industrial lands for non-manufacturing uses and contribute to the reduction of land available for future employment. Peel Region is expected to review staff recommendations for this program at its January 2020 Council meeting. NAIOP will continue its advocacy in support of commercial and industrial development in the Region.

GO Train Electrification

The Province’s plan for two-way, all-day rapid GO transit service will have a dramatic impact on the continued growth of the GTA and links to smaller communities in southern Ontario. NAIOP has been closely monitoring the process and is working with the Ministry of Transportation to address electromagnetic field (EMF) related issues along the downtown Union Station Rail Corridor that could adversely impact tenants and owners. Local stakeholders have indicated that substantial increases to EMF in this area could interrupt sensitive building systems.

Following NAIOP’s outreach, the Ministry has committed to ensuring that any EMF issues will be addressed following the award of the project’s RFP later in 2020. NAIOP is monitoring this issue.

Waterfront LRT

The significant development planned for the east Waterfront has increased the need for transit. NAIOP has been working with the Waterfront BIA to enhance political and public awareness of the imperative for a Waterfront LRT.

Toronto City Staff are expected to present a request to complete the preliminary planning and design work for the LRT to Budget Committee by the end of 2019. NAIOP will continue to advocate in support of this project.

Toronto Budget 2020

As always, NAIOP will be monitoring Toronto’s 2020 Budget process for issues of importance to our membership. City staff and Mayor Tory have committed to an ongoing property tax ratio reduction program to keep Toronto competitive and we will be watching to ensure this commitment is maintained. Staff are also expected to present a report on revenue tools for Council to consider in its efforts to alleviate its annual Budget pressures. NAIOP will be actively involved in this process to ensure that its membership is not unduly impacted.

May 9, 2019 – Last week the Hon. Steve Clark, Minister of Municipal Affairs and Housing, introduced Bill 108, More Homes, More Choice Act 2019. This Bill will significantly change both legislation and regulations governing real estate development in Ontario. While it is aimed at increasing the supply of housing, there are a several relevant amendments for both the commercial and industrial development sector. This article provides a high-level overview of the Bill. For specific details, the full text can be found here.

In addition, there are three related consultations (ending June 1 2019) that you may also want to review. These are focused on the amendments to:

The Development Charges Act
The Planning Act
The Ontario Heritage Act

SOME OF THE RELEVANT CHANGES IN BILL 108 FOR NAIOP MEMBERS INCLUDE:

DEVELOPMENT CHARGES ACT
Proposed changes to the Act would:

Eliminate “soft services” from the development charge calculation (e.g. Libraries, Parks and Recreation, Child Care, etc.) as they will be included in the new Community Benefit Charge;

Allow commercial, industrial, institutional, rental housing and non-profit housing development to:

  • Pay development charges in six annual installments starting when the building is occupied;
  • Freeze the development charge rate applied to the project at the rate in force when the application is made for site plan or zoning approval.

EDUCATION ACT
Proposed changes to the Act would:

Allow School Boards to use revenue from education development charges, with the Minister’s approval, towards innovative and lower-cost alternatives to site acquisition;

Provide the Minister with the power to approve localized education development charge agreements. These agreements would allow landowners to provide a lease, real property or other benefit to the Board for pupil accommodation in exchange for the Board agreeing not to impose EDCs on the land;

PLANNING ACT
Proposed changes to the Act would:

Reduce decision making timelines for municipalities to:

  • 120 days for official plans and amendments;
  • 90 days for zoning by-laws and amendments;
  • 120 days for plans of subdivision;

Allow the Minister to require the use of the community planning permit system in areas specified by the Minister (e.g. major transit station areas and provincially significant employment zones);

Bundle density bonusing provisions (previously Section 37), soft services in Development Charges (e.g. libraries, daycares, etc.) and (in some cases) parkland dedication into a single community benefit charge. These charges would be capped in regulation based on a portion of the appraised value of the land;

Reinstate the previous OMB rules under the Local Planning Appeal Tribunal (LPAT) name. These changes would include:

  • Re-instating “de novo” hearings in all cases;
  • Giving the Tribunal the ability to call and cross examine witnesses and consider new evidence;
  • Providing the Tribunal with the power to require mandatory participation in mediation or other dispute resolution processes by parties in specific circumstances;
  • Broadening the Tribunal’s jurisdiction over major land use planning matters (i.e. official plans, zoning by-laws and amendments) and giving it the authority to make final determinations on appeals of such matters;
  • Ensuring community groups and residents maintain affordable access to the appeals process.

ONTARIO HERITAGE ACT
Proposed changes to the Act include:

New mandatory standards for heritage designation by-laws;

New time limits to confirm a complete application for alterations and demolition, and for designation decisions. These time limits include:

  • 60 day timeline for notifying property owners of whether their applications for alteration and demolition are complete;
  • 90 day timeline for municipalities to issue a notice of intention to designate a property, once certain events have occurred;
  • 120 day timeline for passing a designation by-law after the municipality issues the notice of intention to designate;

Changing the process for adding new properties to the municipal heritage register to ensure property owners are given notice when their property is “listed” and enabling them to object to the municipal council;

Allowing appeals of municipal decisions on designation and alterations to heritage properties to LPAT, whose decision will be binding;

Regulations will be introduced to establish principles that shall be considered by municipalities when making decisions under Parts IV (Conservation of Property of Cultural Heritage Value or Interest) and V (Heritage Conservation Districts).

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In 2018, NAIOP continued to speak on issues of importance to our membership, including the City of Toronto’s major planning exercise: “TOcore”. The City of Toronto completed this planning exercise to establish a 25-year vision for the downtown. Read more about this and other issues in which NAIOP is involved …

(Continued) City of Toronto major planning exercise: “TOcore”

The proposals had significant implications for the commercial development industry. NAIOP Greater Toronto worked with City of Toronto Planning Staff over many months to ensure that the plan was more balanced and better accommodated commercial realities. Ultimately the plan included increased flexibility for mixed use and less stringent requirements for commercial developments. TOcore is being reviewed by the Ministry of Municipal Affairs and NAIOP remains involved in the provincial consultation process.

Commercial-to-Residential Property Tax Ratio

Commercial properties in Toronto pay approximately 2.8 times residential property tax rate. NAIOP Greater Toronto is part of an industry coalition seeking to reduce the commercial-to-residential tax ratio to no greater than 2:1, something closer to the ratio in surrounding jurisdictions. As a result of our combined efforts, City staff and the Mayor are committed to an ongoing ratio reduction program that keeps Toronto competitive.

Toronto’s Development Charges Review

NAIOP Greater Toronto worked closely with the City on the five-year review of the Development Charges (DC) by-law. Our efforts along with BILD and REALPAC resulted in the continued inclusion of the commercial development exemption, reductions to the proposed rate, a two-year phase in process, and, an agreement for DCs to be payable upon first permit once the rates have been fully phased in by November 1, 2020.

TCDSB Education Development Charges

Alongside our colleagues, NAIOP Greater Toronto participated in the Toronto Catholic District School Board’s Education Development Charges (EDC) review. The Board had proposed dramatic increases to the EDC rates. We raised numerous concerns about the proposed increase and flaws with the report on which the increase was based. The Minister of Education froze rates until the Ministry completes a review of Education Development Charge policy framework.

MPAC’S ‘Highest and Best Use’ Assessment Methodology

Commercial properties across the GTA have seen dramatic increases to their assessments, largely due to MPAC’s increased use of ‘highest and best use’ methodology. Working with other industry groups, NAIOP Greater Toronto has recommended that the Ministry of Municipal Affairs require that MPAC base assessments on current use until a development permit is issued. We are continuing this work.

Working with our outside government relations advisors, industry partners, and BIAs, we ensure that public policy decision makers understand and respond to the concerns of NAIOP members. Public policy decisions can have an enormous impact on our industry, so we make sure the industry has a seat at the table. While the issues change, some of the key issues we’re focused on now include …

Commercial-to-Residential Property Tax Ratio

In 2005 the City of Toronto committed to annual reductions of the commercial-to-residential property tax ratio, with a goal of reaching a 2.5:1 ratio by 2020 (i.e. commercial properties would pay 2.5 times the residential property tax rate). This policy has led to increased jobs and investment in the City.

However, due to budget constraints, City Council decided to move away from this target in 2017 and has not committed to returning to it.

To help keep Toronto competitive, NAIOP Greater Toronto Chapter is part of the ‘Property Tax Coalition for Growth’ to get the City back on track. With our partners we created “The Point One Plan” to reduce the ratio.1 each year, starting in 2019.

Potential Electromagnetic Field Interference stemming from GO Train Electrification

Commercial property owners and managers adjacent to the Union Station Rail Corridor are worried that the planned Metrolinx GO Train electrification may cause harmful spikes in the electromagnetic field. They are concerned about the potential impact on tenants.

NAIOP has partnered with the Toronto Financial District BIA, Entertainment District BIA, BOMA and property owners/managers along the corridor to address these concerns with Metrolinx.

Provincial Business Education Tax

While the Province equalized the residential education tax in 1998, ensuring all Ontarians pay the same rate, it did not harmonize the Business Education Tax (BET) at the same time. This has led to wide discrepancies between municipalities with businesses paying significantly higher rates for the same level of benefit.

For example, Toronto commercial properties pay 6.3 times more than businesses in Halton Region – without receiving additional services.

Along with our ‘Property Tax Coalition for Growth’ partners, we have engaged City of Toronto and provincial decision-makers regarding our proposal to harmonize the BET. Our advocacy on this issue continues as we work to obtain a commitment to implement a uniform and fair BET rate across the province.

Highest-and-Best-Use (HABU) Assessment Issue for Toronto’s Downtown

Some Toronto businesses have received re-assessments that have led to extraordinary property tax increases (approximately 500 in over 40,700 commercial properties saw increase of 50% or more). This issue has garnered significant media and political attention.

To address this issue, the City of Toronto expanded its capping and claw-backs program and is considering further changes (such as small business tax class) later this year. Neither of these decisions will resolve the underlying problem: properties being improperly assessed using a highest-and-best-use evaluation.

As part of the ‘Property Tax Coalition for Growth’, NAIOP is working on a potential solution to resolve this issue without placing undue burdens on certain sectors of the industry.

Education Development Charges

The Toronto Catholic District School Board (TCDSB) is proposing a significant increase to its Educational Development Charges (EDCs). The current proposal would see an approximate 650% increase to the non-residential rate. NAIOP is deeply concerned about this proposal and is supporting our colleagues at BILD in their efforts to oppose this increase.

TOcore Review

NAIOP Greater Toronto Chapter actively participated in the City’s TOcore planning review on behalf of the commercial development industry. The goal of TOcore is to draft a new secondary plan for Toronto’s Downtown that will set a 25 year vision for the area.

The plan was adopted by City Council during its May 2018 meeting.