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Municipal - Development Charges Act (DCA). City of Toronto v. Ocean Club Residences Inc.
In City of Toronto v. Ocean Club Residences Inc. (Div Court, 2023) the Divisional Court considers provisions under the Development Changes Act - and then procedures under successively the OMB, the LPAT and now the Ontario Land Tribunal:[21] Section 22(2) of the Development Charges Act provides:A complainant may also appeal to the Ontario Land Tribunal if the council of the municipality does not deal with the complaint within 60 days after the complaint is made by filing with the clerk of the municipality a notice of appeal. [22] Relying on this section, Ocean Club Residences Inc. and Phantom Developments Inc. launched appeals which, at the time, were to the Ontario Municipal Board which was subsequently replaced by the Local Planning Appeal Tribunal. By letter to the office of the City Clerk dated June 15, 2016 the four members of the Humber Shores Landowners Group (Monarch Waterview Development Limited, B-Major Homes (Ontario) Inc., Kingbird developments Inc. and Empire Communities (2183 Lakeshore Blvd.) Ltd.) launched a third appeal.[29] The three complaints were consolidated and heard together by the Local Planning Appeal Tribunal[30] over seven days.[31]
[23] In coming to a decision with respect to the appeal of the complaints, the Local Planning Appeal Tribunal had, and the Ontario Land Tribunal now has, the power to do whatever could have been done by the City.[32] The City’s authority (and therefore that of the Tribunal) is outlined in s. 20(6) of the Development Charges Act:After hearing the evidence and submissions of the complainant, the council may dismiss the complaint or rectify any incorrect determination or error that was the subject of the complaint. [24] It was pursuant to this authority that the Local Planning Appeal Tribunal found that a development charge credit, in the amount of $2,032,333, should have been recognized and, pursuant to s. 25(1) of the Development Charges Act ordered that amount be refunded.[33] It is that finding that is the subject of this appeal.
Leave to Appeal
[25] This appeal was brought under s. 37 of the Local Planning Appeal Tribunal Act, 2017[34]:Subject to any general or special Act, an appeal lies from the Tribunal to the Divisional Court, with leave of the Divisional Court, on a question of law, except in respect of matters arising under Part IV.
[Emphasis added] [26] Leave to appeal was granted by order of this court made on April 8, 2022.[35] The decision granted leave on three questions of law, as follows:1. Did the LPAT err by determining that its jurisdiction on appeal under the complaints procedure established by subsection 20(1) of the DC Act includes the jurisdiction to review the refusal or failure by a municipality to grant a credit pursuant to subsection 38(1) of the DC Act?
2. Did the LPAT err by determining that, if it has jurisdiction to determine entitlement under subsection 38(1) of the DC Act it can award a development charge credit in respect of work that was not performed by the respondents but in respect of which they made a financial contribution?
3. Did the LPAT err by failing to dismiss the Not Timely Complaint on the basis that it did not meet the statutory requirements for commencing a complaint under subsections 20(1) and (2) of the DC Act?[36] The case continues at paras 30-73 to assess this extensive development charges appeal, complicated by legislative procedural changes. . City of Toronto v. Ocean Club Residences Inc.
In City of Toronto v. Ocean Club Residences Inc. (Div Court, 2023) the Divisional Court considers development charges, with an example:Development Charges
[2] Generally, development charges are the means by which municipalities in Ontario obtain the funds to pay for services (for example: sewer, water and roads[2]) necessary to incorporate any proposed development into the overall servicing structure the municipality provides. Local services, those that connect the development to that overall servicing structure, are provided by the developer of the property involved. The value of the development charge is not separately assessed as representing the actual cost of the infrastructure required to service each individual development proposal. Rather, the charge is applied through the passage of a by-law which includes, among other things:. the rules for determining if a development charge is payable and for determining the amount of the charge, and
. the area of the municipality to which the by-law applies.[3] [3] In preparation for the passage of a development charge by-law, the council of the municipality is required to complete a background study. The background study includes, among other things:. estimates of the anticipated amount, type and location of development, in the municipality, and
. an examination, for each service to which the by-law would relate, of the long-term capital and operating costs for the capital infrastructure required for the service.[4] [4] The substance of a development charge by-law is founded on the work and results of the background study. The by-law is to be passed within one year following the completion of the study.[5]
[5] The decision being appealed is with respect to a complaint against the development charge imposed under the authority of Development Charges By-Law No. 1347-2013.[6] Subject to any specific agreement to the contrary, entered into between the council and the person required to pay the development charge, the by-law required any development charge to be paid as of the date a building permit was issued.[7] Counsel for the City advised the court, and the by-law confirms, that the calculation of any specific charge reflects services identified in the background study. They can be specific (for example: the “Spadina Subway extension”) but for the most part are generalized (for example: “Transit (balance)”, “Parks and Recreation”, “Police”, “Fire”, “Roads and Related”, “Water”, “Sanitary Sewer” and “Storm Water Management”).[8] The amount of the charge depends on the type of development: for residential development the charge is calculated per unit to be constructed, the base value depending on the type of unit (“Singles and Semis”, “Multiples 2+ Bedrooms”, “Multiples 1 Bedroom and Bach.”, “Apartments 2 Bedrooms and Larger”, “Apartments 1 Bedroom and Bach.” and “Dwelling Room”) and for non-residential according to the amount of gross floor area.[9] The rates associated with each of the types of residential units and for non-residential development increased over time.[10] Thus, as noted above, and as submitted by counsel for the City, the assessment of the charge does not address the specific service requirements of the particular development but is the result of a mathematical calculation multiplying, in the case of a residential development, the number of each of the various unit types and, in the case of non-residential development, the number of square metres by value of the development charge associated with each of them.
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The Legislative Treatment of Credits and the Process
[14] The provision of credits in lieu of the payment of development charges arises through ss. 38(1) and (2) of the Development Charges Act which state:(1) If a municipality agrees to allow a person to perform work that relates to a service to which a development charge by-law relates, the municipality shall give the person a credit towards the development charge in accordance with the agreement.
(2) The amount of the credit is the reasonable cost of doing the work as agreed by the municipality and the person who is to be given the credit. [15] On its face, what this demonstrates is that presumptively development charges represent an obligation to pay the cost of services to which a development charges by-law relates but that, with the agreement of the municipality, a developer may undertake some part of the work and receive a credit for the value of that work as against the development charges that would, in the normal course, be payable.
[16] As perceived by the respondents, the report dated December 11, 2012 and “delivered on or about December 14, 2012”[21] stands as their request for development charge credits.[22] As already noted, given the timing, it is not surprising that the City did not immediately respond.
[17] When there are concerns regarding the processing of development charges, the Development Charges Act provides a means by which an owner or developer can complain. The means for, and substance of, such complaints are presented by s. 20(1) which provides:20 (1) A person required to pay a development charge, or the person’s agent, may complain to the council of the municipality imposing the development charge that,
(a) the amount of the development charge was incorrectly determined;
(b) whether a credit is available to be used against the development charge, or the amount of the credit or the service with respect to which the credit was given, was incorrectly determined; or
(c) there was an error in the application of the development charge by-law.
[Emphasis added] . Stelmach Project Management Ltd. v. Kingston (City)
In Stelmach Project Management Ltd. v. Kingston (City) (Ont CA, 2022) the Court of Appeal, in the course of ruling about an anti-circumvention case, sets out some history of the Deveopment Charges Act:Lot Levies
[11] Prior to statutory reform in the late 1980s, municipalities in Ontario commonly raised the necessary revenue for development related infrastructure by imposing “lot levies” on landowners who sought development approvals. These levies were established through contracts between municipalities and the landowners and were a condition to obtaining the development approval. As explained in Mississauga (City) v. Erin Mills Corp. (2004), 2004 CanLII 17223 (ON CA), 71 O.R. (3d) 397 (C.A.), at para. 10, the lot levy regime left each municipality to implement its own policy “with a resulting diversity that caused confusion and dissatisfaction across the province.”
[12] Concurrent with the lot levy practice, municipalities also had the power, since at least 1949, to charge developing landowners for deferred benefits from water and sewage works: Municipal Act, S.O. 1949, c. 61, s. 11; compare Municipal Act, R.S.O. 1990, c. M.45, s. 221, which granted the municipality authority to impose fees to offset capital costs for sewage and water infrastructure.
The Development Charges Act, 1989 and amendments
[13] The Development Charges Act, 1989, S.O. 1989, c. 58, was intended to replace the lot levy system. It was later amended as the Development Charges Act, 1997. This court explained the purpose of the new legislation in Ontario Cancer Treatment and Research Foundation v. Ottawa (City) (1998), 1998 CanLII 1255 (ON CA), 38 O.R. (3d) 224 (C.A.), per Osborne J.A.:It was intended to bring uniformity and order into development -- growth-related municipal costs. The DCA replaced, among other things, the existing lot levy system. By late 1989 lot levies had increased substantially, as municipal corporations grappled with reduced grants and increased growth-related costs and it was thought, at a political level, that a new system had to be devised to permit municipalities to recover growth-related capital costs. The new system is set out in the DCA. The underlying economic philosophy of the DCA is that growth (development) should pay for the infrastructure costs that it generates. Such costs, generally speaking, should not be borne by existing residents. [14] Section 2 of the DCA provided the express authority for a municipality to impose development charges: John Mascarin and Paul De Francesca, Annotated Land Development Agreements, loose-leaf (2022 Release 3), (Toronto: Thomson Reuters Canada Ltd., 2000) at §: 6.5. It also prescribed the circumstances in which those charges can be imposed. Subsections 2(1) and (2) currently provide:2 (1) The council of a municipality may by by-law impose development charges against land to pay for increased capital costs required because of increased needs for services arising from development of the area to which the by-law applies.
(2) A development charge may be imposed only for development that requires,
(a) the passing of a zoning by-law or of an amendment to a zoning by-law under section 34 of the Planning Act;
(b) the approval of a minor variance under section 45 of the Planning Act;
(c) a conveyance of land to which a by-law passed under subsection 50 (7) of the Planning Act applies;
(d) the approval of a plan of subdivision under section 51 of the Planning Act;
(e) a consent under section 53 of the Planning Act;
(f) the approval of a description under section 9 of the Condominium Act, 1998; or
(g) the issuing of a permit under the Building Code Act, 1992 in relation to a building or structure. [15] Section 5 of the DCA sets out a method a municipal council must follow to determine the quantum of development charges that may be imposed, and the procedures that must be followed in developing the by-law. The method requires, for example, that council assess and calculate the increase in need for services attributable to the anticipated development (s. 5(1)(2)) that cannot be met using excess capacity (s. 5(1)(5)). With respect to procedure, council is required to complete a development charge background study before it passes a development charge by-law (s. 10(1)), make the study public, and hold a public meeting (s. 12). Section 14 provides a right of appeal of a development charge by-law to the Ontario Municipal Board, now the Ontario Land Tribunal.
[16] The implementation of the DCA in 1989, did not, however, affect other tools municipalities possessed for raising revenue. Significantly, it made no changes to what was then s. 221 of the Municipal Act. As Robert Macaulay and Robert Doumani note in Ontario Land Development: Legislation and Practice, loose-leaf (1999 Release 3), (Scarborough, Ont.: Thomson Professional Publishing Canada, 1991) at §: 5.3, there is no reference to s. 221 of the Municipal Act in the DCA and the fact that a municipality could levy a special charge to pay for sewer and water works was not precluded by the DCA. They go on to note that “there cannot be two collections for the same purpose and if works are to be financed through this section of the Municipal Act, they ought not to be included within the growth demand of development charges.”
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