Council for the City of Ottawa recently passed two new by-laws that significantly increase the cost of residential development and, by extension, have the potential to undercut housing supply and affordability throughout the City. These are:
- a new Parkland Dedication By-law 2022-280; and
- a Community Benefits Charges (“CBC”) By-law 2022-307.
Both were passed pursuant to relatively new provisions of the Planning Act that were introduced in 2020 as part of the COVID-19 Economic Recovery Act, and that intended to ensure that the charges collected by municipalities reflect the actual costs of population growth.
Pursuant to section 42 of the Planning Act, a municipality is entitled to pass a by-law requiring that landowners dedicate land to the municipality for public park purposes, or pay cash-in-lieu of providing land, when developing their property.
Ottawa’s prior Parkland Dedication By-law 2009-95 (the “2009 By-law”) imposed this requirement on development applications that required approval under the Planning Act. Parkland was collected at the general rate established by the Planning Act, being 2% of the area of land being developed for commercial or industrial purposes, and 5% of the area of land being developed for all other uses. However, for residential developments at densities of 18 units per net hectare or higher, the 2009 By-law imposed an “Alternative Rate” requiring that 1 hectare of parkland be dedicated for every 300 new dwelling units proposed (or, in the case of cash-in-lieu, the value of 1 hectare of land for every 500 new dwelling units).
To ensure that residential development remained feasible, the former 2009 By-law capped the Alternative Rate to a maximum cash-in-lieu of parkland rate equal to 10% of the value of the land area being developed. Likewise, where the City required the conveyance of land, dedication requirements for all apartment buildings subject to the Alternative Rate were also capped at a maximum of 10% of the land area being developed or redeveloped. In all other cases, the City was required to produce a written rationale for a land requirement in excess of 10% of the land area being developed or redeveloped.
Under Ottawa’s new Parkland Dedication By-law 2022-280 (passed August 31, 2022) (the “new 2022 By-law”), the requirement to dedicate parkland or pay cash-in-lieu will apply to the construction of any building, addition or alteration that increases useable floor space or the number of dwelling units, regardless of whether approval is required under the Planning Act for the development.
Further, the new Parkland Dedication By-law increases the dedication requirement for many residential developments with densities of 18 units per net hectare or higher in a number of ways. Most notably:
- The new 2022 By-law does away with the previous blanket cap restricting dedication requirements to a maximum of 10% of the value of the land area being developed. Instead, the new 2022 By-law imposes a dedication requirement that varies depending on the proposed built-form and dwelling type – this ranges from 10% of “gross land area” (as defined) in the case of low-rise development; 15% of gross land area for mid-rise buildings; up to a maximum of 25% of the gross land area for high-rise apartments and all mixed-use buildings of 10 storeys or taller.
- The new 2022 By-law does not limit the maximum dedication requirement based on the area of the land being developed, but rather caps the requirement based on “gross land area” as defined by the new 2022 By-law. For residential developments on registered or draft-approved plans of subdivision, this includes the full lot or block on which the development is proposed. For residential developments that are not on a plan of subdivision, gross land area is defined to include the entire legal parcel on which the development is proposed as well as the area of all abutting properties, regardless of ownership or whether abutting properties are proposed for redevelopment.
- In the case of redevelopment, infill and expansion, the new 2022 By-law places the onus of demonstrating that parkland was previously dedicated for existing development on the owner, and only proposes to credit existing development where the owner can demonstrate that the dedication was made.
- The new 2022 By-law significantly limits the type of land that the City will accept as a park dedication, by broadly defining “encumbered lands” that may not be counted toward an owner’s dedication requirement.
Community Benefits Charges (CBC)
The second by-law passed by the City on August 31, 2022 is the CBC By-law. The CBC by-law imposes a new charge on development that was made available to municipalities through recent amendments to the Planning Act and that replaces former section 37 benefit agreements. Specifically, CBCs are intended to pay for the capital costs of “facilities, services and matters required because of development or redevelopment,” other than matters already funded through development charges or parkland dedications.
The CBC By-law applies to residential and mixed-use developments and redevelopments that are 5 storeys or taller and contain 10 or more dwelling units.
The CBC By-law imposes a new charge of 4% of “the value of the land that is the subject of the development or redevelopment” as of the day before a building permit is issued, which is the maximum rate permitted by the legislation.
The CBC By-law may not be used to fund facilities or services that are otherwise addressed through other means of collection, such as development charges or parkland dedication requirements. Eligible projects are broadly identified through the City’s CBC Strategy, however, as a new charge available to municipalities under provincial legislation, there remains uncertainty as to how CBCs should be applied and administered including what projects are eligible to be funded by the CBCs collected.
Both By-laws are subject to appeal to the Ontario Land Tribunal until October 11, 2022. For more information contact our Municipal and Land Development team.