Section 37 and the New Community Benefits Charge
The density bonusing that we saw in the old Section 37 is no longer a specified item for municipalities to negotiate with developers in order to secure trade-offs for community benefit. Instead, this has been replaced with a new Community Benefits Charge (CBC) that combines benefits (Section 37), parkland (Section 42), and covers some development charges described as “soft services”. The purpose is to address the costs of providing services to new residents as a result of development in an area. Payment of the CBC is a condition of approval of development or redevelopment. The charge applies to most development and will be used to fund parkland, libraries, childcare, affordable housing and public art.
It is currently unclear as to how the charge will be administered, at what rate, and how the wide range of services that receive money from the fund will be prioritised. We do know that the money will be kept in a special account and that the municipality must allocate at least 60 per cent of the funds at the beginning of each year. Municipalities are required to have a Community Benefits Strategy before passing a CBC By-law, which must comply with all prescribed requirements. These by-laws are expected to be enacted by January 1, 2021. The charge amount will be based on a percentage of land value. A professional appraisal, or multiple appraisals, will be required if any disagreements arise between the land owner and City valuation.
The Ontario Minister of Municipal Affairs and Housing has published proposed regulations to provide additional detail for Bill 108’s provisions. The CBC regulations are currently open for comments until August 21. The regulations propose that some types of developments be exempt from the charge, such as: non-profit housing, long-term care homes, and universities and colleges. It appears to be at the discretion of the municipality whether to incorporate this proposal into its policies.
The largest change related to the CBC for affordable housing is that funding can no longer be collected specifically to use for affordable housing. Instead, the funding is a part of a larger pot of funds that must be allocated to parks, libraries, and childcare, among others, which may result in less money directed to the development of affordable housing. Centretown Citizens Ottawa Corporation’s (CCOC) recently completed Arlington housing benefitted from $500,000 as equity from Section 37 funds to assist in financing the project. It is unclear whether projects will continue to receive this type of funding under the new CBC system. Furthermore, because 60 per cent of the fund must be spent annually, the collection of funds may not reach a significant amount to make a difference for a housing project.