How Section 37 Funds Work (And Don’t Work)

Crossposted from Torontoist.
We explain the section of the Planning Act that makes every councillor pull out their hair.

Photo by Colin from the Torontoist Flickr pool.

Photo by Colin from the Torontoist Flickr pool.


You may have heard “Section 37” brought up in discussions about some recent developments. Can it pay for a signature park? Can we use it to build affordable housing? Read on for the answers to all your questions.

What It Is

Section 37 is a frequently used but often misunderstood bit in Ontario’s Planning Act. Jake Tobin Garrett explains the basics here, but 1. things have changed a bit since then, and 2. we know you’re a busy person who doesn’t have time to read all that.

Tl;dr: the City’s zoning bylaw limits how tall or how dense a development can be. Section 37 says that if a development exceeds those limits, the developer can make an agreement with the municipal government to provide or pay for some kind of community benefit for the ward in return. It’s the local councillor’s job to negotiate with the developer and the community to find something that works for everyone.

What counts as a “community benefit”? Well, here’s a few typical recent examples:

This is all part of business as usual at City Hall. So why all the confusion?

Well, part of it is simply people not reading the City’s own dang guidelines [PDF]. The process has also been criticized for giving councillors a lot of leeway to secure benefits many consider frivolous. The lack of transparency in the process can also lead to a lot of community mistrust, and the integrity commissioner has frowned upon the conduct of some councillors on this file.

There are also legitimate issues with why Section 37 is even a thing. As Aaron Moore argues in this 2013 paper [PDF] from U of T’s Institute on Municipal Finance and Governance, it’s unclear what Section 37 is actually for. He identifies three different rationales supported by the Province, the City, and the OMB:

  1. To fund the infrastructure needed to serve the higher density development;
  2. To “share the wealth” by redistributing it to the city at large; or
  3. To compensate those negatively affected by the higher density development.

Misconceptions arise when these varying purposes—and the relevant laws—clash. So, instead of talking about what Section 37 is, let’s go over what it isn’t.

What It’s Not

A magical pot of gold that downtown councillors are selfishly keeping for themselves

When Council debates the budget, Section 37 funds are often a source of discontent for suburban councillors who feel that downtown wards get more resources. Periodically a few suggest pooling all the money and dividing it citywide, which is a terrible idea.

First, that’s not allowed. Benefits are unequally distributed because they have to be local. Funds from a new high-rise in rapidly developing Ward 27 have to go to some service or project in Ward 27.

Second, there is already a citywide pool of money that developers pay into. They’re called development charges, and are one of the limited ways that Ontario municipalities can raise money.1 Creating a system that is almost, but not quite, entirely unlike development charges could be seen as an attempt to circumvent the law. Which is one reason Section 37 benefits have to be ward-specific.2

Section 37’s “unfairness” is a function of how the law is written and the way the city is shaped. Downtown, where real estate is lucrative and space is limited, there is incentive to build higher and denser. In the suburbs, you can just build out, not up (although the Greenbelt and the growth plan make this more complicated, but that’s another story). The sprawling, car-centric built form in much of the city discourages the kind of developments that Section 37 applies to. The problem is that many residents—including city councillors—like the suburbs because they’re not downtown. But if you want Section 37 funds like downtown, you need to make your neighbourhood more like downtown.

A revenue tool

One of Toronto’s enduring challenges is that we have a lot of expensive things on our wish list, but no way to pay for them.3 The latest snowflake on the iceberg of unfunded projects is Rail Deck Park. It’s a great idea, but hella expensive to build: the first rough estimate is about $1 billion, and that doesn’t include all the associated costs.

Section 37 money has been used before to fill gaps in the booming downtown core. (The beautiful, high-tech Fort York library is one recent example.) It’s also been extensively used for park improvements. Along with a related provision in the Planning Act, Section 42, it’s been brought up as a way of funding Rail Deck Park. Is it enough? Well…no.

The Fort York Library, built to serve a burgeoning new community, was in part funded by saving many years' worth of local Section 37 funds. Photo by Lori Whelan from the Torontoist Flickr Pool.

The Fort York Library, built to serve a burgeoning new community, was in part funded by saving many years’ worth of local Section 37 funds. Photo by Lori Whelan from the Torontoist Flickr Pool.

The thing is, in the context of Toronto’s larger budget needs, Section 37 agreements just don’t bring in that much money. According to this 2014 report [PDF], since amalgamation Section 37 has brought in $309 million in cash benefits. There are also substantial “in-kind” benefits, like heritage conservation, that are hard to put a dollar value on, but this report [PDF] has them at about half the value of cash contributions. That would mean the Municipal Land Transfer Tax brought in about as much last year alone [PDF] than Section 37 has in 18 years. Not quite “mayoral legacy” money. Maybe just “councillor legacy” money.

There’s a bigger picture here. City Council has gotten into a bad habit of relying on sources of revenue like user fees, TTC fares, and the Municipal Land Transfer Tax, so it doesn’t have to increase property tax revenue. Raising property taxes to improve parks should not be a hard sell. What’s more, this strategy often pushes the costs of running the city onto people who are less able to afford it. Using Section 37 as a revenue tool can create a corresponding problem, which we alluded to previously: residents of areas with little dense growth don’t get the benefits. As poverty shifts to the inner suburbs, it is increasingly important to make sure underserved neighbourhoods get a chance to catch up.

A planning tool

Okay, so the report we just linked says Section 37 is a planning tool. This is the City’s line as well. Arguably, it shouldn’t be. Developers do need incentives to get on board with building a livable, well-designed city—but Section 37 probably isn’t the best way to do it.

The City’s own guidelines say that good planning should be the standard for new development, not a bonus. If the area needs a new daycare or better street furniture anyway, is the City just using Section 37 to implement things they should have already planned for—and, equally importantly, budgeted for? And if not, does that mean the benefits are superficial, people-pleasing elements rather than an essential part of urban planning in Toronto?

The weakest point in the case for Section 37 as a planning tool is affordable housing, one of the city’s most pressing issues. As luxury condos sprout across downtown, Toronto’s lowest income people are being pushed into the inner suburbs.

In recent years, after some successful pilots, City Planning and Council have taken steps to allow affordable housing as an eligible Section 37 benefit. However, affordable housing is only one of many options, and only if the local councillor chooses to push for it. In 2013 and 2014 the City secured $10.25 million for affordable housing, which is great, until you remember that

  1. TCHC’s state of good repair backlog is a couple orders of magnitude greater; and
  2. the definition of “affordable” they’re working with is what most of us would call “market rent” or “average”; there is no requirement that new housing should go to the people most in need.

Section 37 is not the best way to solve the housing crisis for the same reason it is not the best planning tool in general: when benefits are negotiated case-by-case and at the local councillor’s discretion, there isn’t an effective way to mandate a consistent set of standards.

It’s for that reason housing advocates have been asking the Province to give Toronto the ability to implement inclusionary zoning. That is, the City could require a certain percentage of new residential units to be affordable housing. This would take much of the wheeling-and-dealing out of the picture and create a direct relationship between new affordable housing and new, well, unaffordable housing.

Recently, the Province finally agreed. There’s just one little problem: they’re saying Toronto must choose between inclusionary zoning and Section 37. Councillors claim this will unfairly force them to choose between affordable housing and equally worthwhile projects like daycare facilities. But, as TVO‘s John McGrath writes, Queen’s Park is unlikely to listen as long as Toronto refuses to use the revenue tools it already has.

What Should It Be?

Section 37 is an imperfect tool that many, including the current mayor, have been calling to reform. But Council may consider the alternatives—whether it’s raising property taxes, inclusionary zoning, loosening zoning regulations in general, or any number of possibilities—and decide that the status quo is better after all.

  1. Development charges are also imperfect and need to be revamped
  2. Third, one of the wards that gets the bulk of Section 37 agreements is North York’s fast-growing Ward 23, Willowdale. Won’t anyone think of poor John Filion? 
  3. Source: literally all our budget coverage

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The post How Section 37 Funds Work (And Don’t Work) appeared first on Torontoist.

Oh God, is the Toronto Casino Debate Back Again?

Crossposted from Torontoist.
We hope you like reruns!

Oxford Properties' 2012 casino proposal. Image via Urban Toronto.

Oxford Properties’ 2012 casino proposal. Image via Urban Toronto.

Time is a flat circle. Three years after we declared a downtown casino “well and truly dead,” it’s back on the table. Here’s a quick guide to what happened last time, why we’re back here again, and what might happen.

The Story So Far

As Jamie Bradburn writes, Toronto casino proposals (and push-backs) go back to the 80s—with very little to show for it. The most recent go-round began in late 2012 when the Ontario Lottery and Gaming Corporation, looking for ways to increase revenue, raised the idea of putting a casino downtown—if Toronto gave them the go-ahead.

Casino proponents, like then-mayor Rob Ford, claimed it would be a cash cow for Toronto based on an overly optimistic estimate of how much revenue the Province would share with us. The construction industry jumped at the idea of all those new jobs; organized labour hoped that future casino employees would join their ranks. MGM, Oxford Properties and Caesars sent out gaggles of lobbyists and whipped up glossy “visions.”

Concerns about the social costs of gambling united opponents across the ideological spectrum. Casinos make a whopping 60 per cent of their revenue from the small fraction of problem gamblers. (As Kristyn Wong-Tam [Ward 27, Toronto Centre-Rosedale] pointed out, ethnic communities are disproportionately hard-hit.) Religious leaders declared their disapproval en masse.

A trifecta of former mayors—Art Eggleton, John Sewell, and David Crombie—released an open letter asking City Council to “beware the sales pitch.” They were not the only ones to question the economic viability of a casino. The final report from the City Manager also cast doubt on the project from an urban planning perspective: Torontoist wrote, “We cannot build a casino that is both an appropriate size for downtown and that will generate sufficient economic benefits.”

After months of debate and a strong grassroots opposition campaign, all these viewpoints (and more) were aired during public consultations. While feedback was mostly negative, the committee voted to support a downtown casino—plus a host of other conditions and qualifications.

Eventually, the whole thing unravelled. Premier Kathleen Wynne crushed the mayor’s hopes (and OLG chair Paul Godfrey’s insinuations) of an exceptionally high hosting fee, saying that there would be no “special deal” for Toronto. Rob Ford, by then mired in the crack video scandal, tried and failed to call off the special Council meeting. Then Council overwhelmingly rejected a downtown casino and, by a narrow margin, rejected a casino in Woodbine too.

Postscript: Paul Godfrey was quickly ousted from OLG. Last summer, Council ended up approving gaming expansion at Woodbine in principle—a site which has struggled economically for some time.

Flash Forward

Right, so here we are: August 2016. Mayor Tory, flanked by local Councillor Joe Cressy (Ward 20, Trinity-Spadina) and Chief Planner Jennifer Keesmaat, announces an ambitious plan to create a park over the rail corridor between Bathurst and Blue Jays Way. People who like parks are enthusiastic. People who like numbers are less enthused: there’s a hashtag (#RailDeckPark), a pretty rendering, no price tag, and no way to pay for it beyond Section 37 and 42 funds, which will only cover a fraction of the cost. It feels a bit like the need to negotiate with the railways for air rights is more important than downtown residents’ need for green space.

You would be excused for forgetting that Oxford Properties’s 2012 proposal to include a casino in its convention centre redevelopment also included a downtown park. It did! Here’s what we wrote then:

The proposal also mentions “a new 5.5 acre urban park connecting the core to the waterfront” but only vaguely—it is “contemplated” but nothing more—and doesn’t seem to be an essential part of the concept.

Conveniently, Oxford now says that “[if] plans to redevelop the convention centre site proceed, the deck and park space ‘would be an integral part of our conversation and our ambition.’”

Now, the New York Post reports Caesars wants to bid for a Toronto casino project, and everyone is buzzing again. Could a casino also be an integral part of Oxford’s “ambition”? Caesars…Oxford…yes? No? It’s between Woodbine and Durham, which is itself competing with…Pickering? Could the failed Woodbine Live project return?

Right now, there’s not a lot to go on. According to the lobbyist registry, Oxford and Caesars haven’t Zerg-rushed Council. Politicians aren’t making loud noises just yet, although they do have a debate this fall about increasing City revenue, and really hate the idea of “taxes.” Let’s suppose that a casino, whether downtown or at Woodbine, will come before Council again.

Wild Predictions

The makeup of Council is pretty much the same as the 2010–14 term and arguably slightly more right-leaning. The mayor’s policies are largely the same too. The outcome is probably going to be pretty much the same.

Possible outcome: A downtown casino proposal fails narrowly. A Woodbine casino proposal could pass, but nothing actually happens.

We told you time is a flat circle.

What’s Next

Unless someone finds a way to reverse the polarity of the neutron flow and break the time loop, at any time we could be forced to relive any number of other Council debates. For Council Watchers, this is our lot in life. We hope everyone saved their buttons/lawn signs/twibbons!

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The post Oh God, is the Toronto Casino Debate Back Again? appeared first on Torontoist.

Five years ago yesterday…

…I walked into Toronto City Hall for the first time ever. I’d lived in Toronto since 2003, but I had very little interest in city politics—I was too busy first being a student, and later being poor. Then word started going around about proposed sweeping budget cuts. I was worried about how it would affect Parkdale, the neighbourhood I’d moved to in 2009 and grown to love. The mayor had said he would sit at City Hall and listen all night, if need be, to people’s concerns. How often do you get a promise that the mayor will listen to you, personally?

So, off I went. It was magical. You can read my account here. (Or the Star’s. Or Torontoist‘s liveblog. Or watch Matt Elliott’s hand-picked highlights.) I got thrown out near the end, when I yelled “Shut the fuck up” at Cllr Mammoliti. (I was horribly ashamed at the time. I cried about letting down all the councillors who had behaved with such dignity and composure all night. Later, I would learn that this was a normal response to Mammoliti and I was just saying what everyone else was thinking.)

I was hooked, and I kept going back. Normally cautious about privacy, I unlocked my Twitter account so I could livetweet and talk to strangers. I started reading reports and writing blog posts. I became part of a cadre of amateur City Council watchers who followed City Hall for fun—and later, as a calling, as many became writers, editors, political staff, and activists. Many of the people from the 2011 all-night meeting became familiar faces, friends, colleagues, and even chosen family.

I remember the morning I showed up to a Budget Committee meeting and realized that being motivated to show up to Budget Committee meetings in the morning was a rare gift. I remember that night in the pub I started crying because I realized politics could be a genuine career and a ticket out of poverty. I remember when people started buying me beer. I remember the first time I knocked on a door for a Council candidate and asked a complete stranger to vote for them. (It was fucking terrifying, and I’ve done it countless times since.)

It’s been a wonderful five years. I’m intensely grateful for it, and uncertain but optimistic about what the future will bring. Thanks to everyone for reading and being a part of this journey. I will totally hit you up to fund my publication/campaign in the future.

City Council Preview: July 2016

Crossposted from Torontoist.

This is the last City Council meeting before its two-month summer break, and boy, is it a doozy. On the agenda: yet another Scarborough subway/light rail showdown, supervised injection sites, the Road Safety Plan, street hockey, the latest craft brewery, and more.

Continue reading City Council Preview: July 2016

Municipal Budget 2017: Brace Yourselves, Budget Cuts Are Coming

As City staff gear up for the 2017 budget process, the mayor has declared that an above-inflation property tax revenue increase is off the table. Council has also successfully pushed off introducing any new revenue tools until next year. What does that mean for the budget? We read the City Manager’s latest report so you don’t have to.

Read more at Torontoist…