Law Times

Law Times • June 26, 2017 Page 11 www.lawtimesnews.com 'The dollar amounts are huge' Judge rules in city's favour in park levy dispute BY SHANNON KARI For Law Times D evelopment projects that are constructed in phases may still be considered to be part of a single site for the purposes of calculating the park levy that is owed, an Ontario Superior Court judge has found. Justice Paul Perell ruled in favour of the City of Toronto in a park levy dispute over more than $400,000 connected to a residential development in a northeastern section of the city. "The circumstance that a fact- based determination is required to determine what is a 'develop- ment site' does not make the Park Levy By-law ambiguous, and the fact-based determination of what is a development site does not entail that there is more than one meaning of development site to choose from," wrote Perell in Gemterra Developments Cor- poration v. Toronto (City). "Development site means the place where development oc- curs, which will be readily ap- parent in most cases, although where development is staged in phases, it may be necessary to make a factual determination whether the development is to occur at two separate or distinct places or sites." The Superior Court decision involves an area of municipal law where there is a sharp rise in disputes between developers and municipalities, especially in the Greater Toronto Area, be- cause of rising land values. "The dollar amounts are huge," says Brendan O'Callaghan, a senior lawyer in the legal servic- es branch of the City of Toronto, who was lead counsel in the Gemterra case. He estimates that there is cur- rently about $60 million in park levy funds that are the subject of appeals by developers in Toron- to, primarily before the Ontario Municipal Board. The provincial Planning Act permits municipalities to require developers to convey a portion of lands for parks or, in the alternative, to pay funds known as a park levy. In Toronto, the levy is 10 per cent of the appraised value for properties up to one hectare in size. If the site is between one and five hectares, the levy is 15 per cent of the appraised value. Gemterra received approval to build highrise apartment buildings and townhouses on a 1.3-hectare site, which it was de- veloping in two phases and with two building permits. The company maintained that its levy should be 10 per cent of the value of each phase, while the city argued that the 15-per- cent rate was correct, because the site as a whole was more than one hectare. The city's po- sition required Gemterra to pay $408,000 more than it owed, the company claimed. Justice Perell sided with the city and explained that when a development occurs in phases, a "fact-based determination" is what must take place to decide on the appropriate rate of the park levy. "In the case at bar, the factual background establishes that the location for Gemterra's con- struction project was a 1.3-hect- are parcel of land that was to be developed in two phases but the phases did not demarcate two development sites. The fact that separate building permits were obtained did not demarcate two development sites," the judge wrote. If the company had sold off part of the land to another party, for a future development, that might have changed the inter- pretation of which park levy rate should be imposed, noted Perell. "This, scenario, is not what occurred in the immediate case, and, in my opinion, it was appro- priate for the City to regard Gem- terra's two-phased project as the development of a site larger than 1.0 hectare in size," he stated. Mark Flowers, lead counsel for Gemterra in the Superior Court matter, did not respond to a request for comment from Law Times. The city and the company have reached a confidential set- tlement since the ruling was is- sued, explains O'Callaghan. The decision, though, is sig- nificant for the city, he says. The circumstances would be different if the court ruled an- other way. "You would never see a de- velopment application for more than one hectare of land. The financial motivation would be great [to phase in a develop- ment]," says O'Callaghan. The purpose of the levy is to be able to provide more park land within the city, he explains. "We always push to get land instead of cash. But if [park space] is too small, it is a chal- lenge," he states. Jason Park, who frequently acts for developers in park levy disputes, says the issues in the Gemterra case were slightly dif- ferent because it related to inter- preting the size of a development rather than its assessed value. Most of the disagreements that end up at the Ontario Mu- nicipal board are over the assess- ment, he states. "Developers agree that park land is important. But at the end of the day, the valuation has to be fair," says Park, a partner at Devine Park LLP in Toronto. "I think the process could be more transparent," he adds. In Toronto, for example, a de- veloper receives a two-page let- ter initially, stating what the city believes the land valuation to be and the park levy that is owed, Park notes. "A lot of developers are being asked to make payments not re- ally knowing why," he says. While in most instances de- velopers reach a settlement with a municipality, he says, it is only if the decision is appealed that more data is provided. As well, FOCUS Jason Park says a recent Ontario Superior Court ruling was different than other cases because it related to interpreting the size of a development rather than its assessed value. When you are looking for specialized legal counsel, turn to the resource that showcases peer-ranked Canadian legal talent. lexpert.ca/directory 2017 LAWYER Untitled-3 1 2017-06-20 8:49 AM See Law, page 12 You would never see a development application for more than one hectare of land. Brendan O'Callaghan www.twitter.com/lawtimes Follow on

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