Project Plans: 302 Bessborough Avenue (Attachment 3)

6.0 Policy Alternatives to Consider

To identify and evaluate CAC policy options to consider, we divided rezonings into two different categories. These two different types of rezonings could be considered for different CAC approaches:

1. Major rezonings, where the rezoning involves a large site (such as the major Town Centre designated shopping centre properties), or involves change from industrial or institutional to residential or mixed-use, or requires significant new on-site infrastructure and services, or exceeds the maximum density identified in the OCP.
2. Smaller, typical rezonings, where the rezoning involves a small site and the rezoning is from residential or commercial to apartment or mixed-use residential and commercial.

6.1 Identification of Policy Alternatives

It is not possible to determine the potential CAC from major rezonings in advance of a detailed development application that outlines the mix of uses, heights, density and on-site servicing and infrastructure requirements. Therefore, these are not good candidates for a fixed-rate target CAC. However, we do not think that the City should exempt the major rezonings from CACs as these site could create significant opportunities to incorporate on-site amenities over the long term. Therefore, CACs should continue to be negotiated for these major rezonings.

For the smaller rezonings, there are three different CAC options that could be considered:

1. Exempt the rezoning from CACs.
2. Continue to negotiate a CAC on a site-by-site basis.
3. Apply a fixed rate target CAC to the rezoning.

These three options are evaluated in the following section.

Under any policy option, the following additional provisions should be included:

1. Rezonings that include upper floor office space should be exempt from CACs.
2. Sites in the Small Urban Village designation should be exempt from CACs (unless achievable density is increased beyond 2.0 FSR).
3. CACs for any rezonings that are required to include rental housing should be exempted as the rental housing component will impact the ability of the project to provide any CAC. The extent of the impact will depend on the details associated with the rental housing component (i.e., number, size, parking, rent rates).

6.2 Evaluation of Alternatives

A summary of the advantages and disadvantages of each of the three policy options for the smaller rezonings is outlined below.

1. Exempt small rezonings from CACs.

Advantages include:

• Exempting rezonings from CACs will maximize the number of sites that will be attractive for rezoning and redevelopment.
• This approach would be supported by the development industry and property owners.

Disadvantages include:

• No CAC revenue will be generated even though some rezonings could have supported an amenity contribution.
• Rezonings will not help off-set any financial impacts of densification on the City and community.
• Exempting rezonings from CACs could create community opposition to some rezonings.

2. Continue to negotiate CACs on a site-by-site basis for smaller rezonings.

Advantages include:

• Individual negotiations ensure that the CAC does not exceed the amount that can be supported by each rezoning.
• Contributions from rezonings will help off-set any financial impacts of densification on the City and community.
• CACs from rezonings will likely be supported by the community.

Disadvantages include:

• This approach is not likely to be supported by the development industry and property owners.
• The cost and timing of negotiations is an impediment to rezoning and redevelopment.
• Based on our analysis, a negotiated approach will likely result in little or no CAC at many rezonings.
• The negotiated approach creates uncertainty for developers, land owners, the City, and the community.
• The negotiated approach is not consistent with the new Provincial guide for CACs.
• Under this approach overall CAC revenue will likely be modest, but administration of the system could be expensive.

3. Apply a fixed rate CAC target to small rezonings.

Advantages include:

• The fixed rate approach creates certainty for developers, land owners, the City and the community.
• If the fixed rate target is low, it will not affect the financial viability of many (if any) redevelopment sites so it should not slow the pace of redevelopment. For sites that are currently attractive for redevelopment, a low CAC will be affordable (say $5 per square foot of additional floorspace over the base FSR in the OCP). Sites that are not currently viable for redevelopment will continue to be unattractive for rezoning and redevelopment (with or without a CAC).
• Contributions from rezonings will help off-set any financial impacts of densification on the City and community.
• Even though total revenue will be modest with a low target fixed rate CAC, initiating a system with a low fixed rate CAC target will provide the opportunity to refine and improve the system over time, particularly if market conditions and land values change. In addition, CAC revenue can be used to supplement funds available from other sources to help deliver community amenities sooner.
• CACs from rezonings will likely be supported by the community.

Disadvantages include:

• If the CAC rate is set too high, it will reduce the number of sites that are financially attractive for rezoning and redevelopment which will make it difficult for the City to meet its growth objectives outside of the Downtown Core Area. Under this approach the fixed rate target will need to be set toward the lower end of the estimated potential CAC range indicated in our financial analysis to ensure there is a supply of sites that are financially viable for redevelopment.
• Some rezonings would have been able to support a CAC that is higher than the fixed rate.
• The total annual CAC revenue generated will likely be modest. For illustrative purposes, if 100 apartment units per year are built outside of the Core Area each year (about 25% of the City's typical annual apartment market), a $5 psf fixed rate CAC would generate a maximum of about $200,000 per year if all projects rezoned up to the OCP maximum[^12]. At densities less than the OCP maximum, CAC revenue would be lower.

[^12]: 100 units per year at 1,000 square feet per unit results in 100,000 square feet of new floorspace per year. Assuming 40% of the new space is due to the bonus (i.e., from 1.2 FSR to 2.0 FSR) and 100% of the projects achieve the maximum FSR, then the CAC revenue would be 100,000 square feet x 40% x $5 per square foot = $200,000 per year.

7.0 Recommendations

Based on our analysis and on input from City staff, our recommended approach is to continue to negotiate major rezonings on a site-by-site basis and apply a fixed rate CAC target to smaller site rezonings.

7.1 Major Rezonings

It is not possible to determine the potential CAC from major rezonings in advance of a detailed development application that outlines the mix of uses, heights, density and on-site servicing and infrastructure requirements. Therefore, these are not good candidates for a fixed-rate target CAC.

CACs should continue to be negotiated for these major rezonings. This should include:

1. Rezonings of large sites (e.g., over one City block) that will require the dedication of part of the site for new roads and services.
2. Rezonings involving sites that have been identified as a location for a large on-site amenity or public facility as part of the rezoning process (e.g., park space, community centre).
3. Sites that are being rezoned from industrial or institutional uses to residential or mixed-use.
4. Rezonings that exceed the density identified in the OCP.

The total value of a negotiated CAC should take into account the estimated cost of creating the amenities that the City wants in the neighbourhood, but the CAC should not exceed 75% of the increase in property value created by the rezoning over the higher of (a) the value under existing use and zoning or (b) the land value under the base density permitted in the OCP. Otherwise, the rezoning will not be financially viable for developers.

7.2 Smaller Rezonings

A fixed rate CAC target should apply where the rezoning involves a small site and the rezoning is from residential or commercial to apartment or mixed-use residential and commercial. We recommend that:

1. The fixed rate be set at $5 per square foot of additional floorspace[^13] that is permitted over the greater of the OCP base FSR or existing zoning FSR (the existing zoning for some sites allows greater density than the base OCP density).
2. Projects that include at least one floor of upper floor office space should be exempt from CACs.
3. Projects where the City requires new rental apartment units or the replacement of existing rental apartment units (either on-site or at an alternate site) should be exempt from CACs.
4. Rezonings of sites in the Small Urban Village designation should be exempt from CACs (unless the density exceeds the 2.0 FSR identified in the OCP).

[^13]: The $5 per square foot CAC on the additional permitted floorspace is equivalent to a maximum of about $1 to $2 per square foot of overall gross project floorspace depending on the OCP designation and the existing zoning.