PEEL REGION INCENTIVES FOR INTENSIFICATION-OUTLINE PHASE 1 REPORT – ISSUES AND OPPORTUNITIES Intensification Incentives in Peel Region Phase One: Issues and Opportunities The Regional Municipality of Peel March 2010 Intensification Incentives in Peel Region Phase One: Issues and Opportunities The Regional Municipality of Peel TABLE OF CONTENTS EXECUTIVE SUMMARY........................................................................................................................................1 1.0 INTRODUCTION.....................................................................................................................................4 2.0 POLICY CONTEXT..................................................................................................................................7 3.0 UNDERSTANDING INTENSIFICATION............................................................................................. 12 4.0 INTENSIFICATION IN PEEL................................................................................................................. 16 5.0 ISSUES: BARRIERS TO INTENSIFICATION....................................................................................... 28 6.0 OPPORTUNITIES: EXAMPLES AND IMPACTS OF INTENSIFICATION INCENTIVES.............. 31 7.0 CONCLUSION ..................................................................................................................................... 43 Intensification Incentives in Peel Region – Phase One: Issues and Opportunities March 2010 EXECUTIVE SUMMARY Peel Region has initiated a review of its Official Plan, a process that is structured around a sustainable development framework which will enable the integration of environmental, social, economic and cultural imperatives into the future plan. Intensification refers to the increasingly efficient (re)use of land that occurs through the development of medium and higher-density land uses within central urban communities. Properly planned, communities as they become intensified can be highly sustainable, offering a rich quality of life for its residents and significant environmental and cost benefits over suburban forms of development. Intensification relates directly to each of these imperatives and virtually every aspect of long term planning policies in Peel Region. N. Barry Lyon Consultants Limited (NBLC) was retained by the Peel Region to undertake a study of incentives that may be utilized by the Region and lower tier municipalities to encourage residential and employment development in identified intensification areas. The purpose of the project is to “explore options available to the Region and area municipalities to promote and encourage residential intensification in order to meet or exceed the targets in the Growth Plan and to examine feasible approaches to incite employment intensification in the Regional Municipality of Peel”. This report examines the policy, market and development issues that drive medium and high- density developments. It examines the tools that are currently in use in Ontario and their relative performances. Finally, the study examines the barriers to intensification and key issues to help frame more detailed analysis and policy recommendations in Phase Two of the study. These key issues are summarized in the following: • Peel Region and its local municipalities have captured a significant amount of growth in townhouse and higher density residential formats over the past 8 years. In fact, the Region has attracted more apartment projects in intensification areas than any other 905 community during this period. • Virtually all development within intensification areas has come in the form of residential townhouse, apartment condominium development, senior’s retirement rental and market rental buildings. New high-density office development has not occurred in the downtown areas of any of the local municipalities due, in part, to the costs of providing underground parking. The majority of this investment has been oriented to the Airport Corporate Centre and Heartland employment areas. • Attracting development to Peel is not the issue. How to manage, prioritize and direct the investment and shape market forces to ensure growth is directed to the Urban Growth Centres and other intensification areas is, by far, the greatest challenge. • It is unlikely that development will return to levels experienced between 2001 and 2007 soon. Given the lack of demand, what take-up can we expect from incentive programs? If the take-up is estimated to be limited (even with incentives) does this have a bearing on program offerings? Should incentives be more aggressive, understanding that they would Intensification Incentives in Peel Region – Phase One: Issues and Opportunities Regional Municipality of Peel 1 | Page essentially subsidize land owners and/or developers or should the market be allowed to take its course? • The Region of Waterloo has developed a Regional Re-urbanization Community Improvement Plan that gives the Region the power to acquire and consolidate lands for redevelopment within their Central Transit Corridor. The program is designed to target brownfields, or underutilized lands that may not otherwise be redeveloped. What similar role could a Regional CIP play in the development of Intensification areas on Peel’s Transit Corridors or are land values so strong that municipal intervention is unnecessary? • Exemptions of development charges are, by far, the best method of incentifying intensification efforts in Greater Toronto Area (GTA) communities, especially those that have significant market issues in their downtown cores. For the Region of Peel, this is also the most costly approach. A closer examination of development charges for projects in compact communities that are more efficient and sustainable than suburban development should be analyzed. Are “scaleable” development charges feasible? • The Region of Peel is already facing significant financing issues with respect to growth related expenses. Development charge income has declined substantially as the markets have slowed. This reduction in revenue is expected to impact heavily on future growth related expenses. In the face of this, how do the costs of incentives balance with the need to increase development charge revenue? Does this suggest that very specific response is required that targets key areas? • Should incentives be applied in all nodes and areas identified for intensification? Or should, given the fiscal constraints and likely limited take-up, incentives be focused on areas that will benefit the most from increased residential populations such as the downtown areas where business and transit ridership should benefit more than a suburban site that is less dependent on pedestrian traffic? • Low cost loans for residential construction have proven to be successful in Hamilton. Would low cost loans to developers of office developments provide an incentive to development in Peel? Could these loans be properly secured and what risks do they present to local and or regional governments? • Section 37 of the Planning Act can be used to allow developers to exchange density for community benefits. For the City of Toronto, this has been a useful tool in generating additional revenue. Developers, in general, during strong market periods, have been willing to pay these charges given the very high demand and revenue for condominium apartments. The major criticism to this has been the uncertain approach to calculating the charges. In Peel, where demand is weaker and development charges and parking requirements higher, is it realistic to assume that developers will pay for additional density when margins are already thin? How do you reconcile incentifying development through the waiving of fees or charges in some areas and apply additional charges in others? Intensification Incentives in Peel Region – Phase One: Issues and Opportunities Regional Municipality of Peel 2 | Page • Conditional zoning would allow a developer to have a site pre-zoned subject to conditions such as design, payment of fees, and delivery of certain community benefits, but may create a flood of applications in areas where high-density may be unfeasible. Could conditional zoning techniques assist in intensification efforts? • Is there a funding cap that needs to be employed? How do regional dollars get distributed equitably among area municipalities in incentive programs when each municipality has different needs, market demands and land economic issues? The City of Mississauga’s development charges are almost $5,000 less for a large apartment than Brampton’s. How does this get reconciled in the equation? Can a regional evaluation matrix for assessing the reward of development charge grants be paralleled to Brampton’s and still be equitable to Caledon and Mississauga? • Are reduced parking standards a viable way of encouraging intensification, especially in the absence of high order transit? • Even with financial incentives, intensification efforts, especially in downtown Brampton and Bolton, may be difficult given issues with lot assembly. Is there a role that the Region or the local municipalities could play in assisting in redevelopment efforts that provide significant public benefits, but are driven by a private developer? • Should municipalities take a leadership role in assisting with land assemblies through its powers of expropriation where projects are deemed to aid in intensification efforts for either employment or residential developments