Slush funds, or sound planning?

With the mayor railing against Section 37 benefits, we cut through the bombast around the controversial planning rule


On his radio show on Sunday, the mayor devoted a good chunk of air time to bashing a city planning rule known as Section 37. Echoing a series of inflammatory Toronto Sun stories from the week before, Rob Ford accused downtown councillors of using the Section 37 rule to “shake down” developers in exchange for building approvals, and amassing “re-election slush funds” with the resulting money.

Ford’s claims were typically bombastic, lacking in evidence, and, if taken literally, verging on libel. But they’ve succeeded in putting a spotlight on city planning rules, which are after all, far from perfect.

In an attempt to clear the air, here’s the skinny on Section 37.

What are Section 37 benefits?

Section 37 of the provincial Planning Act says that if a developer applies to build a structure that exceeds the height or density restrictions of the municipal zoning bylaw, the city can ask the developer to pay for benefits to the local community in exchange for zoning amendments that will allow the project go ahead.

The stated goal is to give something back to the neighbourhood that absorbs the outsized development, thereby “maintaining the quality of life in the city while accommodating intensification.”

What does a community get from Section 37?

Toronto’s Official Plan has a list of Section 37 benefits developers can provide, including heritage conservation, parkland, non-profit childcare facilities, public art, new affordable housing, libraries, and improvements to transit facilities. Benefits that aren’t on the list can also be negotiated, but they have to be local and they have to be for capital projects that will be around for the long term.

Sometimes developers provide these benefits directly, but more often they contribute cash funding instead.

What do developers get out of it?

They get their outsized development approved. Providing Section 37 benefits also makes it less likely local residents will oppose potentially controversial projects.

How much do developers pay?

There is no set formula for determining the value of Section 37 contributions, but generally it amounts to between 10 and 30 per cent of the value of the part of the development that exceeds zoning restrictions.

Are there problems with the system?

Maybe.

Although the benefits are supposed to offset the local effects of densification, one study found that many Section 37 amenities bear little relation to the proposed development or even the neighbourhood it’s located in.

Critics have also argued that the system is skewed in favour of developers, who use Section 37 benefits to induce the city to approve unwise development.

Are councillors abusing the process to pay for pet projects?

Councillors are never supposed to engage in Section 37 talks without first consulting with planning staff, and the entire process is supposed to coordinated by bureaucrats. But in practice, this may not always happen.

Peter Langdon, acting city manager for community policy, says he can’t be sure councillors aren’t overstepping their bounds.

“I don’t actually see what goes on between community planning staff and the councillor,” Langdon says. “But in some cases, councillors do take a very active role.”

Are Section 37 contributions “re-election slush funds”?

In its most literal interpretation, the mayor’s claim is unsupportable. Under city guidelines, Section 37 cash contributions have to be allocated to specific projects and cannot be put into any general account. They certainly can’t to go towards re-election funds controlled by councillors, and there’s no evidence of this ever happening.

Of course, the Section 37 process can indirectly help councillors get themselves re-elected, if the benefits they secure prove popular with residents.

What does the mayor want?

Ford made two contradictory arguments on his radio show Sunday. He described the Section 37 process as “extortion,” but also said the proceeds of that extortion should be pooled together and shared equally across the city.

His allegations of shakedowns aside, Ford isn’t the first person to suggest sharing Section 37 benefits with wards outside downtown, where there’s relatively little new development and great need for community improvements.

However, for better of for worse, having developers provide benefits in wards where they aren’t building oversized projects would defeat the stated purpose of Section 37, which is to benefit the affected community.

Aside from that, the suburbs already benefit from downtown development in the form of development charges, property taxes, and the land transfer tax, which raise much more money than Section 37 contributions and are pooled in general city coffers.

Of course, Ford isn’t interested in talking about how these revenues might help suburban communities. He’s made it his mission to keep property taxes low, and wants to eliminate the land transfer tax completely.

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