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Ruling protects rentals, city says

Court upholds right to limit developers

Toronto Star - February 22, 2002
by Kerry Gillespie

The city has the power to pass a bylaw that limits developers from demolishing Toronto apartments or converting them to condos until the vacancy rate rises, a court has ruled.

The Divisional Court decision, released Wednesday, is vital to protecting Toronto's stock of affordable rental housing, which is under siege by developers, the city says.

The decision upholds the city's legal right to pass the bylaw that the Ontario Municipal Board ruled illegal because it conflicted with provincial policy designed to encourage new development.

"We're thrilled," said Sharon Haniford, the city's lawyer. "It really strengthens the jurisdiction of municipalities generally to pass laws in areas where other levels of government are."

Official Plan Amendment No. 2, passed by city council in April, 1999, allows the city to block redevelopment projects that involve demolishing or converting rental units if the developer requires increased height and density until the vacancy rate rises to a healthy 2.5 per cent. Right now it is 0.9 per cent, which means 9 apartments out of every 1,000 are available.

Five months after it was passed, though, the provincially appointed OMB sided with a developer, ruling that the city had no right to pass such a bylaw and declared it illegal.

The city appealed.

That three judges on the panel ruled Toronto does have that right, makes the victory all the sweeter to city councillors.

"It reveals how the Ontario Municipal Board really has unfairly sided with developers in the last little while and the court really slaps their wrist by saying you've gone too far in striking down clear planning rights that municipalities have," Councillor Joe Mihevc (Ward 21, St. Paul's) said yesterday.

The court ruled that the OMB exceeded its jurisdiction in declaring the amendment illegal and invalid, that the board erred in saying it is not authorized in the Planning Act and that the board was wrong in saying the amendment is at cross purposes with the Tenant Protection Act.

The city may have won the legal battle, but there is another looming. The amendment still needs approval from the OMB on its planning merits. A date for that hearing has not been set.

If the amendment does stand, here's what will happen:

A developer who wants to tear down an older rental building to build a bigger and better one goes to city council and asks for increased height and density so he can replace 100 apartments in a four-storey building with 350 in a nine-storey building.

The city will say no because the new apartments will rent for much more than the old ones but if the project is otherwise a good one, it may open the door for further discussion.

"It becomes a matter of negotiation, it gives us the power to say no, but if you do this, this and this," Mihevc said. "Then we can speak of waiving that over-all provision because there are other benefits the community and the tenants will get."

Among the things the city wants from developers are agreements to provide the same number of affordable units in a new building as there were in the old one and guarantees that they will stay at lower than market rents for a certain amount of time.

The city has been doing this for some time, but Official Plan Amendment No. 2 strengthens its ability to fight at the OMB when developers appeal its decisions there.

In the past two years, the OMB has approved a net loss of 382 rental units and another 156 more are at risk with current demolition applications. Some 1,700 units are threatened by current major applications for redevelopment and condo conversion.

"It returns to us a lot of levers in controlling development," said Mihevc, who has fought applications for demolition and conversion in his ward.

The development industry says that isn't a good thing because the city is standing in the way of growth and building badly needed rental units.

"We have all these old buildings on sites that were developed a long time ago and could use intensification," said Vince Brescia, president of the Fair Rental Policy Organization, which represents landlords and owners.

"You cannot build a new building and charge 1960s' rents. It's simply a fact of life that to make a development feasible, you have to charge the cost of construction and a reasonable rate of return."

Half of Toronto's population rents; nearly 500,000 households rent and 100,000 new people move to the area each year, yet virtually no new rentals have been built in years.

Since the 1998 Tenant Protection Act, a landlord can raise the rent indiscriminately whenever a tenant leaves an apartment.

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