COURT FILES NO: 340/08

DATE: 20090305

SUPERIOR COURT OF JUSTICE - ONTARIO

DIVISIONAL COURT

RE: CITY OF TORONTO, Applicant

AND: R&G REALTY MANAGEMENT INC., Respondents

BEFORE: KARAKATSANIS J.

COUNSEL: A. Stikuts, S. Haniford, for the Applicants

A. Dryer, A Brown, for the Respondents

HEARD: February 26, 2009

E N D O R S E M E N T

[1] The City of Toronto, (the City), seeks leave to appeal from the decision of the Ontario Municipal Board, (the Board), dated June 17, 2008, which allowed an appeal by R&G Realty Management Inc., (R&G). The decision allows R&G to convert a 161 unit affordable rental apartment building to a condominium.

[2] The City’s position is that the Board committed several errors of law and arrived at a result contrary to law, and contrary to Provincial and City policies that protect rental housing stock. The City submits the Board erred in law in its application of the Planning Act; in disregarding governing provincial and City policies; and in disregarding the governing zoning by-law.

[3] The respondent submits that the Board correctly and/or reasonably applied the criteria set out in subsection 51(24) (a)-(c) and (g) of the Planning Act. It considered the legislative test, the expert evidence and balanced the considerations in the provincial and city policies.

Leave to Appeal

[4] In granting leave the Court must be satisfied that:

(a) there is some reason to doubt the legal correctness of the Board's decision on a question of law; and

(b) the question of law is of sufficient importance to warrant the attention of the Divisional Court.

[5] I need not be satisfied that the decision is wrong, or even probably wrong. I must be satisfied that there is some reason to doubt the legal correctness of the Board’s decision on a question of law.

[6] The standard of review on an appeal from the OMB on a question of law attracts deference when the question of law involves the application of statutes and policies within the particular expertise of the Board. This is such a case. Accordingly, the test on this leave application is whether there is reason to the doubt the reasonableness of the Board decision: Essex (City) v. Material Handling Problems Solvers Inc. [2003], O.J. No. 4619 ( Div. Ct.).

Regard to the Provincial Policy Statement 2005 and the City’s new Official Plan

[7] The Board’s land use decisions must have regard to matters of provincial interest, including the adequate provision of a full range of housing. The decisions of the Board must be consistent with Provincial Policy Statements: Planning Act, R.S.O. 1990, c.P13, as amended, ss. 2, 3. In addition, the Board must also have regard to the City’s decisions relating to a planning matter; including the City’s Official Plans. Planning Act, s. 1.1(f) and s. 2.1

[8] Pursuant to s. 9(2) of the Condominium Act, 1998, the criteria for approval in s. 51(24) of The Planning Act are applicable to condominium conversions.

s. 51(24) In considering a draft plan …, regard shall be had, among other matters, to the health, safety, convenience, accessibility for persons with disabilities and welfare of the present and future inhabitants of the municipality and to,

(a) the effect of development of the proposed subdivision on matters of provincial interest as referred to in section 2;

(b) whether the proposed subdivision is premature or in the public interest;

(c) whether the plan conforms to the official plan and adjacent plans of subdivision, if any; .....

(g) the restrictions or proposed restrictions, if any, on the land proposed to be subdivided or the buildings and structures proposed to be erected on it and the restrictions, if any, on adjoining land; .....

[9] Provincial Policy Statement 2005 sets out the responsibility for providing the housing needs not only of present, but also future residents. That responsibility is to be exercised with regard to the “regional market area”. In the case of the City, the regional market area is the whole of the City. (Provincial Policy Statement 2005, 1.4.3).

[10] The new Official Plan represents the City’s current implementation of Provincial Policy Statement 2005. The Official Plan is the most important vehicle for implementing provincial policy statements. The former City of North York and the former Metropolitan Toronto policies also addressed preservation of rental and affordable rental housing. The Board considered all these Official Plans.

[11] The new Official Plan emphasizes the need to preserve the City’s rental housing supply and recognizes that the rental housing supply is to be stimulated and preserved. The new Official Plan sets out a specific policy relating to the conversion of condominium units. It does not refer to affordable ownership. It spells out that no conversion is to be approved except as set out in the Policy. Council may approve a conversion if it is of the opinion that the supply of rental housing has returned to a healthy state. Factors to be considered include: whether there has been sustained improvement in rental housing supply and in the production of rental housing in the City; the rental apartment vacancy rate; and whether all other applicable legislation and policies have been satisfied.

[12] The City refused the proposal as inconsistent with the policy framework of the Provincial legislation, including the Provincial Policy Statement 2005, and the City’s Official Plans.

[13] R&G appealed its application for approval of the proposed plan of condominium. The Board found that R&G’s proposal was not premature, conformed to the North York Official Plan, the Metro Plan and the City’s new Official Plan, was appropriate, represented good planning and was in the overall interest of the community. The Board considered the mix of rental and ownership housing, the vacancy rates and importance of affordable ownership in the neighborhood and to some extent to the City as a whole. The Board held that the zoning of the property did not require that the buildings remain rental units for 20 years.

[14] I am satisfied that there is some reason to doubt the reasonableness of the Board decision. The Board is required by s. 51(24) (c) to have regard to whether the plan conforms with the Official Plan. While the Board considered the general housing policy in section 3.2.1. of the new Official Plan, it did not consider all the factors in the detailed policy of s. 3.2.1.8, which specifically addresses conversion of rental units to condominium tenure. As well 3.2.1.8 (b) (i) refers not only to the supply but also the production of rental housing city wide. The un-contradicted evidence regarding City wide rental housing growths suggests that 3,2,1,8 (b) ( i) was not met. Similarly the Provincial Statement 2005 requires that the responsibility for providing the housing needs be exercised with regard to the “regional market area”, the whole of the City.

[15] While I recognize that the Board is entitled to look at the totality of the Official Plan relating to housing and weigh the various competing interests, the specific policy relating to conversion was particularly important given the nature of the application. Failure to consider and apply the factors in the specific policy relating to conversion as required by s. 51(24) of the Planning Act, and the housing needs city wide as required by the Provincial Statement 2005 raises some serious debate about the reasonableness of the decision and whether the Board gave appropriate regard to whether R&G’s proposed conversion is contrary to the City policies designed to preserve affordable rental housing.

Regard to Zoning of the Property

[16] In 2002, site specific by-laws were passed and approved by the Board to permit a second apartment building on the property. (Decision Orders No. 0073 and No. 0564) The resulting zoning, RM6(98) required: the facilities which are to be provided pursuant to a s. 37 (Planning Act) agreement, in order to permit the increased density and height, are to ensure both the existing and the proposed building to be kept as rental housing stock for 20 years, until about January 2022. The applicant obtained consent to severance on the basis of this site specific by-law but did not proceed with the second building or with a s.37 agreement. The Board held that the conditions in the site specific by-laws did not apply as they were conditions of a s.37 agreement that was never entered into and not conditions of the use that was specified as apartment dwelling use.

[17] I am not satisfied that there is reason to doubt the correctness of the Board’s finding that the site specific zoning did not require that the rental units be maintained. The City suggests its staff’s opinions, including the zoning examiner and testimony that the site specific zoning does not apply was due to either failure to file it in the system or to the pressures of cross-examination. The consent for the severance decision was based upon the site specific by-law; however, by its terms the zoning by-law permits dwelling apartment use. The restriction relating to rental properties is, on its face, conditions of any agreement under s. 37 of the Planning Act. The Board noted that there was no s.37 agreement. Given the evidence of the city staff and the language of the by-law itself, I am satisfied that there is no reason to doubt the reasonableness of the Board’s decision that the conditions in the site specific by-law did not apply.

Conclusion

[18] The question of rental conversions to condominiums in Toronto is of sufficient importance that, in my opinion, leave to appeal should be granted. New City powers in s. 111 of the City of Toronto Act do not undermine but highlight the importance of this issue.

[19] Leave to appeal is granted on the following question of law:

Did the Board err in law in failing to apply or properly interpret the Planning Act, ss. 1-3, and 51(24) by failing to consider the city wide housing policy in the Provincial Policy Statement 2005 and the City’s New Official Plan policy relating to condominium conversion?

Costs are fixed in the amount of $10,000 all inclusive, payable in the cause.

A. KARAKATSANIS J.

Released: