Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE: July 22, 2022 CASE NO(S).: OLT-22-002019 (Formerly) DC180020

PROCEEDING COMMENCED UNDER section 14 of the Development Charges Act, 1997, S.O. 1997, c. 27

Appellant: Durham Region Home Builder's Association Subject: Development Charges By-law No. By-law 50-2018 Municipality: Town of Ajax OLT Case No.: OLT-22-002019 Legacy Case No.: DC180020 OLT Lead Case No.: OLT-22-002019 Legacy Lead Case No.: DC180020 OLT Case Name: Durham Region Home Builder's Association v. Ajax (Town)

Heard: April 19 to 25, 2022 by video hearing (“VH”)

APPEARANCES:

Parties	Counsel
Durham Region Home Builder's Association (“Association”)	Jennifer Meader
Town of Ajax (“Town”)	Andrew Biggart

DECISION DELIVERED BY WILLIAM R. MIDDLETON AND ORDER OF THE TRIBUNAL

INTRODUCTION

1This Decision arises from the merits hearing, which commenced on April 19, 2022, by VH and was completed with oral argument on April 25, 2022.

2The Association has appealed the Town’s Development Charges By-law No. 50-2018 (“DCBL”) pursuant to s. 14 of the Development Charges Act, 1997 (“DC Act”).

3The materials before the Ontario Land Tribunal (“Tribunal” or “OLT”) at the VH were:

(i) Joint Document Book, comprising 2,861 pages;

(ii) Book of Witness Statements (“WS”), comprising 80 pages including the WS of Audrey Jacob and Michael Dowdall for the Association; and the WS of Andrew Grunda and Brett Sears for the Town;

(iii) Reply WS of Mr. Dowdall, comprising 2 pages;

(iv) Reply WS of Mr. Grunda, comprising 113 pages;

(v) Reply WS of Mr. Sears, comprising 8 pages;

(vi) Sur-reply of Ms. Jacob, comprising 7 pages;

(vii) Sur-reply of Mr. Dowdall, comprising 4 pages;

(viii) Closing Submissions of the Association, comprising 15 pages;

(ix) Closing Submissions of the Town, comprising 15 pages; and

(x) Various jurisprudence submitted by the Association and the Town.

4Each of Ms. Jacob, Mr. Dowdall, Mr. Grunda and Mr. Sears also provided oral testimony at the VH, which is analyzed in Part 2 and Part 3 below.

5The issues raised by this appeal under the DC Act in the view of counsel for the Association are:

• Issue 3 – Is it fair, reasonable, and in accordance with the DC Act to apply funds received through the Federal Gas Tax program to only the non-growth share of the capital costs for projects included in the development charge by-law (“DC By-law”)?

• Issue 6 – For the active transportation projects, is the BTE and PPB fair, reasonable, and in accordance with the DC Act?

• In respect of Issue 6, [the Association]… is no longer objecting to the ‘post period benefit’ (“PPB”) allocation applied to the active transportation projects (“AT” or “Active Transportation”) and instead is only concerned with the ‘benefit to existing’ (“BTE”) allocation.

6While counsel for the Town might not have stated the issues in the same manner as described above in paragraph [5], his final argument dealt with all of those points.

1. DECISION IN BRIEF

7Upon review of the documents contained in the Joint Document Book; the WS’s and Reply WS’s filed; the viva voce evidence in direct and cross-examination of the four expert witnesses listed in paragraph [4] above; and after careful consideration of the well-prepared final written and oral arguments delivered by counsel for the Association and counsel for the Town and of all cited jurisprudence, the Tribunal dismisses this Appeal.

8For the reasons further discussed in Parts 2 and 3 below, the Tribunal agrees with the Town’s counsel that the Association did not meet its onus to demonstrate that the Town failed to properly establish its development charges in the DC By-law in accordance with the provisions of the DC Act. Specifically, the Tribunal is of the view that the Town’s treatment of the Federal Gas Tax Grant (“Gas Tax”) complied with the DC Act. In addition, the Tribunal prefers and accepts the evidence presented by the Town’s experts and determines that the Appellant has not proved that the Town’s allocation of the Benefit to Existing Residents for the Active Transportation Network (“BTE”) failed to comply with the DC Act.

2. THE GAS TAX ISSUE

9Counsel for the Association conceded that although experts for both the Association and the Town testified in respect of this issue, the application of the Gas Tax funding in the context of the DC Act and its regulations, is a matter of statutory interpretation. The Town’s counsel also agreed, stating in final argument that the treatment of the Federal Gas Tax Grant pursuant to the DC Act raises a pure question of law. This accords with the applicable longstanding jurisprudence, one cited example of which is Orangeville District Home Builders Assn. v. Orangeville (Town), [2010] O.M.B.D. No. 762, where the Ontario Municipal Board stated at paragraph 12:

This panel is also aware of the dicta enunciated by the Court of Appeal in Niagara Coalition v. the Town of Niagara-on-the-Lake 2010 ONCA 173, Docket C50553 which has restated some of the findings above. We are aware that in a tribunal setting, experts' views on the law should not be treated as determinative even if deemed to be admissible.

10The Parties disagreed as to whether there are any underlying facts that are in dispute that bear upon the issue of statutory interpretation. The Town’s counsel that:

The facts are not at issue. The Town used some of the Federal Gas Tax grant monies towards the capital costs of the Audley Road Recreation Centre. That money was not granted to the Town by the grantor in respect of the Audley Road Recreation Centre. The money was granted to the Town in accordance with the Municipal Funding Agreement that provides broad discretion to the Town as to how it wishes to spend that money.

11On the other hand, counsel for the Association vigorously maintained that:

a. The Audley Recreation Centre Phase 2 (“Audley Centre”) is included in the Town’s 2018 DC Background Study (“2018 DCBS”) as part of the capital program. The Audley Centre must be a capital cost in order to be included in the DC By-law. There is no dispute that the Audley Centre constitutes a capital cost.

b. The Audley Centre is included in the 2018 Capital Budget and the 2019-2022 Long Range Capital Forecast (“2018 Capital Forecast”).

c. Gas Tax Funding is expressly earmarked in the 2018 Capital Forecast to finance the Audley Centre in part. At Page 1362, Federal Gas Tax Funding is listed as a funding source, at 10% of the total funding for 2018. Page 1348 states that, “$2.6M will be used for LEED certification for Phase 2 of Audley Recreation Centre”. Ms. Jacob indicated that the $2.6 million shown in the BTE column for the Audley Centre is the Gas Tax funding.

d. In 2019 and 2020, the Town spent Gas Tax Funding on the Audley Centre, totaling $2,348,237.95, as shown on the Federal Gas Tax Expenditures Reports for 2019 and 2020 (“Expenditure Reports”).

e. The Gas Tax Funding is a grant given by the Federal Government. Funds are provided to communities twice a year on a per capita basis. The funds are to be invested across 18 project categories to address local priorities.

f. The Audley Centre is a project eligible for Gas Tax Funding. Gas Tax funding is being applied to its construction.

12The Tribunal agrees with the Town’s counsel that the particular use made by the Town of the Gas Tax funding does not determine the central issue of statutory interpretation.

13Section 5(1)(7) of the DC Act reads as follows:

The capital costs necessary to provide the increased services must be estimated. The capital costs must be reduced by the reductions set out in subsection (2). What is included as a capital cost is set out in subsection (3). How the capital costs are estimated may be governed by the regulation. (emphasis added)

14Section 5(2) of the DC Act provides that:

The capital costs, determined under paragraph 7 of subsection (1), must be reduced, in accordance with the regulations, to adjust for capital grants, subsidies and other contributions made to a municipality or that the council of the municipality anticipates will be made in respect of the capital costs. (emphasis added)

15Section 6(2) of Ontario Regulation 82/98 made under the DC Act (“Regulation”) was relied upon by the Association’s counsel, who claimed that the Town’s use of the Gas Tax monies must result in a reduction of the capital costs that are subject to Development Charges. This section states:

If subsection (1) does not apply, the capital costs determined under paragraph 7 of subsection 5(1) of the Act shall be reduced by the amount of any grant, subsidy or other contribution made in respect of the capital costs in the same proportion as the increase in the need for service was reduced under paragraph 6 of subsection 5(1). (emphasis added)

16The essence of the debate between the Association and the Town relates to the meaning of the emphasized portion of the quotation from the Regulation set out in paragraph [15] above.

17The Tribunal finds that there was no convincing evidence before it to establish that the Gas Tax grant to the Town was made in respect of capital costs for the Audley Recreation Centre. The Town admits that some of the Federal Gas Tax Grant monies were used for a portion of the capital costs of the Audley Recreation Centre. However, the Regulation cited in paragraph [15] does not refer to “…any grant, subsidy or other contribution used in respect of the capital costs…”

18In the Tribunal’s view, the Association’s argument conflates the concepts of ‘use’ or ‘application’ of with the ‘making’ of a grant for capital costs. Moreover, the opinion evidence offered by the Association’s witnesses Ms. Jacob and Mr. Dowdall simply repeat and rely upon the notion underlying the Association’s counsel’s argument. In the Tribunal’s view, neither witness could offer opinion evidence that is determinative of the meaning of the above-noted words used in the DC Act or the Regulation.

19The Tribunal rules that the intention of the DC Act and the Regulation are clear in that any grant money provided to the Town is to be deducted from the estimated capital costs when calculating the Development Charge only if the grant was made in respect of the capital cost. The Association simply did not tender evidence to meet its onus to demonstrate that the Gas Tax funding was expressly made in respect of the Audley Recreation Centre capital costs. In fact, the argument of the Association’s counsel replicated in paragraph [11] above in effect concedes as much:

…The funds are to be invested across 18 project categories to address local priorities…The Audley Centre is a project eligible for Gas Tax Funding. Gas Tax funding is being applied to its construction…

The fact that the Gas Tax funding may have been ‘earmarked’ in the Town’s capital budget in a particular way is not determinative at all, in the Tribunal’s view.

20The Tribunal also finds that, as pointed out by the Town’s counsel, a proper reading of the Municipal Funding Agreement dated April 1, 2014, between the Association of Municipalities and the Town of Ajax (“Funding Agreement”), the Federal Government Gas Tax money may be used by the Town for a variety of specified categories. Whether the funds are used for one or more of the eligible categories listed in the Funding Agreement was entirely within the Town’s discretion. This was confirmed by Mr. Grunda in his WS and Reply WS and in his direct oral testimony. In any event, in the Tribunal’s view, the words of the Funding Agreement are clear and did not require interpretation by Mr. Grunda or any other witness – and the Association’s counsel did not tender any other factual evidence that the Tribunal could potentially consider to reach a different interpretation.

21The Tribunal determines that Ms. Jacob’s interpretation of the applicable statutory and regulatory requirements was not assistive and was in any event erroneous. She admitted to confusion about this matter during her cross-examination and that she found the wording to be very complex. Counsel for the Town made much of Ms. Jacob’s misreading of the Regulation. However, as already noted, the Tribunal would not have found the opinion evidence of any of the witnesses to be conclusive on this key question of statutory interpretation.

3. THE “BENEFIT TO EXISTING RESIDENTS” ISSUE

22The Tribunal agrees with the contention by the Town’s counsel that the opinion evidence tendered on behalf of the Association on the BTE question was confusing and ultimately unconvincing. The Tribunal is of the view that the Association has not met its onus as an Appellant to show that the Town incorrectly, unfairly or unreasonably calculated its BTE allocations.

23The Association’s counsel pointed out that the capital costs for Active Transportation attributed to growth during the period of the DC By-law amounted to approximately $18,300,000. The Town then made a deduction of approximately $1,794,000 to the capital program to account for BTE.

24Counsel for the Association relied on the evidence of Ms. Jacobs, a Registered Professional Planner of 35 years’ experience and land economist, qualified to provide opinion evidence on land economics and development charges matters and of Mr. Dowdall, a transportation planner of over 11 years’ experience, qualified to provide opinion evidence on transportation planning.

25The Association’s counsel maintained that both Ms. Jacob and Mr. Dowdall opined that the BTE allocations should be substantially higher than what is proposed by the Town’s 2018 DCBS, which is either 7.5% or 10%, depending on the type of Active Transportation project. Ms. Jacob pro-rated the Active Transportation capital costs between the existing development (employment and population) and future growth during the period of the by-law (2018 to 2031). On this basis, she determined that 87% of the capital costs should be attributed to BTE.

26Counsel for the Association noted that Mr. Dowdall agreed with Ms. Jacob’s approach, but also provided an alternative approach based on the Town’s 2019 Integrated Transportation Master Plan (“ITMP”). He also pro-rated the capital costs based on existing development and future growth but did so according to the portion of the sustainable mode share that the Town is targeting by the year 2031 (26.4% of all commuter trips). On this basis, Mr. Dowdall determined that 71% of the capital costs should be attributed to BTE.

27Counsel for the Town called opinion evidence from Mr. Sears, the Town’s transportation planning expert qualified before the Tribunal, who prepared the background work for the Development Charge transportation component and the Town’s ITMP. Mr. Sears opined that improvements to the Town’s Active Transportation system were required solely to accommodate the Town’s anticipated growth. Neither Ms. Jacobs, Mr. Dowdall nor any other Association witness provided any contrary factual evidence.

28Mr. Sears also testified that the fact that some existing Town residents may use the Active Transportation system is not a reason to increase the BTE allocation made by the Town, in part because such usage may help to ameliorate future road traffic that will inevitably come with the Town’s continued growth. Mr. Sears’ opinion was that the Town determined that it would accommodate that new growth in part by making a deliberate decision to improve the Town’s current trail/path/walking facilities, being aspects of the Active Transportation system - not by simply building additional roads for vehicular traffic.

29The Tribunal found Mr. Sears to be a sensible, practical and forthright witness and accepted his opinion evidence, which was not successfully challenged during his cross-examination.

30The Town called Mr. Grunda, MBA, CPA, CMA, an economist who consulted on the Town’s DCBS and assisted with the DC By-law and who was qualified by the Tribunal to provide opinion evidence on development charges and land economics to support the Town’s position on the BTE allocation. It was Mr. Grunda who applied the Active Transportation system as part of the Town’s Transportation Network into the Town’s DC By-law. Mr. Grunda testified that the allocation of the BTE reflected in the DC Background Study and as set out in the DC By-law is fair, appropriate and in accordance with the DC Act.

31In summary, the Tribunal agrees that Mr. Grunda was able to demonstrate that the BTE utilized in the Town’s DC By-law is fair and appropriate because it: (i) is in keeping with the approach taken by several other municipalities; (ii) actually results in a lower level of service for Transportation in 2031 than currently exists; (iii) is less expensive than might it otherwise have been; and, (iv) is fair to existing residents as well as to the development industry.

32The Tribunal notes that the Parties agree that the DC Act does not direct how the BTE is to be calculated, but requires it be allocated in a fair and reasonable manner. In Amacon Development (City Centre) Corp. v. Peel (Regional Municipality), 2019 LNONLPAT 640 (Tribunal Case No. DC150017) (“Amacon”), cited by the Town’s counsel, former Vice-Chair Schiller noted:

If a cost is unrelated to an increased need that arises because of growth then it cannot be included in the By-law. If there is benefit to existing development, that benefit must be identified and deducted in the calculation of the By-law’s charge. This is set out in section 5(1) 6 [of the DC Act]…

33Section 5(1) 6. of the DC Act provides:

The increase in the need for service must be reduced by the extent to which an increase in service to meet the increased need would benefit existing development. The extent to which an increase in service would benefit existing development may be governed by the regulations.

34Former Vice-Chair Schiller in Amacon at paragraph [38] of her Decision went on to state:

The Region tends to take a flat percentage and attribute that to BTE. Amacon does not take much issue with the flat percentage approach. The Tribunal accepts that a flat percentage approach reflects a common standard and is reasonable.

35The Town’s position is that its BTE flat percentage allocations of between 7.5% to 10% is fair and reasonable and notes tangentially that it accords with the reasonable approach described in Amacon above. Mr. Grunda in his WS, Reply WS and oral testimony provided evidence that there are a variety of different calculations employed by numerous Ontario municipalities when addressing the issue of allocating Active Transportation to BTE. Based on his investigation of 24 municipalities, 13 allocated 0% to BTE and One (Brampton for Infill Projects) has the highest allocation at 69%. It was the evidence of both Mr. Grunda and Ms. Jacob that only Halton Hills and Brampton have applied BTE based upon a percentage of the anticipated population increase, as was proposed by both Ms. Jacob and Mr. Dowdall. Thus, 22 of the 24 municipalities have chosen not to utilize that approach. Mr. Grunda’s evidence demonstrated that the Town is part of the overwhelming majority of the 24 municipalities that have not used Ms. Jacob’s suggested approach. There was no evidence before the Tribunal that any Ontario municipality has used Mr. Dowdall’s proposed methodology.

36The Tribunal is of the view that the evidence of Mr. Grunda, which relied in part on the evidence of Mr. Sears, demonstrated that the future residents of the Town will not see an increase in the level of service on the Town’s road network by the year 2031, but instead a reduction of approximately 13%. Therefore, the improvements to the Transportation Network, which include the improvements planned for Active Transportation system, do not result in a charge to the development industry (including the Association) for the purpose of increasing the level of service that currently exists. This complies with the intent and purpose of the DC Act, in the Tribunal’s view.

37Mr. Grunda also testified, again in reliance on Mr. Sear’s evidence, that the Town’s Development Charge related to the Transportation Network is less than it otherwise might have been. For example, had the Town decided to proceed with the Williamson Drive crossing at a cost of $25 million (which would have required a reduction in the Active Transportation Network), the Development Charge would have been higher than it currently is. The Tribunal found this to be additional evidence of fairness and reasonableness.

38Mr. Grunda also testified concerning the Town’s specific allocation of between 7.5% and 10% to BTE for Active Transportation and explained how this allocation is appropriate and consistent with the other charges related to the Transportation Network. Mr. Grunda referred to the DC Background Study and pointed out how the Roads are treated. When referring to a spreadsheet that the Association’s counsel had prepared for Mr. Sears’ cross-examination, he noted that the straight average of road projects for BTE is 9.6% and that the dollar cost average for road projects for BTE is 10.6%. The Association did not object to the BTE allocation for Roads, and the Tribunal finds that the BTE allocations in a range of 9-10% for Roads are also fair and reasonable.

39Finally, the Tribunal determines that under the DCBS, and based on the evidence of Messrs. Grunda and Sears, the BTE for Multi-Use Trails, Active Transportation (including Off-road Trails which lead to other destinations) and Bike Lanes and Paved Shoulders, the BTE allocation ranges between 7.5% and 10%, which is generally in keeping with the BTE allocated to Roads. Again, in the Tribunal’s view, this allocation is fair and reasonable.

40The Tribunal found Mr. Grunda to be a thorough, knowledgeable and articulate witness whose conclusions were not successfully challenged on cross-examination and preferred his evidence where it contradicted the opinions of Ms. Jacob and Mr. Dowdall. The Tribunal found the evidence of Ms. Jacob and Mr. Dowdall to be less coherent and less reliable, notwithstanding their considerable experience and obvious credentials. It was noted that some of their calculations changed during the course of their WS’s and Reply WS’s, a point exploited effectively by the Town’s counsel during their cross-examination.

41For example, as noted by the Town’s counsel in the final argument, Ms. Jacob’s WS of September 24, 2021 stated that it was her opinion that the Active Transportation projects warranted a significantly higher BTE allocation. Using her approach at the time, this would result in a reduction in the development charge of $2,184 per Single Detached Unit. This was based on a ratio of 92% BTE and 8% to growth. When she wrote her Sur-Reply Statement, Ms. Jacob had changed her opinion and allocated 87% to BTE and 13% to growth, resulting in a reduction of the charge of $2,124 per Single Detached Unit. Mr. Dowdall, using a different method, first stated that the reduction in the Charge should be $1,605 per Single Detached Unit. In his Sur-Reply, he then opined that the Charge should be reduced by $1,690 per Single Detached Unit.

42In summary, the Tribunal agrees with the Town’s counsel that Ms. Jacob’s 87% BTE allocation is excessive, unfair and unreasonable and accepts that the Town’s BTE allocations, based on the evidence of Messrs. Grunda and Sears and the Town’s DCBS is both reasonable and equitable, as already noted above. In final argument, counsel for the Town contended:

Ms. Jacob’s approach places the burden upon existing development to pay for improvements that are necessary to accommodate the forecasted growth. The existing development has already paid for the improvements that were needed to accommodate its arrival. Put another way, the existing development has already paid for the roads that the new growth will be using. It is now time for the new growth to pay for the improvements to the Roads and the Active Transportation system that all future residents of Ajax will use. It is not fair or appropriate to have existing development pay for the needs of new growth – that is contrary to the purpose of the Act.

43The Tribunal commends the efforts of the Association’s counsel expended in preparing a very thorough and well-constructed written final argument. However, in the Tribunal’s view, some of the contentions made essentially reflect passionate policy arguments not necessarily linked to the opinion evidence before the OLT or the relatively narrow issues raised in this appeal. For example, counsel for the Association argued:

If the Tribunal were to accept the historical application of the BTE as the basis for using it in the current DCBS, it could effectively and indirectly stifle that statutory right of appeal for anyone who had not challenged a particular parameter of the DCBS when it was first introduced by the municipality (in this case, an appeal against the 2003 DC By-law would have been required in order to sustain appeal rights today). Such an approach is contrary to the intent and purpose of the DCA.

44It strikes the Tribunal that this position is arguably as much directed to a perceived need to amend and bolster the DC Act and/or its regulations as it is to the remedy sought on this appeal. Clearly, the former objective, however laudable it might be, is well beyond the purview of the OLT.

4. CONCLUSION

45For the reasons set out in the analysis contained in Parts 1, 2 and 3 above of this Decision, the Tribunal determines that the Appellant has not demonstrated that the Town failed to comply with the DC Act with respect to the Town’s enactment and implementation of its Development Charges By-law No. 50-2018.

ORDER

46The Tribunal dismisses this Appeal.

“William R. Middleton”

william r. middleton

MEMBER

Ontario Land Tribunal

Website: www.olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal (“Tribunal”). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.