The award-winning East Fonthill Secondary Plan calls for a community park near the intersection of Wellsping Way and Summersides Boulevard and along-side a watercourse. Since it didn’t own all of this land, the Town had to ultimately acquire some property.
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| Parkland in East Fonthill Plan |
The Planning Act provides options for how a municipal council can acquire parkland and/or “cash-in-lieu” of actual land in new developments.
When a developer proposes a residential subdivision or builds a house, the Planning Act allows a Town to take 5% of the land from the new subdivision for public parkland, or to take a cash percentage of the land value (instead of actual property).
In the case of a cash-in-lieu allocation in Pelham, the Town requires a payment of 5% of the value of a serviced building lot at the “day before the of issuance of the building permit.” To determine this value, a developer or builder provides the Town with an accredited real estate appraisal for the land or for the subdivision.
As time goes on and other homes or businesses are built nearby, the property values increase and, therefore, the parkland payments increase.
Towns must deposit these cash-in-lieu-of-parkland funds into a segregated fund called the Parkland Dedication Reserve.
Sometimes, an overall community plan calls for a park that is larger than an individual property owner is legally obligated to provide – larger than 5% of the land the developer owns or plans to develop. In that case, the owner must give a “parkland over-dedication.”
A parkland over-dedication must be valued in the same way as a cash-in-lieu-of-parkland payment. In Pelham, therefore, an accredited real estate appraiser must value the over-dedication at the “day before the of issuance of the building permit.” Then, the Town uses funds from the Parkland Dedication Reserve to pay for the parkland. (Again, no property taxes are used for this purchase.)
Just as the value of building lots increase over time and as development occurs, the valuation for excess parkland also increases as nearby development occurs; it makes sense and costs less, therefore, to value and purchase parkland early and before the construction of nearby homes or businesses.
In the case of the 3.3 acres of East Fonthill parkland, the Town peer reviewed a 2015 accredited real estate appraisal and negotiated a parkland over-dedication value of $3.6 million. Since the local real estate market increased by as much as 20% since the time of the appraisal, the Town saved parkland funds by negotiating this transaction two years ago and before recent nearby construction.
The Town paid for this land from the Parkland Dedication Reserve. As new houses and businesses are constructed in the East Fonthill area and property values increase, builders and developers will have to contribute 5% of those increasing values to pay for this park and other parklands.
Negotiating the parkland over-dedication early and before rising property values, makes fiscal sense. And, getting re-payed for that parkland by builders as property values increase will provide value-for-money for the Town over the long run.
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2017 September 15 Update:
The Town published some answers for frequently asked questions regarding parkland over-dedication and the development charge credits. Here's the text:
Q: Why did the Town purchase parkland in East Fonthill?
A: The award-winning East Fonthill Secondary Plan calls for a community park. Since it didn’t own this land, the Town purchased the parkland.
Q: Who determines the amount of land needed for parkland?
A: When a developer proposes a residential subdivision or builds a house, the Planning Act allows a Town to take 5% of land for the new subdivision for a park, or to take a percentage of cash instead of a property. In the case of a cash-in-lieu allocation in Pelham, the amount of payment is valued at 5% of the value of a serviced building lot at the ‘day before building permit’. For commercial or industrial property, the parkland is 2%. See section 51.1 in the Planning Act to read more: https://www.ontario.ca/laws/statute/90p13
Q: Who determined the value of the land?
A: The land was appraised and peer reviewed by a professional accredited appraisers to establish the value of the land.
Q: Wasn’t the appraisal value much higher than other land sold in the area?
A: The land was purchased at a price that reflected the value of the land at the ‘day before building permit’ stage. Land without roads, sidewalks, or additional development, for example, would not be valued the same as land that included all of those things, or at the ‘building-permit ready’ stage. When the Town purchases parkland land, it is done so using this formula, a system that is fair to both developers and the Town.
Q: What is this land going to cost me, the taxpayer?
A: Nothing. The land was purchased with funds in the Town’s Parkland Dedication Reserve. As new houses and business are constructed in the East Fonthill area, the property values will increase and builders and developers will have to contribute 5% of those increase values to pay for this and other parklands, replenishing the reserve fund. Towns must deposit these cash-in-lieu funds into that reserve fund.
Q: What is Parkland Over-Dedication?
A: Sometimes, an overall community plan calls for a park that is larger than an individual developer is legally obligated to provide – larger than 5% of the land the developer owns or plans to develop. In that case, the developer must give a parkland over-dedication.
Q: Was purchasing the land in 2015 a good idea or not?
A: Negotiating the parkland over-dedication early and before rising property values makes fiscal sense. Getting repaid for the parkland by builders as property values increase will provide value-for-money for the Town in the long run.
RE: OP-ED: Stop the dodging, I'll pay for the audit – The Voice of Pelham, September 13, 2017
Q: Did the Town do a secret deal with a developer, wherein the Town agreed to buy land from the developer, land the developer did not even yet own, in exchange for some $3 million dollars’ worth of “Development Charge credits,” and was this credits scheme even legal?
A: No, the Town did not do a secret deal with a developer. All agreements between the Town and any individuals or corporations are publicly approved. Specifically, on September 8, 2015, Town Council considered and approved the report “Over Parkland Dedication (East Fonthill) Agreement (Issue #20150901002)” and approved by by law 3650 (2015).
Q: Can parkland legally be purchased with Development Charges?
A: The Town did not purchase parkland using development charges. Parkland is purchased through the Parkland Dedication Reserve.
Q: Why did Town Council agree to pay $928,000 dollars per acre for this land when the going rate was approximately $150,000 to $200,000 per acre?
A: In the case of the 3.3 acres of East Fonthill parkland, the Town peer reviewed a 2015 accredited real estate appraisal and negotiated a parkland over-dedication value of $3.6 million. Since the local real estate market has increased by as much as 20% since the time of the appraisal, the Town saved parkland funds by negotiating this transaction two years ago and before recent, nearby construction.
For a printable version of these questions, please go to www.pelham.ca/ParklandFAQ.
You may contact Mayor Dave at mayordave@pelham.ca or read past columns at www.pelhammayordave.blogspot.ca.
