We continue our conversation with David Wex of Urban Capital, and bring in partner Mark Reeve today. We discuss and compare the planning process in Toronto, Montreal and Ottawa.
We spoke about how condominium purchasers' expectations are different in Toronto from those in Montreal or Ottawa. How have you found the planning and development process differs in those cities from what we're used to in Toronto?
David: Each city has its own culture, and I would say Toronto is a difficult place mostly because of the amount that's going through the system. You could build a building without site plan approval, and the city's fine with it. In Ottawa you do go through the motions, and they are catching up to us in terms of the development charges. There used to be no charges of the section 37 type. All of that stuff is coming because they have a little condo boom right now too. The cost of doing business there is not equalized. Montreal is a completely different thing: there is no OMB type body, you build what's prescribed, and there is no discussion.
Prescribed in what sense?
David: The zoning that is in place: there is no change from the zoning at all.
Do you find that more restrictive than what we have here?
David: We find that there is a lot more certainty in it.
Without an OMB, is there is any recourse to appeal zoning in Montreal?
David: What happens is if you want a change from the zoning, you apply to the local planning department. They take your file, go to a committee and make the application for you using your information, but you are not present at that meeting. We made no changes from the zoning there when we built. Our idea for the site was radically different, but we couldn't make changes. At least then when you buy a site you know what to expect. Here in Toronto you buy [land] on prospective zoning. You take a risk and you spend hundreds of thousands of dollars on the process. There is no process in Montreal. If you're doing a major, major development, then you can go through what would be the equivalent of zoning for us, but if you're doing a regular development like we're doing, there is no committee of adjustment, there is no OMB, there's just the zoning, and they don't care if you don't build it. You'll build to the zoning. The benefit of that is certainty, and a very consistent design giving of all the buildings a certain form. You must build your building to look a certain way.
Almost like what the Tall Buildings guideline was trying to lay out?
David: Already with Toronto's Tall Building guidelines everyone is pushing here, pushing there. There is a known entity here in the Entertainment District. You know that in this area you're going to get a tower with relatively small floor plate - on a podium - of approximately 30/35 storeys. Maybe 37 maybe 32, you know generally the parameters. There it's just written out ahead of time.
Boutique would have been be an early foray into the height issue in Toronto for you.
Mark: and how small the building will look in the next five years [laughs]!
The taller second phase was supposed to be 20 floors originally, then Shangri-La comes and gets 66 floors across the street. Tell us what happened at that point, and the zoning district situation here.
Mark: When we were originally approved for 20 storeys, we went to the Planning Department and said that we should be taller than 20 storeys. We wanted 35 plus. They said no, you guys are in the warehouse district, King-Spadina, and 20-something was appropriate height. We were stuck in that position. When Shangri-La came along and was approved at 66 stories we went back to Planning and said "66 storeys across the street, don't you think we should be higher than 20?" The answer again was no, you may be 100 feet away, but you're in a different district, end of story. So then what happened was a municipal election and Adam Vaughan got elected. At that stage our municipal lawyer suggested that we speak with the councillor and we explained the situation to him, and he agreed that it was a bit ridiculous. He agreed that Boutique should be 35 storeys, and he wanted public benefits, so it became a discussion of public benefits.
What did your Section 37 (public benefit) money go to?
David: I don't remember, but some would have been earmarked for social housing. That was before John Street improvement plans, so it wouldn't have gone there - - - Tableau and a lot of those ones now have Section 37 money going to that. I was not hugely in favour of Tableau Section 37 money going to John Street improvements because John really isn't proximate to it.
We have heard from some developers that they're a little frustrated that the City can be slow to specifically identify what the Section 37 funds are being used for from particular projects. Is that something that's ever bothered you at all?
David: Not particularly. You'd like to see it going to the neighbourhood where the project is, but it doesn't always happen. That's not always our biggest concern at the time. Our biggest concern is getting the approval for the project. What is interesting if you talk about other cities, Ottawa is now getting into the Section 37 type funds. It's gone from no development charges, to development charges, to Section 37. It has developed as rules of thumb about what Section 37 amount will be levied. It's not written down anywhere, it's just rules of thumb, so you have to be in the know… which is not incredibly helpful because there is always room for discussion which adds to uncertainty! In Ottawa they have no history of this. I sat down with an Ottawa councilor regarding a new building site, based on a new plan for Ottawa that is a built form from Toronto - a podium and a tower - and the councilor doesn't like it at all, but it's coming down the path. I said "I know you're going to support this, how much money for public benefits?" They had no idea. No one knows in that city what the Section 37 money should be.
Mark: Here is hit and miss too. You can't call the Planning Department and ask what's the price of height and density in Toronto. Here in the Entertainment District there is a precedent, and you can see what everyone's got, and it's tending towards a norm. You can ask a lawyer or a planner what you think it's going to be, and they will give you a ball park figure of what it should be. It's a negotiation amongst people who know what is happening. You sit down with your lawyer and the planner. Planning in Toronto is lawyer and planner based. Planning in other cities is architect and city policy based. That's the nature of the world we live in.
Pros and cons to both sides?
Mark: Yeah, I'm not aware of the pros of our system [laughs]!
The city does benefit from the development money.
David: The problem is that we're drunk on development money, because when development stops or slows, a lot of money that's coming into the city is coming from this temporal factor of huge devleopment. If you're basing your city's ability to build things on this moment in time when you're the centre of the world for building, you will have a problem when it's not, so it's not a healthy way to build a city. But, if you are going to do it, some certainty is helpful, and in the worst situation like our Ottawa project, we have no idea how much to budget. I can tell you in Toronto, I think it's sophisticated enough to know kind of where you're going to go and where you're going to end up.
Mark: You know, Toronto has never been so drunk on development charges as a place like Mississauga.
They announced that for the first time in their 30 year history they will be borrowing because their development moneys aren't coming in as fast as they used too.
Mark: In a way I can see - it's hard to know exactly because I'm not as familiar with it - but in Mississauga they were building these things without infrastructure in some cases so they have to put in services. The problem here for Boutique is what services did the City put in for the incremental number of people that moved in here? So it ends up being about public benefits, or maybe money to do what the City would like to do more generally. That's fine if you look at it as a one-off, but if you're funding things that are ongoing with development moneys now, and if in 5 years development isn't happening at the same rate, then you're going to have an issue.
Then they'll have to increase the property tax.
Mark: But there's a general aversion between paying, and the desire to have things, all over the western world.
Will the potential lockout affect your ability to get permits?
David: Everyone in the city has been scrambling to get permits by the end of January for that reason. Absolutely, of course. Now will you be able to submit a permit in this time and get going? I think so, but at your own risk. I think you'll be able to submit a permit.
And get going preemptively?
Mark: Toronto works on the basis that you move in lock step, and you get your permits when they're needed. In other cities without the same amount of development pressure, maybe the follow the actual strict rule. If you follow the strict rule here, they would either have to double the planning or inspection side, or do what we do, which is get conditional permits and move it along, otherwise nothing is going to happen. Everyone is agreed to that.
You said earlier that in Toronto they don't really care if you have a site plan approval.
Mark: They do care. You're going to sign a conditional form that says you can build - we're letting you build, but you're totally responsible if you don't get your site plan approved later.
David: They do have the right to say stop and take it down if it's not proper.
Mark: With the zoning process here, the zoning plans you submit are basically site plans as they are so detailed, that by the time you are going through the site plan approval process, nothing changes. It's more of a formality.
David: Right now the city has a whole department to review your drawings but they are so busy. Even if they screw up after they review your drawings, if you've got a permit, it doesn't matter: and you can't say to them 'well you gave me a permit'. The truth is if your plans are wrong, and you have a permit, it's your problem and not the City's problem. I've heard the discussion that maybe you take that department out of the City's responsibility, and now you're responsible. I don't think this is news to anyone. Many many cities don't have the same level of review that we have. I don't believe that Vancouver does. This is coming from the City itself.
Engineering reviews, or architecural reviews?
David: This has just been told to me by discussions happening at the City. Everything is already delayed, people are working extremely hard and they can't get a permit because they have too much coming through, and they haven't hired enough people. Can you just say that this function can be done by someone else so we can actually give the resources to get the other things done? Those are the kinds of things that may actually be happening now. This is what I've heard coming from the City itself.
Mark: You know what the City does? They'll say 'go out, hire a building code consultant, get him to review your building for OBC ompliance, and get us a report'. They basically abdicate their responsibility.
David: We do that, all of our buildings now. We submit with an OBC, otherwise it will never get done. We hire a professional code consulting firm so that we can submit without a permit.
Mark: I don't think this is the first time that this has been thought of and discussed, it's just that no one has really pursued it to any great degree.
David: At the end of the day, we have an incredibly robust building industry. It's not like it isn't working - it is working because things are getting done - it's just that there are other means of getting things done to make everything work.
Mark: We were just talking about how Byzantine the whole process is that you have to get through, and the different departments and layers you have to go through: one guy is examining structure, another is examining plumbing, another for zoning compliance, and it's endless.
David: For River City we had many, many differernt – from an environmental and city planning point of view – many, many departments with diametrically opposed requirements, and we just asked planning to come back to us, the main planner, to negotiate and moderate amongst all the different departments and tell us what you want to do, and what you want from us. They never did, and we would have to negotiate. It does happen in other cities too, it's just that no other city has this much amount of work going on in it, this number of projects.
About the 10% potential cuts to Planning - that every department is dealing with - is it a question of just 10% slower processing of everything because of fewer staff, or is it time that the City looked very specifically at their regulatory approvals process, and should certain things be going to professional consultants?
David: One is a very blunt way of doing it, and one is sitting back and going, is there stuff that we can be doing and do it better? That's obvously the better way of looking at it, and not make everyone work 10% slower. From what I understand - from the people helping us get permits - that is the discussion going on in the City right now. I'm just hearing with they are talking about. I would be heartened since we spend a lot of money on building permits and we do a lot of the work ourselves. I'd be heartened if new systems could be put in place so that it would work better. You look around and it is kind of working, and it is a lot of work and we pay a lot of money to professionals to move this through a system. We spend a lot of money on lawyers and planners, and is that the best way to get buildings built?
Mark: Concord Adex - when they were really going at the beginning - paid to hire a planner at the City, their own planner, who did nothing but service their plans at the City. It's been done before, and there's gotta be a better way than the City does it now. Now they're talking about raising the application fees by 50% because they don't think that they're getting full cost recovery for their applications, and we're shaking our heads thinking we're not sure where the first 50% is going.
David: The thing is, it's like anything, we think we're getting some value for it, but they're so busy. If you build it and they don't like it in the end – we had to remove all the wood at the top of this building [Boutique] in the outdoor area, trellises and such - even though we had a stamped permit application, the City didn't want anything outdoors that was flammable, but it was in the plans. I've had situations where I've had stamped drawings, totally approved, built it, and they decided they didn't want it. Not their responsibility, our responsibility.
UrbanToronto thanks David Wex and Mark Reeve for speaking candidly with us about the issues they face as developers in Toronto. We will be talking further with Mark Reeve in an upcoming story about their Trinity-Bellwoods Towns & Homes project.