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In the first two parts of our DenseCity series, we took a look at the planning framework that manages growth in Toronto both past and present, in order to understand the how and why of development in the city. These policies explain much of the urban structure of our city, but the process of translating these policies into physical buildings is very complex, and involves a host of stakeholders in both the private and public sectors that work together to build our city.
In this instalment of the series, we take a look at the private development industry, exploring how a building comes to be and the series of decisions that determine the location, the density, and the built form of a proposal. We sat down with Jim Ritchie, Senior Vice President of Sales and Marketing at Tridel, and Remo Agostino, Vice President of Development at The Daniels Corporation, who represent two prolific companies that have been instrumental in shaping the city, to see what factors and decisions determine the future of Toronto.
Doing Your Homework: The Pre-Application Phase
Long before the first massing models of a new development appear on UrbanToronto’s front page, developers have been tirelessly planning and crunching the numbers behind the scenes for months trying to determine the best fit for their site. Doing their due diligence is of paramount importance, and an impressive amount of resources go simply into market research, planning policy analysis, and conceptual building models that will result in their preferred scenario for a built form. Even before a site is purchased, developers may already have schematic designs of what could be constructed on that property.
“You’re more successful if there’s a tremendous amount of homework done beforehand,” explains Ritchie. “Before that land has been purchased, we’ve already drawn schematics and we’ve run all sorts of parameters against it, so that the numbers that we are looking at to make the land purchase support what we are trying to do.”
This isn’t, however, a straightforward process. If there is one thing that can’t be stressed enough, it’s that there is no single one-size-fits-all approach that can be applied to every site. Each scenario is unique, within a different context, a different market, different zoning, and so on. The condo market, Ritchie explains, while being reduced to averages in many statistical analyses in the media, is comprised of many different sub-markets that can produce infinite outcomes. There’s high-end luxury, mid-range units, seniors’ housing, student housing, family-sized suites, bachelor suites, suburban condos, urban condos: the list goes on. Each market scenario will warrant a different approach, which is very much dependent on the location, size, and context of the site in question.
So how, then, does one begin to assess if a site is appropriate for density or not? The answer, Agostino states, is the Official Plan. Developers will use the various planning documents available to determine what is permitted on the site, and that will form the basis from which they can begin to test out different development options. Often times, zoning by-laws are lagging behind provincial or Official Plan policies, so the point of reference is always the broader growth policies in the hierarchy. And if they see fit, developers may propose a change to these policies, but these changes will always be based firmly in their research.
“When we step forward to the city, usually we have a compelling argument as to why we think it could be different, or it could go beyond what the current circumstances are and that’s where the dialogue starts,” says Ritchie. Sometimes, developers try to get ahead of the game. For example, if a new transit project is announced by the province, developers may purchase land along the route in anticipation of the coming infrastructure, even before provincial or Official Plan policies have adjusted to the new circumstances.
There are many successful examples in Toronto of policy changes proposed by developers. Tridel’s Metrogate community, located at Kennedy Road and the 401, began as 17 acres of asphalt and derelict warehouse buildings. Designated as Employment Lands in the Official Plan, Tridel approached the City with the idea for a master-planned tower and townhouse community centred around green sustainable development. The City welcomed the proposal, the Official Plan Amendment was passed, and Tridel is now opening their sixth condo tower in the neighbourhood, with a seventh on the way: evidently a well-calculated and successful move.
Other examples include Liberty Village, which was a proposed master-planned development that resulted in a Secondary Plan produced for the area, and the more recently announced redevelopment of the Celestica site at Don Mills and Eglinton, dubbed Wynford Green, where City staff had initially excluded the privately-owned lands from their Secondary Plan study of the intersection, but have since adopted the master plan into their study as a welcome addition.
Agostino explains that beyond the planning framework, there is also a wider examination of the context that helps determine the appropriate built form. What, for example, is happening in the surrounding community? Are they the first ones to develop in the area, and can they piggyback on existing infrastructure—schools, parks, community centres, transit, etc? Is it an infill project or part of a larger redevelopment? All of these factors have an impact on the final outcome.
Above all, both Ritchie and Agostino stressed, collaboration is key. Developers often request pre-application meetings with City Planning staff to pitch their ideas and identify any issues or concerns the City may have before submitting a formal application. They may also engage with the community, hosting pre-application meetings with the public and interested stakeholders, sometimes even before purchasing the land, to evaluate what concerns they may have, and what they may be willing to support. The aim is to resolve as many issues as they can before submitting the application, to make the process go as smoothly as possible.
Consultants are also brought onto the project very early on, often before the site is purchased. Usually planners and architects are the first to be hired, as they provide guidance in translating the existing policy framework and often hash out different scenarios of built form that might work. Depending on the unique site conditions, other consultants will be included as well, such as heritage specialists, environmental specialists, soils and geotechnical engineers, civil site servicing, arborists, and so on, all who contribute to assessing whether or not the proposed building can be supported on the site, and how much that might cost.
The pre-application phase is perhaps the most work-intensive, and the most important step in the process. “Due diligence goes from everything from understanding the planning regime, understanding who are the stakeholders, understanding what the technical requirements are, and also bringing all your consultants together and putting together an application,” explains Agostino. “That process can go on for a year, six months, two years, it varies by the site. Very rarely are things instantaneous.”
That’s not to say this happens in every case. There are some developers who do not engage in pre-application consultations with the City or community, and there are cases where the rules of the planning framework are intentionally ignored. “Some people shoot for the moon and try to saw it off in the middle somewhere,” says Ritchie. “They always ask for a little bit more and I think the City knows they’re asking for more, so it’s almost like a bit of a negotiation game.” But these circumstances are certainly less common, and, as veterans of the industry who perceive themselves more as city builders rather than simply property flippers, both Ritchie and Agostino stressed that if you want a successful and sustainable product, then collaboration, extensive research, and public consultation are key.
Land Value and Density
As Torontonians are well aware these days, the cost of housing has skyrocketed across the GTA, and everyone from buyers to renters is feeling the pinch. Inevitably, this unprecedented upswing in the housing market is having a direct impact on how we manage density, but perhaps not in the ways that you might think.
The price a developer pays to purchase a plot of land is the result of a carefully calculated risk, one that relies heavily on the due diligence and planning assessment carried out prior to purchasing. It is not enough to say that a site must be developed in a certain way simply because the owner paid a certain price for it. “It’s the other way around,” Agostino explains. “We looked at the site, we think that a 40-storey building, or a 25-storey building, stacked townhouses, row townhouses, or single detached homes are appropriate for the site, so we are going to go purchase that land based on what we think is appropriate.” Speculation does occur, he adds, when developers predict a certain area of growth even before planning policies are put in place—perhaps along a future transit corridor or near a projected growth centre—and pay a higher price in anticipation of this, but they are still well aware of the risks involved.
In a very general sense, it is not the land value that determines the density; rather, it is the density that determines the land value. The market often operates on a highest and best use principle, and if the Official Plan and provincial policies dictate that a site is targeted for growth, then the land will immediately become more valuable.
That’s not to say that density is entirely independent of land values. Ritchie agrees that there is a general trend between the two, and that the cost may influence the amount of density asked for; however, there must always be a justification behind that decision beyond just the money. “I don’t think the municipality could care less what we pay for the land,” Ritchie states. “We’re looking at what’s the highest and best use, and they’re looking at what fits with the community and all the parameters that work with good planning. In terms of the density, that’s not a compelling reason for the City to even contemplate why you’re going there.” The most direct correlation in higher land values, he argues, is reflected in the price of the product, rather than the amount of density asked for.
Land values are also directly impacting the type of product being provided. Ritchie explains that with the average price of a single detached home soaring well above the one million dollar mark, condo living is becoming a more palatable situation for those looking to buy. This translates into larger unit sizes provided in condo towers, a trend that Ritchie says would be very much welcome in the development industry. “The larger the average suite size in the building, the higher the percentage of our profit,” he explains. “We’re building half as many suites, so we have half the number of kitchens going in, we’re paying half the number of development charges, we have half the parking to deal with. There are a lot of things that would be ideal if we would just be building big suites. Unfortunately, the market doesn’t always support that.”
Currently, many new condo towers in urban areas are packed with smaller bachelor and one-bedroom suites, with 10% of the total number of units as three bedrooms, as mandated by the City. “We fit as many as we can in because it might be easier to sell them,” Ritchie explains. “Of course it would be easier to sell a $300,000 suite than it would be a $600,000 suite, but today a $600,000 suite is half the price of a single home in the city, and if the lifestyle works for you, you’re going to look at that as an option.” He predicts that the market is shifting toward larger units to accommodate the growing number of people priced out of a detached home.
This variation in unit size raises an interesting point: height does not necessarily equal population density, and population density does not necessarily translate into height. A 30-storey building with an average suite size of 750 square feet is very different from a 30-storey building with an average suite size of 1500 square feet. There is often a subconscious association between the two parameters, but the relationship is much more nuanced: it is entirely possible to build high but with a relatively low population density, and the issues associated with each factor are completely different.
The Anatomy of a Development Application
The development application process is a well-defined, step-by-step process laid out by the province’s Planning Act and the City of Toronto’s guidelines that all applicants much adhere to. There is much involved, and we will only give a brief overview of the main components, but for a complete list of requirements you can check out the City of Toronto’s development guide, found online here.
For large, impactful developments—which are most relevant to this article—there are four submissions that a landowner may need to make, if relevant. Applications must be submitted, in sequence, for an Official Plan Amendment (if the proposal does not conform to the Official Plan), a Zoning By-Law Amendment (if the proposal does not conform to current zoning by-laws), Site Plan Control (approval by the City of a specific site plan), and Draft Plan of Condominium or Subdivision (permission to divide the land into lots, blocks, or units, depending on whether it is condos or a different built form). Official Plan Amendment (OPA) and Zoning By-Law Amendment (ZBA) applications can be combined into one submission to save time and money, and may be concurrently submitted along with Site Plan Control (SPC).
The City has a long list of required documents it needs in order to properly assess the development application. These include, most importantly, boundary surveys of the land parcels, topographical surveys, and appropriate plans and drawings that illustrate and detail the proposed building. A building mass model, either physical or digital, is also required. For OPA and ZBA applications, an important document is the Planning Rationale, which provides an analysis of the planning framework, the existing context, the proposed development, and details why the applicant believes that their proposal is an appropriate fit for the site.
Other commonly seen documents include a Pedestrian Wind Level Study, a Sun/Shadow Study, Architectural Control Guidelines, and Urban Design Guidelines. Several other documents are contingent on the specific site conditions: a Heritage Impact Assessment, an Archaeological Assessment, a Contaminated Site Assessment, and an Environmental Impact Assessment, among others. Several technical submissions are also required: a Noise Impact Study, a Geotechnical Report, a Transportation Impact Study, a Servicing and Stormwater Management Report, the Green Development Standards Checklist, the Accessibility Design Standards Checklist, and so on. The list is quite extensive, and encompasses a myriad of different components of a development.
The specific documents necessary for each application are usually clarified during the pre-application meetings between the City and the landowners. The onus is on the developers and their consultants to provide the proper documentation in order for the City to declare it complete and begin to assess the application.
Once submitted, the developer will engage in further meetings with City staff and additional public consultations where they will receive comments and concerns about the proposal, to which they will make revisions in an iterative process. As outlined in the Planning Act, the City has 30 days to send a notification that the complete submission has been received, and 120 days to respond with a decision about the application (180 days for OPA). City staff will circulate a preliminary report to the relevant approval bodies, followed later by a final report that includes a recommendation to approve or reject the application. The application will then go before the relevant Boards and Committees, and if it passes, will ultimately be voted on at City Council.
There is, of course, the Ontario Municipal Board (OMB), the ever-present provincial appeals body that has the authority to overrule any decision made by a municipal Council in Ontario. There has been much criticism of late over controversial decisions handed down by the Board, but both Ritchie and Agostino stress that in good practice, it is best to avoid appearing there.
“We don’t file an application thinking that we are going to the Board,” Agostino explains. “I don’t believe you should ever be filing an application with that predisposition already in your mind. It’s an insult to the process.” Ritchie adds that since they are in the development business, they can’t be adversarial all the time. It is much better to work with the City and to adhere to the process, as there will be more development applications in the future, and it produces a better result if they work together with City staff. The OMB is generally the worst-case scenario, or the last resort, and avoided if possible.
Both Ritchie and Agostino acknowledge that the OMB must be taken into account when putting together an application, but more in a sense that if they do end up before the Board, they need to make sure that their project is convincing and is fitting within the applicable planning policies, in order to ensure that it does get approved. With the Ontario Government bringing changes to the appeals process in the form of the new Local Planning Appeal Tribunal, we assume that Ritchie and Agostino will feel similarly about it, still preferring collaboration to get development approval.
In the end, the outcome of the entire process is very much dependent on the careful balancing act that developers perform when combining economics and good planning in putting together their proposals. The due diligence phase is extremely important in determining appropriate built form, and collaboration with City staff and key stakeholders helps to shape the proposal into a livable building. More often than not, our city builders work with the community to produce a product that is beneficial for all, usually with greater ambitions in mind than simply making a profit.
We’ve taken a sneak peek behind the decision-making process in the development industry, but it is now time to take a look at the flip side and examine how these development applications are assessed and approved at the City. In our next instalment of the DenseCity series, we speak with staff at the City of Toronto to find out the details of the evaluation process, and how the policies of the Official Plan come into play. In the meantime, keep checking back on UrbanToronto to get updates on all the developments happening across the city, and you can get in on the discussions by checking out their respective Forum threads.
