Intensification Incentives in Peel Region - Phase Two ... · intensification efforts in GTA communities, especially those that have significant market issues in their downtown cores

PEEL REGION INCENTIVES FOR INTENSIFICATION-OUTLINE PHASE 1 REPORT – ISSUES AND OPPORTUNITIES

Intensification Incentives in Peel Region Phase Two:

Policy Options

The Regional Municipality of Peel

July 2010

N. Barry Lyon Consultants Limited

Intensification Incentives in Peel Region Phase Two The Regional Municipality of Peel

TABLE OF CONTENTS

EXECUTIVE SUMMARY........................................................................................................................................1

1.0 INTRODUCTION.....................................................................................................................................6

2.0 REGIONAL NEEDS .................................................................................................................................7

3.0 INTENSIFICATION AREA ANALYSIS ................................................................................................ 10

4.0 IMPACT OF INCENTIVES ON INTENSIFICATION.......................................................................... 18

5.0 STRATEGIES.......................................................................................................................................... 27

APPENDIX A – INTENSIFICATION AREA MAPS

Intensification Incentives in Peel Region – Phase Two: Policy Options 1 | P a g e July 2010

EXECUTIVE SUMMARY In community planning it is understood that compact forms of development can offer broader economic, environmental and social benefits than less intense forms of development. However, there is also growing recognition that there are challenges associated with directing new growth into existing neighbourhoods and promoting intensification through redevelopment and reuse of underutilized properties. In order to overcome these challenges most municipalities will have to be more engaged and participatory in the development process. This can mean providing incentives into the marketplace to stimulate or direct growth to achieve intensification objectives. In order to effectively pursue these planning objectives and meet the associated challenges, Peel Region embarked on an extensive review of its Official Plan. The Peel Region Official Plan Review (PROPR) embraced a multi-faceted process based on a framework of sustainable development. This study looks directly at the potential need for incentives to attract and shape development in order to meet the broader interests of Peel Region and its local municipalities. The purpose of the project is to “explore options available to the Region and area municipalities to promote and encourage residential intensification in order to meet or exceed the targets in the Growth Plan and to examine feasible approaches to entice employment intensification in the Regional Municipality of Peel1”. This research work is intended to serve as background information, with recommendations to be treated purely as suggestions. Detailed analysis of these tools will need to be undertaken in collaboration with the area municipalities before the suggested tools are brought forward for Council endorsement. This is the second phase of a two phase study. The first phase assessed the policy framework, identified the tools available to municipalities in considering intensification, and discussed some of the key barriers to development. This Phase Two report builds on this research to examine the incentive options available to the Region.

The core conclusions of the Phase One Report included:

• The factors that drive intensification are market driven, but are supported by municipal infrastructure; transit in particular.

• Relative to other Greater Toronto Area (GTA) communities, Peel Region and its local municipalities, primarily Mississauga, have captured a significant amount of growth in high density forms over the past 8 years. Most of this growth has been focused in the Urban Growth Centres and Port Credit Village. However, the factors driving growth in each of these areas are unique.

1 Consulting Services for Managing Growth-Incentives for Intensification Project, Terms of Reference.


• The majority of all development within intensification areas has come in the form of residential condominium development, seniors’ retirement residences and market rental buildings.

• Only modest amounts of high-density office development have occurred in the

intensification areas of Peel. This is, in part, due to the cost of providing underground parking in the intensification areas to meet municipal parking requirements.

• At this time none of the “905” Regional governments offer comprehensive incentive programs. Most of the intensification experience at the upper tier municipal level is in Niagara and Waterloo, where significant brownfield and market issues exist.

• Exemptions from development charges are, by far, the best method of incentifying2 intensification efforts in GTA communities, especially those that have significant market issues in their downtown cores. These exemptions are also very costly to municipalities.

Within this context, the following are our central conclusions and recommendations:

Establish a Policy Framework – Peel Region should consider the inclusion of Community Improvement policies in the implementation section of the new Official Plan. Draft policies are contained in Section 6.0 of this report. Co-ordinate with Local Initiatives- Aligning regional and local intensification objectives, in both planning policy and supporting Community Improvement Plans and other incentive programs, will maximize the benefits and offer greater efficiencies in resources.

Consider Targeted Program Initiatives Including:

Prioritize Intensification Efforts Considering the significant supply of potential intensification sites and the comparatively limited demand for intensification over the planning period, Peel Region should give consideration to prioritizing efforts to encourage intensification to the areas where the best results can be expected. In areas where there is little to no existing market demand, the Region should also contribute to local municipal efforts to promote intensification, in order to better prepare such areas for intensification in the longer-term. The most suitable form of Regional incentives would be through the provision of social infrastructure under the Region’s jurisdiction, such as; affordable housing, social services, day care, etc.; a large amount of which already exists in areas that currently have a high degree of market interest.

2 Incentifying refers to the practice of offering incentives for developing land in specific areas and for prescribed purposes.


Hurontario High Order Transit Corridor The provincially designated transportation agency, Metrolinx, has identified the Hurontario/Main Street Corridor in Mississauga and Brampton as a future higher order transit corridor in their Regional Transportation Plan (The Big Move). Stemming from this, the Region, in their Draft Official Plan (ROPA 24) has identified the corridor between the two Urban Growth Centres as a Regional Intensification Corridor. The possibility of a higher order transit corridor on Hurontario/Main Street would have a significant impact in terms of encouraging intensification within the identified nodes along Highway 10, especially the two Urban Growth Centres. High-density residential and office uses are typically most successful when in close proximity to higher order public transit, due to the strong market attraction associated with such a characteristic, especially in comparison to lower-density, more suburban alternatives. Continued support of this initiative with a possible Community Improvement Plan to facilitate re-urbanization (to assemble parcels for transit hubs or redevelopment) at key areas should be considered. Consider Specific Economic Development Initiatives As areas continue to become increasingly intensified, the development process will become more complex. An internal agency experienced in development matters, which might come together on a project by project basis, with the objective of co-ordinating municipal development and infrastructure initiatives, could help expedite current projects and facilitate the development of future initiatives (such as land assemblies and planning approvals on strategic sites). The Region’s involvement in these agencies could help in a co-coordinating capacity especially in regard to servicing issues. Parking Related Initiatives Consider assisting in the establishment of municipal “Parking Authority” style organizations to address the cost of providing underground parking, a major barrier to intensification and to take advantage of an important, long term, revenue generating opportunity. Ensure Density and Land Use Regulations are Aligned with Economic Forces In complex urban areas, height and density are the key factors that drive the viability of developments. Local municipalities should be encouraged to review areas where intensification is expectant to ensure height limits are sufficient to offer the economic incentive to achieve community planning objectives. The criteria for increasing height and density limits should be established in such a way that they promote good planning practices, transit supportive densities and achieve balanced population and employment ratios in Urban Growth centres and Intensification Nodes. Incentives for High Density Residential Development Given the current economic climate, it is likely that even with financial incentives there is insufficient consumer confidence to support the development of a large number of new residential projects in the Region in the near-term. It is also important to recognize that the development charge rebate programs in Brampton and Caledon have been very successful. As further projects are completed and occupied it’s likely that these successful precedents could, in themselves, stimulate future development in their respective areas.


Finally, the Hurontario Transit proposal would also add additional incentive to development in Brampton and Mississauga. Given the economic climate and the existence or emergence of some incentives, we would not recommend any direct financial incentives for residential development in the near term. However, the use of tools of this nature could be encouraged in the future by providing the policy framework in the Official Plan for use as the market stabilizes. The exception to this may be mid-rise housing developments that might be viewed as key development components in certain areas such as sensitive lower density communities. Consider Incentives for Employment Uses as Incentives for Residential The need for financial incentives to attract employment uses to downtown areas is currently far more pronounced in the Region than the need for residential oriented incentives. Incentives which might include; the construction of municipally owned parking facilities, and development charge or tax rebates could have many long term benefits including improving live/work relationships, supporting transit use, and increased long term tax assessment. Generally speaking, people follow jobs. If incentives could be designed to support centrally located office based employment uses, the demand for centrally located housing would also increase. Tackle Lot Fragmentation and other Barriers to Mid-Rise Developments Mid-rise apartments offer a development form that is more easily integrated into existing neighbourhoods but they can also present unique economic challenges. They are also frequently more suited to families that prefer lower rise buildings that offer the ability of parents to observe outdoor play areas. The Region and the area municipalities could help facilitate medium-density development of this nature by:

• Helping with lot consolidations, especially where small “holdout” parcels are required to assemble lands necessary for intensification initiatives;

• Provide funding assistance (grants or loans) through Community Improvement Plan programs to promote mid-rise, medium/high density housing developments in intensification areas; and/or,

• Provide interest free loans to help fund non-residential (street-retail components) for qualifying projects. Qualification criteria could include being within a priority intensification area, design oriented to families (larger suites), project size and pricing targets.

Create Criteria for Application of Incentives Under any circumstance, the application of specific criteria, ideally aligned with municipal programs, is necessary to ensure programs are targeted to the projects that yield the best benefits for public funds invested. Criteria for program acceptance would differ from program to program but could include matters such as project size, distance from transit, and project design features. To provide fiscal limits to any incentive program, annual funding caps should be applied for programs based on budget availability.


Brownfield Programs Through a community improvement plan process or a specifically targeted brownfield program, Peel Region and the local municipalities could determine, in consultation with stakeholders, appropriate tools for encouraging the redevelopment of brownfields. A prime example for the use of such a program could be the redevelopment of the Imperial Oil lands in Port Credit. Area Specific Development Charges Development charges are currently calculated on a local and regional basis. However, the growth related costs associated with compact communities are different from those of suburban areas. There is a growing pool of evidence that, through intensification, greater efficiencies can be expected in the provision of municipal and regional services3. As the Urban Growth Centres and other intensification areas become increasingly developed, the cost differences are likely to become more pronounced. Peel Region, along with the local municipalities, should consider an analysis of this issue to determine if the burden of growth related charges should/could be apportioned between greenfield development and urban centre intensification. In particular, this analysis should examine the cost of providing sufficient water and sanitary sewage capacity to accommodate the planned growth for each area. Furthermore, this analysis must be done with the goal of insuring that there will be adequate capacity to accommodate the planned growth for each area, at no cost to the Region or local municipality.

3 McKellar, James and Amborski, David, Building a Sustainable Toronto, January, 2009


1.0 INTRODUCTION This report is the second phase of a study on the need for and potential application of incentives for intensification. The conclusions and recommendations developed during this research have been used to inform the Peel Region Official Plan Review Planning Process (PROPR). The first phase of the research provided a baseline analysis of issues associated with intensification, including the factors that support demand for high density residential and office developments. It also illustrated some of the key barriers and issues blocking this form of development. The study acknowledged that intensification is largely a function of the maturation of urban communities. Intensification is an urban process that evolves over long periods of time. While municipalities can influence markets though investment in services and facilities, such as community centres and transit, they cannot compensate for the absence of market demand. Even generous financial subsidies in the form of development charge relief or tax grants cannot substitute for market demand for buildings constructed by the private sector in urban growth centres and major intensification areas. As a result, this second phase of the work program examines in detail the areas already identified for intensification in each of Peel’s area municipalities, with a view to identifying those areas that have the physical and market characteristics necessary to attract market interest over the planning horizon of Peel Region’s Official Plan. The study then looks at the impact of current incentive programs in Peel Region and the need for these incentives within the near and longer terms. Understanding these dynamics, our report examines specific strategies for consideration by Regional staff and Council. The concluding section provides policy suggestions for inclusion in the Regional Official Plan.


2.0 REGIONAL NEEDS The Province of Ontario, through the updated Provincial Policy Statement (PPS) and the Places to Grow: Growth Plan for the Greater Golden Horseshoe document and associated legislation, has recognized the importance and benefits of urban intensification. Intensification is defined in both documents as:

“The development of a property, site, or area at a higher density than currently exists through:

a) redevelopment, including the reuse of brownfield sites; b) the development of vacant and/or underutilized lots within previously developed

areas; c) infill development; and, d) the expansion or conversion of existing buildings.”

The PPS and Places to Grow: Growth Plan contain numerous objectives and policies that are intended to both guide and encourage urban intensification in Ontario, particularly in the Greater Golden Horseshoe (GGH) Area. In fact, such is the provincial commitment to intensification that by 2015, each upper and single-tier municipality within the GGH, including the Region of Peel, is mandated to achieve a minimum annual intensification rate of 40% of all new residential development. The Provincial commitment to intensification is not unfounded. Over the past 20 years, there has been a significant amount of research conducted on urban form and growth management. This work has been completed under the assumption that the traditional model of suburban development, one focused on the automobile and separated, single-use, low-density neighbourhoods, is producing negative consequences and, considering current economic, environmental and social constraints, is at risk of failing. This line of thought typically associated with “New Urbanism” and “Smart Growth” approaches to urban planning, identifies numerous benefits associated with intensification and regards it as central to the economic, social and environmental sustainability of cities. The benefits of intensification are numerous and are aligned directly with the economic, cultural, social and environmental imperatives underpinning the Regional Official Plan’s sustainable development framework. Economic

• Creates the potential for more interesting and eclectic environments, a pre-requisite to attracting creative based economies;

• Increased average worker productivity, as a result of reduced commuting times; • Decreased economic costs associated with congestion; • Increasing an area’s competitive advantage, making it more attractive to people and

jobs; especially those jobs that are better paying, more specialized and innovative;


• Reduced costs associated with the provision of municipal infrastructure, since the majority of infrastructure is typically already in place;

• Reduces pressure to expand municipal services into costly suburban areas; • The encouragement of walking and cycling improves personal health thereby reducing

spending and reliance on health services; • Increased local property tax revenue; and, • Due to lower average housing and transportation costs, intensification can also increase

individual/household disposable income, as well as concentrate household spending. Both of these factors allow for the expansion to and addition of new local businesses.

Social • Contributes to a better mix and selection of housing, in terms of both cost and unit

types/sizes; • Increased land use efficiency helps make affordable projects more feasible; • Improves housing affordability, as the amount of individual/household income spent on

transportation decreases; • Can improve the aesthetic of an area and its’ “street life”, which can contribute to reduced

crime and an improved overall perception; • Assists in creating balanced complete communities, where people work, live and play; • Can contribute indirectly to the increased physical activity and health of residents and

workers; • As a result of reduced commuting times, intensification can lessen personal stress and

increase time spent with friends and family; • Allows for better access and efficiency in the delivery of community services to a broader

number of people; and, • Provides housing that offers opportunities to reduce isolation for seniors and other groups.

Figure 1: A Modest Public Square in Portland Provides opportunities for socialization


Environmental • Limits the continued outward growth of urban areas and the loss of open space,

agricultural land, and natural areas; • Provides for the efficient use of municipal infrastructure, including electricity and water; • Higher density buildings are more easily designed to meet modern sustainability

requirement standards. They are also more easily serviced by district energy systems and other alternative heating and cooling systems;

• Intensified areas can better mitigate local climate impacts through wind and solar protection and orientation;

• Through the reduction of automobile dependence, intensification reduces air pollution, as well as the consumption of non-renewable resources, such as oil and gas; and,

• Can very often lead to the remediation of contaminated sites. Cultural

• Intensification can help create a greater sense of community and increase social connectivity;

• Through greater socializing opportunities, groups and individuals are more likely to collaborate in the arts;

• Large numbers of people are necessary to support commercial ventures of artist communities;

• Intensified communities provide for the number and diversity of people required to support major cultural institutions; and,

• The establishment of these major institutions, including libraries, art galleries, studios and schools, in turn, attracts energetic and creative people.

There are, of course, negative aspects to intensification that include noise and population congestion. Even with public transit, vehicle emissions are more concentrated in downtown areas which can create air quality issues, particularly in the summer. In some communities, issues of crime and safety associated with intensification can erode many of the benefits of intensification. However, if carefully planned with a healthy mix of uses, most of these issues can be mitigated or eliminated. Furthermore, even in the best planned suburban communities, it can be challenging to achieve the associated benefits to the same level as is possible in a well designed compact urban community. Given the benefits and challenges to intensification discussed previously, the remainder of this report reviews each of the designated intensification areas in the Region, the existing and potential impacts of regional intensification strategies/tools, and based on this analysis, provides recommendations on the goals, target areas, type and magnitude of available tools to Peel Region to encourage intensification.


3.0 INTENSIFICATION AREA ANALYSIS While the Phase One report identified the primary factors that drive intensification, this section measures each intensification area against these factors and others, with a view to assessing the ability of each area to attract high density development forms. Through this analysis we can better determine which areas have the potential to attract new or additional intensified forms of development in the near term and benefit the most from Regional and area municipal incentives. Each area identified for potential intensification within Peel Region is unique by virtue of its location and the characteristics of the community but also by its pattern of development. These features have a bearing on the viability of intensification of each area. By exploring these, and other characteristics, the issues and barriers to intensification can be isolated and better understood. Through this, the general need and form of incentives can be better studied on an area by area basis. Table One examines each intensification area by evaluating it against a range of criteria. The criteria used in this table are obtained through readily available sources that provide insight into the economic and physical characteristics of the area. However, more detailed study of each of these nodes is required. Appendix A illustrates the parcel fabric and development pattern of each intensification area within Peel Region, along with medium and high density residential development activity (between 2001 and 2008). These maps were used to assess whether parcel fragmentation was an issue and what, if any, role the Region of Peel’s land ownership may play in assisting the consolidation of parcels for intensification initiatives (only Peel Region lands that were unoccupied were mapped). From these two exercises, we can see that the development activity of both medium and high density development within the identified nodes is focused in a limited number of areas. Of the 23 areas identified for potential intensification, only 10 areas have experienced any significant development activity and of these areas, only 5 have attracted more than 2 projects since 2001. The vast majority of development has occurred in the following areas:

• Downtown Brampton; • Hurontario Uptown; • Central Erin Mills; • Mississauga City Centre; and, • Port Credit Village.

This analysis illustrates the wide range in parcel typology and development patterns within the Region. The following sections take a closer look at the intensification areas within each area municipality.


3.1 The City of Brampton

The areas for intensification in Brampton were identified in a study by Hemson Consulting completed in November 2008. These areas were identified based on the following criteria:

• Area of known development interest; • Area at least 2,000m2 in size; • A current value assessment of less than $1.0M per hectare for medium density; and,

current value of $2.5M per hectare for high density development opportunities. It should be noted that the Hemson report did not consider market factors in its analysis. Stemming from the Hemson Report and other background documents, the City of Brampton has included a number of amendments to their Official Plan as it relates to intensification, especially areas in which the intensification should be focused. The City of Brampton’s Draft Official Plan Amendment highlights the primary areas best suited for increased density, which include: the Urban Growth Centre; the Central Area; Intensification Corridors; Mobility Hubs and, Major Transit Stations Areas. Furthermore, to facilitate opportunities for intensification in some of these areas, the use of bonusing has also been incorporated within the Draft Official Plan Amendment. The areas identified by the City for future intensification can be split, based on market demand, into two categories; those likely to experience significant high-density development in the near-to-mid term and those likely to experience it in the mid-to-long term. Of those likely to develop in the near-to-mid term, Downtown Brampton, Bramalea City Centre (Queen and Dixie) and the broader Queen Street Corridor, have proven to have the strongest market demand, given the more mature and urban nature of the areas. The Queen Street Corridor is planned to be a major urban boulevard. As a result, along Queen Street the City of Brampton has set in place land use policies, financial incentives, on-going policy work and a new rapid transit system focused on the corridor with the aim to support its ongoing redevelopment. Hurontario and Steeles (Shopper’s World) and Hurontario and Ray Lawson Boulevard, are also areas that, given their wide range of services and amenities, likely have a growing potential for more immediate intensification. If higher order transit service, currently under consideration for these areas, becomes a reality, the potential will be further enhanced. However, the small lot pattern suggests that assembling sites large enough for redevelopment will become increasingly challenging. Another intensification node in the City of Brampton that has the potential, although less so than the preceding nodes, to experience some high-density development in the near-to-mid term, is the Mt. Pleasant Village area, centred at Creditview and Bovaird. Unlike the other intensification areas in this category, which are largely developed, central areas; Mt. Pleasant Village is located on the urban fringe of the City and is still relatively undeveloped. Mt. Pleasant Village’s future intensification potential is tied to the presence of a GO Train station, undeveloped parcels of land, and the significant planning work recently undertaken by the City of


Brampton. Specifically, through the approved Block Plan, the City is visioning this area to become a compact, transit-oriented area, with a variety of housing types and densities, all to support the Mt. Pleasant Village Mobility Hub and existing GO Station.

Figure 2: The Bovaird and Creditview Node may attract some intensification in the near-to-mid term (source: Google Maps).

While it is acknowledged that the recommendations in the Hemson study are meant to be general in nature, the report identifies some areas, such as Bovaird and Highway 410 and The Gore Road and Queen Street East, as having potential for intensification when in fact the bulk of the demand for intensification in these areas, for various reasons, is likely to be in the mid-to-long term. While these nodes offer excellent long-term opportunities for residential and non-residential intensification due to their availability of land, non-fragmented lot patterns and highway access, and have been planned to be mixed-use and pedestrian friendly, these nodes will have to mature, with a broader range of amenities and services, before they can attract higher density office or residential uses. In the mean-time, the majority of residential and employment intensification in Brampton will be focused in the more mature and central areas of the City, including the Downtown, along major corridors, such as Queen and Main, and the emerging Mt. Pleasant Village. As a result, these areas should be considered as the main targets for direct/indirect intensification incentives.

3.2 The City of Mississauga

Similar to Brampton, the City of Mississauga has experienced most of its intensification in its more mature communities. The exception is in the City Centre area, which has seen the most new high density residential development in the GTA outside of the City of Toronto. The reasons for this significant amount of new development are:

• Aggressive public investment in cultural facilities and transit; • Vacant land parcels;


• The retail attraction of Square One Shopping Centre; • Accessibility to 400 series highways; • Changing demographics; • A large pool of surrounding buyers, including investors; • Favourable planning permissions; and, • Low land and development charges at the time of acquisition and pre-development.

Other areas, including Port Credit Village and Central Erin Mills, have also attracted significant amounts of development. FRAM’s Port Credit Village project, developed on the former St. Lawrence Starch site, has successfully introduced several new development forms to the area including apartments with street retail and live-work housing. Streetsville illustrates many of the characteristics necessary to attract higher density residential developments, including a range of retail uses and GO transit access, but has seen only modest amounts of redevelopment over the past 20 years. This is likely due to a limited supply of available parcels and the complexities and costs of assembling parcels. Over time however, as demand increases, higher revenues will likely make intensification more feasible. Zoning that limits heights in these areas may also have a bearing on project feasibility. For areas such as Streetsville and Port Credit (as well as some areas in Caledon and Brampton) intensification is may pose further challenges due to the presence of heritage properties/buildings and the planning policies related to their preservation.

Figure 3: Streetsville

Mall based intensification nodes such as Malton, South Common, Sheridan, Rathburn and Applewood have surprisingly few intensification opportunities. The major opportunities seem to be in the redevelopment of the shopping centres for mixed-use developments. However, retail land values, which include surface parking areas, compete strongly with high density residential values. In mixing uses, in the absence of high order transit, parking ratios still must be maintained. If residential development is added to these shopping centres, retail parking spaces must be replaced. If the only solution is structured parking facilities, then the cost of this new parking typically renders the mixed-use concept unfeasible.


Figure 4: A portion of the Rathburn and Applewood Node

In Mississauga, other areas such as Malton and Lakeview likely do not have the market strength from the surrounding community to support new high density residential development. These areas have the lowest median incomes and home values of the Peel nodes, which suggest affordability issues in the area. This is especially true for empty nesters who may wish to relocate in their neighbourhood but depend on the sale of their current home to finance a retirement residence. First time buyers might also be difficult to attract to these nodes as they (as well as empty nesters) tend to seek locations that have a broader range of services and amenities. We expect however, that over time, within the planning horizon of the Regional Official Plan, these conditions will improve as the factors that drive intensification take a deeper hold.

3.3 The Town of Caledon

Bolton is the only area identified for significant intensification in the Town of Caledon. Bolton, in recent years, has attracted an apartment condominium development, as well as townhouse style developments. However, despite a quality product in an attractive downtown location, sales of the apartments have been slow, even at competitive prices, suggesting market weakness in the area. This market weakness explains the need for the financial incentives the developer received from the Town.

3.4 Summary

This analysis suggests that each node has unique factors that will impact their ability to attract intensified development forms. The analysis points to the complex issues that drive the feasibility of high density developments and the need for more detailed study in each node. These studies would be best accomplished in conjunction with the local municipalities, potentially within the context of a community improvement plan; a policy development process designed specifically to provide the legislative framework necessary to identify key issues linked to revitalizing communities and providing incentives for private development initiatives. The Growth Plan conformity work recently undertaken by the City of Brampton serves as a good example of more detailed intensification planning.


However, it is important to appreciate that there is only so much higher density residential market demand. In Brampton for example, the Hemson Report suggests a potential supply of about 34,000 medium and high density units within intensification areas and a demand of 10,106 households by 2031. The actual demand for medium and high-density development within the nodes of Brampton between 2001 and 2008 produced about 1,430 units. This amounts to a yield of about 175 units per year (in a very strong market cycle). Achieving the demand targets suggested by the Hemson Report will require the yield of average over 400 units per year between 2006 and 2031. With no production forecast for 2009 and 2010, this growth will have to occur in the latter years of the planning period and at a strong pace. This will require a significant shift in buyer patterns, influenced perhaps by infrastructure improvements such as the Hurontario Transit Corridor, and emerging planning policies and initiatives. Assuming redevelopment of some existing low density developments, Mississauga and Caledon also have more than enough capacity demand over the forecast period in their intensification areas. Understanding this, Peel Region and the local municipalities may wish to use policy initiatives, including incentives to not only encourage intensification but to direct the market demand for higher density uses to the areas where intensification potential is the best. By focusing development of this nature, the community benefits of more compact growth could be realized sooner and require less financial investment by the Region/municipality. Incentives in areas that have proven market success and have significant public infrastructure investments might help support development momentum to complete these communities. Priority may also be given to areas where public investments are planned, such as the Hurontario High Order Transit Corridor , which is currently under study. Again, the prioritization and hierarchy of intensification nodes recently developed by the City of Brampton serves as an excellent starting point for the development of specific incentives to be used to attract development to these nodes. Table One provides a starting point to begin prioritizing nodes for intensification. However, determining priorities for public investment in terms of incentives should be made with a fuller set of criteria, including a broader understanding of community needs and infrastructure. This analysis should be made within the context of a detailed study on each node. Note: Intensification areas listed in Table One and identified on the corresponding map are reflective of intensification areas outlined in recent local municipal growth management work, including; the Inventory and Assessment of Intensification Opportunities (Hemson Consulting Ltd., November, 2008) and Sustainable Living: A Growth Management Strategy for Mississauga (City of Mississauga, October, 2008). The boundaries of some nodes may have changed. For most up-to-date information on nodes and respective boundaries, contact respective area municipality planning departments.


Map # Node Municipality

Forecast Household

Growth 2008 ‐2031

Forecast Employment Growth 2008 ‐

2031

Median Household Income (2006)

Average Estimated Home Value

(2006)

Apartment Units

Row Units

Servicing Constraints

Incompatible Land Uses

Lot Fragmentation

Heritage Buildings

Along Proposed Higher Order Transit Route

(Proposed) <500 Metres

<500 metres from GO

Train station

<1km from Major

Highway

Concentration of Office

Development

Parks, Open Space &

Recreation

Range of commercial services and conveniences

1 Downtown Bolton Ca ledon n/a n/a 87,300$ 374,600$ 67 ‐ yes No Yes Yes No No No No Yes Yes

2The Gore Road & Queen Street

EastBrampton 463 2,000 76,300$ 433,400$ ‐ ‐ No No No No Yes No Yes No No Yes

3 Highway 410 & Bova ird Dr. Brampton 842 960 78,500$ 321,000$ ‐ 381 No No No No No No Yes No No Yes

4 Creditview Rd. & Bova ird Dr. Brampton 2,675 520 80,400$ 364,100$ ‐ 129 No No No No No Yes No No No No

5Dixie Rd. & Queen St. (Bramalea City Centre)

Brampton 1,692 4,310 45,800$ 178,800$ ‐ ‐ No No No No Yes No Yes Yes Yes Yes

6 Downtown Brampton Brampton 2,733 8,950 54,200$ 332,000$ 1,252 178 No No Yes Yes Yes Yes No Yes Yes Yes

7 Bramalea Rd. & Steeles Ave. Brampton ‐ 3,580 61,900$ 261,400$ 400 ‐ No Yes No No No Yes Yes No No No

8 Hurontario Rd. & Steeles Ave. Brampton 61,100$ 303,000$ ‐ ‐ No No No No Yes No No No Yes Yes

9 Hurontario Rd. & Ray Lawson Blvd. Brampton 62,800$ 309,200$ ‐ ‐ No No No No Yes No Yes Yes Yes Yes

10 Miss i ssauga Rd. & Steeles Ave. Brampton 786 13,230 90,900$ 445,800$ ‐ ‐ No Yes No No No No No No No No

11 Malton Miss i ssauga 118 81 55,400$ 290,900$ ‐ ‐ No No No No No No Yes No Yes Yes

12 Meadowvale Miss i ssauga 307 393 54,100$ 310,100$ ‐ ‐ No No No No No No No No Yes Yes

13 Streetsvi l le Miss i ssauga 682 897 68,900$ 348,200$ ‐ ‐ No No Yes Yes No Yes No Yes Yes Yes

14 Rathburn & Applewood Miss i ssauga 353 141 60,900$ 301,000$ 260 ‐ No No No No No No No No Yes No

15 Hurontario Uptown Miss i ssauga 2,365 1,347 65,600$ 354,600$ 991 410 No No No No Yes No Yes No No Yes

16 Central Erin Mil l s Miss i ssauga 2,751 2,080 77,000$ 363,400$ 1,265 ‐ No No No No No No Yes No Yes Yes

17 Dixie & Dundas Miss i ssauga 400 ‐ 46,000$ 322,800$ ‐ ‐ No Yes No No Yes Yes No No No No

18Miss i ssauga City Centre (inc.

Cooksvi l le)Miss i ssauga 16,355 11,515 65,400$ 334,200$ 10,224 142 No No No

Yes (Cooksvi l le Yes

Yes (Cooksvi l le) Yes Yes Yes Yes

19 South Common/Erin Mil l s Miss i ssauga 1,360 561 51,800$ 329,000$ 0 ‐ No No No No No No Yes No Yes Yes

20 Sheridan Miss i ssauga 117 74 64,400$ 524,600$ ‐ ‐ No No No No No No Yes Yes Yes Yes

21 Lakeview Miss i ssauga 156 59 48,900$ 298,100$ ‐ ‐ Yes No Yes Yes Yes No No No Yes Yes

22 Port Credi t Miss i ssauga 680 362 53,200$ 449,500$ 363 235 No No Yes Yes Yes Yes No Yes (Loca l ) Yes Yes

23 Clarkson Vi l lage Miss issauga 545 250 73,600$ 333,700$ 226 72 Yes No Yes Yes Yes Yes No No Yes Yes

36,331 53,546 89,877$ 15,048 1,547 General Notes: Boundaries used are taken from recently completed growth management work for City of Mississauga & Brampton. Downtown Bolton boundary estimate to at roughly 500 metre radius from intersection of King and Queen StreetSources:Household & Employment forecasts are based on Region of Peel forecasts by loca l area . Boundary of forecasts may not match exactly to proposed boundaries of nodes contained in recent local growth management work.Average Home Value and Median Household Income based on 2006 census tract information. Since boundaries of census tracts do not relate to proposed node boundaries , 1 or an average of 2 census tracts for each node were used. Apartment, Row/Townhomes units completed or under construction between 2000 and present i s based on RealNet data . Node boundaries are based on recent local growth management work. Office completeions from 2000 to 2008 based on data provided by CBREServicing Constraints ‐ Based on discuss ions with regional engineering Alex Mais ley. Only areas that are at or are nearing capaci ty (water/sewer) are identi fied as being constrained. Vacant Lots ‐ Based on a ir photos , municipal Mapping and growth management workIncompatible Land Uses ‐ Based on Air photos and Growth Management workLot Fragmentation ‐ Based Geowarehouse MappingHeritage Buildings ‐ Based on Local Municipa l Mapping, a ir photoes and s i te vis i tsProposed High Order Transit ‐ Based on Metrol inx ‐ Transportation Plan for the GTAHGO Station ‐ Based on onl ine mapping and GO Trans i t WebsiteAlong transit Route ‐ Based on GO trans i t Website, Miss issauga Trans i t and Brampton Trans i t webs i tesConcentration of Office and Ammenities, Based on Onl ine Mapping and Si te Vis i ts

Table One ‐ Intensification Node Analysis Matrix ‐Region of Peel

Existing/Planned Amenties

Completed & Under Construction

(2001 to present)

2,200 915


Figure 5: Intensification Areas


4.0 IMPACT OF INCENTIVES ON INTENSIFICATION This section looks at the impact of incentives stimulating intensified forms of development. For the purposes of this section, we discuss direct and indirect incentives. Direct incentives are financial contributions in the form of grants and rebates. As discussed in the Phase One study, these incentives come in many forms. We look at the impact of a selection of these tools in the context of prototypical residential and office developments in Peel. Indirect incentives are likely of greater importance, as they involve public investment in infrastructure and programming that help to create a high quality urban community, which in turn, attracts market interest and investment.

4.1 Indirect Incentives By far the most successful incentive in the Region has been the continual program of public investment in the downtown areas of Brampton, Bolton and Mississauga City Centre. Each of these communities has benefited from various scales of public investments in cultural facilities, public open space and streetscape improvements, as well as transit. These investments have improved both the aesthetics and amenities of these areas, underpinning strong investment interest.

Figure 6 -Public Investment in Cultural Facilities such as the Rose Theatre in Brampton's Downtown Impact on the Market Demand for the Area

There is no doubt from a market viewpoint that the municipally led development of the Rose Theatre in Brampton had a bearing on the decision of developers to invest in the downtown core. While the developers of the current condominium projects all received financial incentives, the Theatre Project has had the effect of stimulating investment in the downtown, and building on other earlier investments, such as the municipal offices nearby. Community programming also plays an important role in incentifying development. The skating path in Gage Park in Brampton for example, offers not only a recreational opportunity for residents but is an attraction to downtown that helps generate traffic for businesses, improves


safety, and animates the streets. These are all factors that attract investment and support the achievement of the PROPR sustainability framework.

Figure 7- Gage Park Skaters

Measuring the impacts of indirect incentives is, however, difficult. The difficulty lies in the fact that benefits of these investments are not quantifiable, are difficult to separate from other influences, and can only be measured over a long period of time. The building of a library or public square is a community building exercise, with its success measurable in terms of both subjective and objective terms. While the amount of development attracted, retail vacancy levels, crime statistics, and land values are possible measures, they are heavily influenced by other factors such as economic cycles. There are empirical studies that provide evidence that public infrastructure investments create an underlying incentive to intensification through the raising of land values. As discussed in Phase One, access to quality parks and open spaces acts as an advantage, both through the amenity it provides, as well as the enhanced views that it provides. In fact, a number of studies suggest that land values increase with proximity to parks and open space. The following are some interesting points taken from studies exploring the relationship between property values and parks/open space:

In a study of residential units within 800 feet of parks in Portland Oregon, it was estimated that a 1% to 3% property value premium could be attributed to the park (Bolitzer & Netusil, 2000).

In Dallas, Texas, the homes facing one of 14 parks were found to be worth 22% more

than the homes located more than one half mile farther from such an amenity (Miller, 2001).

Finally, John Crompton, of the National Promotion and Parks Association suggests that a positive impact of about 20% on property values abutting or fronting a park is a reasonable point of departure and that the impact is likely to be substantial, up to roughly 500 radius foot1.

1 As referenced in Measuring the Impact of Parks on Property Values, Sarah Nicholls, National Recreation and Park Association, March 2004 & The Impact of Parks on Property Values, John L. Crompton, National Recreation and Park Association, May 2001.


In 2005, NBLC undertook a study to examine the impacts on land values as a result of Toronto’s Harbourfront and Spadina LRT extension. This study illustrated that, after accounting for inflation, land values increased from about 10% to 15%. Perhaps the most dramatic illustration of the impact of public infrastructure investment on intensification has been the Sheppard Subway line. Completed in 2002, the subway line played a role in the marketing and sale of about 5,000 apartment units along its corridor. Daniels Corporation alone has built and registered about 2,800 units. The redevelopment of the former Canadian Tire distribution facility by Concord Adex and served by two subway stations will add an additional 5,000 units in 20 high-rise and mid-rise buildings. However, there has been little investment in terms of employment uses. A study conducted by the City of Ottawa also attempted to measure the impacts of public investments, including the Sheppard Subway line on the competitiveness of Cities2. The study points to municipally led investments that have generated significant economic impacts and have supported investments in the community. While there are significant data gaps, the study points to the social and economic benefits of projects like Toronto’s St. Lawrence Neighbourhood revitalization, which improved many acres of derelict land, provided much needed affordable housing, and enabled the presence of a lower wage labour force to work within the downtown core. The study also points to the benefits of a mixed income, mixed-use neighbourhood which promotes strong social cohesion and helps mitigate poverty. These types of incentives, properly planned and aligned with market forces, are likely the most powerful and enduring measures available to governments wishing to attract growth to urban communities. However, the level of investment has to be properly gauged to the market dynamics of the area. Public investment decisions in areas such as downtown Oshawa and Hamilton will likely have different market responses than at the Mississauga City Centre location. Within Peel, the expenditure of limited public resources must be considered in tandem with the market forces at play in order to assess the best result of a given intensification area.

4.2 Direct Incentives Direct incentives that have the effect of encouraging intensification developments can also produce enduring positive impacts to communities through the introduction of new homes and places of work. By leveraging market forces, the delivery of the benefits from these developments can also be more rapid and place less pressure on municipal resources than do major public investments such as transit systems. However, because the use of grants or rebates is still dependent on market support, these tools are most effective in locations where buyer demand exists. In Peel Region for example, financial incentives will be most effective in areas where market demand is currently present. Areas such as South Common Mall in Mississauga that have access to transit, retail and services within walking distance may better benefit from incentives than areas such as Gore Road and Highway 7, that currently lack the basic components necessary to attract

2 Social Infrastructure for Competitive Cities, A Working Paper for the City of Ottawa/Infrastructure Canada Knowledge-building, Outreach and Awareness Research Program, City of Ottawa, March 2009


mid or higher density developments. Direct incentives are also more easily and rapidly deployed and can be easily managed and maintained, due to funding limits or imposed timeframes. This makes them more useful in achieving immediate investment results than indirect incentives. It is possible that even without obvious market demand, very deep direct incentives to developers, could make pricing so affordable that buyers/renters could be attracted to any area in Peel. However, this level of incentive would be very expensive to municipalities and could redirect market interest from more mature areas. The public benefit of adopting an approach such as this would have to be carefully measured. The following section examines the impact of financial incentives on prototypical financial models of residential condominium and office projects within Peel Region, from the perspective of the development community. It is assumed that the projects receiving the incentive funding have been reviewed against criteria to ensure they maximize the PROPR sustainability objectives. To assess the need for financial incentives, we developed a proforma financial analysis of prototypical developments in Mississauga City Centre and Downtown Brampton. It should be noted that the development charges, construction costs and land values of existing projects within these areas would be significantly less than what a developer would encounter today. Revenues however, have remained relatively stable for the past 24 months. In evaluating these scenarios, we are seeking to support a land value of $15 per square foot or greater. This is an arbitrary figure but, in our experience, it is at the low end of the market, where an owner would be motivated to sell his land.

4.2.1 Residential Apartment Development Only the City of Brampton and The Town of Caledon have offered direct financial incentives to encourage residential apartment development in downtown areas. Both have offered programs through Community Improvement Plans that, subject to criteria, provide grants or cost alleviation to compensate for development charges paid. In Brampton, seven projects, all within the Brampton Urban Growth Centre, have taken advantage of this program including:

• Alterra, 303 Units; • Inzola, 225 Units; • Medallion, 257 Units (Rental); • Mattamy Homes, 240 Units; • Region of Peel (John Street project), 200 units; • The Belvedere, 109 units; and, • Greenway Retirement Community, 242 units.

These projects constitute about 1,576 units. Importantly, especially with respect toward achieving the sustainability objectives of the Regional Official Plan, the Medallion development brings new


rental units to the market, one of the few3 new rental buildings to be constructed in the GTA within the past 30 years adding much needed rental stock to the area and helping to diversify housing choices. Since the time that these projects began, development charges for apartments have increased substantially. Total development charge fees in Brampton, for example, increased from about $9,999.58 in 2003 (for an apartment unit over 750 square feet in size) to $30,7474, one of the highest rates in the GTA. This dramatic increase in the development fees, without compensating revenue increases5, likely has had the impact of increasing the need for incentives within the City. To determine the impact and magnitude of the specific incentives required in order for a high-rise project with underground parking to be feasible, a number of scenario analyses were performed whereby a gradual increase in the amount and type of incentives was introduced to a residential development, in order for it to generate positive land value. The incentives include, in order, 1) the elimination of municipal development charges; 2) the elimination of regional and educational development charges; 3) the elimination of permit fees, and 4) the provision of municipal tax relief. The results of the financial analysis show that some level of incentives will likely be required for a high-density residential development requiring underground parking within the Region of Peel. None of the scenarios approached the benchmark land value of $15 per buildable square foot. However, the magnitude and types of incentives required may differ between municipalities, as illustrated in Table Two for Mississauga and Brampton. In mid-rise examples, the lack of density (saleable gross floor area) makes the economics even more challenging. The exception to this, as pointed out in the Phase One Study, is in areas where higher than average revenues can be achieved such as waterfront areas and in some cases where land values are low and where less expensive wood frame construction can be used.

Mississauga A prototypical high rise condominium apartment development with underground parking in the City of Mississauga may only be marginally feasible without any incentives, based on an average index condominium selling price of $375 per square foot, representing the average revenue index achievable in Mississauga. However, developers typically target a return on equity of 15% to 20% for a condominium apartment development. In order to achieve this amount, both regional and municipal components of development charges would have to be granted back to the developer, in this scenario.

Brampton In comparison to the City of Mississauga, Brampton’s municipal development charges are significantly higher (almost double) at approximately $16,133 per unit compared to $7,856 per

3 There have only been 10 new market rental buildings constructed in the GTA. About half of these buildings cater to the luxury or near luxury market. 4 Includes Regional Development Charges, GO Transit Charges and School Board charges 5 Between the same period of time, average revenues have increased by about 7%


unit in Mississauga. Brampton’s total development charges are $30,747 per apartment unit (over 750 square feet). Also, Brampton commands a lower index pricing at approximately $325 to $350 per square foot, compared to $350 to $400 per square foot in Mississauga. This drives a greater need for incentives in Brampton for development. Based on an average index price of $335 per square foot, a prototypical development in Brampton may require incentives on all levels to achieve a modest return on equity of approximately 10% and support a land value of $8 per buildable square foot. While high-level, this analysis offers a view of the development economics of a project as a developer might see it. Increases in revenue would have a bearing on improving the performance of the project. However, increases would have to be significant in these models to reach acceptable levels of returns.

Mississauga Downtown

Brampton Downtown

Gross Floor Area (SF) 150,000 150,000Average Unit Size (SF) 900 900Number of Units 146 146# Parking Stalls (@1.45 per unit for Mississauga; 1.5 for Brampton)*

213 220

Average Index Price (PSF) $375.00 $335.00End Price $337,500 $301,500Total Projected Revenues $56,334,496 $50,440,123Total Projected Revenues (PSF) $376 $336Total Development Costs $50,665,111 $50,740,527Total Development Costs (PSF) $338 $338Required Developer Profit 10% 10%Estimated Developer's Profit $5,537,043 ($300,404)Estimated Developer's Profit (PSF) $37 ($2)Estimated Residual Land Value $69,772 $0Estimated Residual Land Value (PSF) $0 $0

Elimination of Municipal DC's* $707,063 $0Elimination of Municipal DC's (PSF) $5 $0Elimination of Municipal & Regional & Education DC's $1,930,409 $63,841Elimination of Municipal & Regional & Education DC's (PSF) $13 $0Elimination of Building Permits $2,002,053 $159,981Elimination of Building Permits (PSF) $13 $1Elimination of Municipal Property Taxes $2,083,924 $1,270,338Elimination of Municipal Property Taxes (PSF) $14 $8

Note: The number of required parking sta l l s in the City of Brampton i s based on exis ting zoning regulations . However, i t should be noted that the number of required sta l l s in some recent downtown developments has been below the ratio of 1.5.Note: The base development scenario for the Downtown Brampton development already assumesthe elimination of DCs, which is why no respective impact is expected.

Source: N. Barry Lyon Consultants Limited

Assumptions

Table TwoThe Impact of Incentives on Residential Development in Peel Region

Municipality

Site Stats & Residual Land Value

Impact of Incentives


4.2.2 Office Development To examine the need for incentives targeting office development, NBLC examined prototypical developments at Mississauga City Centre (where little new office investment has occurred in the past 20 years) and Airport Corporate Centre (where new office development has been successful) to represent both a downtown and suburban location within the Region of Peel. In each case, the building size modeled was 100,000 square feet. For comparative purposes, all variables are assumed to be the same, with the exception of parking requirements, which are assumed to be less for a downtown location such as Mississauga City Centre (2.5 stalls per 100 square metres of development) compared to a suburban location such as Airport Corporate Centre (3.2 stalls per 100 square metres). A pro forma financial model, using a calculated Residual Land Value (RLV) methodology, has been created to compare the viability of an office development located within a municipality’s downtown (requiring underground parking) with one situated in a suburban location (providing less expensive surface parking). The difference in development values is then used to represent the amount of incentives required to achieve the same profitability at both locations. To assess the impact and magnitude of incentives on land values for an office development, a number of scenario analyses were performed, whereby a gradual increase in amount and type of incentives were introduced to the lower-valued downtown development to achieve the same value as the higher-valued suburban development. The incentives include, in order, 1) the elimination of municipal development charges; 2) the elimination of regional and educational development charges; 3) the elimination of permit fees; and 4) municipal tax relief. The results of the financial analyses are presented in Table Three. The difference in value between a downtown and suburban development is significant and appears to require incentives from all levels, including a relief of all development charges, permit fees, and property tax relief of 15 years on the improved property, to achieve the effect of equalizing development costs between the different locations.


Mississauga City Centre

Airport Corporate Centre

Building Size (SF) 100,000 100,000

# Parking Stalls (@3.2/100SM for Suburban; 2.5/100SM for ACC) 251 297

Net Rental Rate per Year (PSF) $19.00 $19.00Vacancy Rate 5.70% 5.70%Estimated Project Value $21,767,095 $21,767,095Cap Rate 6.50% 6.50%Required Developer Profit 10.00% 10.00%Estimated Developer Profit $2,176,709 $2,176,709Estimated Developer Profit (PSF) $22 $22Residual Land Value ($8,025,025) $1,711,538Residual Land Value (PSF) ($80) $17

Elimination of Municipal DC's ($7,530,638)Elimination of Municipal DC's (PSF) ($75)Elimination of Municipal & Regional & Education DC's ($6,523,186)Elimination of Municipal & Regional & Education DC's (PSF) ($65)Elimination of Building Permits ($6,403,019)Elimination of Building Permits (PSF) ($64)Number of Years of Municpal Tax Relief to Break Even 12Number of Years of Municpal Tax Relief to Generate Same Value as Suburban Development 15

Table Three

Assumptions

Source: N. Barry Lyon Consultants Limited

Development Site

Impact of Incentives

Site Stats & Residual Land Value

The Impact of Incentives on Office Development in Peel Region

4.3 Summary A very high development charge environment, the need for a significant amount of underground parking and flat revenues indicate a need for near term continued development charge relief in Brampton’s downtown area in order to encourage residential developer interest. In Mississauga City Centre, there may also be a need for incentives, but to a lesser extent. Other nodes would have the same construction costs and development charges, but lower revenue potential (except Port Credit Village), making the viability of projects in other intensification nodes more challenging. However, the current economy and the limited sources of available financing make assessing the appropriate approach to direct financial incentives (how much and where) to developers challenging. The need for financial incentives is not as obvious for the Region or the local municipalities. The City of Brampton’s investments have already supported a significant amount of development. These developments will bring a large number of residents to the downtown core which, in itself, should invigorate the area and act as stimulus for new investment. Similarly, in Mississauga City Centre, where incentives are also likely necessary for developers in the near-term due to the current economic climate, there may be more significant and enduring benefits gained from focusing on initiatives such as the Hurontario High Order Transit Corridor and Downtown 21. Given the above and the uncertainty of the direction of the economy it may be appropriate to reserve any new direct financial incentives until the market has stabilized. A good indication of recovery may be three quarters of positive gross domestic product growth. This would also allow


the Region and the municipalities to study the nodes in greater detail and determine which tools are most appropriate. The area where direct incentives may be worth considering is in stimulating employment uses. The analysis of office development activity illustrates the cost advantage to developers in suburban locations compared to the Mississauga City Centre. This is due primarily to the significant cost of providing expensive underground parking. Encouraging office development in key intensification areas would likely yield greater benefits in terms of meeting the imperatives of the sustainability framework of the Regional Official Plan than residential development. In addition, providing incentives for significant employment may also relieve the need to provide incentives for residential development, as the presence of the new jobs may, in itself, stimulate the demand for new apartments or townhomes. With parking emerging as a key issue in intensification, the importance of transit investment is underscored. Access to frequent, reliable and low cost public transit will have a significant bearing on the viability of both high density office and residential developments. Other parking solutions may also be considered, such as the establishment of municipal parking authorities that can provide parking on behalf of office developers in intensification areas. The use of direct and indirect incentives to encourage intensification has yielded positive results in Peel. Investment in public infrastructure, including cultural facilities, parks and libraries along with specialized financial programs to developers have supported major developments in areas targeted for intensification. Assessing the benefits of these investments in ways that are measurable is however, challenging. A recent study by the Urban Land Institute examined the impacts on greenhouse gas emissions based on a variety of improved transit and land use scenarios, largely in intensified formats. This study estimated, in its most aggressive scenario, greenhouse gas emissions could be reduced by as much as 24% through major changes to transportation, travel and land use patterns (associated with compact communities). Significant economic savings in terms of vehicle use are also accounted for in this study.6

6 Urban Land Institute, Moving Cooler, An Analysis of Transportation Strategies for Reducing Greenhouse Gas Emissions, July 2009


5.0 STRATEGIES There are communities within the Greater Golden Horseshoe that, due to major market issues are in need of significant and aggressive programs to encourage investment. This condition does not exist in Peel. Peel receives a significant portion of the high-density development in the GTA. Since 2004, Peel has consistently captured between 7% and 13% of the GTA’s sales of high-density residential units, the highest percentage outside of the City of Toronto. Stronger sales are posted for townhouse developments. Peel Region has also captured the largest proportion of employment related development in the GTA, although, as indicated in the Phase One Report, little of this has been attracted to intensification areas. Peel, due to its market position, is poised for continued growth in comparison to other GTA communities. However, even with this growth, the supply of land in areas under consideration for intensification far exceeds the estimated demand. Peel Region therefore needs to consider whether to encourage intensification in all these areas or to focus its attention with local municipalities on the areas that offer the best near term opportunities to become complete compact communities. To this end, the following actions are suggested.

5.1 Establish a Policy Framework Prior to the consideration of any detailed incentive program, a Regional Policy Framework is required in the Official Plan that provides the ability to establish a process for undertaking needs analysis. Typically, this is best accomplished through the preparation of a community improvement plan. The new Planning Act legislation allows upper tier municipalities to develop their own plans, as discussed in the Phase One Report. As with other Regional Municipalities that have employed community improvement policies, it is likely beneficial for the new Official Plan to designate the entire municipality as a Community Improvement Project Area, as provided for in Section 28 of the Planning Act. By doing this, the Peel Region would be in a position to prepare community improvement plans to deal with one or more of the following matters:

• Infrastructure that is within the upper-tier municipality’s jurisdiction;

• Land and buildings within and adjacent to existing or planned transportation corridors that have the potential to provide a focus for higher density, mixed-use development and redevelopment; and,

• Affordable housing.

With respect to initiatives, of particular relevance is the ability to create community improvement plans focused on transportation corridors in support of high density development and affordable housing.


Within this policy framework, Peel Region may identify regional community improvement plan areas. Depending on the recommendations of the Hurontario High Order Transit Study, Peel Region may consider the designation of the entire corridor as a community improvement project area.

5.2 Support Local Initiatives The identification of possible community improvement plan areas should be aligned with local initiatives. This will allow for better co-ordination of efforts between the upper and lower tier municipalities and provide the ability to participate in each other’s grants or loan programs. The development of local community improvement plans would benefit significantly through leadership from the Region. For example, while not related to intensification, Caledon provides development charge discounts for industrial developers that can employ sustainable development techniques to reduce water usage and discharge. If consumption of water and waste water capacity can be reduced, there may be a rationale for the Region to similarly reduce development charges. Other regional needs may also be identified with local municipalities during the community improvement planning process. Affordable housing initiatives, for example, may be identified through the process. Strategic land parcels or potential partnerships may be revealed that offer new opportunities for Peel Builds. Providing affordable housing in intensification areas, where services and transit are more likely to be within walking distance, can better serve target groups. A major water service reconstruction in a downtown area might be tied into a local streetscape improvement plan. Each Community Improvement Plan will have a different set of needs. How Peel Region participates in programs must be justified where regional benefits can be identified on a case by case basis.

5.3 Consider Targeted Program Initiatives This section identifies opportunities, initiatives and programs that could be employed to encourage intensification in the Region. The program initiatives outlined in this section are presented as concepts, which will need to be researched, investigated and explored further in collaboration with the local area municipalities. It should be noted that the financial tools suggested in the paper should be evaluated in relation to the at hand municipal financial context, in order to fully determine their broader financial impact. Further studies should also be conducted to examine alternative funding and/or revenue sources to finance Regional and area municipal infrastructure to potentially offset the impact of any financial incentives.

Prioritize Intensification Efforts Considering the significant supply of potential intensification sites and the relatively limited related demand over the planning period, Peel Region should give consideration to prioritizing efforts to encourage intensification in the areas where the best results can be expected. These are the areas that have already experienced market results or are likely to, in the initial years of the planning period (5 to 15 years). These areas might benefit from a community improvement planning process that would pinpoint area specific issues that are limiting intensification efforts and would recommend equally specific programs to


address these issues. As an initial step, Peel Region should designate and align its new Official Plan Community Improvement Plan Policies with those of the local area communities, to enable consideration of Regional support in these areas. In areas where there is little to no existing market demand, the Region should also contribute to local municipal efforts to promote intensification in these areas, in order to better prepare such areas for intensification in the longer-term. The most suitable form of Regional incentives would be through the provision of social infrastructure under the Region’s jurisdiction, such as; affordable housing, social services, day care, etc.; a large amount of which already exists in areas that currently have a high degree of market interest. Hurontario High Order Transit Corridor The recommend approach to the Hurontario High Order Transit Corridor by the consultant team is a light rail transit system, primarily within a dedicated right-of-way. As proposed, this system would offer state-of-art service with three minute headways during peak periods. This type of service will have a significant impact in terms of encouraging intensification in the identified nodes and Urban Growth Centres. In terms of parking requirements, it could reduce the need for underground parking spaces, generating cost savings to developers and improving project feasibility. A reduction in parking requirements from 1.5 to 1.0 space per unit could save $2.4M in garage construction costs. This factor alone could help put office development in the corridor on an equal footing with suburban locations not only by reducing costs, but also by improving client and employee accessibility. A regional community improvement plan, along the Hurontario Transit Corridor, aligned with local plans, may be beneficial in facilitating and encouraging high density residential development within the Mississauga and Brampton nodes/urban growth centres, through the acquisition and consolidation of lands, especially where future transit station areas are planned for areas with a highly fragmented parcel fabric. Consider Specific Economic Development Initiatives The installation of municipal services such as transit, as well as water and sewage systems has traditionally been within the purview of planning and engineering departments. As areas continue to become increasingly intensified, the provision of these services and other public facilities will become more complex. The challenges, for example, of creating a legitimate downtown environment at Mississauga City Centre are becoming apparent in the Downtown 21 initiative. It is clear in this project that a leadership role is required that can co-ordinate the interests of the City of Mississauga and negotiate with the private sector towards the implementation of a master plan. An internal Regional agency experienced in development matters, perhaps composed of existing Regional and local municipal staff, which would come together on a project by project basis (for those projects with Regional implications), with the objective of co-ordinating municipal development, rezoning certain lands and facilitating infrastructure initiatives, might help expedite projects and facilitate the development of future initiatives.


Regional involvement in these agencies could help in a co-coordinating capacity especially in regard to servicing and certain infrastructure issues. Parking Related Initiatives The provision of parking, especially in underground or structured formats, is a key barrier to intensification efforts. It also represents a significant business opportunity that improves as areas become increasingly intensified. If a local municipal parking authority could be established in the near term, it would increasingly benefit from the diminishing supply of free parking facilities and the increasing demand, as the Toronto Parking Authority has demonstrated. In the meantime, the creation of new parking facilities through this organization would be a significant incentive to employment related development unwilling or unable to fund this infrastructure. The City of Oshawa has adopted this strategy which was instrumental in attracting the new District Court House to a downtown location. Ensure Density and Land Uses are Aligned with Economic Forces Certainty in land use is a major issue for developers. In complex urban areas, height and density are the key factors that drive the viability of developments. In the areas where development is imminent, local municipalities should be encouraged to review areas where intensification is expectant, to ensure that height limits are sufficient to offer the economic incentive to achieve community planning objectives. The criteria for increasing height and density limits should be established in such a way that they promote good planning practises and transit supportive densities, and achieve balanced population and employment ratios in Urban Growth Centres and Intensification Nodes. Incentives for High Density Residential Development Given the current economic climate, it is likely that even with financial incentives there is insufficient consumer confidence to support the development of a large number of new residential projects in the near-term. It’s also important to recognize that the Brampton and Caledon development charge rebate programs have been very successful. As these projects are completed and occupied it’s likely that these successful precedents could, in themselves, stimulate future development in their areas. Finally, the Hurontario Transit proposal would also add additional incentive to development in Brampton and Mississauga. Given the economic climate and the existence or emergence of some incentive programs, we would not recommend any direct financial incentives for residential development in the near term. However, the use of tools of this nature should be encouraged in the future by providing the policy framework in the Official Plan for use as the market stabilizes. The exception to this may be mid-rise housing developments that might be viewed as key development components in certain areas such as sensitive lower density communities. However, while it is suggested that incentives for high density developments not be utilized in the near-term, the Region should consider the implementation of incentives aimed at encouraging specific housing types/forms in intensification nodes (where the need is justified) not readily created by the marketplace, such as affordable housing, rental housing, seniors housing and medium and high density housing units targeting families. The Regional Official Plan Amendment #23 introduced policies to promote complete compact


communities and to encourage locating regional affordable housing projects in such locations that they allow for more transportation options with improved access to services and amenities. Consider Incentives for Employment Uses as Incentives for Residential Development Housing demand is a function of consumer confidence. Confidence from families or individuals considering purchasing a home is rooted in their outlook for their employment and for overall economic health. Generally speaking, people follow jobs. If incentives could be designed to support centrally located office based employment uses, the demand for centrally located housing would also increase. Incentives for developers of downtown office space would result in more significant employment multipliers from support services and suppliers than would likely be created through equivalent incentives applied to residential development, further supporting overall intensification efforts. Similarly, non-residential (office or retail) components of mixed-use developments that create new employment could also be targeted specifically for incentives. These incentives could come in the form of development charge grants, tax exemptions or municipal-regional loans for specified periods, including Tax Increment Financing (TIFs). Tackle Lot Fragmentation and other Barriers to Mid-Rise Developments Mid-rise apartments offer a development form that is more easily integrated into existing neighbourhoods but that can also present unique economic challenges. They are also frequently more suitable to families that prefer lower buildings offering the ability for parents to observe outdoor play areas. The Region and the area municipalities could help facilitate medium-density development of this nature by:

• Helping with lot consolidations, especially where small “holdout” parcels are required to assemble lands necessary for intensification initiatives, through their powers to acquire land contained within CIP legislation;

• Provide funding assistance (grants or loans) through CIP programs to promote mid-rise and medium and high-density development; and/or,

• Provide interest free loans to help fund non-residential (street-retail) components for qualifying projects. Qualification criteria could include being within a priority intensification area, design oriented to families (larger suites), project size and pricing targets.

Create Criteria for Application of Incentives Under any circumstance, the application of specific criteria, produced in consultation with local municipalities and ideally aligned with local programs, is necessary to ensure that programs are targeted to the projects that yield the best benefits for public funds invested. Criteria for program acceptance would differ from program to program, but


could include matters such as project size, distance from transit, financial cost of incentives relative to total investment, and project design features. To provide fiscal limits to any incentive program, annual funding caps should be applied for such programs, based on budget availability. Brownfield Programs It is in the Regional and the local municipality’s best interest to redevelop brownfields. Through a Community Improvement Plan process or a specifically targeted brownfield program, Peel Region and the local municipalities could determine, in consultation with stakeholders, appropriate tools for encouraging the redevelopment of brownfields. A prime example for the use of such a program would be the redevelopment of the Imperial Oil lands in Port Credit, currently designated as “Land Use to be Determined” in the Mississauga Official Plan. Area Specific Development Charges Development charges are currently calculated on a local and regional basis. However, the growth related costs associated with compact communities are different from those of suburban areas. There is a growing pool of evidence that, through intensification, greater efficiencies can be expected in the provision of municipal and regional services7. It is cheaper to operate, maintain and replace infrastructure in compact communities. CMHC estimates savings of $11,000/unit over 75 years, a reduction of 9%.8 As the Urban Growth Centres and other intensification areas become increasingly developed, the cost differences are likely to become more pronounced. The Peel Region, along with the local municipalities, should consider an analysis of this issue to determine if the burden of growth related charges should/could be apportioned between suburban/greenfield development and urban centre intensification. In particular, this analysis should examine the cost of providing sufficient capacity to accommodate the planned growth for each area, at no cost to the Region or local municipality.

5.4 Draft Regional Official Plan Policies The following are general guidelines and directions for policies to be considered by Regional staff for inclusion in the Regional Official Plan. These policy suggestions must be considered in conjunction with drafting of the plan in its entirety. They are therefore offered with the view to stimulate comment and discussion.

Intensification (General Policy Section) Peel Region recognizes the social, economic, cultural and environmental benefits of well planned community. The intensification initiatives can support and encourage intensification within the Urban Growth Centres, in conjunction with the local municipalities.

7 McKellar, James and Amborski, David, Building a Sustainable Toronto, January, 2009 8 David Suzuki Foundation, Getting the Facts. June 2003


The Region, where not already recently completed at the local level or where more detailed work needs to be done, should coordinate and work with local municipalities in the development of detailed plans for each Urban Growth Centre, and areas identified for intensification in local plans. The Region could contribute by:

• Identify requirements for affordable housing and housing for families; • Address issues and provide strategies related to encouraging intensification, such

as lot ownership fragmentation; • Assist in the development of a co-ordinated pedestrian, cycling, vehicular and

transit plan; • Take the lead in a detailed open space and community facilities strategy; • Ensure the adequacy of municipal water supply and wastewater systems; and, • Provide an implementation plan that may include Regional and/or local

Community Improvement Plans and associated financial incentive programs, and other tools.

The Region should work with the local municipalities to designate areas suitable for intensification and undertake detailed studies of these areas within the context of Community Improvement Plans, Secondary Plans or other planning approaches. These studies should examine opportunities and barriers to intensification including:

• Land use controls that encourage reinvestment and protect existing communities; • Issues associated with the assembly of parcels suitable for redevelopment; • The availability of water and wastewater infrastructure; • The need/timing for community services to accommodate the identified growth;

and, • The role of regional/municipal incentives.

Community Improvement Plans (Implementation Section) The administrative boundaries of Peel Region constitute the boundaries of the Community Improvement Project Area under the Planning Act. Community Improvement Planning provides an effective framework for examining future intensification areas, with a view to identifying the barriers and opportunities for reurbanization. Community Improvement Plans also provide access to a range of implementation tools, including financial incentives, which can address Regional and local initiatives associated with:

• affordable housing; • infrastructure that is within the Region’s jurisdiction; • land and buildings within and adjacent to existing or planned Transit Corridors

that have the potential to provide for higher density reurbanization. As described in the Phase I report, because of the Regional nature and importance of transit


corridors, Regional CIPs are able to be directed towards lands/buildings that are normally not under their jurisdiction, as is the case in Kitchener-Waterloo ; or

• other matters the Province may prescribe in accordance with the Planning Act. The Region should work with local municipalities to co-ordinate Community Improvement Plans to ensure the most efficient use of resources. The Region may provide grants, loans or other assistance under its own Community Improvement Plans. The Region may also provide grants, loans or other assistance as Council deems appropriate for the purposes of carrying out programs as described in local Community Improvement Plans. Regional Community Improvement Plan can also go beyond the promotion of intensification, and also encourage economic development, urban beautification and community revitalization. In the development of the Regional CIP, other local and regional goals and objectives, beyond intensification, should also be considered and included.

APPENDIX A – INTENSIFICATION AREA MAPS Note:

All maps provided are extrapolated from Geowarehouse (Teranet). NBLC has manipulated the maps only by outlining the intensification nodes in yellow and the identification of recent residential/office development and regionally owned lands.

Maps show location of development activities that occurred between 2001 and 2008.

Townhouse Development High Rise Development Office Development Region of Peel Lands

INTENSIFICATION NODE #1 CALEDON Bolton


INTENSIFICATION NODE #2 BRAMPTON The Gore Road & Queen Street East


INTENSIFICATION NODE #3 BRAMPTON Highway 410 & Bovaird Drive


INTENSIFICATION NODE #4 BRAMPTON Creditview Road & Bovaird Drive

Source: City of Brampton, RealNet & NBLC


INTENSIFICATION NODE #5 BRAMPTON Dixie Road & Queen St. (Bramalea City Centre)


INTENSIFICATION NODE #6 BRAMPTON Downtown Brampton

Not to Scale


INTENSIFICATION NODE #7 BRAMPTON Bramalea Road & Steeles Avenue


INTENSIFICATION NODE #8 BRAMPTON Hurontario Street & Steeles Avenue


INTENSIFICATION NODE #9 BRAMPTON Hurontario Street & Ray Lawson Boulevard


INTENSIFICATION NODE #10 BRAMPTON Mississauga Road & Steeles Avenue


INTENSIFICATION NODE #11 MISSISSAUGA Malton

Source: Mississauga Plan Review 2008, RealNet & NBLC


INTENSIFICATION NODE #12 MISSISSAUGA Meadowvale


INTENSIFICATION NODE #13 STREETSVILLE MISSISSAUGA Streetsville


INTENSIFICATION NODE #14 MISSISSAUGA Rathburn & Applewood


INTENSIFICATION NODE #15 MISSISSAUGA Hurontario Uptown


INTENSIFICATION NODE #16 MISSISSAUGA Central Erin Mills


INTENSIFICATION NODE #17 MISSISSAUGA Dixie & Dundas


INTENSIFICATION NODE #18 MISSISSAUGA Mississauga City Centre (inc. Cooksville)


Not to Scale


INTENSIFICATION NODE #19 MISSISSAUGA South Common/Erin Mills


INTENSIFICATION NODE #20 MISSISSAUGA Lakeview


INTENSIFICATION NODE #21 MISSISSAUGA Port Credit



INTENSIFICATION NODE #22 MISSISSAUGA Sheridan


INTENSIFICATION NODE #23 MISSISSAUGA Clarkson Village

Documents

Intensification Incentives in Peel Region - Phase Two ... · intensification efforts in GTA communities, especially those that have significant market issues in their downtown cores