Nov 21, 2017
In this webinar we provide a cross-country update on recent and proposed land use planning and development legislation affecting the commercial real estate sector. Also, industry development and planning experts discuss the opportunities and challenges presented by the legislative changes.
Cross-country update on the increasing power of municipalities
Key market updates on the implications of recent changes to and proposed amendments of land use planning and development legislation affecting the commercial real estate sector, including:
- Bill 139, the Ontario government’s proposed overhaul of the Ontario Municipal Board;
- Bill n°122, An Act mainly to recognize that municipalities are local governments and to increase their autonomy and powers, recently passed in the Province of Quebec that will result in significant changes to the development landscape across Quebec and in Montreal in particular; and
- The Alberta government’s proposed amendments to the Municipal Government Act.
Panellists:
Industry perspectives
Hear from planning and development experts from across the industry on the challenges and opportunities presented by the various land use and development legislative changes.
Panellists:
- Don Manlapaz, Vice President, Development – Forgestone Capital Management LP
- Tony Medeiros, Vice President, Development – Dream Unlimited
- Cory Estrela, Director, Corporate Legal – Oxford Properties Group
Moderator: George Valentini, Counsel, Osler
Video transcript
ROD DAVIDGE: Everyone, I think we're going to get started. First of all, welcome to Osler. Thanks a lot for coming, those both in person and those in line. I'm Rod Davidge. I'm the chair of our national real estate group. I'm really happy to have you here today.
I think everyone here probably realizes we've had some proposed legislation in Ontario that's going to change the planning process, and we thought that was a good time to put together a seminar and discuss those changes and what we think may come from that. And then, in particular, we thought, why don't we look at our other offices and talk to some of our experts there, and we can get their perspective on, are things changing, or how might it be different there, or maybe in fact, we can learn something from them that'll give us a sense of what Ontario might be more like after these changes.
So from that, I think we'll get going. We've got a lot of ground to cover today. I thought I'd like to introduce the first panel. We're going to start with a panel of Osler people. We're going to talk about the changes in the legal process, and then we're really fortunate to have a group of industry participants who are going to come up share some of their war stories, share their perspectives. And George Valentini, who's on my right here, is going to chair that, and we'll introduce them when they come up.
So joining me on this first panel is Michael Bowman, who's a partner in municipal land use and planning group-- extensive experience in all aspects of municipal law, including obtaining and planning approvals, development approvals, and pursuing appeals in front of boards, appearing in front of boards, councils, and the OMB, which he may be doing less of.
MICHAEL BOWMAN: [CHUCKLE] We all are.
ROD DAVIDGE: At the end, Nelson Medeiros is joining us from Calgary. He's also an associate in a real estate group with expertise in municipal land use and planning. Nelson is himself a planner, and he spent 10 years or so working as a planner, so brings that perspective and the experience working at a municipality on these matters to the table and to his analysis of these kinds of issues.
And then, joining us from Montreal is Sebastien Savage. He's a partner in our real estate group in Montreal-- extensive experience on all aspects of real estate, particularly in the hospitality industry, where he's also worked on developments in that area. He also spent two years at Carbonleo, which is a prominent developer in the Montreal area, so again, brings us a lot of perspective on development and how people react to obtaining approvals, and negotiating with municipalities. So Michael, I think, is going to start us off with a bit of background on these changes in Ontario.
MICHAEL BOWMAN: Thanks, Rod. And I hope to-- I don't know if you've got the presentation copies, but I'll just flip through it, hopefully properly. So I'm going to do that for the first page. You don't need to see us, because you've seen us, and you know where Ontario is, I presume, everybody in the room.
So I'm going to talk about what's happening in Ontario with Bill 139. It's the Building Better Communities and Conserving Watersheds Act. That's a mouthful. They could have called it the Death of the Ontario Municipal Board Act or the Emasculation of the Ontario Municipal Board Act, because that's in fact what they've done.
I'll take you through an overview of it, what it does, and how that obviously impacts, and then we can hear from the panel later. Just in terms of the statutory components of Bill 139, there are really three pieces that are important. There's what's called the local-- and this is a schedule to the act-- Local Planning Appeal Tribunal Act. There's the Local Planning Appeal Support Center Act, and then there's Amendments to the Planning Act, and other legislation that I'm not going to get into.
There are also amendments to the Conservation Authorities Act and other legislation. I'm going to focus on the LPAT Act, what I'm going to call the Local Planning Appeal Tribunal Act-- spend a minute just on the support act, which is an ironic piece of legislation, given the lack of ability to participate in what are going to be called hearings, and the Planning Act changes, of course, as well. Just in terms of timing, you're here at the right time, because the first reading was on May 30.
It's been the last few months before the Standing Committee on Social Development, and that just reported to the legislative assembly last week on November the 15th. They made a few changes, some of which I'll point out, that are somewhat significant, although not many. They haven't changed the thrust of the legislation beyond some changes.
And third reading and royal assent is anticipated to take place by the end of this year. We don't know exactly when that's going to happen. And of course, there's a reference in the statute to what is the effective date when that happens, and what happens on the effective date. But again, we don't know that at this point.
So just in terms of the Local Planning Appeal Tribunal Act, what it does-- well, one it repeals the Ontario Municipal Board Act. Under the act, it continues to use its phrase, the Ontario municipal board, as the Ontario Land Tribunal. It maintains many of the provisions from the OMB act, regarding general municipal jurisdiction-- for example, municipal borrowing and debt-- that doesn't change. And it doesn't really materially impact other legislation that comes to the Ontario municipal board-- for example, matters under the Expropriations Act or Heritage matters.
But what it does do is, it does deal with planning appeals, as does the Planning Act, and it introduces some specific new provisions that will limit the ability to appeal municipal planning decisions, particularly relating to major official plan and zoning bylaw matters to this new LPAT tribunal. Just a word on the Local Planning Appeal Support Center Act-- it establishes a Local Planning Appeal Support Center. The objective, according to the Ministry of Municipal Affairs and Housing, is to make planning appeals more accessible to the public by providing support services to eligible persons.
Who are eligible persons? We don't know, because that's going to be dealt with in regulations that we haven't seen. But the support services will include-- I've listed them there-- information on land-use planning, guidance on the new tribunals procedures, advice or representation-- again, an interesting comment, because you'll hear me say later that it's pretty hard to be added as a party or a participant to these appeals. But they set up this new mechanism to do that. And again, all the other services will be prescribed by the regulations. But again, we don't have any regulations.
Just for those of you who are not familiar with the current OMB framework, let me just take a minute. And I'm assuming most of you are, but just briefly-- under the current Planning Act, municipal councils have the jurisdiction to adopt planning instruments, such as official plan, zoning bylaws, subdivision approvals. And these may either be initiated by the municipality, or they may be initiated by private developer or proponents.
You can appeal these decisions to the Ontario municipal board within the frames allowed under the Planning Act. Board hearings are what's known as de novo. And for those of you who don't know the Latin term, that means it's like starting all over again. What happened before really didn't matter. You have a fresh hearing before the board, that the board gets to determine who the parties are, what the procedures are, what the evidence will be, including the evidence that it will hear, and to make a decision.
You'll see that I've made a reference to the provisions in the Planning Act that require the Ontario municipal board and any other decision maker of planning matters to have regard to the decisions of a municipal council. So I want to make it clear that the OMB does not have unlimited jurisdiction. We live in a policy-based framework in Ontario, and the board's decisions have to follow policy.
And you'll see the two bullets that are going to keep coming back in this presentation-- that planning decisions have to be consistent with policy statements, provincial policy statements that have been issued under the Planning Act, and conform with provincial plans that are in effect as of the date of an application or do not conflict with those. And you're going to keep hearing that, because what's happened is, that will be cut-- that is basically that statutory requirement in the current Planning Act is now taking a higher prominence as the new test to even get you before an appeal body.
The bottom point I want to emphasize is that the OMB is increasingly emphasizing and facilitating mediation and alternative dispute resolution. And just as a common, everybody-- it's very popular these days to bash the OMB. I'm not one of the bashers. The Toronto Star, if you read their articles, very unfairly, I think, has come down on the OMB and some of their members.
The OMB, in my experience-- and I hate to say this, but it's been over 30 years-- makes its decisions based on the evidence that it hears. To my mind, it's got no bias, other than any bias that any member-- that any judiciary judicial or administrative tribunal might bring to the table. But the board has never been tilted to development, and part of these amendments and the history of amendments to the Planning Act is, the government wants to put an end to long hearings that are expensive, that the government thinks are heavily tilted towards developers, that the government thinks that local ratepayers and local communities don't have a level playing field to participate in.
And while some reform is required, I don't think those allegations are fair. And in fact, the irony of all of it is that the OMB as it currently stands is really seeing itself more as a board that doesn't want hearings but is seeking collaborative and mediated solutions to planning issues. So back to the reforms-- as I've said, they're going to significantly restrict the appeals.
And in reading the legislation, I've just identified really three themes, three areas of restriction that I'm going to talk about. One, what the reforms do is, they'll limit what you can appeal to the new tribunal, to the new LPAT. Secondly, the new reforms limit how hearings are going to be conducted, and the evidence that can be heard and presented at the earliest. And third, the new reforms limit the jurisdiction of the LPAT over municipal land use decisions and development decisions.
I've just listed what the government's policy objectives were. We can talk later as to whether these are being met or not. Giving communities a stronger voice-- that's what they're trying. Faster, fairer, and more affordable planning appeals-- I'll let you guys decide that after you hear everything else. Certainly, sheltering major planning decisions from appeal-- yeah, they're doing that.
So in terms of the first restriction, limiting what can be appealed-- and as I've indicated, Bill 139 is really the latest in a series of amendments to the Planning Act. The Planning Act has been getting amended, it seems, almost every month. But more seriously, there have been several amendments that are significant to the Act in the last number of years-- 2006. Even last year, in 2015, there were just amendments.
So these amendments have had a theme, and the theme is more community support, more community representation, and a movement away from big, expensive hearings. I think that's constant. And there have been, prior to Bill 139, some prior amendments that in fact have restricted and limited what you can appeal to the OMB, and I've listed those under the first billet. You can't any more, in these amendments-- this is before Bill 139-- you can't appeal an entire official plan, you can't appeal growth plan, forecasts in employments, in population, settlement area boundaries, employment land removals-- these are things that cannot be appealed already.
What Bill 139 does is, it continues that process of restricting what can be appealed. So under Bill 139, you can no longer appeal an official plan or policy respecting a protected major transit station area. And that's a new definition in-- oh, my-- in the Planning Act. You can't appeal decisions of the minister of municipal affairs, and you can't make amendment requests for secondary plans that have already been adopted.
There's a new restricted test to appeal, and I'm going to-- I'm afraid I'm told that I've got just 15 minutes here. And I'm sorry that there's a lot here, but I didn't write this stuff. Prior to Bill 49, just restricting the test to appeal-- prior to Bill 49, you could file a notice of appeal, but there was nothing in the legislation or the regulation to say what the grounds of appeal had to be. You would have to identify land use planning grounds, or else your appeal could be summarily dismissed. But those usually-- but there was nothing prescribed, other than-- there was something in the last reform in 2015-- if you were going to refer to the provincial policy statements or plans, provincial plans, you should refer to those in your notice of appeal.
But-- and again, I point out those two tests under the Planning Act-- that the OMB and all bodies must ensure that planning decisions are consistent with provincial policy statements and conform with provincial plans or don't conflict with these. Those two criteria in the existing Planning Act have now been taken and applied as a new mandatory test for appealing, just getting in front of-- appealing official plans and zoning bylaws and just getting in front of the new tribunal. So again, the grounds to appeal are now restricted by what is a new appeal test-- that's my term.
And again, the appeal test, I've set out-- I'll have to keep saying this-- but inconsistent with a provincial policy statement, failure to conform with a provincial plan or other municipal plan. The other important criteria is the bottom bullet. The notice of appeal now shall explain how the part of the decision or the failure to decide fails to meet those criteria. So you have to have that as part of your explanation.
There's another more complicated dual test-- is what I'm calling-- in instances where you have appealed a private Amendment application. So you've gone to the municipality with a development application that council has refused or has failed to apply. And your appeal in that case is a dual test.
The first part is the appeal test. So the first bullet that I've got-- that the existing official plan fails the appeal test. I'm not going to read it, because that's going to take up a whole lot of time. The second point that you have to prove is that the requested amendment that you're seeking conforms with provincial policy statements, or is consistent with provincial policy statements and conforms to provincial plans and relevant local plans.
And again, your notice of appeal must explain how these tests are met. So that's the limitation in terms of appeals. The second point is, hearings are now going to be limited. This slide just sets out some of the new provisions of the LPAT Act. Like the OMB Act, the new tribunal can set its own rules. The minister can make regulations regarding the conduct and format of hearings, regarding the evidence that can be heard at a hearing.
One of the new rules is-- the OMB has case conferences, but now, for official plan and zoning appeals, these are going to be mandatory, and they're going to be set upon the receipt of the record of the appeal. And there's also a provision in the Statutory Powers Procedure Act or in the LPAT Act that says, notwithstanding the Statutory Powers Procedure Act, which is legislation that protects procedural rights, basically, for most lawyers in the room-- the regulations made under the LPAT Act and the tribunals rules can prevail if there's a conflict. So what that means is that if there's an issue with respect to natural justice or procedural fairness, the rules and the regulations are going to trump those. Now, again, in fairness, the OMB has had some of these rules for some of its powers to summarily dismiss appeals, but this is taking this a big notch further.
And again, just in terms of limiting hearings, the OMB has summary appeal powers, summary dismissal powers. But again, what I want to point out is the first bullet under my second point, that under the amendments to the Planning Act, the new LPAT shall dismiss appeal and appeal without holding a hearing if the explanation provided in a notice of appeal does not meet the requisite test-- those that I just showed you. The other two points are the powers to dismiss appeals, summarily without holding hearings, or in the third case, sometimes after holding a hearing. The point being, there are broad powers to just summarily dismiss appeals.
There are also limits, and I'll just go very quickly through this slide, in the legislation restricting the addition of parties. The statutory parties to an appeal are only the person who has appealed, the municipality, or the approval authority, if there's an approval authority. In order just to cut through the chase on this slide, because the Act talks about two different scenarios-- to cut to the chase, if you're a third person who wants to participate in the appeal, what you've got to do is, you've got to prepare a written submission to the LPAT within 30 days before the mandatory case conference. And within that submission, you have to show you've identified an interest that meets that appeal test of being inconsistent with provincial policy statements or failing to conform to plans.
And that's all done in writing, and it's only through that review that you can have standing-- if LPAT grants it to you, to participate in an appeal. So it's going to be harder for third parties to participate in the appeal. I'll be very curious to see how this works in conjunction with this new, free support service that the government has provided with this legislation.
Oral hearing restrictions-- the bottom line of everything I'm saying here is that the days of oral hearings, viva voce evidence, are gone, basically. This is all going to be further determined under the rules and regulations, which we don't have yet. But what I can tell you is that there are going to be rules authorizing hearings in writing. And what I can also say under the LPAT Act-- oral hearings are not mandatory.
In fact, if you look at-- the Act talks about-- if there's going to be an oral hearing, at an oral hearing, parties may make an oral submission that doesn't exceed the time that's allowed under a regulation, which we haven't seen. And most interesting, under-- at a hearing, no party or person may adduce evidence or call or examine witnesses. So this is just totally different from the way hearings at the OMB, or frankly anybody has done hearings-- this is not how we do hearings.
Bottom line here is that it seems, subject to the rules and regulations, that oral hearings will probably just consist of oral submissions that maybe a lawyer can make, that are limited to the written record that has been provided to the municipality that is going to be part of the board's record. That has implications in terms of dealing with municipalities up front. Now, I'm going to very quickly go through-- I'm sorry that this slide has got so much information in it. I'm going to cut it down-- this slide and the next slide.
Because what it basically talks about is the limited jurisdiction of the tribunal. So you appeal your official plan decision or zoning decision or failure to make a decision to the tribunal. Under the LPAT Act and under the changes to the Planning Act-- first of all, I did just put in quotes, "after holding a hearing of the appeal, LPAT shall dismiss the appeal."
So let's start-- just once you file the appeal, the wording in the legislation is mandatory, that LPAT shall dismiss the appeal. That's the first thing you see. After holding a hearing-- that wasn't even in the first reading of the legislation. That's been added just in the third reading that came out last week.
It sounds good, but now that we know that a hearing is pretty meaningless-- maybe it's not so good or maybe it is meaningless in any event. But to start with the provision that LPAT shall dismiss the appeal, and in the case of a decision where you don't meet the appeal test, in the case of an application, a private application, a requested amendment, where you don't meet the dual test. And what also came out of the third reading, out of the social policy committee changes, is a provision for appellants to consent to a revised application.
And in that case, again, how prescriptive this legislation is-- in that case-- and I'm looking at the third bullet down there. But in that case, the LPAT, the tribunal-- if you present a plan or a bylaw on consent, the legislation says LPAT shall approve it, unless it doesn't meet the test. So again, there are very prescriptive rules here in terms of what LPAT can and can't do.
If the tests are not met under the first appeal, then LPAT cannot just make a decision. What LPAT then will have to do is refuse what's before it, and give notice to the municipal clerk, and tell the municipal clerk, you've got an opportunity now to make a new decision, and under the new legislation, you've got 90 days to do it. So no decision on that appeal. It goes to back to the municipality to make a decision.
And that's where you get to the second appeal. And again, municipality has 90 days to make a decision or not make a decision. Then, that can be appealed to LPAT. And at that point, LPAT can make decisions.
But again, if you read the legislation closely, it's prescriptive, in terms of what LPAT can do. So again, I've just listed them. It has powers to approve or modify official plan amendments or to make modifications. It can repeal or amend bylaws.
Again, interestingly, if the parties come on the second appeal and say we've got consent here, the starting point is, LPAT shall approve, unless LPAT determines that it doesn't meet the test, in which case, it can modify or amend. I've just listed on this slide-- that's the gist of it. Are there other changes?
A couple I want to point out-- local appeal bodies, the second bullet point. Local appeal bodies came into effect with the last Planning Act. Only the city of Toronto has one. They can do minor variances.
Under this legislation, they're suggesting now that we'll allow local appeal bodies to maybe consider site plans and consents. My comment on local appeal bodies here is, it's a further undermining and emasculation of what the OMB did. And frankly, I don't get it, because if you're an appeal body, you're supposed to be independent.
I don't know what anybody is thinking by putting a local appeal body under the jurisdiction of a municipality. Do you think that the municipality therefore has the opportunity to influence it? That's still not right. So these don't make sense to me.
I've got the other changes here. The other interesting point here are the transitional rules, and that's a problem for those of you who have appeals out there, as I do. We're hoping that the old rules apply, but we don't know that, because that's going to be determined in the regulations, and we don't know what the regulations are.
What we do know is that under third reading, they've mucked it up even further. We thought that on the effective date, once the legislation comes into effect-- once the legislation comes into force, normally, that's when the new rules apply. Under the third reading, they've added another provision to the legislation in terms of the transitional rules that seems to make some suggestions that there may be differences if you have an appeal before royal assent is granted, as opposed to after royal assent is granted or it hasn't come into effect.
But again, it'll go back to the regulation. So the bottom line is, I don't know what's going to happen to existing appeals, although I hope there's some sanity here. So bottom line here-- and I'm going to turn this over.
I've just set a few of what I consider some of the implications to be. But obviously, the first one is, we can't effectively appeal decisions anymore. We've lost that ability to effectively appeal decisions to an impartial tribunal.
And I think what that does, as everybody knows, is that it gives more control to municipal planning staff and elected councils over final land use planning and development decisions. And you can ask yourselves whether there's an opportunity to have hearings or to fairly consider fairly complex applications in the context of public meetings, where everybody's out there making-- first of all, you're usually limited to five minutes. Maybe if you're the proponent, they'll give you another five minutes here or there, but you're limited there.
And frankly, we're also looking at a politicizing of decisions. And by the way, I'm not just thinking in terms of development applications. I think in terms of group home applications, for example, where nobody-- or think in terms of Margaret Atwood-- or group home applications, where people don't want things in their neighborhoods, and local councilors say, I don't want it. So what happens there in that sitch?
And in some cases, local councilors will say, I don't want it, knowing-- or local councils entirely will say, I don't want something, knowing that they've got the OMB to backstop them to do the right thing. So we're going to lose all that. And the third point-- we're losing the OMB as an impartial arbitrator and mediator-- increasingly mediator-- and don't lose sight of that-- of land use planning disputes.
And we've lost the checks and balances in the decision. We've lost the tension in the system, frankly, to keep the municipalities in the municipal councils honest. In terms of development applications, obviously, what this points to-- and I think most sophisticated developers do this in any event. You have to collaborate with council, with planners, with stakeholders, including the communities.
And people do that. I know that's done, and you constantly do that, even if you've gotten to an appeal before the OMB. But I think obviously, this becomes even more important now, because you don't have that ability to-- you don't have that ability to appeal as you did before.
And I think what's also important in view of the new tests and in view of the limitation of evidence that's going to be at the OMB is that if you're doing your development applications at the municipal level, I think you have to make sure that your applications are, more than ever, framed to respond to those planning act tests of consistency, with provincial policy statements, conformity to provincial plans, and conformity to all applicable local plans. That has to be plastered, as it was in my presentation. But that has to be plastered everywhere, because that's going to be the only hope, frankly, if you don't get what you want at the municipal level-- that you're going to have the ability to appeal in front of OMB.
Other than that, in terms of timing and costs, I'm going to leave that to our next panels. I've put that as a question. I think our developer panel will be able to speak to that. And with respect to how it works in other jurisdictions and what we're heading to, I'll turn it over to my colleagues. Thanks very much.
NELSON MEDEIROS: Could I get you to advance the slide?
MICHAEL BOWMAN: Sorry. Oh yeah. Oh, am I in charge? Alberta.
NELSON MEDEIROS: Alberta. Yeah. So when we first thought about holding this client seminar, we talked about what the content would be. And I was a little hesitant, because I didn't know what kind of experience this group might have in Alberta. And then, the more I heard from Michael about what was happening Ontario, I realized, oh, we're quite different in how we approach land use planning in Alberta.
And obviously, there are cultural and contextual differences that have informed the legal framework. So some of the things that Michael has said, about having a local appeal board that reports to a municipality-- that's what we do in Alberta. Every single municipality has that.
And so in terms of the Wild West, I wanted to talk to you a little bit about what's happening in Alberta. There are actually some things that have changed in Alberta recently. For the last three years-- it actually started with the conservative government, but the NDP government has really, really advanced a policy platform on modernizing the Municipal Government Act.
So there have been a number of amendments that have come forward, and there are still changes that are going to happen and come into force this year and next year. But again, the legislative goal here is to modernize and strengthen, to really give more tools for municipalities to deal with the changes that have occurred since the last time the Planning Act was updated, which was in the late '70s. So that was really the last time the province, sort of, took a really hard look at the way that planning was done in Alberta.
So all of the planning provisions are contained in a piece of legislation called the Municipal Government Act. So everything from taxation to bylaws of general application to planning-- it's all bundled in one piece of legislation. So in terms of being a practicing lawyer, it's great that you can see one document that cross-references everything that a municipality is able to do.
Some of the big changes that have occurred are what we refer to there as offsite levies, or what you might hear be called here-- they might be called development charges. So these have always been strictly interpreted in Alberta. There's no such thing as a section 37 agreement or a community benefit agreement. A municipality is only able to impose those development costs that the legislation prescribes.
And traditionally, those have been for hard infrastructure-- so roads and utilities. And one of the big changes that's happening now is that municipalities will be able to impose costs for soft services for fire, for police, for recreation facilities, libraries, things like that. So that has been, sort of, a controversial change, something that municipalities have really, really lobbied for, and the development industry-- not so much, with respect to increasing the cost of development.
One of the other big changes is inclusionary zoning. Again, something the municipalities have been lobbying for, for years. It'll basically-- there's going to be a regulation, which is not yet in force. But it will essentially allow a municipality to require developers to either provide land or units for the purposes of affordable or attainable housing.
But in doing so, a municipality will be able to or must provide some kind of offset. So some municipalities do this now through density bonusing. So if a developer wants to have additional density in their development, they can provide affordable housing, and the municipality will give them the density bonus. So this happens now, but it'll probably be a little bit more prescriptive when the regulation comes into force.
One of the other big changes that's happened in Alberta in the last 10 years, at least, is that there's been a big emphasis on regional planning. The province has gotten into the original planning game in a big way. They've mandated regional plans to be prepared for all portions of the province. And now, they're making changes to the local government provisions to make sure that local governments are in line with these regional plans.
And for Calgary and Edmonton, at least, it means that there's going to be growth management boards. So you know, municipalities that are on the hinterland or the periphery of these areas are going to be constrained with respect to what kind of growth they can improve outside of the major urban centers. And another big change for Calgary in Edmonton is that they will be getting city charters.
So this is still in the policy development phase, and I'll talk about this in the next slide. But again, this was the government's response to the fact that these two major cities lobby that the tools that were available for all municipalities shouldn't necessarily constrain the needs of a larger municipality who's dealing with more complex matters. So Michael, the next slide.
So this is really the comparative piece between what Michael is talking about here in Ontario and what we do in Alberta. Historically, Alberta has experimented with what's called a zoning system and a development control system. In a development control-- so in the 1960s and '70s, Alberta actually required municipalities to adopt development control bylaws, not zoning bylaws.
And what these bylaws did is, they essentially permitted uses of land with very, very few development rules. So every development application was negotiated, essentially. And it provided a lot of flexibility for some applicants, but not a lot of predictability or certainty.
And so in the late 1970s, they introduced something called the hybrid model. So in Alberta, municipalities can adopt both the zoning and development control bylaws in one bylaw. And depending on the municipality, you'll see that they go more to a zoning approach, where everything is permitted, and there are prescriptive rules, and if you meet the rules, you get a permit.
With a development control model, most things are discretionary. And so yeah, there are rules, but lots of things can be negotiated through the permit approval process. And the development control model is highlighted as well in the legislation by council's ability to directly regulate anything that it wants.
So on a rezoning application, if council chooses or if an applicant chooses to use something called direct control, they can create a custom tailored zoning district just for a particular development or for an area. And I'll talk about this a little bit later, but there are special appeal provisions that deal with direct control sites.
The other feature of development control that makes its way into Alberta, especially in Calgary and Edmonton, is that administration-- the same people who evaluate your permit applications-- are given a high degree of discretion to relax the rules. So often, what's said, tongue in cheek, is that the bylaw is the starting point. And it's not exhaustive, and depending on the type of development, you may be asked to conform to a higher standard.
But in practice, most people are getting a relaxation of a standard, because you're providing something else. So this type of negotiation is very flexible. There's no board of variance. There's no minor variance issues. Depending on the municipality, you could go in and provide a development that really doesn't meet any of the rules, and come away with a permit, provided that it meets policy.
So there are tons and tons of flexibility in the system. The way that planning approvals are provided is not through a site plan system. It's through a development permit system. And if you have a development permit, it legally entitles you to build what the municipality has allowed you to build.
They're not registered on title, and any type of development agreement that flows from it is negotiated after the scene or after the approval. So you know, this really changes the scope of the legal services that developers and other builders need in Alberta. We're not often involved with the zoning approval up front. We, sort of, come in at the end to help negotiate some of the agreements that the municipality's requiring to give effect to the development.
One of the other big principals in Alberta is that finality in planning decisions is key, and this gives tremendous certainty to not only communities and residents, but also to applicants who are taking big risks when they come forward with the development application. So unlike the OMB system and the system here in Ontario, there is no right of appeal when a municipality makes a decision. So when a council makes a rezoning decision, a zoning decision, an official plan, or any other type of statutory plan decision, and if an applicant doesn't like the decision, they cannot appeal it to the courts.
Their only recourse is to make an argument that there was a lack of procedural fairness through the process, or that the municipality lacked the statutory authority to pass the bylaw or to refuse it. In practice, there are not that many judicial review applications that come forward for municipalities. Most applicants work within the system, and they do what Michael said. They do a lot of engagement with not only the local council, but communities and the administration, to make sure that when they put forward a development application, that they can be more confident that it'll be supported by the time they get to council.
Michalos asked, well, what happens if council says no? What can you do? And so in many cases, if a developer feels that council's going to say no or get that inkling, they'll usually ask council to table the decision, and they'll go back and do more work. Or if council says no, you can make an application again.
And some councils have a statutory moratorium where you have to wait six months. So that's why some developers don't want to have that happen to them, and they'll go back, and they'll make changes before council actually makes that their decision. So this is what happens in Alberta.
And we made the comment about, well, is this the Wild West? Like, what happens? Does this system lead to anarchy? And I think surprisingly, it doesn't. Again, there are cultural differences there.
The planning policies, in my experience as a planner and also as legal counsel with the city of Calgary, there's a strong commitment by council of the policies that the municipality has put forward. So even for controversial applications, especially infill applications, you see councils struggling with the policy decisions, with the opposition that they're hearing from their own constituents. And so there is no backstop. So council knows that the decision that they make is an important one, and it's final.
After that, so once the zoning is in place, the development permit process or the subdivision process is the next key. And there are rights of appeal at that stage. An applicant for a subdivision, if he doesn't like the decision, he can appeal that. It's more common that development permits are appealed.
So after an applicant gets their zoning approval, they apply for the development permit. If they've gotten a direct control district, which is what I talked about earlier, then the right of appeal is quite limited. The appeal board has to determine whether or not the development application conforms to what council thought they were approving.
So if the answer is yes, then there's no appeal. The appeal is dismissed. If the answer is no, then the appeal board can go and exercise some authority. The test for whether or not you can commence an appeal is, one, first you have to be affected. It's very broadly interpreted, and so most people can make that branch of the tests.
And the next is that you have to have a planning merit. So similar to [? V01B, ?] you have to cite what your planning merits are. In my experience, planning merits are not really cited heavily. In most cases, the local appeal board will accept an appeal, and they won't make a determination about whether or not someone was actually eligible until after they've had the hearing.
It's a lot easier to have the hearing, and then not have to deal with the fact that someone might actually or might have been-- they might not be able to determine that until they've heard all the evidence. Despite the fact that the appeal board has wide power to vary, revoke, or confirm a development permit decision, there are not a lot of appeals that happen, especially in Calgary. When I worked in Calgary with the appeal board, we estimated-- this was about five years ago-- only 5% of development permit decisions were actually appealed on a yearly basis, and most of those were just for houses, for infill houses.
So for major development applications, we weren't seeing a lot of appeals that were being commenced. So despite the fact that there is an appeal process, it isn't something that people use to stop development in many cases. And again, our appeal board is also bound by those same council policies, and so you see them wrestle with that as well.
With respect to city charters, Calgary and Edmonton-- so at the policy stage right now, we see that the province is toying with the idea that Calgary and Edmonton will be able to define their own subdivision process and the contents of their land use bylaws. So there's a bit of a question mark with where those municipalities are going to go, whether they're going to become more restrictive or more flexible. And something else that the municipalities will get power over is, they want to be able to regulate certain aspects of building design, which is not currently allowed in Alberta. Municipalities aren't able to enact their own local building codes.
But some municipalities want to require certain environmental standards to be met in buildings, and so that's something as well that the province is thinking about. So those are some of the things that are leading me to question where we're going. But with respect to the appeal framework and the core of the land use planning system, it's intact, and as you can see, very different than what you're doing here in Ontario. So if anyone has questions about Alberta, either after or later, I'd be happy to answer them.
SEBASTIEN SAVAGE: Thank you, Nelson. So according to my math, I have minus-5 minutes to go through my material, so I'll try to be as efficient as possible. My name is Sebastien. I'm from the Montreal office of Osler.
Apparently, I come from a distinct society, so I decided to go-- I've decided to go without slides today. The good news is, you don't have to read the slides. The bad news is, you actually have to listen to me.
Montreal's real estate market, as you probably know, has been booming for a number of years. We have about 150 cranes in Montreal skyline right now. I know it's pale in comparison to what's happening in Alberta and Toronto-- or, well, perhaps not in Alberta-- but in Vancouver and Toronto, at least.
But it represents, according to our former mayor, about $25 billion of investment in real estate at the present time-- 1.35 billion, I'd say, in non-residential real estate in the past quarter, which is an increase of 13% over the same period last year and 10% over the previous quarter. What you describe as the Wild West can actually also be pretty much imported to describe what's going on in Quebec, which I guess is the Wild East now. As opposed to having one regulation or one statutory very defined framework, as you have in Alberta, it's a bit of a zoo out there.
We have over 40 key statutes and regulations governing development in the province of Quebec. So what I've decided to do today is to touch upon some three main themes of Bill 122, which was enacted in this past summer, adopted on June 15, and was sanctioned on June 16-- named, an act to recognize that municipalities are local governments, and to increase their autonomy and powers. So it says what it has to say.
So the three themes are urban planning, urban policy, and urban financing. In terms of urban planning, it's a little bit like what you describe in Alberta, but the government has decided to literally give discretionary power to the municipalities in terms of what they want to do. So developers are encouraged to speak with the community to speak with the governments to speak with the local government, upstream, and really to try to get the buy-in at the beginning, at the outset, as opposed to being faced with a negative council decision later on.
There are multiple layers along the decision-making process. There's what we call the CCU, there is a PPCMOI, there's a PIIA. I'm not going to try to translate everything for you, because regardless of the language in which you do your deals in Quebec, these are the common expressions that will be used by developers.
One of the powers that was given to municipalities is to increase the taxation power. So for example, the transfer duties-- there used to be a cap for the portion of the purchase price that was above half a million dollars. The government has decided to get rid of that. There's now a new cap of 3% that does not apply in the city of Montreal.
So in the city of Montreal, in terms of purchase and sale of real estate, the mutation duties are no longer a cap, and that's something to keep in mind. There used to be exceptions under the transfer duties legislation in Quebec that allow you to do transfer of beneficial ownership interest in the past, without having to be subject to the transfer duties. This has changed, and now, our regime is a lot more like the regime you have in Ontario.
There's also a new paradigm in terms of public consultation. Whenever a bylaw or a proposed bylaw or proposed development was affecting zoning or requiring a land subdivision, the municipality had the duty to send a notice to certain citizens in order to call for a referendum. This is no longer the case when a public consultation scheme has been put in place by the government-- by a local government.
What the institutions are looking for is for municipalities to use this power to put in place structures whereby the population would be encouraged-- it would be an incentive for them to speak up and pronounce themselves at, again, the outset of the project, as opposed to the developers doing all the legwork, spending all the money, time, and resources, and coming down the path with a negative decision of the council. The regulatory requirements of this public consultation, in order to allow the exemption from referendum, has yet to be put in place. There are a number of criteria that are laid out in the legislation, but we haven't really seen how it's going to play out in practice.
As you probably also know-- or you may also know-- we also have a new administration in Montreal-- Mayor Coderre was voted out. We now have Mayor Plante, who said that she would be using the Office of Public Consultation a lot more. That's a public body that exists in Quebec that has the power to review projects but not to issue binding decisions.
And historically, the local administrations have used this public body, essentially, to go to it whenever they knew that they would favor the project, and to avoid going to it or simply ignore their decision whenever they were opposed to the project. Mayor Plante has been very vocal about the fact that she would be using this office a lot more than her predecessor, and she would be respecting the decision. So again, that militates in favor of seeking public consultation and public support at the outset.
In other words, what Montreal is doing is really following the trend of-- mixed use has evolved into placemaking nowadays. And local economic development is part of the government of Quebec strategy. So if you're able to demonstrate as a developer that that's what you are doing, then chances of getting your project supported are higher.
There is no formal appeal board like you would have in Ontario, for example. If at the end of the process, you end up in a situation where you can't not get your building permit but you think that the decision hasn't been fair or that the criteria have not been properly applied, then you have to go before a formal court and get a writ of mandamus, and essentially get the municipality to relook at its decision.
So that's for urban planning. Urban policy, essentially, is the war against ghost building. We have a lot of those in Montreal. In the past, the municipality only had the authority to send a notice to the owner to do the work or do the work itself. Now, it can actually register something on title so that an eventual purchaser would be aware of the notice, and if it's not complied with, the municipality has the power by expropriation or agreement to buy the building.
And just wrapping up, in terms of the additional taxation power that has been given to the city of Montreal, Bill 122 contains a lot of provisions in that respect. But those provisions, as opposed to the other key provisions of the Act, are not coming into force before January 2018, so it's too early to say how they're going to be used.
But what we expect is that given the trend to encourage sustainable development, the war against greenhouse gases and the likes, what we expect is that those powers will be used in order to impose additional duties on those development projects that will not respect certain environmental concerns of the local administration. So there's a lot more to say, but I invite you to the Quebec chapter of that presentation that will be held in the Montreal office in a couple of weeks.
ROD DAVIDGE: Thanks, Sebastien. So I think what we'll do is, we're going to do questions overall at the very end. We'll wait till after the next panel. If people have questions then, we'll address them then. So thanks a lot, guys.
GEORGE VALENTINI: All right. Well, onto the second part of our program. Please, by all means, help yourself to coffee and dessert in the back. We'll just keep talking, and you guys go ahead.
I'm George Valentini, counsel of the real estate group here at Osler. And for the second part of our program, we thought it'd be very interesting and informative to have some of our senior members of the development community provide their views on the challenges and opportunities presented by the various land use and development legislative changes that we just heard. And as Rob mentioned, we'll hopefully have time for questions at the end, so we'll try and keep this moving very quickly.
I'm very pleased to be joined up here by Don Manlapaz on my far right, Vice President of planning and development at Forgestone Capital Management. Tony Medeiros next to him-- Vice President of development at Dream unlimited, and finally, but certainly not least, Cory Estrela, Director of corporate legal at the Oxford Properties Group.
Gentlemen, thank you very much for joining us. Welcome. To begin, would each of you just provide an overview of what you do in your role of the company, and perhaps some of the experiences that you've been or been involved in?
DON MANLAPAZ: Sure. Thanks, George. It's a pleasure being here. Hello, good afternoon, everybody. My name is Don Manlapaz, VP of development with Forgestone Capital. We're a Toronto-based private equity firm investing in real estate, existing income-producing assets, as well as development projects. We source our own development sites as well as invest in partners.
We've got about six million square feet under management, about 3 and 1/2 billion dollars under management-- small fries to some other bigger groups at the table, but nonetheless, very interesting. And we work across the country, mostly investing in greater Vancouver area and the GTA. My background, actually, formerly was with Dream.
And at Dream, I looked at the office REIT portfolio and looked at intensifying existing office REIT assets, and also worked with Tony on helping to manage a portfolio of development properties that came out of JV with CP Rail. Prior to that, I was with First Gulf Corporation and was their director of development and planning, and was responsible for all of the municipal approvals as well as directing some office development projects such as The Glob and Mail Centre. And before that, I was with Giffels for about six years.
GEORGE VALENTINI: Tony?
ANTONIO MEDEIROS: My name is Tony Medeiros, Vice President of development at Dream. That's an unauthorized photograph. I didn't provide that.
[LAUGHTER]
ROD DAVIDGE: I asked you for one--
[LAUGHTER]
ANTONIO MEDEIROS: --you were just going to make a random photo.
ROD DAVIDGE: I didn't get that from anyone at the office.
ANTONIO MEDEIROS: It's all good. So I work for Dream Asset Management. We have five publicly traded companies on the TSX, two of which-- in about $15 billion of assets under management. We have an office suite with a portfolio across the country, and we have a global reach that has a portfolio in Europe, including Germany, Netherlands, and Brussels.
There's a Dream Alternatives Trust, which invests in infrastructure projects, other real estate projects as well as renewables. And there's an office REIT, and then the company that I work for is the development arm. So we basically provide services to the other REITs themselves as well as our own and develop our own properties.
So in terms of our team-- and shout out to our team there in the corner-- we're responsible for doing a lot of the upfront approvals, developing the vision, doing the feasibility, basically coming up with the overall strategy for the real estate that we're looking at, and then supporting the company in so doing. We have a number of partnerships at Dream. I'm basically doing the things that Don's no longer doing.
He mentioned looking at some of the office REIT intensification. We're actively looking at that in our portfolio, especially in downtown Toronto, and then managing our partnership with CP Rail, so it's a JV developing their surplus assets across Canada and in the Midwest and the US. We have a number of projects on our portfolio, including sites in Chicago, Edmonton, Vancouver, Montreal, as well as a number in Toronto. We have a number of partnerships, including a 70-acre site on Port Credit.
And we most recently announced the Mirvish deal with Great Gulf on King Street as well as the silo site on the waterfront. Personally, I went to school at U of T, did my undergrad there, and did my planning degree in the US. I lived abroad in Shanghai, New York, and Boston for about eight years, came back to Toronto in 2007, worked at Waterfront Toronto for a number of years, working on the LCBO lands, the East Bay [INAUDIBLE] precinct, and then most recently, joined Dream about 2 and 1/2 years ago.
GEORGE VALENTINI: Cory.
CORY ESTRELA: Thank you, Tony. So George, I'm-- of course, I'm with Oxford Properties Group. I'm actually a municipal board lawyer, but former practice. My role at Oxford is somewhat unclear some days, but I don't buy it, and I don't sell it, and I don't lease it, and I don't finance it.
But there's a big gap in there for developing it, and that's really what I do. I don't actually do it, to be clear. They took my tool belt away years ago. I've never worked at Dream. So that's probably a distinguishing feature, I think, on this panel.
[LAUGHTER]
So really, what I do is, I support the Canadian development team. So that means I work really in Alberta, Quebec, Ontario, and BC. I deal with all the agreements and the contractual side. So I help manage the risk of hiring all those architects that have great visions and less structural experience than you'd like to think, and then also hiring those very, very fancy design architects who have great vision and no time for contracts.
So besides that-- because that's, you know, small stuff, and it's not very busy-- I also work on the entitlement front and help manage risks on that and have put it in structure. So some of the things I've done in the last little while-- construction contracts for our new building at 100 Adelaide, which is lovely, and we're in for the last year. And come look at it. It's marvelous. The heritage work was fabulous.
Just in case Mark Cote is watching, I want him to hear me say good things. But no, I also work on things that aren't in the ground yet, so that means [? prog ?] sites like Metro Toronto Convention Center, where we are a long-term owner of the site there-- so putting in place structures around there.
We recently purchased with one of our investment partners a parking lot south of the Gardiner, where we'll hopefully build an office tower in the future-- so working on those, and other things that are more mundane but definitely more OMB-related, like putting in place a long-term plan to take Yorkdale from 2 and 1/2 million square feet to six million square feet. So it's a pretty broad range, and I do have a fair amount of experience at the OMB, obviously in Ontario.
Before that, I am from Alberta. I grew up in Calgary, so I worked at Stantec. I put pipes in the ground. I've created things. I framed houses. I've put stuff on roofs with shingles and fallen off roofs with shingles. But that's, sort of, my broad experience.
GEORGE VALENTINI: Great. So now that we've had a chance to listen to all the changes that Michael, Nelson, and Sebastien have raised, and in keeping in mind your practices, your experience with developments, and thinking about future developments, I guess a few questions to discuss-- and I'd like to, sort of, open this as a panel discussion. Please jump in as you see fit.
So what are you seeing in the present day, in terms of the current differences among the cities? I mean, obviously, without an OMB, Calgary seems to be working very well. It sounds like Quebec-- Montreal, and other cities in Quebec are going to work its way through, I guess, some new changes. And obviously, we're, in Ontario, with quite a big change coming very quickly.
So can you talk about the kind of developments you've been doing? How do they compare in other cities, and really, where do you see it going, especially in Ontario, going forward? And why don't-- again, why don't I start with you?
DON MANLAPAZ: Right, sure. Thanks, George. Well, as a debt and equity investor, and managing joint ventures with development partners whose vision it is to execute, over the last couple of years at Forgestone, I've been more or less at arm's length from the municipal development applications and really advising on strategy. And one observation I can make, apart from the actual structure of the regulatory framework, is that the cultural differences across the country are pretty apparent.
In Vancouver and in Toronto, and stark differences between the two-- I mean, they can see their growth boundary. You know, they look out the window, they can see the mountains, they can see the ocean. And so there's a buy-in that in order for them to grow and to develop, it's got to be in through intensification, whereas in Toronto, we have this very nebulous sort of framework of the green belt that is really controlling development and really, sort of, giving us less of an opportunity to consider intensification as an overall development strategy for the growth of our region.
And because of our sheer size, I think that it's really hard to grasp, that in order for us to grow effectively, we've got to intensify. And that really sets the groundwork of people's buy-in for development, whereas here, you know, we have city staff that act more or less like community advocates than planners. And so that's the observation that I see between the two.
In Calgary, I would agree that the development mentality is Wild West-like. You know, I mean-- a lot more sophisticated than we give them credit for. But I mean, they're more welcoming, and I think it has to do with the business culture there, and frontiermanship that people that have gone to Calgary experience, and that's what they live and breathe.
GEORGE VALENTINI: Tony, do you agree?
ANTONIO MEDEIROS: Oh, yeah, no, absolutely. I agree with everything that Don says, always.
[LAUGHTER]
But I think just to take it a step forward, I think for us, and especially at Dream, we have to go to where the projects are, right? So we don't get to pick necessarily where the jurisdictions are or what the rules of the game are. So if we want to be in the development game and working in the markets that we feel have the most potential, we really need to make sure that we're best equipped to actually go there and be successful.
So I think no matter whether it's in Vancouver, Edmonton, Montreal, or Toronto, we have to first of all put together our vision that we think is a good vision to bring forward. We need to get buy-in from the community, from all the stakeholders. Everyone needs to feel good about what we're actually working towards.
And then, I think, in terms of the actual process itself, whether it be on the planning side, whether there are appeal bodies or there's not any appeal bodies, you really just need to make sure that when you're representing yourself, you're above board. You, sort of, say, well, you know, I think I can make that happen if you can understand my point and maybe give me some relaxation in another part of the development application that I'm bringing forward.
So I think it's that conversation. And I think it's going to be more and more important, especially in Toronto, to be able to leverage your experience and what you've done in the past. And I think that's going to be very important, because you no longer have that option to actually appeal to a larger body.
So many developers in the past have really just engaged city staff, knowing that eventually, they're going to go ahead and file an appeal, and they're just preparing their application as they're going forward. And I think that strategy is obviously not going to work going forward. And I think it's going to be very important, for people to be successful in this business, to actually realize that fact and act accordingly.
GEORGE VALENTINI: Cory is a member of one of the largest real estate companies in Canada, and certainly, internationally as well. Do you feel that the process for you works well when you attend a council meeting or committee meeting?
CORY ESTRELA: Well, let's start by being clear that everything I say today is my opinion. It's not Oxford's opinion or [? Olmer's ?] opinion. So I'm going to start there, because I say some controversial things, or just off-the-cuff things that turn out to be controversial.
So I would say that by and large, for an entity such as ourselves, a lot of the legislative changes are, from my business perspective, much ado about nothing. From my personal perspective as a citizen, I think they're very substantial. So that's really hard to navigate, because you know, personally, I love the OMB. I think it's a wonderful institution that provides an incredible check on our elected officials, who-- 10 minutes, gotcha-- who otherwise have really no incentive strongly to listen to any particular individual.
You're one of the many voters that they're going to try to woo in a few years, and you know, they know that they can do some controversial things and get to you at the end and see if they get there. So personally, I love the OMB. I think it's one of the greatest things for democracy and individuals. You can actually directly participate in your democracy.
Practically speaking as a developer, I'm not sure that it's all that great for the system overall, because of the way it sets everybody up in a fairly adversarial approach. You know, there's a lot of developers and a lot of municipal counsel out there who spend most of their time positioning for that ultimate OMB appeal, and I've certainly given that kind of advice in the past. And it can be very good advice when it's coupled with the fact that you're putting out the work you're doing and into the public realm for consultation to build that dialogue and to move it forward, keeping an eye on the fact that you might be going to an OMB hearing.
Unfortunately, for a lot of politicians, they feel-- and I don't think it's true-- but certainly, staff feel like if they don't toe the line or go the path that you want, you're just going to pull the plug, go with the OMB, and you'll take your money and resources, and they'll gun them there. And you know, the irony is that I don't have quite as many years of experience at the OMB as some members.
And the experience I've had in the last decade working there is that I think we took a few very aggressive positions and won some aggressive fights for some of the retail clients I got to work for in my early career. But that approach stopped being a fairly effective approach five or six years ago-- really maybe even 10 years ago, and I just caught the tail end of it. But you know, the reality is, those of us in the bar have been saying you can't fight city hall for a while now, and do everything you can to get the city on board.
What's my biggest fear? We're working on Canada Square. We've got vision there. What's my biggest fear? For 300 bucks, some ratepayer's going to screw up a lot of timing.
You know, build on spec, you've got a tenant lined up, you've got penalties. That's my biggest fear in Toronto. Ironically, you know, the other way around, when I was in private practice, I loved the OMB. I was like, $300, and I'm going to get a bonus this year.
[LAUGHTER]
It's going to be a busy year. In house, it's just a completely different perspective on it. And you know, the reality is that timeline, the fact that you're not building on spec, makes a huge difference in your approach. If you're building on spec or not, it will drive your approach.
So I think from my perspective, I say it's much ado about nothing, because at the end of the day, development is political. It's entirely political. Politicians get to vote on what goes ahead. The people who are going to move into projects and occupy them-- they come in election cycle later, so it's political.
And you know, you better, more now than ever, I think, build your friendships and relationships. And for a lot of developers, and some of my friends in the room who I see, I know that's not going to be a problem. The little guys-- the one-off, the noninstitutional, the non-billion-dollar private equity, which might sound small against the balance sheet of Oxford, but it's a huge company, and so they're not the ones that have to suffer. It's the one-offs, it's the little guys. The industry is going to change and it's going to squeeze a lot of them out.
GEORGE VALENTINI: Last question so that we have a little bit of time for questions from the audience. Do you feel that the planning departments of various cities, especially now in Ontario, are going to be much more aggressive in their discussions and negotiations with you and counsel are going to feel empowered--
CORY ESTRELA: Yeah, well, I think there's going to be an empowerment as well as a certain level of fear, that people are going to have to start using their brains and make decisions and not know that there's a deferral to an ultimate body that can make a decision that people might feel uncomfortable with making. I think that the best planning practice is to go out and seek the opinion of the constituency, helping them help you formulate the development plan, where there are ebbs and flows.
I mean, nothing is very static. Things are in a very constant state of motion in development. And you know, I think there will be an element of collaboration and teamwork between the two sides, but it's going to take a little bit of growing pains, for sure. Yeah.
ANTONIO MEDEIROS: Yeah, and I think part of the challenge is just a lot of uncertainty as to how the market's going to react to the changes, how the professions are going to react to the changes. You know, we were talking about this earlier. When you go to do a development application in Vancouver, you hire the architect to do that. There's not a planner. There's not a lawyer involved.
So I mean, theoretically, they're-- from a planning professional perspective, it's a public profession. It's not necessarily on the consulting side. Because you know, the rules of the game are well understood for everybody involved.
And it, kind of, makes sense in a way if you step back. Because it is like, OK, well, the city has been planned. There are these rules. I am going to operate within that context.
In Ontario, I think part of the reason why people are feeling the pain-- and I think our company is in the same boat as to why we're so concerned about all the OMB changes-- is that there is a reason why the OMB is a hot topic. Because so many cases go to the OMB, which, kind of, means there's a more fundamental problem that hasn't been addressed through the entire process. The province has these intensification targets, you know, whether it be for transit or for growth centers.
And then, there's a number of municipal-- you know, whether it be secondary plans, site- and area-specific plans. There are other things that actually conflict with it, in addition to the voice of the community and the local councilors. And these things don't really talk to each other.
So there is a problem there that really needs to be solved, and we're actually going through on a site-by-site basis, and actually rezoning every single site. That basically means there is no zoning. If you're rezoning on a site-by-site basis, there is no zoning.
DON MANLAPAZ: Yeah, we work with an antiquated zoning bylaw. You know, those developed-- and not written to implement today's official plan, which is really formulated to execute the desires of the province. And so there is no trickle-down of this, right down to the basic element of the zoning bylaw on what you're permitted to do. So there's not that clarity and certainty of what you're able to do, and that, kind of, creates the friction, because it's not defined.
ANTONIO MEDEIROS: And it's all based on land use, too. And I think it all comes back to [INAUDIBLE] the zoning that we actually work with today was developed in 1916 in New York, confirmed by the Supreme Court about a decade later. It's all about protecting land uses and making sure that land uses are compatible.
We have a number of other potential planning tools that could be employed to actually address those, whether those be form-based codes or performance-based codes. And those are things that are really not part of our lexicon. I'm not actually advocating that we do that.
But there are some other cities that have said, OK, if our policy is to intensify the city, we're not going to be prescriptive about how that happens. We're going to give it an option for the market to react to it, and developers can work with each other to actually bring forward a vision that actually works. And that doesn't work within our current framework.
GEORGE VALENTINI: Last comment-- [CHUCKLE] sorry, no, no, no. Last comment goes to Cory. So I'll cut to the chase. Is this going to work? Is it going to be a disaster? Is it somewhere in between?
CORY ESTRELA: It's going to work great. I mean, this is the system. I mean, the system is, you ask a politician to give you something, and they either do or you don't. And if they don't, you give them more money, more other trinkets, more goodies.
What other ways can you help them look good and get re-elected to keep their job? And you know, we had a short circuit in the system beforehand, which said, you become unreasonable-- that sounds really wrong. This isn't in the public interest. Let's go to the OMB and have an impartial advisor.
The world has developed without impartial advisors and decision makers adjudicating over whether political decisions are truly political decisions or good decisions. It's going to work. It's going to work just fine. Are people going to enjoy their system the same way? No.
People are going to get shut out. Individuals are going to lose their voice. It's going to go downhill dramatically, because you have no ability to hold people to account. And if you want to, you're going to have to band together with somebody else, and somebody else, and you're going to have to get the money, and you're going to have to produce. You're have to put a lot more work in up front, because you're not just going to be able to rely on your counsel to make a good decision.
Because one of the interesting things-- and I almost fell off my chair laughing when we talked about taking away-- you know, the idea that this is going to be for the citizens. You hear the government talk about these changes, and they're all for the citizens and transparency. Anybody here invite the public to their meetings with the counselors and staff to talk transparently about what's happening?
I don't. I don't, because that's where you have hard discussions and get into a little bit of the nitty gritty of horse trading that happens in the development industry. Well, I can pay for this. I can't do that. That's unreasonable.
I need this timeline. I need this timeline for this confidential client that wants to build a new office in your city and bring employees, but I can't put that in the public realm yet. So that one's actually real. That's Vancouver.
We're going-- you know, we've got a great tenant there. We couldn't announce it for, like, six months. If we would have walked in and told people, maybe we could have. So it's going to work.
There's going to be growing pains, and there are going to be transitions. I think at the end of the day, as I said, it's the same point we started at. It's going to be about relationships. It's going to be about having a plan. And there's going to be more uncertainty at the margins. But--
GEORGE VALENTINI: Well--
CORY ESTRELA: --most of us don't work in the margins.
GEORGE VALENTINI: --with that, thank you. Thank you all for a very interesting and informative discussion. I know we could talk about this for a lot longer. But I think if there's a few questions, Rod wanted to have some time to open up to the floor.
AUDIENCE: Hi, my name is Randy Gladman. I'm from Triovest. I'm curious what happens in the city of Toronto, where land values are at a level that assume that you'll be able to get more density than the zoning says. So once you can no longer go to the OMB and add density to the land, at least with certainty, where do you see land values going?
Do they go down, or do they go up? Do the lands that already have the density go up even higher because the density now is known, whereas on the sites that don't have the density yet, does the value of those go down accordingly?
DON MANLAPAZ: [LAUGHTER] Well, either-- something's got to give, Randy. I mean, it's either the land prices or developer's margins and the owner's yields. You know, so out of those three, what's going to give?
I mean, I think it would be the land values, and it's going to take some cold dark days in order for vendors of key land positions to come off of what their expectation is. Because I mean, even now, without the defined rules and what you're actually explicitly able to develop on a piece of-- I mean, those land values are misaligned with real estate development fundamentals.
ANTONIO MEDEIROS: I mean, just to add to that, I mean, I think zoned property is going to become more valuable, because you know you have that in hand. I think what you're already seeing in the acquisitions market is, there's a bit of a hedging going on as it relates to what you think you'll be able to get on a certain piece of property, given the legislative changes. And it might get a little bit turbulent before it gets clear, until people, sort of, understand what that new normal is.
CORY ESTRELA: Yeah, I think the other thing I'd add is that I think the value of land is always going to be reflective of what you think you can build on it. And whether there's an OMB or not, people are going to rezone and upzone land. Values are already out of whack, and we have a real affordability problem.
It's not the buyers. It's the end users that really drive up the price if you can't make the money. And historically, taking you through the process itself has been a skill, it's been a risk, and it's been an opportunity. And you know, the people that were really good at doing it on a technical basis get to the board.
They're going to have to reset their skill set, and they're going to be doing it on a different basis. And some people are really great at that other basis, so they're going to be really collaborative, and they're going to move it forward, no problem. And you're going to take a risk that says, this is undervalued by the market, but I got the skill to move this from here to there, just as we always have. So I think you're just going to change the metrics by which you evaluate that risk.
ROD DAVIDGE: Any other questions? Well, I just want to echo George's thanks again to our panel. Thanks a lot for joining us, [INAUDIBLE]. Thanks to everyone from Osler [INAUDIBLE]. And thanks to everyone for taking their time and joining us today. Hope you found it informative.