Section 37 funds cause a stir in Scarborough

Councillors question use of limited Planning Act funds

It’s a bureaucratic regulation that lasts all of five sentences, but one small section of the Ontario law has Toronto City Council fuming over how to spend the $300 million it brings in each year. Some councillors say communities like Scarborough are missing out.

Ontario developers can apply for zoning exemptions to exceed normal density bylaws. Section 37 of the provincial Planning Act allows them to cut a deal with the municipality to fund facilities or services in return for building larger projects than normally allowed.

The provincial municipal affairs ministry says the funds “may support intensification, growth management, transit supportiveness and other community-building objectives.”

Similar regulations exist in other jurisdictions like the UK, where they are specifically intended to fund infrastructure projects to offset the increased usage of public services that large buildings prompt.

But from charity dinners to Metropass giveaways, Section 37 funds have been used for projects that benefit small groups rather than wider communities, the Toronto Sun reported last week.

In one example, the newspaper found that Scarborough’s Walk of Fame was funded up to $200,000 from developers’ Section 37 funds in 2005 and 2012.

“It’s not clear what [Section 37] is actually supposed to do,” said Aaron Moore, a post-doctoral researcher at the University of Toronto.

Moore studies city planning and the politics of urban development, and led a discussion on Section 37 at the Institute on Municipal Finance and Governance last summer.

“The actual wording doesn’t specify what [the funds are] to be used for,” he said. “Different people in government have different views.”

Moore’s research found that only 40 per cent of Toronto’s Section 37 spending went to roads and parks over the past five years. Half the projects are more than a five-minute walk from the development involved.

Councillors consult city planners before approving deals, but ultimately lead negotiations. Last month, Mayor Rob Ford called Section 37 use “extortion” and accused councillors of trying to “shake down” developers for their “re-election slush funds.”

Glenn De Baeremaeker, councillor for Scarborough Centre (Ward 38), told The Sun his community benefited from the Walk of Fame funding because it raised morale for an area that often gets bad press. Moore says the project is “emblematic” of the councillors’ concerns about how funds are used.

Calls to pool funds

Meanwhile, Mayor Ford has echoed a handful of suburban councillors who have proposed pooling money generated from Section 37 for the whole city. Because most development contracts for projects like condominiums are signed in downtown wards, suburban areas have fewer opportunities to gain funding under the regulation.

“I have one of the poorest wards. In terms of development, it’s social housing.” Michelle Berardinetti, councillor for Scarborough Southwest (Ward 35), told the Observer.

We’ve got to start sharing these funds.

— Michelle Berardinetti, councillor for Scarborough Southwest (Ward 35)

“You have some wards bringing in millions from Section 37, while others get around $100,000,” she said. “We can look at pooling some of the fund for shared services.”

The Ontario Municipal Board, a government body that monitors planning disputes, makes sure that Section 37 funds go to projects near the developments, according to Moore.

“The OMB has said you can’t do that,” he said. “You can move around funds but not that far; it’s a pretty limited area.”

Last week, Adam Vaughan, councillor for Trinity-Spadina (Ward 20), suggested wards follow his decision to dedicate 10 per cent of Section 37 funds for new community housing developments within their own wards.

That prompted Berardinetti to investigate a proposal to pool 10 per cent of all Section 37 funds across all wards gaining over $3 million, and use the money to fund the piling list of repairs to the wider city’s existing community housing.

“People are living in squalor, with no heat and rats. We’re like slumlords,” she said. “We’ve got to start sharing these funds.”

The vote failed by two-thirds and attracted the ire of downtown councilors, like Kristyn Wong-Tam of Toronto Centre-Rosedale (Ward 27) who suggested it was inappropriate to transfer funds out of wards.

How effective is Section 37 use?

Even when funds are approved they don’t always deliver, as witnessed by the Milliken Community Recreation Centre, which has been waiting to expand since 2007.

The project has been stalled after Section 37 funds were designated from two failed shopping mall proposals – the South Asian-themed Sitara at Markham Road and McNicoll Avenue and the Landmark Ltd. mall at Steeles Avenue and Middlefield Road.

Meanwhile, Section 37 funds from the Equinox condo towers adjacent to the Scarborough Town Centre will be used to build a second entrance to the nearby TTC RT station.

De Baeremaeker was the sole councillor to vote against the funding last May, proposing the funding be split between six renovations to community centres, libraries and an animal shelter. He could not be reached for comment.

“Some projects certainly are used to serve favour within the voting population in their ward,” said Moore, adding that sometimes funding is used for multiple projects, “spread so thinly that it isn’t actually used.

“The fact that councillors decide is somewhat problematic,” said Moore. “It certainly raises questions as to whose benefit is those investments.”