At a Jane’s Walk last May imagining the future of Rail Deck Park, the number one question was: how are we going to pay for it? It’s not just an important question—it’s a critical one. Amidst so many priorities at the City, how do we find money for parks? This question is especially important when it comes to expensive ones like Rail Deck Park, which is estimated to cost as much as $1.66 billion.
As a project that has been lifted to importance on the continually rising tide of downtown residential growth, it only makes sense to use that super-charged growth to pay for it. But finding money for Rail Deck Park means reviewing how we pay for parks in general and making sure these tools are used effectively, both for Rail Deck Park and for the city as a whole.
Not many things have dedicated funding tools in Toronto, but park development does. Through a provision called Section 42 in the Planning Act, the province provides municipalities with a park levy tool. This allows municipalities to extract land or money for parks from new development or redevelopment—money that can only be spent on park acquisition and development.
The inner workings of Section 42 are complicated, but in high-priority park areas, like downtown, it boils down like this: each new residential development must contribute a maximum of 0.4 hectares of land per 300 units built—though, as we’ll see later, the City doesn’t capture this full amount. If, as is often the case with skinny condo developments, land isn’t feasible, the developer provides cash as an alternative. The City divides that money between land acquisition and park development, both in the communities surrounding the development and across the city, meaning downtown development actually helps fund park development citywide.
Over the years, this park levy has brought in a lot of money for parks—$482 million in the last 10 years, to be exact. The bulk of this funding was collected within the city’s south district and, more specifically, the downtown. In fact, between 2012 and 2014, downtown brought in $128 million in park levies.
This all sounds good in theory, but in practice it has been difficult for the City to spend the money on actually acquiring parkland downtown.
In short, land downtown is expensive and there is little left that would make a great (and large) park. When the City does find land, the owner may not want to sell, especially since the City is legally obligated to pay only the market rate, while other buyers can offer more and move more quickly. So, while we’ve seen new downtown parks developed (Corktown Common and Regent Park are two recent examples), they were the result of master-planned communities on land the City already owned, not from the City buying new land.
But there’s another catch. The City is under-collecting its park levies from Section 42. While the province allows municipalities to collect up to one hectare of parkland per 300 units from development (a newly approved revision by the province has changed this to one hectare per 500 units when paying cash instead of land), Toronto set its rate at 0.4 hectares—under half.
The City also imposes a cap on how much land or cash any single development has to contribute based on the size of the land being developed. This means the City stops collecting park levies once the cap is hit. For developments of one hectare or less in size—most in the downtown—that cap is 10 per cent of the land or, if cash is given, 10 per cent of the value of the land.
An example from a recent City report shows how this cap works in practice: two downtown developments on the same size piece of land contributed similar amounts of park levy cash (an average of $2.8 million) despite the fact that one had 526 units and one had 225 units. Now, a certain cap does make sense if we want to keep developments viable. If you’re building a tall building with lots of units on a tiny piece of land, you can quickly owe the City far more parkland than you actually have at all. However, as the City argues in its report, the cap is set too low for today’s development, which includes ever taller buildings.
These policies were approved nearly a decade ago when downtown development was very different. In the last 10 years, downtown growth was triple the rate it was in the 10 years prior. Now seems like a good time to review park policies and ensure we’re not hampering our ability to fund park development that keeps up with demand—a review that is currently happening as part of the citywide Parkland Strategy.
Reworking park levy policies is good for funding Rail Deck Park, but it’s also good for parks across the entire city, as the redistributive policy ensures that portions of the park money generated downtown funds park development in areas of the city that see less growth. Growing the pie, so to speak. For example, these funds have gone towards park development in Scarborough’s McCowan District Park and North York’s Mallow Park.
But, while Section 42 is a critical dedicated park-funding tool—one that can produce more funding if reworked—it alone will not be enough to fund Rail Deck Park in its entirety.
There are other tools tied to development growth that can also be used. Development charges are one example. Section 37, which extracts money from developers for community benefits (like parks) in exchange for added height and density, is another. There’s also the possibility of federal grants towards green infrastructure projects and, since a portion of Rail Deck Park may contain a new transit station as part of the Metrolinx RER expansion, transit infrastructure funding.
But paying for Rail Deck Park will also require some new thinking. One potential new tool is value-capture, which would essentially capture a portion of the increased property value generated in the neighbourhoods around Rail Deck Park to go back into the park. As a new funding mechanism, expect a lot of debate about how it could actually work in practice.
Whatever the funding tool, the principle is the same: if we are going to pay for Rail Deck Park, we have to do a better job of harnessing the value created by the incredible growth of downtown to do it.