The City of Toronto recently held a hearing to update everyone on the status of the Rail Deck Park. Is it happening? Maybe. While the presentation did go into some detail on how the Rail Deck Park would actually be built, it seems like everyone is mostly concerned and/or interested in the total cost and where the money will come from.
As you’ve probably seen in a few headlines, the estimated cost of building the Rail Deck Park is nearly $1.7 billion. Here’s a breakdown of the costs:
Deck construction: $844 million
Park construction: $95 million
Design fees: $95 million
Contingencies: $327 million
Allowances (potential work restrictions in rail corridor): $304 million
The City is considering many sources of funding, such as contributions from adjacent properties and businesses, federal and provincial applications, and a phased approach to manage the cost (Phase 1 is estimated to cost $872 million).
These things are mentioned in the presentation deck, but there isn’t much detail, except for one approach to the Alternative Parkland Dedication Rate (Section 42).
Via the City of Toronto
The current Section 42 rate is more than a decade old and development has changed quite a bit in the last 10 years. The rate has a site cap, stipulating a maximum land dedication or payment of cash-in-lieu.
According to the City, since 2005, residential densities have gone up 205% by project and the average units per hectare have increased by 254%. With 83% of Toronto’s development being vertical communities, the need for parkland is stronger than ever.
The presentation says that on a citywide basis, there are only 28 square meters of park per resident. Looking at just downtown, that number is reduced to 10.8 square meters. Once you add employees to the mix (people who work in Toronto but do not live there), the citywide figure drops to 18 square meters and downtown there’s just 4 square meters!
Let’s look at an example of how the Section 42 rate works at the moment. Picture a 225-unit residential tower at Yonge and Bloor; this would generate $2.7 million cash-in-lieu. Now look at a 526-unit residential tower at Bloor and Sherbourne; this would only generate $2.9 million. Because of the site cap, the larger condo only adds an extra $200,000 for parkland, even though it’s bringing nearly double the people to the neighbourhood.
The City says that 90% of new development hits the 10% cap of the site or equivalent value. The way the City sees it, there’s a lot of extra money being left on the table for parkland, and it’s time to update Section 42 to reflect the way residential development is being designed. So, it’s been suggested that the rate be based on density.
Via the City of Toronto
In theory, this makes sense, and we are team RDP all the way, but there’s an affordability issue that needs to be taken into consideration here.
Development charges are fees developers pay to the City, which are then supposed to go towards developing and improving infrastructure to accommodate all the new people moving into the neighbourhood. The thing is, these fees are factored into the price of the home, so while the fees are paid by the developer, the cost is passed down to the homebuyer.
In a housing market already struggling with affordability issues, is increasing the cost of development the right move? It can be if done correctly in conjunction with other major shifts. If the city moves forward with an updated Section 42 rate, they may want to consider cutting some red tape and finding a smart way to make the approvals process more efficient so the developer doesn’t have to bump up their prices.
There are still a lot of questions, but we’re super excited to see the Rail Deck Park moving forward. This is a rare opportunity to build something special in Toronto, so we really hope it materializes!