22ND REPORT OF THE
Corporate
Services Committee
meeting held on September
9, 2014, commencing at 2:00 PM, in Committee Room #5, Second Floor, London City
Hall.
PRESENT: Mayor J. Baechler (Chair) and Councillors
J.P. Bryant, B. Polhill and H.L. Usher and L. Rowe (Secretary).
ABSENT: Councillor J.B. Swan.
ALSO PRESENT: Councillor W.R.
Monteith; J.P. Barber, P. Christiaans, C. Colvin, N. Hall, M. Hayward, M.
Henderson, P. Kokkoros and G. Kotsifas.
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Recommendation: That it BE NOTED that no
pecuniary interests were disclosed.
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Recommendation: That
after convening as a Tribunal under section 26 of Part IV of By-law
C.P.-1473-212, and pursuant to By-law A.-6361-177 that would delegate the
hearing to the Corporate Services Committee from the Board of Control, to
hear a complaint from Junction Climbing Centre Inc. regarding the development
charge imposed by The Corporation of the City of London in connection
with development on the land known as 1030 Elias Street, as detailed in the attached
Record of Proceedings, the complaint BE DISMISSED on the basis that the
Tribunal finds that the development charge was properly imposed in accordance
with the applicable by-law.
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The meeting adjourned at 3:32 PM.
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RECORD OF PROCEEDING
CORPORATE SERVICES
COMMITTEE
convening as a Tribunal
under section 26 of Part IV of By-law C.P.-1473-212 and pursuant to By-law
A.-6361-177 that would delegate the hearing to the Corporate Services Committee
from the Board of Control, to hear a complaint from Junction Climbing Centre
Inc. in respect of the development charge imposed by The Corporation of the
City of London in connection with development on the land known as 1030 Elias
Street.
September 9, 2014 –
2:00 PM
Committee Room #5
London City Hall
PRESENT
Mayor
J. Baechler, Chair
Councillor
J.P. Bryant, Tribunal Member
Councillor
B. Polhill, Tribunal Member
Councillor
H.L. Usher, Tribunal Member
L.
Rowe, Registrar
J.P.
Barber, City Solicitor
P.
Christiaans, Director, Development Finance
N.
Hall, Solicitor II
P.
Kokkoros, Deputy Chief Building Official
G.
Kotsifas, Managing Director, Development and Compliance Services and Chief
Building Official
J.
Kudelka, Complainant
A.
Ferreira, Patton Cormier & Associates, Complainant’s Agent
CALL TO ORDER
The Chair called the Tribunal to order at 2:01
PM on September 9, 2014.
DECLARATIONS OF PECUNIARY INTEREST
None.
HEARING
Hearing before the Corporate
Services Committee (CSC), convening as a Tribunal, with respect to the development
charge imposed by The Corporation of the City of London in connection with
development on the land known as 1030 Elias Street.
1. Preliminary
and Interlocutory Matters:
The Chair provided a
brief overview and explanation of the Hearing process.
G. Kotsifas, Managing
Director, Development and Compliance Services and Chief Building Official; P.
Kokkoros, Deputy Chief Building Official; P. Christiaans, Director, Development
Finance; J.P. Barber, City Solicitor and N. Hall, Solicitor II appeared on
behalf of the City of London. A. Ferreira, Patton Cormier & Associates and
J. Kudelka, Junction Climbing Centre Inc, appeared on behalf of Junction
Climbing Centre Inc.
2. Summary of the Evidence Received by the
Tribunal:
The following attached
documents were submitted as Exhibits at the Hearing:
Exhibit #1: Notice of
Hearing dated August 15, 2014
Exhibit
#2: Written complaint from Junction Climbing Centre Inc., submitted by A.
Ferreira, Patton Cormier & Associates, lawyers for the Junction Climbing
Centre Inc., date stamped in the City Clerk’s Office on May 16, 2014;
Exhibit
#3: Staff report dated September 9, 2014, from the Managing Director,
Development and Compliance Services & Chief Building Official;
Exhibit
#4: Undated submission by A. Ferreira, Patton Cormier & Associates, made at
the Tribunal hearing on September 9, 2014, entitled “Junction Climbing Centre
Inc. – Submissions to the Corporate Services Committee”;
Exhibit
#5 Undated submission by P. Kokkoros, Deputy Chief Building Official, made at
the Tribunal hearing on September 9, 2014, entitled “1030 Elias Street –
Redevelopment – Permit History”; and
Exhibit
#6: PowerPoint presentation made at the Tribunal hearing on September 9, 2014,
by P. Kokkoros, Deputy Chief Building Official, entitled “Development Charges
Complaint – 1030 Elias Street Redevelopment”.
Councillor Usher
requested clarification as to why Mayor Baechler was chairing the Tribunal. He
was advised by the Registrar that as the Mayor is Chair of the Corporate
Services Committee and, in turn, the Corporate Services Committee serves as the
Tribunal to hear complaints under the Development Charges By-law, the Mayor
also, in turn, serves as Chair of the Tribunal.
A. Ferreira submitted an
undated submission entitled “Junction Climbing Centre Inc. – Submissions to the
Corporate Services Committee” as Exhibit # 4. She noted that interior
renovations were required to convert an industrial use to an indoor rock
climbing gym and $111,816.04 in development charges were imposed and paid under
protest at the time of obtaining the necessary building permit. A complaint
under the Development Charges By-law was subsequently made and that is why the
hearing is being conducted today.
Ms. Ferreira
indicated that development charges need not and should not be automatically
imposed, that each complaint should be considered on its own unique set of
facts. She also stated that the Development Charges By-law should not be
applied in an overly technical manner and that reductions or waivers of
development charges should be granted by the City, where appropriate, as the
City has done in the past.
Ms. Ferreira noted
that the new Development Charges By-law which came into effect on August 4,
2014 remedied certain inequities under the previous By-law. She further stated
that it was the understanding of Junction Climbing Centre Inc. that had it
applied for its building permit after the new Development Charges By-law came
into effect, it would have paid a development charge of approximately $5000.00,
rather than the $111,816.04 it actually paid, with the latter amount
representing almost one-fifth of the gym’s budget. Ms. Ferreira indicated that
while Counsel for Junction Climbing Centre Inc. had requested Mr. Kokkoros or
Ms. Hall to confirm that calculation, no confirmation has been received as
yet. However, the City Clerk has confirmed that there are no other “pending”
complaints under the previous By-law, so a decision to reduce the development
charge in this case would not open the floodgates for other complaints.
Ms. Ferreira pointed
out that her client, Mr. Kudelka, has always been vocal about his opposition to
the Development Charges By-law and made representation to the City to that
effect, including to P. Christiaans, Director, Development Finance. Ultimately
changes were made to the City’s Development Charges By-law and the inequity was
remedied. However, as her client had to proceed with obtaining a building
permit, he had to pay the development charges that were imposed at the time,
under duress.
Ms. Ferreira indicated
that the nature of the development poses an equally compelling reason for
reducing the development charges that were imposed, stating that the purpose of
development charges, pursuant to section 2 of the Development Charges Act,
is to pay for increased capital costs required because of increased needs for
services arising from development. She noted that in this case the following
facts must be considered by the Committee:
a) The
“development” by Junction Climbing Centre involved interior renovations of an
existing building. This building may otherwise be sitting vacant.
b) No
additional floor space has been created. The building’s footprint has not been
enlarged. There have been no structural changes.
c) There
will be no increased capital costs to the City arising from this development.
d) There
will be no increased need for municipal services arising from this development.
e) The
previous industrial use, a steel manufacturing facility, creased a higher
demand on City services than the climbing gym in the form of heavy truck
traffic and increased water usage.
f) There
is no greater impact on sanitary flows, water usage, fire, police, or storm
water management as a result of this development.
Ms. Ferreira added
that indoor rock climbing is a popular recreational activity that requires a
unique type of building, not easily found in traditional commercial areas, and
that industrial buildings are particularly suited to this type of facility, so
her client decided to use an industrial building that would have otherwise
remained vacant.
Ms. Ferreira noted
that the Junction Climbing Centre is currently the only climbing gym in the
City of London and that it offers its members premium equipment, leagues and
training. She also indicated that there are three climbing competitions that
are scheduled to take place at this facility, which will attract competitors
from across Ontario. Ms. Ferreira emphasized that small businesses such as the
Climbing Centre should be supported and welcomed to the City of London.
Ms. Ferreira
requested that the development charge be reduced to $14,373.86, which she feels
is more than fair and reasonable in the circumstances, and accounts for the
additional washrooms, party room and maintenance room, totaling 887 sq.ft. (82.4
m2). This is particularly so given that only approximately $5000.00
would have been payable under the new Development Charges By-law.
Ms. Ferreira
concluded by saying that the business is going well, the client has had an
excellent response, and there are many people wanting to sign up for training
sessions. She noted that her client has only been able to develop half of the
space being leased, and that the other half of the space is just sitting
there. If the development charges were reduced, then those monies could go
back into the business to expand the gym, thereby enabling it to host larger
competitions and better represent the City of London.
Councillor Usher
enquired when the development charges were paid. Ms. Ferreira advised that
payment was made at the time the building permit was issued.
Councillor Usher
further enquired if, at that time, the client was aware of the current
Development Charges By-law being under review and that changes may be
forthcoming. Ms. Ferreira advised that her client was aware that the By-law
was under review, that there may be changes, but that there were no promises or
assurances as to what changes, if any, would be forthcoming. She further
stated that because of business reasons, her client had to proceed at that time
as he was paying rent for the space.
Councillor Polhill
enquired if, when the new By-law was coming out, was there any indication of
what the reduction would be. Mr. Kudelka indicated that he knew the By-law was
under review and that there was a proposal being made to the Municipal Council,
but that there were no guarantees as to the outcome of the Municipal Council’s
consideration of the matter. Mr. Kudelka further stated that he was aware of
the direction staff were hopeful it would take, but that there were no
guarantees as to the outcome.
Councillor Polhill
noted that Mr. Kudelka had no guarantees, but he had to proceed with the
project.
Mayor Baechler
enquired if Ms. Ferreira was advising that the $111,816.04 was not correctly
determined because a credit was not being appealed. Ms. Ferreira indicated
that staff have worked within the allowable grounds within the By-law, but that
there is an error due to the unfairness because of the timing of the
development. She confirmed that they were not suggesting that there was a
mechanical or mathematical error in the calculation.
Councillor Bryant
indicated she could not see an error in the application of the Development
Charges By-law. Ms. Ferreira reiterated her view that the By-law does not need
to be applied in an overly technical manner and could be applied considering
the unusual circumstances and further, should not be applied in an overly
technical manner.
Councillor Usher
indicated that he required additional clarity that he has to look at the By-law
at the “point in time” and that the calculation was made correctly, and that
the development charges were paid in protest. Ms. Ferreira indicated it was
important to note the overly technical manner in which the former By-law was
applied as this is an important consideration towards a decision to reduce the
charge. She also noted that it was important to consider if there was an
increased demand on services. Ms. Ferreira indicated that the use did not
create any additional strain on existing services which means that the
development charge was extremely high and not warranted. She also noted that
building permits are not issued until the development charges are paid, so her
client paid the development charges in order to get the building permit.
However, paying the development charges should not be seen as agreeing with
them. Her client only paid them in order to get the building permit and
retained the right to protest the development charges.
Councillor Usher
indicated that he could only consider if there was an incorrect calculation.
Ms. Ferreira responded by indicating that if you look at this as simply a
mathematical task, there is no error in calculation. However, there is an
error in this case in that there is some discretion in terms of applicability
considering demand on services.
Mr. Kokkoros provided
a written submission entitled “1030 Elias Street – Redevelopment – Permit
History” (Exhibit #5) and recited the contents of that submission. He also
provided a hard copy of his PowerPoint presentation entitled “Development
Charges Complaint – 1030 Elias Street Redevelopment” (Exhibit #6).
Mr. Kokkoros, made
his presentation, stating the following:
·
under
the Ontario Building Code, a change of use is required when there is a change
of occupancy and as such, development charges are applied when there is a
change in use from industrial to commercial;
·
the
Development Charges By-law applicable at the time provides for the following
“Grounds of Complaint”:
a) the amount of
the development charge was incorrectly determined;
b) whether
a credit is available to be used against the development charge, or the amount
of credit or the service with respect to which the credit was given, was
incorrectly determined, or;
c) there
was an error in the application of this by-law.
Mr. Kokkoros advised of the determination of
the validity of the grounds of complaint provided by the complainant, as per s.
27 as follows:
- The amount of development charges was
incorrectly determined. This is valid as a ground of complaint as per
s.27(a).
- The building was previously used for
industrial purposes as a steel manufacturing and assembly plant. This is
a statement of fact; not disputed; not a valid ground of complaint.
- The Climbing Centre will not create an
increased need for services. This is not a valid ground of complaint.
- The interior alterations to the building
will not result in additional floor space. The development charges are
not based on additional floor space; this is not a valid ground of
complaint.
- The amount of development charges is
neither fair nor reasonable in the circumstances. This is a statement of
opinion, not a valid ground of complaint.
Mr. Kokkoros indicated that section 4 of the
Development Charges By-law states that “The owner of any land in the City of
London who develops or redevelops the land or any building or structure thereon
shall, at the time mentioned in section 5, pay Development Charges to the
Corporation calculated in accordance with the applicable rate or rates in section
6, 7, 8 and 9 hereof.” He also indicated that in accordance with the By-law,
development “means the construction, erection or placing of one or more
buildings or structures on land or the making of an addition or alteration to a
building or structure that has the effect of changing the size or usability
thereof, and includes all enlargement of existing development which creates new
dwelling units or additional non-residential space and includes work that
requires a change of use building permit as per Section 10 of the Ontario
Building Code; and “redevelopment has a corresponding meaning;”.
Mr. Kokkoros further advised that the
conversion of an industrial use to an assembly use requires a change of use
permit, which is clear from Table 1.3.1.4 of the Ontario Building Code.
He stated that as indicated previously, there is clearly only one valid ground
of complaint, being whether or not the amount of the development charge was
correctly determined. He went on to explain how the calculation was made, as
detailed in the slide of his PowerPoint presentation entitled “How were the
Development Charges Determined?” (Exhibit #6).
Mr. Kokkoros then spoke to the matter of
redevelopment and the impact on municipal services. He indicated that the
complainant’s letter makes no mention of what resolution is being sought. For
example 50% of the assessment of development charges or full exemption. Mr.
Kokkoros directed the attention of the Tribunal members to the section of his
staff report entitled “DC Exemptions as per the DC By-law in effect” and
indicated that staff have applied and administered the By-law correctly and to
uphold the complaint would set a dangerous precedent. Mr. Kokkoros encouraged
the Tribunal to consider if the development charges had been correctly
calculated, if there was any credit available, and if there was any error in
the application of the By-law. He stated his belief that the grounds for the
complaint are not valid and the development charges were correctly calculated,
and respectfully requested that the complaint be dismissed.
Councillor Polhill enquired if the
development charges were paid at the time of the issuance of the building
permit and was advised by Mr. Kokkoros that this was the case.
Councillor Polhill further enquired about
what the Order to Comply was for and was advised by Mr. Kokkoros that that
matter was not within the mandate of this Tribunal, but that it related to a Building
Code infraction. He further indicated that that matter was noted on the
Permit History (Exhibit #5) so that the Tribunal could see the building permit
history.
Councillor Polhill enquired if the
development charges were refunded when the earlier building permit was revoked
and was advised by Mr. Kokkoros that the charges were refunded.
Councillor Usher enquired why the development
charges paid in 2014 were significantly less than those originally paid in 2013
and was advised by Mr. Kokkoros that the original permit was for approximately
1502 m2, while the second permit was only for 641 m2.
Councillor Usher then asked if the floor plan had changed and was advised by
Mr. Kokkoros that the scope of work was reduced from 1502 m2 to 641
m2 , which resulted in a reduction in the development charges.
Councillor Usher stated that we had an
industrial building which was not subject to development charges at the time,
but now that the use has been changed, development charges are now applicable.
He asked for an explanation as to how you can go from no development charges
being applicable to owing development charges. He was advised by Mr. Kokkoros
that that comes from the Development Charges By-law that was in effect at the
time, and also referred Councillor Usher to Table 1.3.1.4 of the Ontario
Building Code.
Councillor Usher further enquired if an industrial
building paid development charges and there was a new use, would any
development charges be payable between the old development charges and the new
development charges? Mr. Kokkoros advised that the Development Charges By-law
has formulae for applying development charges. He noted that section 14
discussed what happens when there is conversion from one form on
non-residential use to another form of non-residential use. He also noted that
in this case it was considered as “development”, not previous use. Mr.
Christiaans indicated that under the City’s By-law in effect at the time of the
building permit issuance, there was no provision for a credit against the
higher commercial charge applicable at the time. However, with the new By-law
that came into effect in August, there is a conversion credit available,
irrespective if there was no development charge that was initially payable. He
further stated that the By-law was applied correctly.
Councillor Usher stated that at the time the
application was made the development charges were applied as if it were a new
building from scratch and in accordance with the By-law. He asked if the owner
was aware of this. Mr. Christiaans indicated that the City was having
discussions with the applicant between the timing of the two permits, but is
not exactly sure of the timing of the discussions with Mr. Pedulka and he
believes that Mr. Pedulka was aware there was a chance that the new By-law may
bring the development charges down. Mr. Kokkoros again drew the Tribunal’s
attention to Exhibit #5 and indicated that it was made very clear to the
proponent that he understood the situation regarding development charges and it
was the proponent’s position that he could not wait for the new By-law to get
the permit issued.
Councillor Usher asked if any promises were
made to the proponent and was advised by Mr. Kokkoros that it wasn’t possible
to make promises as there is no provision in the By-law for retroactivity.
Councillor Bryant asked if the City would be
in a position to make any deductions or waivers and if there is any deductions
that could be made that had been made on other projects. Mr. Kokkoros
cautioned against the use of deductions or waivers as the By-law is not
discretionary and the Development Charges By-law has to be strictly enforced as
passed and approved by Council. He noted that credits can only be granted in
accordance with the Development Charges By-law. Councillor Bryant further
asked if Mr. Kokkoros could think of any legal deductions or waivers within the
By-law that could be applied in this instance and was advised by Mr. Kokkoros
that if there were, staff would have considered those and that there is nothing
available for this particular redevelopment.
Councillor Polhill asked if the industrial
credit is in the By-law or if it is gone and was advised by Mr. Kokkoros that
the current By-law introduces a new industrial development charge rate, whereas
previous By-laws did not include an industrial rate. Councillor Polhill
indicated that if there was an industrial building and they kept using the
industrial building for industrial purposes, but installed 25 washrooms and
created all kinds of traffic then no development charges would have been
payable under the previous By-law. Mr. Kokkoros indicated yes, that would have
been the case because the Municipal Council decided that development charges
would not apply to industrial purposes.
The Chair asked Ms. Ferreira if there was any
further oral evidence or submissions in reply to any new issues raised by the
submission made by the Civic Administration.
Ms. Ferreira indicated there were a couple of
points she would like to make. First, with respect to the position by Mr.
Kokkoros, she indicated concern with the overly technical application of the
by-law and the same approach to the complaint letter. She noted that when the
grounds of appeal were set out, those grounds constituted their reasons,
including technical and other general arguments. Secondly, she indicated her
intention to touch quickly on Mr. Kokkoros’ point that the Development
Charges Act specifically states that the amount of the development charge
for development need not be limited to any increase in capital costs. This is
an important point as, again, the development charges are not mandatory.
The Chair asked if there was a need to go in
camera for the purpose of receiving legal advice and it was determined there
was no need to do so.
Councillor Bryant indicated that it is
unfortunate that staff don’t have any credits or reductions they can apply in
this instance, to which Ms. Ferreira responded that the By-law has some
discretion to reduce or waive a charge when appropriate. She further indicated
that staff have strictly applied the By-law, which is fine but this has resulted
in a very unjust and unfair situation. Ms. Ferreira added that the Building
Permit History (Exhibit #5) demonstrates the urgency that the business had to
open and that they are in the position that they are in today because of that
urgency. She explained that the $14,373.16 they are suggesting constitute the
development charges represents an area based upon the renovations, the majority
of which are climbing walls, plus washrooms, a party room and a maintenance
room. Ms. Ferreira indicated that it would be fair to approve that area as
being subject to the development charges, but the other unfinished area is not
a conversion. She emphasized that the client has been cooperative and wants to
work with the City and feels this would be a fair outcome. She noted the rate
used was the commercial rate applicable under the previous By-law.
Mayor Baechler noted that when looking at
Part IV of the Development Charges By-law, the Municipal Council shall make the
determination and the Committee shall make a recommendation to the Municipal
Council as soon as practical. She noted the Tribunal has heard the complaint
and there has been a degree of discussion about the interpretation of the
degree of discretion. Mr. Barber indicated that there is no equitable discretion
in that the Committee and Council have to impose a just and fair result. He
stated that his advice has consistently been that the development charges have
to have been incorrect based upon Ontario Municipal Board jurisprudence in
order to necessitate a decision other than to dismiss a complaint. He added
that you are restricted to your consideration of the gross floor area that has
been cut in half, and you have heard from both the City and the complainant on
this matter. The question is what is the floor space? Mr. Kokkoros advises it
is 641 m2. In order to confirm that the Tribunal has to be
satisfied 82.4 m2 is the correct floor space, and not Mr. Kokkoros’
number.
Councillor Polhill questioned if there was
any justifiable change, when only washrooms, a party room and maintenance room
occupied the floor space, as the rest of the use was in the air and not on the
floor space. He also noted that the use did not make any further demand on
City services and that there was actually less traffic and a cleaner use. He
acknowledged that you have to pay development charges, but noted that the rules
regarding the development charges changed only three months later.
Councillor Polhill proposed that $14,373.86
be the applicable development charges. There was support by other Tribunal
members for that proposal.
Councillor Bryant asks if there is a time
limit to come forward with a complaint of this nature and was advised by Mr.
Kokkoros that he believed the time limit for such a complaint to be filed is 90
days from the date the fees are paid. Councillor Bryant asked if the complaint
was received within the time limit and was advised that it was.
Councillor Polhill enquired why the
development charges were adjusted for the church on Blackfriars Street. Mr.
Kotsifas advised that each case has to be considered based upon its own merit.
Councillor Bryant enquired if questions could
be asked of staff after the Tribunal. Mr. Barber indicated that there would be
deliberation at Council and there is the potential for questions beyond the
information contained in the Record of Proceedings. However, in terms of
approaching staff outside the Council meeting, it would be improper not only
because of closed meeting provisions, but also to the extent that if someone wanted
to take a different position that could be raised at Council.
Councillor Bryant raised one more point of
clarification, asking how the development charge went from over $200,000, down
to $111,816.04; was that due to use and design. Mr. Kokkoros indicated that
the development charge rate that was applied was the same in both cases, but
the floor space was reduced from 1560 m2 to 641 m2.
The Chair indicated that the Tribunal
recognizes the difficult situation and assured the complainant that they take
their responsibility in considering the complaint seriously and have weighed
the merits of what has been done and what is being sought. That is why the
Tribunal has asked a lot of questions and if there had been an error in the
calculation the Chair would be seeking a rectification of that error. The
motion before the Tribunal acknowledges that staff have applied the development
charges in accordance with the rules and there is no wiggle room.
The Chair then called for a decision with
respect to the complaint.
RECOMMENDATION:
That after convening as a
Tribunal under section 26 of Part IV of By-law C.P.-1473-212, and pursuant to
By-law A.-6361-177 that would delegate the hearing to the Corporate Services
Committee from the Board of Control, to hear a complaint from Junction Climbing
Centre Inc. regarding the development charge imposed by The Corporation of the
City of London in connection
with development on the land known as 1030 Elias Street, as detailed in the
Record of Proceedings, the complaint BE DISMISSED on the basis that the
Tribunal finds that the development charge was properly imposed in accordance
with the applicable by-law.
ADJOURNMENT
The Tribunal adjourned at 3:26 PM.