There’s a growing public perception that cities always lose to developers in appeals at the Ontario Municipal Board, but don’t tell that to Brendan O’Callaghan, a lawyer with the City of Toronto. “I win over 80 per cent of my hearings,” says O’Callaghan, who’s usually involved in 20 to 25 hearings a year. “I’m pretty happy with the treatment I get at the board.”
He says the public perception that Toronto gets the short end of the stick at OMB is simply wrong. O’Callaghan, whose practice is almost exclusively before the OMB and covers development applications and expropriations, recently defeated RioCan, a retail real estate trust, in its efforts to build a large retail format store in the Dundas and Bathurst area of Toronto, the heart of west end downtown.
There have been a number of other cases where Toronto city planning prevailed over developers.
Developers were beat back in their attempts to build big box retail on Toronto port lands. An attempt by Top of the Tree Developments Inc. to build a 25-storey tower on the northwest quadrant at Yonge and Eglinton, a major transit hub and an area already dotted with skyscrapers, failed because parts of the land needed for the project are designated neighbourhood. The OMB ruled it wasn’t in the public interest or the principles of good planning to change that.
Nonetheless, municipalities do take their lumps at the OMB. In a bid to stop urban sprawl, Waterloo Regional Council proposed opening up only 197 acres to development. Developers took issue with the formula the region used to arrive at that figure and challenged it. In January, the OMB sided with the developers’ methodology and ordered more than 2,500 acres be made available. The region is now appealing to the Ontario Divisional Court.
A lightning rod for criticism
When it comes to development in Ontario, the OMB, which dates back to 1906, is the lightning rod for public criticism. In fact, few Canadian adjudicative tribunals are as excoriated as Ontario’s arbiter of planning. Developers bemoan the cost of going to the board and the inconsistency of municipalities in their decisions. Politicians accuse developers of being bullies and dislike seeing an “unelected” body overturn their planning choices. Members of the public generally oppose change to their neighborhoods and simply don’t understand the process, often feeling shut out. The OMB brings together this volatile mix of passions, politics, and self-interest, which can quickly explode like a bad marriage when a high-profile development is proposed.
For city solicitors, that handful of internal lawyers at developers and their external law firms who practise before the OMB, it presents a challenging environment: one that is always under the microscope and subject to political whim.“It is challenging, but it is also very rewarding,” says Mary Ellen Bench, city solicitor for the City of Mississauga. “You get to be part of all this building. It is quite amazing.”
Call for reform
But there is a growing call for OMB reform, something politicians in Ontario have been grappling with for decades. City councils in Toronto and Mississauga are so upset by the OMB process they have both passed motions seeking to be freed from its clutches. Queen’s Park has heard the clarion and is weighing two private members bills. Conservative MPP Frank Klees proposed bill 41, which would prevent municipal rulings involving intensification from being appealed to the OMB (intensification is planning jargon for increasing the population density in cities).
NDP member Rosario Marchese, who represents a downtown Toronto riding, wants to go further. His bill, which has passed second reading, would carve out Toronto from under OMB’s oversight.
Marchese says “the fundamental issue is that cities should have the power to settle land-use disputes. Cities should have the power to be able to do their own planning in a way that is best suited for them.” He cites a paper presented at a Canadian Political Science Association conference in 2009 that found developers win 64 per cent of the time at the OMB. “It’s the people with money who tend to win. It’s just the way the system works. It’s not a level playing field. It can never be a level playing field,” he told the house during debate on his bill, which will now go to a committee for further study.
In an interview, Marchese says Toronto has a $10-billion budget and a big planning department. Thousands of hours are being spent on planning appeal issues. “Those hours are wasted and the money could be used for better planning.”
He argues developers build the cost of going to the OMB into their project’s budgets, which makes them quick to pull the appeal trigger when turned down by council.
Marchese says there is an appetite at Queens Park for OMB reform, supported by comments during the debate involving his legislation.
“Toronto isn’t the only place that complains about the powers of the OMB. I guarantee because of my bill the debate is on and there’ll be changes to the OMB. I have no doubt about it.”
While few people advocate scrapping the OMB, many concede there is a need to change aspects of the way the country’s most populous province manages its development appeals.
Finding the right balance is not an easy task. That’s because the OMB has one of the most difficult jobs of any adjudicative tribunal in the country, experts say.
A 2009 Ontario Bar Association report to the provincial standing committee on government agencies found the OMB derives powers and duties from more than 42 different pieces of legislation. A 1971 Royal commission report once quipped “. . . it has often been the practice of successive legislatures that when faced with the necessity of creating a jurisdiction to cope with a particular problem, to assign the problem to the municipal board.”
Then there are the conflicting policy issues. The OMB must maintain the delicate balance of provincial planning initiatives and policies, with those of local councils and the politics that entails. It’s foreboding and an effort that often leaves participants dissatisfied on both sides of the debate, which suggests the board works as well as can be expected given the legislative and policy labyrinth.
A necessary evil
“It’s a necessary evil,” says James McKellar, associate dean, external relations, at the Schulich School of Business. “It is the only protection against the irrationality of political decision-making,” he says, especially in Toronto. “I do see it as a safeguard against the kind of wonton disregard for planning principles by council,” says McKellar, an architect who runs the infrastructure and real property program at the school.
He didn’t always feel this way. When he arrived 20 years ago from the United States (and before that Alberta), he didn’t understand the need for the OMB. “It’s an anomaly in the approval process,” he says, noting Ontario is the only province with such a tribunal. In Alberta, council delegates major decision-making to a planning commission of experts and from there, appeals go to a development appeal board, which has technical expertise.
However, he says, cities like Toronto have been “hijacked by ideology, both right and left.” The problem with the Ontario system, he says, is local politicians have too much say, which “leads to let’s make a deal. The mediocrity in the planning process is appalling. I don’t think anyone can look at what we built in the last 15 years in Toronto and say it’s really good.”
Mark Karam, vice president and general counsel at Menkes Developments Ltd, agrees the ward system for electing councillors impacts development decisions.
He notes in places like Toronto, councillors are elected by each constituency, rather than across the city. That means a politician might support a project in principle, but fear local voter wrath so votes against it, even though the project meets the criteria of a city’s official plan. That leads to many of the appeals that hit the OMB.
“Politicians fear the backlash of the community,” he says. “As long as you have a system where councillors are not elected at large, I don’t think you can extricate yourself from political decisions unless you have an impartial third party.”
Karam, who is responsible for land acquisition and approval, says one of the reasons why the OMB is under fire is there’s been a lot of development in the last 10 years.
Adding to the pressure have been major provincial legislative reforms, for example, the focus on intensifying development within cities. In 2002, Ontario passed legislation restricting development on the Oak Ridges Moraine, a 1,900-sq- km ecologically sensitive land mass from Brampton to past Cobourg: the densest, most populated part of the province.
The government followed up with the Greenbelt Act, 2005, which included restrictions on more ecologically sensitive areas, and introduced the Places to Grow Act in 2005, which designates growth plan areas, such as the Golden Horseshoe. In 2006, the province introduced major amendments to the Planning Act, requiring municipalities to have their official plans conform with provincial growth plans, all of which is now impacting the OMB, particularly intensification and allowing re-developments within city borders.
Toronto’s O’Callaghan notes the Greater Toronto Area needs to accommodate one million more people over the coming decade. “The corollary of no development on the Oak Ridges Moraine means intensification of downtown Toronto.”
As developers look to acquire and re-develop existing properties, neighborhoods get encroached upon and voters get mad. Marchese believes developers are eager to bypass council and get to the OMB. Karam disagrees. “We don’t like to go to the board. We want work it out with community and residents. Sometimes it’s not possible.”
The OMB process is expensive — some estimates put it at $250,000 a week depending on the nature of the hearing. “If I am coming to the board without a solid chance of winning, then I am an idiot,” Karam says bluntly.
Chris Tzekas, a municipal lawyer with WeirFoulds LLP, agrees the process can use some reform, but people who call for scrapping the board or removing cities from its oversight don’t understand the implications.
Sometimes the conflict with a planning decision is between different levels of government. Sometimes it’s even within government departments and there is a need for a body to sort out those disputes.
“The courts are extraordinarily un-interested in this stuff. They want it to be dealt with in the first instance by a specialized tribunal,” says Tzekas.
The costs of creating an appeal board at a city level that would protect the rules of natural justice are onerous, says Jane Pepino, a municipal lawyer at Aird & Berlis LLP. She estimates it would cost thousands of dollars to file an appeal under such a system, rather than $125 before the OMB.
As well, experts like McKellar say the province needs a third party to keep the city politicians honest in their decision-making so planning isn’t caught up simply in politics, but adheres to the official plans and rules in place, which is what the OMB tries to do. Karam notes developers want consistent rules and to have them applied fairly.
Pepino blames structural issues for some of the public dissatisfaction. She notes the OMB, a quasi-judicial tribunal, is constantly criticized, unlike the judiciary. “Nobody is calling to do away with the Supreme Court of Canada,” she notes.
She recalls a hearing where a woman stood up and used the term “morally bankrupt” when speaking of the board’s decision-making powers. “Nobody would say that of a judge. The board has lost the protection of prestige.”
So what needs to be done? Lawyers interviewed for this story suggest key changes would make a difference.
Trial de novo or appeal?
Mississauga’s Bench notes there is “no real clear definition of what the OMB is supposed to do in terms of its role.” Does it hear cases de novo or is it merely an appellant body that limits its review of counsel decisions? Currently, the board hears matters that have already been mooted at council and relies on experts, similar to a judge at trial. A Divisional Court ruling in City of Ottawa v. Minto Communities Inc. dealing with Planning Act amendments found the OMB need only “scrutinize and carefully consider” a council’s decision, as opposed to giving it a narrow, deferential treatment, the way a court reviews administrative body ruling.
Another reform is eliminating appeals for minor variances. They take up more than 30 per cent of the board’s appeals. “Two neighbours fighting over a deck coming too close to their side yard is apt to take a day,” notes Tzekas. “I am not entirely convinced that a full judicial process for something like that is necessary.”
Pepino also thinks the board needs structural bolstering and more resources. She would like to see the appointment process modified to attract different candidates. “The board has lost its ability to demand and secure public confidence because its members are no longer appointed as judges are. They are no longer paid the way judges are.” She says the three-year appointment term is too short. “Who the hell is going to give up his senior career for a three-year contract?” she asks. “This is not [an appointment] that has any sort of certainty and no sense of independence.”
While much of the fighting over the OMB’s role in local planning stems from councils in the GTA, O’Callaghan welcomes the debate because the alternative isn’t attractive. There are Ontario cities that don’t have people clamoring to convert their industrial land to retail, he notes. “I have to say in the City of Toronto, we’re lucky in that everybody wants to be here. Developers want to build tall buildings. It’s where everybody wants to live. It’s a function of where the activity is.”
Adds Karam, “If you abolish the board, I think development in the province comes to a standstill. I don’t think people appreciate how much is tied into the development and construction industry in this province in terms of the economic engine. To go to a process where you are leaving it in the hands of local politicians to make decisions at the end of the day is a nightmare scenario. I don’t think anybody wins.”
OMB Fast Facts
The Ontario Municipal Board is one of the country’s oldest adjudicative tribunals.
It has a broad mandate covering everything from appeals involving minor variances to consents, zoning bylaws, fights over official plans, zoning refusals, subdivision plan approvals, development charges, and compensation fights in expropriation.
Much of its activity centres on the greater Toronto area, with 46 per cent of new cases in 2011–12 generating from the GTA, 30 per cent of which are attributed to Toronto matters. Ottawa accounts for nine per cent and Niagara six per cent.
Last year, it opened 1,527 new files, which amounted to 1,997 appeals. Variances led the way with 30 per cent of the appeals, followed by official plans (19 per cent), consents (16 per cent), zoning bylaws (14 per cent), and zoning refusals (6 per cent). The rest fell into a number of categories, such as land compensation and development charges.
The board held 2,026 hearings, a nine per cent increase from 2011, and there were 90 mediations, up from 73 the year before.
Most minor variances have a first hearing within 120 days of being filed, compared with 180 days for other applications and appeals.