Development Incentives

Section 37 is a way for municipalities and developers to help fund community projects

Increasingly, in Canadian cities with strong development activity, there is a way for developers to contribute to arts projects through what is called in Ontario ‘Section 37’.  This refers to Section 37 of the Planning Act, a ‘density-for-benefit’ agreement introduced by the province in 1983.

In exchange for being allowed to build higher or with greater density than typically permitted, developers agree to include community benefit amenities in their projects, which can include parks, affordable housing, heritage preservation, or arts facilities (among others). In Toronto, ward councillors can negotiate cash and in-kind benefits from developers seeking adjustments to zoning regulations.

The approval process: how it works

Section 37 agreements are negotiated on a case-by-case basis. Here is the process:

  1. The developer approaches the city planning department to increase the density on the site to greater than what is permitted by the zoning bylaw.
  2. If the city planner agrees, the value of the additional density at that particular site is appraised.
  3. In many cases, the city planner tries to secure 15 to 20 per cent of the value for Section 37 benefits from the developer.
  4. The councillor approaches the developer with a list of benefits or amenities that they would like to secure, which they negotiate.

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