Drafting Agreements II: Everything You Still Wanted To Know, But Were Afraid To Ask

Transcription

1 May 2013 Municipal Law Section Drafting Agreements II: Everything You Still Wanted To Know, But Were Afraid To Ask Aaron Silver The Municipal Law and Real Property Sections held a joint dinner program on Tuesday October 30, The program was a sequel to the very successful Drafting Agreements: Everything you Wanted to Know But Were Afraid to Ask. The program consisted of a panel discussion regarding: Section 37 agreements under the Planning Act, presented by Brian Haley, Solicitor for the City of Toronto; Effectively drafting and negotiating crane swing and tieback agreements, presented by Alon Eizenman, Legal Counsel at Plazacorp Investments Limited; and Avoiding liability when negotiating, drafting and reviewing developer cost sharing agreements, presented by Kimberly Beckman of Davies Howe Partners LLP The program was chaired by John Mascarin of Aird & Berlis LLP and Nili Birshtein of Stikeman Elliot LLP. Section 37 Agreements Mr. Haley s presentation focused on the steps one must undertake to successfully negotiate a section 37 agreement with the City of Toronto. In particular, Mr. Haley utilized the City of Toronto s Implementation Guidelines for Section 37 of the Planning Act and the Protocol for Negotiating Section 37 Community Benefits to assist in describing the process. Section 37 of the Planning Act permits a municipality to pass a zoning by-law to authorize increases in height and density of a development beyond what would otherwise be permitted. In return, the developer must provide such facilities, services or matters as are set out in the bylaw. The agreement secures the developer s obligations to provide the public amenities and may be registered on title and enforced against subsequent owners. Implementation Guideline Requirements Before the developer and municipality can arrive at a section 37 agreement, several considerations must be taken into account.

2 2 First, all projects being considered for section 37 must represent good planning. As such, the use of section 37 must be contingent upon a project conforming to the City s Official Plan and the existence of adequate infrastructure within the community to support the development. There should be an expectation going into negotiations between an owner/developer and the City that inappropriate height and density increases will not be approved regardless of the community benefits offered. The acquisition of an impressive benefits package from an owner/developer does not create good planning. Second, community benefits secured should have a reasonable planning relationship to the increased density and/or height of the development. The City guidelines outline that at a minimum the planning relationship includes having an appropriate geographic relationship in addition to addressing planning issues in connection with the development. Community benefits ought to maintain the quality of life enjoyed in the affected area of the City prior to the intensification. Protocol for Negotiating No formula exists for determining the quantum or form of section 37 benefits. As a result, agreements are negotiated on a case-by-case basis. The Ward Councillor as well as the City Planning staff should always be consulted prior to the negotiation of benefits. The Ward Councillor has a role in determining what benefits ought to be secured for the community and the City Planning staff are responsible for ensuring the Official Plan policies are being complied with. The City Planning staff is tasked with submitting to Council a recommendation of an appropriate package of community benefits. Section 37 agreements are prepared by City planning lawyers. Agreements will typically be executed prior to the introduction of the by-law in Council seeking the rezoning of an area for increased density and/or height, but not before the provision by the developer of a standard form title opinion. The payment by a developer of the cost of the community benefits may be deferred. The zoning by-law amendment does not take effect until the agreement has been registered on title. Additionally, should a developer choose to defer payment, the City will often withhold the building permit until such time as the required payment under the agreement is made. The City seeks to comply with the applicable law requirements by incorporating all of the section 37 benefits within the zoning by-law that is passed by Council. In concluding his remarks, Mr. Haley stressed the City s goal of achieving greater consistency in using section 37 agreements, including a standard form agreement. Crane Swing and Tieback Agreements Mr. Eizenman s presentation focused on the elements of crane swing and tieback agreements and matters to consider when negotiating such arrangements. At the core of both crane swing and tieback agreements is the provision of a licence that permits a temporary, limited interest in land in exchange for consideration and an indemnity in the event of damage resulting from the crane or tieback. Crane swing agreements require two elements in addition to those considered above:

3 1. whether the agreement covers the boom only or both the boom and the load; and 2. a description of the licensed area. Tieback agreements require the inclusion of three additional elements: 3 1. a determination of the ownership in the rods and anchors left in the subsurface of the neighbouring property; 2. de-tensioning of the tieback; and 3. restoration of the licensed area in the event of damage. Issues to Consider During Negotiations Mr. Eizenman outlined several issues to consider when negotiating tie back agreements. First, though there is no standard payment amount, so long as the parties to the negotiation are reasonable, the costs are not typically overbearing. In cases where the neighbouring property owner is not being reasonable, there are alternatives to an agreement. Though more costly, rakers can be installed to perform the same function as tiebacks. To avoid a crane swing agreement, the crane can be swung the other way. In addition to payment, one must be cautious to document the condition of the land before beginning any work to avoid in future claims of environmental contamination. Furthermore, one must ensure to secure licenses from other parties, such as the City, in the event that additional parties are impacted. Working Without an Agreement In the event that no agreement is secured but the crane or tieback is installed, a neighbour has the potential to take legal action. The Trespass to Property Act allows a neighbour to pursue damages even if no physical damage was incurred. Damages are, however, capped at $1,000 and any future claims would be extinguished. A second option would be to pursue a tort action. The potential remedy would be an injunction forcing the individual to remove the tieback. Furthermore, the municipality would refuse to issue a building permit to reinstall tiebacks until an agreement with the neighbouring party was reached. Negotiating, Drafting and Reviewing Developer Cost Sharing Agreements Ms. Beckman s presentation focused on ten tips to follow in order to avoid an LPIC claim when negotiating, drafting and reviewing developer cost sharing agreements. Her suggestions include: a) Make sure to warn the client not to ride the coattails of other parties as doing so often results in the client s interests being pushed aside. b) Never assume the client knows the law, even if the client has been in business for a long time.

4 4 c) It is important to adhere to the client s directions and not pursue issues a client would prefer to leave aside. As long as the client has been advised of his or her rights, responsibilities, and risks, it is not the lawyer s job to exert undue influence. d) It is essential to read the boilerplate clauses of developer cost sharing agreements. The boilerplate provisions are just as enforceable as the case-specific clauses in an agreement. e) Legislation gets revised quite frequently. Therefore it is critical to read all of the applicable legislation prior to entering into an cost sharing agreement. f) Inserting an assurance received into several agreements may result in the provision getting watered down or becoming inconsistent. When possible, to avoid this situation, leave the assurance in one agreement. g) When using a precedent agreement, do not assume it was drafted properly or that the content is appropriate for the applicable arrangement. h) One should not presume to have all the experience and knowledge necessary to provide advice on a multi-dimensional agreement brought by a client. It is beneficial to consult with other counsel who specialize in areas one may not be familiar with. i) Keep sentences in an agreement short and be sure to write in plain English. j) Fighting every last detail to death is not beneficial if one does not take the big picture into account. Conclusion Each speaker concluded with a question and answer period. Some of the issues discussed included: 1. the recourse if after securing a section 37 agreement, the project is downsized; 2. whether section 37 agreements amount to a shakedown of developers; 3. the safety provisions built into crane swing agreements; 4. the treatment of positive covenants intended to run with the land in a developer cost sharing agreement entered into between or amongst neighbouring land owners; and 5. the likelihood of damages being awarded where no crane swing agreement existed, but the crane in question had no load. Aaron Silver, Student-at-Law, Aird & Berlis LLP

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