A proposal to charge developers extra for oversized projects passed a planning committee vote Tuesday and is expected to pass a city council vote at the end of March.

Coun. Stephen Blais says that with taller buildings coming into the downtown core, the Section 37 guidelines could help pay for community improvements there. (CBC)

The Section 37 guidelines apply to projects with 7,000 square metres of space or more. The exact financial formula hasn't been finalized, but essentially, the proposal calls for developers to put aside roughly 15 to 30 per cent of the value of any significant height or density rezoning application (an increase of 25 per cent or more) to pay for community benefits such as daycares or community centres, or to hand the city a cheque to achieve the same.

Tuesday's planning committee green light came after seven years and two failed attempts. Many other cities in Ontario have already adopted the provincial guideline, and the city said the changes will help improve life in the downtown core.

"As we look to taller buildings in the downtown it could see the city benefiting by millions of dollars to pay for community improvements in those neighbourhoods where buildings go up," said Coun. Stephen Blais.

Guidelines could drive up housing costs: developers

But developers argued the measure would amount to little more than a new tax.

If the city wants community amenities, they said, it should pay for them with property taxes. By tapping into their profits instead, developers said they'd be forced to pass on that extra cost to homeowners by driving up housing costs.

"When you're dealing with anything government regulations and taxes, in the end, it's coming out of the consumers' pocket," said Neil Malhotra, vice-president of Claridge Homes.

Community associations largely approved the plan, but said they're worried about potential loopholes. For example, developers might think that simply constructing an open plaza might count toward a community amenity.

They also want the financial formula negotiations between the city and developers open to the public.

Planning committee chair Coun. Peter Hume also said residents shouldn't fear a rush of major rezoning applications because developers can simply cut a cheque.

"They don't need to be worried about that because we don't expect that to happen on a lot of sites," Hume said. "This is going to be the exception and not the rule."

John Moser, the city's general manager of planning and growth, said the guidelines won't amount to density giveaways and aren't expected to make large quantities of money.

"This is a culture change — a new way of doing business for significant buildings," Moser said.

City council was scheduled to vote on March 28. If passed, the guidelines would take effect April 1.