Parkland Dedication on Commercial and Industrial Development in Ontario: How Much Land (or Cash) the City Can Take

The Planning Act caps it at 2% of the land for commercial and industrial projects. Whether your project pays that, pays nothing, or pays a residential rate depends on what you are building. Five project types, walked through one at a time.

I’m Arthur Zhao, a real estate broker in Toronto.

Picture one investor holding three Toronto properties: a vacant lot zoned for employment uses, a two-storey office building from the 1980s, and a tired strip plaza. Each has a plan. The lot becomes a distribution warehouse, the office building gets an addition, the plaza is torn down and rebuilt. The Planning Act gives the City the same ceiling on all three, and yet the parkland line on those three projects can come out as nothing for the warehouse, nothing or a full charge for the addition depending on its size, and a cash payment tied to land value on the day before the first permit for the plaza.

The reason is that the province only sets the maximum. What a given project actually owes is decided by the municipality’s own by-law, and the by-law sorts projects by type before it ever applies a percentage. So instead of reading the rules top to bottom, this article runs five typical (fictional) projects through them and lets the mechanics show up where they bite. Toronto is used as the worked example because its by-law is published in full; other municipalities write their own.

The rulebook every project is measured against

Planning Act s.42(1) lets the council of a local municipality, by by-law, require land to be conveyed for park or other public recreational purposes as a condition of development or redevelopment. The amount may not exceed 2% of the land where it is proposed for commercial or industrial purposes, and 5% in all other cases. Under s.42(6), council may take a payment in lieu instead, equal to the value of the land that would otherwise be conveyed.

In Toronto, the by-law is Article III of Municipal Code Chapter 415, adopted by By-law 1144-2022 and in force since August 15, 2022. Its §415-22 sets 5% for residential uses and 2% for non-residential uses, and §415-30 lists the kinds of development the article does not apply to at all. That exemption list is where several of the five projects below are decided. (The figures here are from the Chapter 415 text dated June 26, 2025; check the City’s current version before relying on it.)

Two neighbouring levies are separate from parkland and are not covered here: development charges and community benefits charges. Site plan approval, which sets one of the key dates below, is also its own process.

Project A: a new distribution warehouse in Toronto

This one can come out at zero. §415-30A(8) of Chapter 415 exempts Industrial Uses from the parkland article. §415-21 defines Industrial Uses as land, buildings or structures used for or in connection with manufacturing, producing or processing goods, warehousing or bulk storage, self-storage facilities, distribution centres, truck terminals, and research and development connected to manufacturing. Office space and sales to the public count as part of the industrial use where they are accessory and subordinate to it.

The definition also draws two hard lines. It does not include a building used exclusively for office or administrative purposes unless it is attached to an industrial building, and it does not include warehouse clubs or retail warehouses, meaning businesses whose principal use is selling goods in a warehouse format. A big-box store with racking is therefore on the commercial side of the line, not the industrial side.

The exemption is not automatic in practice. §415-30C puts the onus on the owner or applicant to produce evidence, to the City’s satisfaction, that the exemption applies. Outside Toronto, the provincial ceiling for the same warehouse is still 2%; whether anything is owed depends on that municipality’s own by-law and its exemptions, which this article has not reviewed.

Project B: a new retail plaza on the same Toronto block

Retail is non-residential and not industrial, so the Toronto rate is 2% of the land to be developed (§415-22B). Where 2% of the site would not make a workable park, the by-law has an answer: under §415-24A, where the size, shape or location of the land is unsuitable for park purposes, Council may require cash in lieu. §415-27 authorizes the General Manager, Parks, Forestry and Recreation to set the specific combination of land and cash on a site-by-site basis.

What the cash is. Under s.42(6) it equals the value of the land that would otherwise have been conveyed, so it moves with land value, not with construction cost. Section 42(6.4) fixes the valuation date as the day before the first building permit is issued, and Toronto’s §415-29C says the same. According to the City of Toronto Municipal Code (Chapter 415, 2025), appraisals are carried out under the direction of the Executive Director, Facilities and Real Estate, using generally accepted appraisal principles, and the owner pays for any appraisal the City undertakes (§415-29A and B).

Which version of the by-law applies. Section 42(2.1) fixes the amount as it would be determined under the by-law on the day the site plan application was made; if there was no site plan application, the day a zoning by-law amendment application was made; otherwise, the day the first building permit was issued. Under s.42(2.2), that holds even if the by-law in question is no longer in effect when the land is conveyed or the cash is paid. The protection has an expiry: under s.42(2.4), if more than two years have passed between approval of the site plan or rezoning application and issuance of the first building permit, the application date no longer controls.

My reading, not a rule: s.42(2.1) fixes which by-law amount applies, and s.42(6.4) fixes the date the land is valued. The statute does not spell out how the two interact. On a plain reading, the rate can be locked at the application date while the dollar figure is set by land value on the day before the first permit. If that gap matters to your budget, confirm the City’s position in writing.

When it has to be paid. §415-28 requires the conveyance or payment before the first above-ground building permit is issued, and s.42(6.1) says no one may construct a building on the land until the payment is made or arrangements satisfactory to council are in place.

Project C: adding to an existing office building

Project D: retail at grade, apartments above

A mixed-use building on one parcel draws two rates at once. Toronto’s §415-22C says that where a single parcel is developed for both residential and non-residential uses, the respective rates are allocated proportionally according to the floor space of each use. The retail floors carry the 2% non-residential rate; the residential floors carry the residential rate.

The residential share is where the numbers can climb. At the provincial level, s.42(3) allows a by-law to set an alternative rate based on residential units, and that alternative applies only to land proposed for residential purposes; commercial and industrial floor space never moves onto it. In Toronto, §415-23 applies an alternative rate to residential development in parkland acquisition priority areas, and §415-21 defines those areas to include Mixed Use Areas and Avenues in the Official Plan. The residential calculation is its own subject and is not worked through here. The point for a commercial owner is that adding residential floors changes the parkland calculation for the whole parcel, not just the new floors’ share.

Project E: the industrial site that later goes residential

The general rule protects land that has already contributed. Section 42(7) says that once land has been conveyed, or a payment in lieu received or owing, under s.42 or as a condition under s.51.1 or s.53, no additional conveyance or payment can be required for later development of that land. There are two exceptions: (a) a change that would increase the density of development, and (b) land originally proposed for commercial or industrial purposes that is now proposed for other purposes.

A rezoning from industrial to residential falls under exception (b). Section 42(9) then requires that what was already conveyed or paid be included in determining the new requirement, so the earlier contribution counts toward the residential one; it does not disappear. If the owner and the municipality disagree on the amount, s.42(11) lets either party apply to the Ontario Land Tribunal for a final determination. Toronto’s §415-29D gives the same credit for land conveyed or cash paid, and its definition of development in §415-21 expressly includes converting a building originally proposed for an exempted or non-residential use to another use.

One consequence follows from combining those texts (an inference, not a stated rule): if the site was a Toronto warehouse that was exempt as an Industrial Use, nothing was conveyed or paid, so there is nothing to credit when the residential project arrives. The full residential requirement would then apply to the conversion.

A tool that cuts across all five: offering specific land instead of cash

Since July 1, 2026, owners have had a statutory route to propose which part of their land goes to the municipality. Sections 42(4.30) to (4.39) were enacted in 2022 but brought into force on that date by Order in Council 933/2026. Under s.42(4.30), at any time before a building permit is issued, an owner may identify part of the land to satisfy the parkland requirement in whole or in part. Section 42(4.31) allows that land to be part of a parcel that abuts other parcels, land subject to an easement or other restriction, land encumbered by below-grade infrastructure, or an interest in land short of full ownership that is enough to allow park use.

According to Ontario Regulation 509/20 (as amended by O. Reg. 207/26, 2026), the owner must supply a plan of survey by an Ontario land surveyor, a description of existing or proposed easements and below-grade infrastructure, and a statement on whether the land meets the prescribed criteria. Those criteria, in s.11 of the regulation, include no contaminants posing a risk to human health, enough soil depth and volume for trees, public access at all times and visibility and direct access from public land, and a size and shape appropriate for a park.

If the municipality refuses, it must give notice (the regulation requires that within 20 days of its decision), and the owner has 20 days from that notice to appeal to the Ontario Land Tribunal under s.42(4.35). If the Tribunal finds the criteria are met, it orders the conveyance and the land counts toward the by-law requirement despite anything in the by-law. Under s.42(4.38.1), added in 2026, encumbered land or a partial interest conveyed this way is counted at its area multiplied by 0.7, or a larger factor if the municipality chooses. Toronto’s §415-26B, in the June 2025 text, still says conveyances must be free of liens and encumbrances; for a Tribunal-ordered conveyance, the statute’s “despite any provision of that by-law” wording controls.