Legislative Assembly of Ontario

COMMUNITY ECONOMIC DEVELOPMENT ACT, 1993 / LOI DE 1993 SUR LE DÉVELOPPEMENT ÉCONOMIQUE COMMUNAUTAIRE

MINISTRY OF MUNICIPAL AFFAIRS

CONTENTS

Monday 23 August 1993

Community Economic Development Plan, Bill 40

Ministry of Municipal Affairs

Drummond White, parliamentary assistant to the minister

Tania Melnyk, director, community development branch

Larry Clay, manager, program management section, community development branch

Tim Burns, senior adviser, community development branch

Dale Taylor, senior economist, municipal finance branch

Diana Dewar, manager, municipal planning policy branch

Kelly Yerxa, solicitor

James Loken, solicitor

STANDING COMMITTEE ON GENERAL GOVERNMENT

Chair / Président: Brown, Michael A. (Algoma-Manitoulin L)

*Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)

Arnott, Ted (Wellington PC)

Dadamo, George (Windsor-Sandwich ND)

Fletcher, Derek (Guelph ND)

Grandmaître, Bernard (Ottawa East/-Est L)

*Johnson, David (Don Mills PC)

*Mammoliti, George (Yorkview ND)

Morrow, Mark (Wentworth East/-Est ND)

Sorbara, Gregory S. (York Centre L)

Wessenger, Paul (Simcoe Centre ND)

*White, Drummond (Durham Centre ND)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Haeck, Christel (St Catharines-Brock ND) for Mr Morrow

Hope, Randy R. (Chatham-Kent ND) for Mr Dadamo

Jackson, Cameron (Burlington South/-Sud PC) for Mr Arnott

Jamison, Norm (Norfolk ND) for Mr Fletcher

Phillips, Gerry (Scarborough-Agincourt L) for Mr Sorbara

Poole, Dianne (Eglinton L) for Mr Grandmaître

Wiseman, Jim (Durham West/-Ouest ND) for Mr Wessenger

Clerk / Greffier: Carrozza, Franco

Staff / Personnel: Anderson, Anne, research officer, Legislative Research Service

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The committee met at 1306 in the Humber Room, Macdonald Block, Toronto.

COMMUNITY ECONOMIC DEVELOPMENT ACT, 1993 / LOI DE 1993 SUR LE DÉVELOPPEMENT ÉCONOMIQUE COMMUNAUTAIRE

Consideration of Bill 40, An Act to stimulate Economic Development through the Creation of Community Economic Development Corporations and through certain amendments to the Education Act, the Municipal Act, the Planning Act and the Parkway Belt Planning and Development Act / Loi visant à stimuler le développement économique grâce à la création de sociétés de développement économique communautaire et à certaines modifications apportées à la Loi sur l'éducation, à la Loi sur les municipalités, à la Loi sur l'aménagement du territoire et à la Loi sur la planification et l'aménagement d'une ceinture de promenade.

The Vice-Chair (Mr Hans Daigeler): I'll call the meeting of the standing committee on general government to order. We're here today to begin discussions and public hearings on Bill 40, the Community Economic Development Act, 1993.

MINISTRY OF MUNICIPAL AFFAIRS

The Vice-Chair: I understand that the minister is not able to be with us. He wrote a letter to the Chair of the committee making reference that he has to speak at the AMO conference, which I think is understandable. He has sent his parliamentary assistant, Mr White, who will be with us during these hearings and who I'm sure will be able to answer, with the help of the officials from the ministry, the questions of the committee members. Without further ado, Mr White, I think you want to make some opening comments.

Mr Drummond White (Durham Centre): It gives me great pleasure to enter the ministry's comments in regard to the Community Economic Development Act. This is, we hope, a positive thrust for municipalities and for local economic sustainability.

The Community Economic Development Act is an important part of the government's three-year, $300-million Jobs Ontario Community Action program. The philosophy behind both Jobs Ontario Community Action and this bill is that communities themselves, building on their talents, their interests and the resources of all their diverse members, are best equipped and best able to stimulate local economic activity.

Bill 40 covers three main areas. First, it provides a means and support for communities wishing to build upon financial capability and capacity. Second, it attempts to assist economic recovery through streamlining the plans approval process. Finally, it creates a municipal role in building economic capacity and expands the way that municipalities can provide municipal infrastructure and investment.

Let's talk for a moment about how the Community Economic Development Act provides tools to help communities invest in themselves.

It has become apparent that there are very many good ideas for local development out there, but the very people who have these good ideas often can't get the capital they need to pursue them. Traditional financing institutions often do not meet the needs of entrepreneurs, and many enterprises do not have access to credit or equity financing. This can create an almost insurmountable barrier for those at the entry level to our economy. These barriers are particularly problematic as our communities struggle to recover from the effects of the recession and free trade.

This legislation will help communities overcome that barrier. It gives communities the means to raise their own investment capital and to forge new economic partnerships to provide capital for entrepreneurial opportunities. The legislation makes available a series of tools and mechanisms to help communities build financial capacity. Now, more than ever, such innovative mechanisms are essential.

Two such mechanisms can be created under this legislation: the community loans funds and community investment share corporations. Although these corporations are created under other existing legislation, Bill 40 provides special features including a registration process and other provisions whereby the minister can regulate their operations and activities; a provision for government guarantee of the principal of the securities of these corporations; provisions to protect persons investing in community loan funds and community investment share corporations; and new enabling authority to permit municipal involvement.

Community loan funds, or CLFs, will give local investors a chance to support small businesses in their community. They'll provide credit for those at the entry level to the economy by encouraging members of the community to invest in guarantee pools on deposit at local financial institutions. These guarantee pools will be used to secure loans for local enterprises, generally less than $15,000. When we speak of an entry level, we should remember that this applies to many older workers who are retraining just as much as it does to youth who are trying desperately to gain their first taste of economic self-sufficiency.

The boards of directors of community loan funds will have broad community representation and be responsible for reviewing and making final decisions on loan guarantee applications. Loans will be administered by existing financial institutions which agree to work with the board. Money will be raised by the selling of notes. Local investors who put money into these funds will have their principal guaranteed by the province.

The province will also provide startup funding, operating support and technical assistance to sponsors establishing community loan funds.

Borrowers will be eligible for community loan fund assistance if they are unable to obtain financing through traditional channels and have a business plan acceptable to the community loan fund board. They will also need to demonstrate a clear link between the loan and self-employment or the creation of new hiring. The fund will provide ongoing assistance to borrowers through the term of the loan.

Sponsors may include a variety of groups, from local governments and community groups to labour or business.

Community investment share corporations, or CISCs, will be vehicles that provide equity investment in small to medium-sized businesses. These CISCs, which will be set up by local groups, will raise equity funding of up to $500,000 for local business startups and expansions. CISCs will seek out investors to purchase shares and, in turn, invest the capital in new or expanding local businesses. The CISC will be a for-profit corporation.

Sponsors of the CISC may be, for example, a municipality, a cooperative or an incorporated community-based group.

The CISC, to be governed by a board of directors, will solicit investors through a share document similar to a prospectus. The share purchase will be for a fixed term of up to seven years. The CISCs will be limited to a minority position in terms of the equity capital invested in the target company and voting control of that company.

The initial capital invested by local citizens in CISCs will be guaranteed by the province. The province will also provide startup funding and technical assistance to sponsors establishing a CISC. No rate of return will be guaranteed; the rate of return will depend upon the performance of the enterprise invested in by the CISC.

Out of the overall $300-million community action budget, we plan to allocate $10 million for community loan fund guarantees and $20 million for community investment share corporations.

By putting this money into the hands of communities and encouraging them to direct it where it will do the most good, we believe that the effect can and will be felt. We estimate that over the next five years, 40 community investment share corporations and 35 community loan funds will become operational in communities throughout Ontario. This will help communities contribute to the creation of nearly 4,000 jobs.

Bill 40 will also enable municipalities to participate in the establishment of non-profit community development corporations, nominate members of boards of directors and support corporate operations of those community development corporations.

The community development corporations will be focal points for a wide variety of efforts designed to simulate local economies. Among other things, the CDCs may coordinate implementation of community strategic plans; provide local leadership training and development; and promote and coordinate investment for priority projects and local businesses.

These corporations will mobilize people's time, talents and resources, helping to forge new partnerships, focus efforts and lead the way to stronger, more self-reliant communities.

Community development corporations will be operated by boards of directors that will reflect a wide diversity of community people and local organizations. Directors will be chosen by the membership, which will also include local governments, community groups, labour, business, educational institutions, cultural groups, credit unions, cooperatives, equity groups and other interested citizens.

The government will help interested communities establish these corporations. Some provincial funding will be available to help them get started.

In addition to these new mechanisms, the proposed legislation also facilitates good local investment through the Municipal Act and the Planning Act.

The legislation also amends the Municipal Act to allow municipalities to work with the private sector to finance facilities that benefit the entire community, such as community centre complexes, water and sewage facilities, roads and transit facilities.

Municipalities will also be able to make better use of pooled investment and borrowing arrangements among certain public sector institutions.

The Community Economic Development Act also includes amendments to the Planning Act that will save time and money and will contribute to economic renewal. The changes will contribute to a smoother and more efficient and effective planning and development review process.

This legislation is intended to support the strong, self-reliant local economies which are so important to the financial well-being of the province as a whole. This legislation gives local communities the tools they need to help lead the way to jobs, growth and economic prosperity.

I look forward to hearing my colleagues' comments and, of course, the presentations that will occur over the next few days.

The Vice-Chair: Mr Phillips, for the Liberal Party.

Mr Gerry Phillips (Scarborough-Agincourt): I too am looking forward to hearing from expert witnesses, the staff and interested parties on the details of the presentation.

There are several things in here that I think are encouraging and interesting. From our perspective, the economy will get rolling not by something that Queen's Park dictates but by individuals and individual corporations having good ideas and being able to expand and to grow. Community-based economic assistance I think is useful and one can't help but be very supportive of that.

Just in terms of the things that I think we'll be wanting to understand better and perhaps have the staff explain this afternoon, and as we have a chance to debate, we can find ways to either alleviate the concerns we might have or fix them.

On the loan program, I want to understand what the provincial guarantee will be around it. My experience in business is that indeed it sometimes is difficult to raise capital or to raise funds. On the other hand, one has to be careful that there are other disciplines when the loans are made, that we are looking at viable propositions, because you don't do anyone a favour, frankly, by loaning them money on a proposition that has a long risk of success or a big risk of failure.

I think we'll just want to make sure as we set these things up that the mechanisms for being helpful to the people these loan funds loan the money to are there. As I say, you don't do anybody a favour by loaning them money for a bad proposition, because most often people who are starting up businesses put an awful lot of their own cash and, obviously, energy into it.

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I think, similarly, on the equity proposal -- and maybe we will hear this afternoon how this will work. I think all of us love to own shares and things that are growing. It's only when you own shares in a thing that's losing money that you realize the shareholders are responsible in the end for the losses and, again, I want to know where the province's responsibility starts and ends on the investment share corporations and where we see that one heading.

Making it easier for municipalities and others to embark on creative capital projects is also, I think, an interesting possibility. The thing I think we have to realize is that in many cases, all we are doing is borrowing money in a different way. We had the debate last week here, Mr Chair, as you will remember, on Bill 17, where what Bill 17 was about was borrowing money in different ways. I go back to what I said last week, that when I was chairman of the school board there was just an endless number of private sector organizations that would love to build a school and lease it to the school board, just an endless number. The problem is that if the school board couldn't afford the capital in the first place, it couldn't afford the lease costs in the second place.

Similarly, I think we'll want to be careful as we structure this thing, particularly when -- there is, for example, an old rule of thumb on hospitals that two years' operating costs equals the capital cost of a hospital, so it isn't the capital cost of a hospital one worries about, it's the operating costs. One way in the past that operating costs have been controlled, or tried to be controlled, in health care was through capital. If we allow -- I'm not sure whether this bill does it for hospitals, but it does for other things -- the leasing of hospitals, which is the case in Alberta, I think -- many hospitals are built now by the private sector and leased -- I just think we will want to be careful that we don't kid ourselves that suddenly it helps to alleviate our financial challenges. It's just that we borrowed money in a different way and rather than paying off provincial bonds, we are paying off lease costs on developments.

There's a provision in here, as I recall it, for MPPs to comment on these proposals and I'd like to understand the merits of that and why MPPs are going to become involved in it. I think there may be some advantages in it; the disadvantage is, I think, that Ontario in the past has been seen to be an environment where ideas are based on merit, not on whom you know politically. I just want to be sure that we aren't running the risk of the proposals being accepted or rejected on the basis of what political party may or may not be involved in it.

The community development corporations are spelled out fairly sketchily in the bill and here in the opening remarks by the government. I'd like to, as we get into it, find out a little bit more about what these things are planning to do and what benefits will be available to the public.

I think it looks like it's an interesting and important bill. It talks to many of the issues that we've talked about in the Legislature, around how we can help to get the economy rolling, how we can have community-based economic development, and how we can have local communities involved rather than its being done out of Queen's Park. As we head down that road, I think we have a responsibility to make certain we do the best we can to make sure it'll work well. I've tried to outline for the committee some of the things we'll be looking at as we head into the debate.

The Vice-Chair: For the Conservative Party, Mr Johnson.

Mr David Johnson (Don Mills): I guess it's unfortunate that, to start with, this is taking place at the same time the AMO conference is taking place. I presume, number one, that has limited the participation of the minister and, secondly, I suppose there may be members, mayors and councillors from the various municipalities who may be interested in participating in this debate but are unable to because they may be participating in AMO. I don't know how that sort of situation could be addressed in the future, but it does seem a pity that the two events are going on at the same time and perhaps eliminating the possibility of some participation.

My comments may be somewhat similar to Mr Phillips's in that it seems to me there is some potential in this act. Certainly there is a tremendous need in our economy in this province for the small business sector to be successful. There is a huge job creation potential in the small business sector. I just can't recall the exact number, but I think well over three quarters of the new jobs that are going to be created, it has been estimated, will be with the small business sector. We certainly need to get people back to work and we certainly need to get the economy going, so there is a worthy objective behind this act if the objective is to achieve that, and I think that's what it is.

I might say in that regard that any actions taken will be aimed at overcoming some of the onerous taxes we have in this province, some of which were concocted in the budget this spring. It's interesting that this bill, being entitled Bill 40, is a bill to attempt to encourage the small business community.

I wasn't here last year, but I understand there was another Bill 40 that was before the Legislature --

Mr Phillips: I remember that.

Mr David Johnson: Mr Phillips remembers that bill before the Legislature last year which, by all accounts, had exactly the opposite effect, which was in fact to discourage the business community, to discourage small businesses and certainly to discourage investment in the province of Ontario. So that's just a wee bit ironical.

I'm interested in taking part in the debate over the next couple of weeks and hearing the deputations. Certainly, in terms of a critic role, I intend to be as fair as possible on this because I do think there is merit in the objectives. I think we have to be conscious, though, of these sorts of announcements which sometimes tend to be overblown.

I had an article somewhere in my pile of paper from the Toronto Star of last week which spoke to the Jobs Ontario program. It recounted the history of Fantastic Technology, which is a corporation in Scarborough, and there again the purpose was to be involved in job training, job creation, that sort of thing. This particular business was seeking a grant and received a grant of some $250,000. It claimed that it would install 30 new workers, get 30 people back to work in the province of Ontario.

Unfortunately, the announcement was made by the minister about six or seven weeks ago and today the office of Fantastic Technology is bare, all the telephones are out and nobody's employed. The whole thing went bankrupt, I gather. As I understand it, though, no grant money was paid out so at least the taxpayers are happy about that.

But I think it shows that we have to be very realistic and very concerned about the controls, about the discipline; I think Mr Phillips mentioned the discipline. We have to ensure that what we're dealing with is logical and makes sense.

This comes at a time, I might say, when taxpayers are particularly concerned about waste of government money, about government schemes that don't pan out. One only needs to mention the health care fraud that is a very deep concern to the people of the province of Ontario at the present time. Welfare fraud: We had two offices right here in Metropolitan Toronto, within the last couple of months, that did studies that indicated that welfare fraud was about 16%, which represents about $1 billion a year in tax dollars across the province of Ontario. We need only think of the Workers' Compensation Board and the fraud that is generally acknowledged to be taking place there.

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When we're setting up programs such as this, as legislators I think we need to be most cautious and ensure that the mechanism that is set up is one that doesn't lend itself to fraud or mismanagement.

Now, just one other general comment I guess I wish to make, that the basic premise behind the program seems to be that -- and indeed the statement by Mr White today indicated that the banking community is not satisfying the needs of the business sector. I won't dispute that, but I think we can carry that too far. You know, banks can become a favourite target in our society today and I think to some degree at all levels of government it's perhaps useful to find another villain we can shoot at. The general public is not happy with the way the federal government is being run, the provincial government is being run and in some cases even the municipal governments, so find a third party to shoot at and in many cases, I guess, that's the banking institution.

Mr Jim Wiseman (Durham West): They're a big target.

Mr David Johnson: Mr Wiseman apparently would agree. But I might say that if you were to ask the average person on the street who they would rather have investing their money in a business endeavour, particularly one with a higher-than-average degree of risk, and who they would rather have stewarding their money, would it be the banking institution or would it be this government? My guess is that 95% of the people would say, "Give me the banking institution every time." So I think maybe we should keep sight of that.

The banks don't run on continual deficits year in and year out. They have to meet a business plan and they have to put it in operation and be successful. So if the banks have turned down -- and this is one of the qualifications in this particular bill -- a business application, then it could be because they're not being responsive. That's a possibility.

Mr Wiseman: They won't even write anything under $5,000.

The Vice-Chair: Order, please.

Mr David Johnson: That's a possibility --

Mr Cameron Jackson (Burlington South): Just because you can't get a loan, Jim. Why don't you listen?

Mr David Johnson: It could be because they've investigated the application and they've investigated this particular business environment and they find it too high a risk, in which case the question is, do we want government money, in the form of a guarantee, backing this kind of a business venture?

That would be an interesting proposition to put to the people of the province of Ontario. I'm sure through these hearings we're going to get the message that, yes indeed, this is a role for government. I'm sure this bill is going to take place, but many taxpayers will have doubts about whether the government should be stepping in and guaranteeing ventures that are in a high-risk category.

I only need think of back -- what was it? -- a year ago or so when venture capital was proposed to be raised by using pension funds here in the province of Ontario. At that time, I was in the municipal sector and, I can tell you, the uproar was unbelievable. People who never before had ever been involved in politics -- staff members at the local level, at the regional level -- people who had never taken petitions signed a petition, were not only signing petitions but they were taking them around to their individual departments. They did not want the government investing their pension money -- I can tell you that -- the money that they had worked many years for, the money that they depended on. They certainly didn't want the government investing that money.

Again, I think that should give us pause and should give us more drive to ensure that the controls are in place such that this money -- we're talking about $10 million through the loan fund, $20 million through the share corporation, guaranteed money, and I'm not sure how you cap that either. Perhaps Mr White will explain that at some point or perhaps the staff will. How do you cap it at the $10 million; how do you cap it at the $20 million? At any rate, even taking the money at those levels, that's a considerable amount of taxpayers' money that's going to be invested and the controls should be in place to make sure it's well used.

I was talking to a member from the private sector this morning before coming into this hearing and the gentleman said that basically, as a member of the private sector and representing other private sector interests beyond his own, he didn't have any problem with this, but the one question he raised was with regard to what we're really doing here is decentralizing an aspect, perhaps. We're giving the power to local communities to raise funds and to make investments, decentralization of that sort of concept, which he didn't have any problem with, but a parallel he drew was with the non-profit housing.

He said, "I hope there are better controls in place through the community economic development corporation than there are with non-profit housing," because he said that there's a firm belief out there today that non-profit housing, which again is decentralized to the degree that local community groups make decisions, in his view had made many bad decisions, particularly, for example, in the purchase of property. Property was overvalued, they paid too much money for property, property that had formerly been at a peak but over the last two or three years had come down in price. The price being paid was not the realistic market price today but an inflated price, a peak of a few years ago, and in his view this decentralization had led to numerous bad decisions through non-profit housing and he was hopeful that some mechanism would be in place so that wouldn't be duplicated through this particular fund.

Just a couple of specific questions that I'll throw out, and Mr Phillips indicated that he had some questions. Coming from a municipality, having heard the parliamentary assistant's explanation today, I'm still not sure what the municipal involvement is in this whole program. I'd been given to believe that municipalities, other than for perhaps startup grants, maybe operating grants, hopefully very minimal, would not have any financial commitment to this program, that they weren't permitted to actually invest funds. I'd like an answer to that question.

I did talk with a person who sits on the board of AMO and a person who is involved with a large municipality in Ontario, and his recommendation was that unless that was so, unless municipalities were prohibited from getting deeply financially involved in this fund, it shouldn't go ahead, that there should be restrictions on municipalities getting caught in a possible quagmire, because they really don't have a whole lot of experience in these kind of funds. So I would seek some clarification of that.

There is the guarantee we mentioned. I'd be interested if the government has any estimate or any forecast of how much of the $10 million and the $20 million for the loan fund and the share corporation that they're guaranteeing up front would actually have to be used in the case of loans that went sour or corporations that weren't successful.

There is some suggestion that both of these vehicles will be eligible for RRSPs, and I wonder if there's any further word on that.

Frankly, I think that's very dangerous. Here again we're talking about people investing money that they're counting on for later in life. You know, it's one thing to have sort of a community spirit and invest some of your excess funds, I suppose, that you know you'll get at least the capital back out of, if no interest, as a GIC sort of investment or current sort of investment, but if you're investing moneys that you're counting on for 10, 20, 30 years from now, an RRSP that you're counting on during your retirement years, I think that needs a second look.

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Basic controls that have been mentioned earlier on salaries, office expenses, for the corporation: It's been indicated -- another question -- that the operating grants will be on a diminishing basis because it's hoped that over a period of time the funds will be self-supporting. What happens if they're not? Are there any guidelines in place to address that or is there a plan of action in place to address that?

Up front, the community will need to demonstrate an ability to coordinate supervision and mentoring for the businesses. Is there anything more specific on that, any sort of guidelines that the community will have to demonstrate that it's considered able to do that?

Those are some of the questions that I have, and there's a number of others, but perhaps at this time I'll just mention a couple of the points and then leave it at that.

We're wondering if the definition of the qualifying businesses is broad enough. As I understand it, it involves tourism, manufacturing and processing and information and telecommunications. Perhaps when the staff address this, is this a rather narrow definition? I understand that the definition to some degree includes businesses and technology that we'd like to see proceeding. It's sort of the modern age type of thing, but is it practical, and particularly in many rural settings where there may be other kinds of businesses that might be more traditional?

The CISC will be restricted to no more than 40% of the share capital of a business, but I even question, and perhaps the staff could comment on this later, is 40% a bit too high? I just wonder at the balance. That's a considerable investment through the CISC.

I guess with those few comments I will just reiterate again that I'll be looking forward to the next couple of weeks participating in this debate.

The Vice-Chair: Thank you very much, Mr Johnson. Mr White, did you want to have the ministry staff come up now or have some questions first?

Mr White: Yes, indeed. If I could, I just want to say how much I appreciate the comments from the official opposition and the third party, Mr Johnson, Mr Phillips, very well put questions, and I'm sure that those questions will be addressed. I am certainly aware of the responses to most of them. I'm sure that they will be addressed during the technical briefing which will be happening now.

Perhaps I might introduce first Tania Melnyk, who is director, community development branch, MMA. Tania will be speaking about the community development corporations.

The Vice-Chair: Will we have everybody come up, or do you want to take them one at a time?

Mr White: I thought that would be best.

The Vice-Chair: It's up to you. Do you want to begin then, Ms Melnyk, if you'll introduce yourself again just for Hansard.

Ms Tania Melnyk: My name is Tania Melnyk. I'm the director of the community development branch in the Ministry of Municipal Affairs. I am here with my colleagues from the ministry to provide a number of technical statements on the key components of the Community Economic Development Act, Bill 40, which is before you for consideration. My responsibility here today is to present the standing committee with a technical statement on the community development corporations referred to in the Community Economic Development Act. This technical statement will outline the program's purpose and objectives, the program concept, the program's characteristics and the provincial and municipal roles.

The community development corporation initiative, a key component of Jobs Ontario Community Action, is a vehicle designed to promote coordinated and inclusive community economic development action across Ontario. It should be emphasized that community development corporations are an option that communities may choose to adopt to formalize the broadly based community partnerships that may have been established in the development of the community strategic plan.

Its objectives are twofold: first, to assist communities to establish organizational vehicles capable of mobilizing local resources and coordinating action on community-defined strategic priorities; and secondly, to provide communities with a means to foster broad participation in the local economic development decision-making.

In 1991, the Ministry of Municipal Affairs consulted with communities across Ontario around its proposed new initiatives in support of community-based economic development. Many communities advised that they did not have the capacity to deliver some of these community economic development initiatives and/or that their existing economic delivery vehicles, for example, economic development corporations or municipal economic development departments, were not legally constituted to deliver the more inclusive community-based decision-making model proposed by the province.

At the same time, the government of Ontario was rethinking the way in which it provided support for economic development across the province. In the 1993 Ontario budget, a new program for community economic development called Jobs Ontario Community Action was announced. Jobs Ontario Community Action has three major components: community development, community financing and community capital. Community development corporations are an important part of the community development component.

In developing the program concept and characteristics, Municipal Affairs set out the following criteria that community development corporations would be required to meet. First, they must be community-driven; that is, the community should have to identify a need for a community development corporation, usually in the development of its community strategic plan. It should be inclusive; that is, broad community participation would be essential to ensure greater social equity in community economic development decision-making. They should be flexible; that is, the community should have flexibility in designing their community development corporations to meet their unique needs. They should be viable; that is, the community would have to demonstrate that the proposed community development corporation is viable in the long term by identifying and securing sources for sustained funding. Lastly, they should be not-for-profit. Community development corporations created under this program would be non-profit in nature, incorporated under part III of the Corporations Act.

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Community development corporations may take responsibility for a variety of tasks, including coordinating implementation of community strategic plans; providing local leadership training and development; creating, maintaining and ensuring access to information; facilitating partnerships and promoting and coordinating investment for priority projects and local businesses; providing assistance and promotional services; and lastly, sponsoring the establishment of a community loan fund or a community investment share corporation.

Community partnerships among business, labour, government and voluntary interests are essential to the long-term success and viability of community development corporations. Municipalities are important partners.

Since municipal participation is not specifically provided for through existing legislation, an amendment to the Municipal Act has been introduced in Bill 40 to enable municipal membership and participation on the board of directors to establish the basis for municipal financial support and to allow for regulations, if required in the future. This is in part VI, section 112.2.

Under the community development corporation component of Jobs Ontario Community Action, the province would provide startup assistance to community sponsors, including municipalities, clusters of municipalities, not-for-profit community organizations and community groups.

Two types of communities would be eligible for provincial assistance: first, those lacking the organizational capacity to coordinate action to achieve locally identified community economic development priorities, and, second, those with existing organizational vehicles, such as economic development corporations or social action committees, for example, that wish to broaden their scope or mandates to pursue more broadly based community economic development initiatives.

The provincial role would be to promote, market and administer the program and ensure that all proposals recommended for provincial support reflect the program's principles.

Generally, municipalities may be expected to provide leadership on the board of directors, work to resolve conflicts which may arise between community interests as the community development corporation carries out its business and ensure coordinated action with senior governments.

Municipalities may sponsor community development corporations, nominate candidates for the board of directors, and provide financial and in-kind assistance to the community development corporation.

In concluding my remarks, I would like to briefly highlight some of the key benefits of community development corporations.

By helping to mobilize people's time, talents and resources, CDCs may help forge new partnerships, focus efforts and lead the way to stronger, more self-reliant communities. Community development corporations can ensure the greatest degree of coordinated action on community economic development priorities. They can promote broad community participation in the economic and social development of the community. They are designed to be flexible delivery vehicles that can be tailored to meet varying community needs.

That's the conclusion of my statement. I will be followed by colleagues from the ministry, as I mentioned earlier. Larry Clay will provide a detailed technical statement on the community investment share corporations. He is one of the managers with the community development branch. Following Larry will be Tim Burns, a senior adviser with our branch, who will provide a technical statement on community loan funds. Dale Taylor, from the municipal finance branch, a senior economist there, is available to provide detailed comments on the innovative municipal financing component of the act. Finally, Diana Dewar, a manager with the municipal planning policy branch, will provide details on the Planning Act amendments.

The Vice-Chair: Thank you very much, Ms Melnyk. Now, I'm not quite sure how long each of these presenters will be speaking. If possible, can we can limit their interventions to about five minutes each? We planned to adjourn at 3 o'clock and I do want to leave some time, obviously, for questions by the committee members. With the permission of the committee, I think we'll have the presentations first and then open it up to questions. Is that agreeable? Again, if you can limit your comments, if at all possible, to the minimum and leave time for questions from the committee members, I'm sure we'll be able to clarify some of the items that you wanted to talk about.

Mr Clay, introduce yourself, please, for the purposes of Hansard.

Mr Larry Clay: My name's Larry Clay and I'm a manager with the community development branch of the Ministry of Municipal Affairs.

I'd like to take this opportunity to present to the standing committee on Bill 40 a technical statement regarding the community investment share corporations referred to in the Community Economic Development Act. This technical statement will explain the program's objectives, the concept of community investment share corporations, the characteristics of a community investment share corporation, the province's role in facilitating this initiative and the benefits of the community investment share corporation.

The community investment shares program has been designed to assist in achieving several key objectives: to raise local capital from the community and for investment in local business ventures, with the added security of a 100% provincial guarantee on investor's capital; to invest capital in local businesses unable to secure equity financing from conventional sources for startup and expansion; and to provide local residents an opportunity to participate in the economic development of their communities in a direct way and create permanent local jobs.

The program will permit non-profit organizations to sponsor the establishment of community investment share corporations. In order to successfully establish such a corporation, a sponsor will have to generate community interest in the community investment share concept and undertake most of the development work leading up to incorporation and registration of the corporation under the community development act.

Those sponsoring groups, except municipalities, that are successful in obtaining approvals for a community investment share corporation will be eligible to receive a reimbursement of 50% of startup costs from the province.

Eligible sponsors of a community investment share corporation are non-profit organizations which could include municipalities, community development corporations, which Tania just mentioned, Indian band councils, community-based organizations and cooperatives. Ideally, sponsors will be representative of the broader community in which they operate and will have some knowledge of the community's social and economic characteristics.

Once established, investors purchase preferred shares in the community investment share corporation. That capital is then reinvested by the corporation in shares of an eligible local business. There are two types of community investment share corporations: (1) the project corporation, which will invest in a single business, and (2) a pooled corporation, which will raise a pool of equity capital to invest in a number of eligible businesses in a community.

Investors' money will remain in the community investment share corporation for the life of the share term, which can be as long as seven years. It cannot be removed or withdrawn during that period. The province will be providing a 100% guarantee on the investor's capital and, pending Revenue Canada approval, the community investment share corporation shares will be RRSP-eligible.

To ensure that no single investor controls the corporation, investors and their associates are not permitted to hold more than 10% of the preferred shares in a community investment share corporation, subject to a maximum of $25,000. Ineligible investors in a community investment share corporation include the sponsor, municipalities and those persons who are shareholders, directors or officers in the eligible business for the two-year period immediately preceding the investment. Any other Ontario resident, corporation, cooperative or community group may invest in a community investment share corporation.

Once the community investment share corporation has invested in an eligible business, investors may receive either annual or cumulative dividends depending on the performance of the business. At the end of the share term, the business in which the investment was placed must redeem the community investment share corporation's investment. Once the investment share corporation has been repaid, investors will be reimbursed their original capital contribution plus any dividends unpaid and the community investment share corporation will be deregistered.

The key principle to this approach is to attract investors who may take potentially lower returns on investment in return for stimulating social and economic benefits in their community.

A community investment share corporation must be a for-profit corporation with share capital that is incorporated under the Ontario Business Corporations Act or the Co-operative Corporations Act. In order to be recognized as a community investment share corporation under Bill 40, the corporation must be registered by the Minister of Municipal Affairs. Only those sponsors that meet program requirements will be able to register.

In addition to incorporation, the sponsor will prepare a draft offering statement; a draft investment agreement; a business plan for the eligible business; an investment criteria plan for their proposed investments, for a pooled approach -- the prior one for a project-based CISC; a third-party review; and a community impact statement.

For investments over $150,000, one of the province's development corporations will be reviewing the investment proposal, which will include a review of the business plan. For those investments under $150,000, the investment share corporation will be responsible for conducting a third-party review of the business plan. This review will be used to determine the feasibility of the business plan of the eligible business.

Once registered, a community investment share corporation will be managed by a board of directors, two thirds of whom are elected by the investor shareholders of the corporation, with the remaining one third elected by the sponsor shareholders of the corporation. The responsibilities of the board members will be the same as those of any incorporated business. This would entail, for example, holding an annual shareholders' meeting, preparation of an annual report, monitoring the progress of the businesses in which the investment share corporation has invested and keeping shareholders fully informed on the status of the corporation's investment.

Bill 40 requires community investment share corporations to retain a minimum reserve of 10% to 20% of their total share capital. The interest income earned on this reserve fund may be used to pay operating costs that may be incurred by the corporation.

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Bill 40 also has provisions in place to restrict community investment share corporations to a minority equity contribution and minority voting control of the eligible business. Presently, the regulations being developed propose to limit the maximum eligible investment in any one business to 40% of the total equity required. This feature ensures that the community investment share corporations do not become a vehicle for taking over the ownership and control of the business.

Investments are raised from the community on the basis of a share offering statement which is approved by the Ministry of Finance. This statement will include a disclosure of risk, details of the proposed business investment and the terms of the offering. The decision by potential investors to invest in the community investment share corporation will be based on information contained in this document.

Once its share offering has been successfully concluded, a community investment share corporation must invest in an eligible business within 12 months.

Eligible businesses seeking equity financing from a community investment share corporation must redeem the corporation's investment at the end of the negotiated share term and must use the proceeds of the investment solely for startup ventures or expansion of business. Funds may not be used for refinancing of existing debt.

As noted earlier, sponsors may structure the community investment share corporation as a project corporation or a pooled corporation.

A project corporation would be used by sponsors who are able to identify a single business investment opportunity within their community that is in need of equity. An example of where a project corporation might be used in a community is where a local manufacturer has the opportunity to diversify the company's product line to accommodate a market niche if it can purchase the machinery needed to facilitate the expansion.

The pooled corporation permits sponsors to raise a pool of investment capital that would be directed towards several eligible businesses within the local community. An example of where a pooled corporation might be used is where a community has identified tourism as a priority for economic development and wishes to raise investment funds for businesses involved in the tourism sector such as a theme park expansion, development of a tourist facility and the expansion of tourism-related service business operations.

In terms of the provincial role, in addition to administering the community investment shares program, the province will guarantee 100% of the initial capital contributed by local investors in a community investment share corporation. This guarantee will only be paid out in those instances where an eligible business is unable to fully redeem the shares that are held by a community investment share corporation at the end of the share term. In such cases, the province will pay out on the guarantee on the difference between the investors' initial capital investment and any amounts received from the community investment share corporation.

In order to ensure that all share offerings prepared by the community investment share corporations are in compliance with the regulations of the program, the province, through the Ministry of Finance, will be reviewing all share offering documents prior to permitting shares to be sold to investors.

The province will provide startup assistance to non-municipal sponsoring organizations. This assistance will be provided on a 50-50 basis, subject to a maximum of $15,000, where the sponsoring organizations are successful in obtaining approval.

Finally, the province will be responsible for providing program materials, including setup and training manuals.

In summary, this initiative will benefit communities by creating local jobs and providing a unique opportunity for communities to assist in the growth and diversification of their local economies.

This initiative will benefit local investors by providing a way to put their savings to work in their community, offering the security of a provincial guarantee on their investment as well as providing the potential for returns on their investments in the form of dividends.

Finally, the province benefits by creating a mechanism to retain and redirect local capital into local businesses to create local jobs.

I trust this technical statement on the community investment share corporations as defined in Bill 40 has been of benefit to the members of the standing committee.

The Vice-Chair: Thank you very much, Mr Clay. I understand Mr Burns has some brief comments to make.

Mr Tim Burns: Hello. I'm Tim Burns, a senior policy adviser in the community development branch of Municipal Affairs. This technical statement concerns the community loan fund corporations.

Community economic development policy favours solutions based on community control of decision-making and a commitment of local human and financial resources. The objective is to make a lasting contribution to local economic capacity.

Given these objectives, we've tried to develop a program model which offers some prospect of establishing self-sustaining loan funds. For this reason, the loan fund program is based fundamentally on a partnership between investors, sponsors and financial institutions.

Loan funds have to be effective in getting credit into the hands of those with no other alternatives, but should take full advantage of the extensive credit and business assistance infrastructures which are already in existence.

Community loan funds will be locally controlled, non-profit organizations established to provide access to credit and other assistance to self-employed individuals in small enterprises. Their boards of directors will be broadly representative and will be responsible for reviewing loan guarantee applications and making final decisions on extending collateral to borrowers from a guarantee pool created by the issue of provincially guaranteed class A notes.

Loans will be for enterprise startups and expansions in amounts ranging from $500 to $15,000, with an average of about $5,000. However, a group wishing to form a partnership or a workers' cooperative could be eligible for a higher loan level.

Strict viability tests will be applied to all applications. Loans will be on market terms with no forgiveness of interest or principal. The intent of the program is to provide access to credit, not subsidized credit.

Borrower eligibility has been defined as broadly as possible to ensure community loan funds have the flexibility they need to respond to local priorities. Bill 40 requires that borrowers be Ontario residents and that borrowing be directly linked to a new enterprise or to the expansion of an existing enterprise which will result in new hiring.

Eligible loan fund sponsors include community groups, labour groups, church groups, municipalities, Indian band councils and non-profit cooperatives and corporations. Potential sponsors have indicated a particular interest in assisting women, aboriginals, cooperatives, the long-term unemployed, small business expansions, remote communities and so on. This type of focus is useful as the success of community loan funds depends on having an intimate understanding of client needs.

Eligible investors include individuals and corporations, including foundations. Individuals would be limited to investments of $25,000; corporations and foundations to $100,000 or 25% of the total fund. Sponsors would be required to incorporate under part III of the Corporations Act or as non-profit cooperatives under the Co-operative Corporations Act. Boards will be elected from among the membership.

Community loan funds will raise capital to back guarantees for clients by selling provincially guaranteed class A notes. The notes will be 100% guaranteed as to principal. Application is being made to obtain RRSP eligibility.

Annual returns on the investments will be based on performance and will be limited probably to the rate paid on a guaranteed investment certificate. This rate of return would not be guaranteed, and failure of a community loan fund to make an interest payment in any given period would not trigger a payout on the provincial guarantee. Early redemptions would be permitted only in exceptional circumstances, such as the death of a holder of a class A note.

Bill 40 requires that community loan funds provide the public with an approved offering statement containing full, plain and true disclosure when soliciting investment. Investors would receive also annual financial and management reports from the loan fund.

Community loan funds will be required to develop a standing agreement -- this is an element of the partnership -- with a credit union, bank or trust company. Under the terms of the agreement, the financial institutions will extend loans to the clients referred to them by the community loan fund, using the fund's assets as collateral. The financial institution would also agree to remit a portion of the interest collected from borrowers to the community loan fund's account as a guarantee fee and to notify the fund immediately in the event of a missed payment. Other services can include routine credit checks, fund management services and so on.

A community loan fund will actually have two funds: the operating fund covering such items as salaries and office expenses, and the capital fund, raised through the sale of class A notes, which is used to provide collateral for borrowers. Class A capital will not be used to fund the operating cost of loan funds.

Another feature is the safe reserve account initially amounting to 20% of class A capital. This reduces the exposure to defaults.

As mentioned, a share of the interest paid by the borrowers, probably about 2% or 3% of outstanding principal, would be allocated to the loan fund. Another source of surpluses for community loan funds is the difference in the amounts paid to investors and the total yield on the class A capital which has been invested in the investment pool. For example, the pool might earn about 5.5% while investors might be willing to accept 4%.

On the operating side, community loan funds will have three main sources of support: community contributions, operating grants from the province and income earned from the capital activities, as outlined above. As this type of lending is expensive, the program includes operating funding. In negotiating operating agreements, the province will be concerned with encouraging long-term independence. Therefore, provincial support will probably diminish over time.

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Sponsors will be required to develop business plans indicating a substantial level of non-provincial support for their operating costs. To open up one new source, the Community Economic Development Act enables municipalities to provide operating assistance to community loan funds.

Loan funds will provide their clients advice and technical support in addition to loan collateral. Such assistance, monitoring and mentoring is instrumental to maintaining high enterprise survival rates and minimizing default rates.

The issue of borrower default is a central one for investors and the province as the guarantor of their capital. This program will rely on the sense of obligation boards will have towards local investors, effective screening processes and the enriched technical assistance offered to borrowers to minimize defaults.

Provincial financial support will be in four areas: start-up grants, the operating assistance just mentioned, reimbursement of technical assistance costs and a guarantee on invested principal.

In addition, section 112 of the Municipal Act will be amended to allow municipalities to sponsor community loan funds, to participate on the boards and to provide operating assistance in cash or in kind. Municipalities will not be permitted to purchase class A notes.

In conclusion, the main benefits of the community loan fund program are access to start-up and expansion capital for enterprises with no other alternatives, hence a new range of job creating opportunities for communities; creation of permanent community-based financing mechanisms able to mobilize credit to meet local economic objectives; and a new balance in the relationship between the province and the community, which has a high level of community decision-making and a lower level of dependence on public money.

The Vice-Chair: Thank you very much, Mr Burns. Mr Taylor.

Mr Dale Taylor: Section 48 of Bill 40 contains --

The Vice-Chair: I understand you're with the municipal finance branch.

Mr Taylor: Municipal finance branch, indeed. That's one minute already.

Section 48 of Bill 40 contains provisions responding to the interest expressed by municipalities in being able to use more creative and flexible methods of financing such capital facilities as municipal offices, community centre complexes, water and sewage facilities, roads, transit. Some of the provisions in this part of Bill 40 also cover school facilities.

The objective of these provisions is to help generate new funding sources for the provision and renewal of local public infrastructure with respect to which Ontario is beginning to experience a backlog. This would also enable some priority projects and related jobs to go ahead that would not otherwise proceed.

Currently, property taxes pay for the bulk of the $4 billion spent in capital outlays by municipal and public school sectors. The traditional methods of financing capital outlays include moneys from the current levy, development charges and moneys from reserve funds, capital assistance transfers from the province and municipal borrowing. The latter, municipal borrowing, was made more flexible a couple of years ago by the enactment of Bill 165.

The deliberations of a provincial-local-industry task force on innovative infrastructure financing, reporting to the minister in 1991 and 1992, indicated that significant benefits can be realized by forming partnerships with the private sector to procure and finance public infrastructure. Such a co-venture agreement to provide infrastructure facilities would be undertaken wholly or partly by and/or with a private sector partner over some period of time.

This can take such forms as:

-- Build-operate-transfer, which I guess is a co-venture proper, where a partner builds and operates the facility for a period of time to obtain a rate of return and turns back the facility to the municipality or school board, as the case may be. There are examples recently of Windsor, its multi-use recreation complex, and the Windsor tunnel.

-- Design-build and turnkey type methods where a set of performance specifications is bid for and built at a fixed cost; for example, Newmarket's latest fire hall and Burlington's Brant Hills recreation centre.

-- Leasing arrangements if these financially outperform traditional borrowing to provide capital facilities. An example would be Gloucester city hall in recent years, and sale and leaseback of equipment such as the GO rolling stock situation which is being negotiated at the provincial level.

-- Public components or a public component of a multi-use project; for example, school or municipal multi-use projects.

Some use of these techniques has already emerged in Ontario either under existing public legislation or a private bill -- for example, the Windsor complex -- and illustrative cases will soon be published in a manual being put out by the Municipal Finance Officers' Association and the Association of Municipal Clerks and Treasurers of Ontario.

Under the proposed section 48, section 210.1 would be added to the Municipal act to remove certain obstacles that currently discourage municipalities from entering into coventuring and related types of agreements with the private sector to procure and finance public infrastructure facilities.

Some of the features: Municipalities and school boards would be permitted to give an exemption from property taxation for projects undertaken through agreements with private partners. There is a reference here to the paragraphs. Property tax exemptions will cover only those types of facilities or parts of facilities that are now tax exempt because they are government facilities. Property tax exemptions will not extend to facilities that are not tax exempt.

As with current municipal and school facilities, these tax exempt facilities will not have an impact on levy apportionments, cost-sharing or grants based on taxable assessment. Provisions for giving notice of any resulting change in tax status of property on the tax rolls and for making such adjustments to the rolls are also included.

The bonusing prohibition in section 111 of the Municipal Act would not apply to such projects or portions of projects which exclusively provide municipal services. The exemption from section 111 of the Municipal Act proposed for these partnerships is only to ensure that projects receive the same treatment as similar facilities done entirely by government. This is the same principle being applied in the proposed taxation status provisions.

Also provided for is the establishment of reserve funds for the maintenance of co-ventured facilities. This is to ensure the facilities involved are maintained and transferred back to the municipality in a well-maintained condition.

Regulations are provided for in paragraph 19. The ministries of Municipal Affairs and Education and Training are now developing a regulation that will define the scope of municipal and school facilities to be covered by the flexible financing provisions and any further details regarding application to school boards.

It is anticipated that the permitted facilities that will be listed in the initial regulation will include the basic physical plant of municipalities and school boards that must be provided and maintained, such as administrative offices, sewer, water, transportation, most public utility infrastructure where it is provided by a municipality, and municipal recreation complexes and social facilities such as homes for the aged.

Prescribed facilities will not include facilities for which the tax and bonusing treatment provided for in this section would not be accomplishing a public infrastructure purpose or would be providing an inappropriate advantage; for example, clubs that are not intended for general public use. As well, facilities of some types will be excluded where there is a separate context for determining and resolving issues about appropriate public-private partnerships; for example, electricity undertakings.

Bill 40 also provides for the benefits to be gained from making better use of pooled investment and borrowing arrangements among certain local public sector institutions. Through the proposed provisions in sections 44, 45 and 47, colleges, hospitals, universities, municipalities and school boards will be allowed to participate together in investment pools. This relates to investable surplus or reserve funds deposited into a central fund, maximizing investment yield while providing appropriate liquidity. Such sector-wide investment pools will permit better returns through administrative efficiencies and obtaining increased returns on the investment of larger amounts of funds.

Examples of current investment pools up and going in the municipal sector are the so-called CHUMS pool, or the colleges, hospitals, universities, municipalities, schools pool, and the Local Authority Services Ltd or LAS pool. Participation in investment pools will be voluntary. It will not expand the scope of permitted investments of any of the agencies under their current legislation.

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The Vice-Chair: Thank you very much, Mr Taylor. Diana Dewar, I understand you're the manager of the municipal planning policy branch.

Ms Diana Dewar: I'm Diana Dewar, the manager of municipal planning policy branch from the Ministry of Municipal Affairs. I will briefly summarize the proposed Planning Act amendments in Bill 40.

The proposed Planning Act amendments are part of the urban economic recovery initiatives. They are short-term administrative and housekeeping changes intended to streamline the review and planning approval process to make the process more efficient and effective and to support and facilitate economic recovery.

It must be stressed that the proposed amendments are short-term administrative changes intended to improve the current process. They are a positive first step toward further improvements to the planning system. They are consistent with the recommendations submitted recently by the Commission on Planning and Development Reform in Ontario, also known as the Sewell commission, regarding the need to streamline and improve the planning process. The government is currently reviewing the final report for future action.

Several of the proposed amendments will serve to streamline the Ontario Municipal Board process. The first one would allow the board to make an order to allow any part of a bylaw which is not an issue in an appeal to come into force before the board has disposed of all appeals to the bylaw. This will allow building permits to be issued for development projects which are not affected by zoning appeals to proceed without delay.

The second change sets a 15-day deadline for municipalities to forward appeals on interim control bylaws to the Ontario Municipal Board so that the board will be able to deal with the appeals in a timely manner.

A third change allows the board to make decisions on severance and minor variance applications which have been amended from the original application if it is demonstrated that no one is prejudiced by doing so.

The existing legislation permits the board to make a decision on a severance or minor variance appeal based on the original application only. If the application has been amended, the applicant is required to submit a new application to the approval authority. The board is unable to make a decision on the amended application. To ensure that provincial and municipal reviewing agencies and other interested parties are not prejudiced, notification and consultation with interested parties will be required.

The fourth change allows a zoning bylaw to take effect automatically if appeals are withdrawn. Currently, the Planning Act does not contain a provision to allow the board to dismiss the withdrawal of an appeal against a zoning bylaw in a simple administrative way. The board's current practice is to issue a board order dismissing the appeal.

The proposed amendment will provide that where an appeal to a zoning bylaw has been withdrawn from the board, the bylaw would be deemed to come into force without an order of the board.

A further amendment will allow the minister to prescribe the information to be included in the notice for the passage of a zoning bylaw so that people who are notified of the bylaw will also be notified of the corresponding official plan amendment.

The board has found that where there is an official plan amendment associated with a zoning bylaw under appeal, the public is often unaware that there are two separate appeal processes. Zoning appeals are filed with the municipal clerk. Objections to official plan matters are filed with the Minister of Municipal affairs as a request for referral to the board. The prescribed information under consideration will include the requirement that municipalities give information on official plan amendments related to zoning bylaws so that the public will have full information.

In addition to these proposed changes, the proposed legislative package provides that the minister may delegate planning approvals on his own initiative to upper-tier municipalities and separated cities and towns. Currently, the Minister of Municipal Affairs may delegate to the council of a municipality certain of his approval authority under the Planning Act on the request of council.

The proposed amendment will allow the minister on his own initiative to delegate approval functions to qualified and capable municipalities with professional planning staff. It is intended to speed up the delegation process by not requiring a request from a municipal council.

Another proposed amendment allows the minister to charge fees for planning applications submitted to the province for approval. Under the existing legislation, municipalities and planning boards can charge fees for processing planning applications. The province does not charge for this service.

The proposed amendment would allow the ministry to charge fees for processing planning applications. The Parkway Belt Planning and Development Act is also being amended to give the minister similar power in respect of amendments to land use regulations.

The appropriate fee schedule is currently under consideration and fees are intended to be similar to those being charged by municipalities and planning boards which have been delegated planning approval functions.

Some of the applications under consideration for a fee are plans of subdivision, condominium, severances, zoning orders, part lot control, validation of title and power of sale in territorial districts where the minister has sole jurisdiction.

The next amendment allows the minister to prescribe information for planning applications such as official plans and amendments, zoning order amendments, plan of subdivision, condominium and severances.

By defining the information requirements up front, applicants will know clearly what the rules of the game are at the beginning of the process. With complete information, the municipality and the reviewing agencies will be able to review a development proposal in a more effective and timely manner.

Another proposed amendment would assign the approval of validation of title and power of sale to municipalities. Since these approvals may have the effect of creating a parcel of land, it would be appropriate for this authority to rest with councils which are already assigned the power to grant severances.

Finally, there is a proposed amendment to allow a district land division committee, should one be established, to keep the fees it charges for severance applications in order to meet the anticipated cost of processing those applications.

Municipalities and planning boards dealing with severance applications are already authorized to prescribe and keep the fees to meet the administrative costs; it would be appropriate to allow the same for district land division committees.

To conclude, these proposed amendments are short-term administrative changes intended to improve and streamline the current planning process.

The Vice-Chair: Thank you very much for your presentation. If I could ask all the presenters to come back to the table so that we can expedite matters a little bit. We have half an hour. I'm suggesting to the committee that perhaps each caucus be allocated 10 minutes, that makes 30 minutes, if that's fine with you. That might be the easiest way to proceed.

Mr White: I'm just wondering, particularly for Mr Johnson; he had a couple of very specific questions which I think were dealt with to some degree by the technical statements. The issue about RRSP eligibility and municipal investment, those items were dealt with. Does he feel satisfied with the responses?

Mr David Johnson: I guess I should address them during my questions.

The Vice-Chair: Yes, I think that would probably be the best way. Thank you very much, Mr Johnson. Mr Phillips, did you want to start?

Mr Phillips: I'll start with community development corporations. I'm still not completely clear on how these work and who determines the structure and the format of them. I gather from reading this that a municipality may choose to participate or not participate; it doesn't have to have municipal involvement. The last part of that is, in the legislation, where should I look for the legislative authority setting this up?

Ms Melnyk: I can answer the first part of it. I'll defer to our lawyers for part two. In terms of who can establish a community development or how it's structured, it is very much based on the community. As you may be aware, the whole concept of community economic development provides for communities to be somewhat self-defining. So the community could be an ethnic group; it could be a group of groups; it could be the municipality and a series of partners, which is probably the preferred one but not necessarily the only way to go for the establishment of a community development corporation. It is, in effect, an entity that provides the vehicle for things to happen. It's like an umbrella organization which brings together a number of groups from the community, unlike, for example, municipal economic development corporations, which focus primarily on the economic players in the community and work with the business groups, the chambers.

Mr Phillips: The reason for my question is just that I can visualize down the road a community having two groups wanting to be the community development corporation, and historically municipalities have been actively involved in it. The determination will be the Minister of Municipal Affairs who determines.

Ms Melnyk: In most cases, or perhaps the regional teams deciding on some of the approvals under Jobs Ontario Community Action. If municipal involvement is there, we would recommend that our minister have a role in approving those, but otherwise it's the core teams, the regional teams.

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Mr Phillips: It's the who?

Ms Melnyk: It's the regional teams. Part of the whole Jobs Ontario Community Action initiative involves sort of an interministerial decision-making process where decisions are flowed through regional teams which involves a number of ministries.

Mr Phillips: Okay, I understand that now, the bells start to go off a bit, I just -- oft-times.

Ms Melnyk: A key consideration too to bear in mind is that these things will only have startup funding, so in terms of the approval, the long-term sustainability of that particular development corporation will be a factor in its approval. It has to be based on a fairly viable and strong group support before it takes off or is approved.

The Vice-Chair: Do you want an answer from the ministry lawyers?

Mr Phillips: Just quickly worded. Where is it in the legislation?

Ms Melnyk: Where is it in the act?

Ms Kelly Yerxa: I'm Kelly Yerxa from the Ministry of Municipal Affairs, legal services branch. If you turn to section 46 of the act, which provides for amendments to the Municipal Act, and then to 112.2 on page 25, that particular amendment to the Municipal Act deals with the establishment of community development corporations.

Mr Phillips: Okay, thank you. On the community investment share corporations -- I'm just trying to figure this one out -- the guarantee is just on one's initial capital investment. You can have it for seven years and you'll just get back the money you put in it and there is -- on some of the labour-sponsored venture capital corporations, which this is not totally unlike, there are some tax credits available. There are no tax credits on this?

Mr Clay: No, there are no tax credits. The key provincial support here is really the guarantee. There is RRSP. We're seeking RRSP eligibility on the investment, as well, from the federal government.

Mr Phillips: Right, which would be whatever your marginal rate is: 30%, 40%, 50%.

Somewhere in here I misread something that implied, at some stage, the thing wraps up when the money is paid back, but was I looking at -- I'm sorry, I can't remember what part of your presentation, but that would only be for the project pool, or the project --

Mr Clay: Yes. In the case of a project community investment share corporation, the CISC would deregister once the moneys have been paid back and the original investors have been repaid. In the case of a pooled CISC, the CISC would continue until the last business investment is completed.

Mr Phillips: Although one would expect these things to be kind of just a permanent -- would you expect the pooled one to be kind of a permanent venture capital local pool, is that what the concept here is?

Mr Clay: No, we don't intend them to be infinite and go on for ever. The longest share term that an investment can have is seven years, so it really can't extend beyond that period.

Mr Phillips: I'm thinking of your pooled investment share program. You say the longest it can invest in any one single project is seven years, or the longest it can exist is seven years?

Mr Clay: Well, pretty much the longest it could -- it could exist for eight years because once a pooled CISC has been registered it has 12 months in which to make all its investments.

Mr Phillips: All of its investments.

Mr Clay: All its investments, and the longest term for any one investment can be seven years.

Mr Phillips: I had kind of misread this thing. I thought this was a local venture capital pool ongoing, but you're saying this is a time-limited --

Mr Clay: Yes. The CISC will have a period of defined time in which to make its investments, yes.

Mr Phillips: So what happens in a Kitchener-Waterloo one that wants to have this thing available at all times is that it has to find another community investment share corporation?

Mr Clay: Yes. The intent of the CISC program is really twofold. It is to really try to identify projects within the community that are ready to go, that for whatever reason have been unable to access conventional sources of equity financing.

There will be cases, of course, where a community will put together a pooled CISC, but I guess the danger is that if you don't put a period of time upon which that investment could be made, it could be an infinite period of time. The pool could be established and unsuccessful in obtaining any potential investment, so we want to put some parameters around the period in which it takes people's money and puts it to good use in the community.

Mr Phillips: Would you visualize -- I keep using Kitchener-Waterloo -- that there might be more than one of these community investment share corporations in existence?

Mr Clay: In any one community?

Mr Phillips: Yes.

Mr Clay: It's possible. There's nothing at this point to suggest that won't happen. Again, we envision, at least initially, having 40 community investment share corporations across the province, so the government will probably be interested in spreading those as broadly as possible.

Mr Phillips: On the loan one, which is kind of the third part of this, this is kind of the last-resort credit. Is that what the concept here is?

Mr Burns: Applicants have to have a prior refusal from a bank or credit union or trust company, so in that sense it's a last resort.

Mr Phillips: And I guess that was your first point you made, proving that they have been --

Mr Burns: That they had tried to obtain financing from other sources but were unable to.

Mr Phillips: Do you see this being a time-limited proposition, or is this kind of a permanent bank?

Mr Burns: No, it's somewhat distinct from the investment share corporations because they can revolve a pool of capital and they may be able to entice investors to stay in after the initial term, during which their investment was guaranteed. Hopefully, at that time if they have a reasonable track record or they've managed to accumulate some permanent capital, they could stay in business, basically.

Mr Phillips: Is there a fair bit of evidence that this is a significant issue, and are there other examples somewhere in North America where it's been shown that there are very viable operations that have been turned down by normal --

Mr Burns: Yes to both questions. There's a lot of anecdotal evidence in Ontario in our discussions with many groups working with typical loan fund clients. It's a very widely used model. There are a number of variations on loan funds, but it's literally used the world over, from Bangladesh to South America, all over the United States and different parts of Canada. So there is quite a bit of evidence of where it's been applied.

Mr Phillips: Which is the most successful model that I should look at?

Mr Burns: The US. They have --

Mr Phillips: Could you be a little more specific?

Interjection: The mainland.

Mr Burns: The lower 48. I'm trying to think of a good one. The best example that comes to mind that I can remember -- there's a handbook of them, actually -- is one in Nebraska that has a small pool of $80,000 which it's been turning over continuously since the early 1970s. Basically, that means they've been taking quite a small fund and have made one or two loans every month or maybe six a year and have managed to survive for about 20 years turning it over and over continuously. They have managed to survive and not have their capital completely depleted by defaults.

The Vice-Chair: Thank you very much, Mr Burns. I'm sorry, Mr Phillips, but your time has run out. Mr Johnson and Mr Jackson.

Mr David Johnson: One of the questions I raised earlier was with regard to municipal financial involvement. Many of these documents dealt with that, but I just want to make sure I've got it right. Municipalities are not allowed -- I don't know who I should look at here --

Ms Melnyk: I'll try.

Mr David Johnson: Municipalites are not allowed to invest in the loan fund or the share corporation?

Ms Melnyk: They are allowed to provide support, but not --

Mr David Johnson: What does "support" mean?

Ms Melnyk: "Support" means facilities, staff, dollars, grants --

Mr David Johnson: Dollars.

Ms Melnyk: -- to help operate the fund, but not as part of the loans that are made that are in any way -- they are not allowed to get involved in lending to businesses.

Mr David Johnson: What sort of a cap is put on that? You mentioned dollars in the middle; you said staff, space --

Ms Melnyk: There is no cap on municipal dollars. We're looking for sharing, and we have some notional numbers. The regulations will govern the level of involvement, but it's really a sponsorship role that we're looking at for the municipality. It's assumed that it would be in their interests to have this kind of facility in their community to support the businesses.

Mr David Johnson: I don't disagree with that. I guess the difficulty is that local municipalities could well come under the gun, could well be pressured to invest money.

Ms Melnyk: No, that's not allowed. That would contravene the bonusing.

Mr David Johnson: I'm still not too clear. You've indicated that municipalities could put dollars in.

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Ms Melnyk: Just dollars to support the operation of this: to support the meetings, the administration, some portion of the process. For example, a unique feature, as you may have noted in Tim's presentation, is the technical assistance that's offered. The mentoring component of the loan fund is a very important feature which helps people to get through a loan process successfully.

Mr Jackson: The people in the planning department who aren't busy at the moment.

Mr David Johnson: When do you expect the regulations to be issued?

Ms Melnyk: Around the time, hopefully, that this may get passed.

Mr David Johnson: "Around the time." Okay. I'll let that one go.

Ms Melnyk: We're developing those.

Mr David Johnson: Secondly, in terms of some of the infrastructure -- the water, sewage, school boards, that sort of thing -- my understanding was that if they tie in with this whole plan, there had to be a business plan that would show that this money could be repaid, either in terms of the loan, I guess, over a period of three to five years, in terms of the --

Ms Melnyk: This is on the innovative financing component? This is the water -- yes, we've got another expert on that.

Mr David Johnson: I'm just curious. Would the municipal infrastructure come under the same provisions, that the moneys would have to be repaid over a three- to five- or seven-year period? If so, how does that work? If a municipality is to construct a sewer under this program, is there some sort of user-pay system, or how does it work?

Mr Taylor: Your question has me concerned that there may be some further clarification needed here. The part that deals with innovative financing is quite distinct from the kinds of things that you've been talking about right now. It's in the bill because, I guess, infrastructure contributes to economic development, but basically there are none of those kinds of provisions related to the innovative financing of infrastructure part.

Mr David Johnson: That's fine, thank you.

Getting back to another question that I raised earlier with regard to the uses, as I understand it, in terms of the loan or share corporation, we're looking at tourism, manufacturing, telecommunications, that kind of thing. Are you looking to expand?

Ms Melnyk: We're looking to expand the definition.

Mr David Johnson: For example, retail has been raised.

Mr Clay: In fact, we've been considering that quite a bit. I guess, again, the fundamental principle is really to let the community decide what it thinks are the most appropriate investments to make within the community. I think we sort of agree with your statement that those sectors that you identified might be a little bit limiting to a community. For example, your retail operations are a very significant contributor to the economy of a small community. So I think, as Tania noted, we're looking at making the scope of eligible businesses as broad as we can.

Mr David Johnson: Mr Phillips asked the question about the United States. Somebody raised the fact, I'll say, to me that in the United States there are tax exemptions that are linked in with the equivalent kind of program that they have, so that makes this thrust more attractive, I suppose, and in fact -- I forget; it was a conversation I had within the last couple of days -- that there have been tax changes in the States in the last few years that have actually lessened the attractiveness of these loan corporations and share corporations considerably. Can anybody speak to that?

Mr Burns: I saw some opinions about having losses or forgone interests in these types of investments being eligible as a tax deduction, but I frankly don't know what changes may have occurred to that regime. They also have a community reinvestment act which encourages their banking sector to invest in these types of activities, and that has generated a lot of activity.

Mr Jackson: Therefore they can't be non-profit --

Mr Burns: No, the --

Mr Jackson: They're all non-profit lending corporations in the US?

Mr Burns: I don't know that they're all non-profit, but a significant number of them are.

Mr David Johnson: Is it possible to get information in that regard?

Mr Burns: Certainly, yes. There's a national association in the States which puts out a handbook.

Mr David Johnson: Because this is being held up that in the United States it is very popular and works quite well, but if the tax provisions are different and that's why it works, then I think we should know that up front, if you can just look into that.

Mr Clay: That's community-based equity. There's no real comparable --

Ms Melnyk: On the equity side, the comparable ones in Saskatchewan -- actually, in Canada: Saskatchewan and Manitoba have recently introduced their GRO bonds, as they call them.

Mr David Johnson: Going back, then, to the planning section, I didn't quite catch this part on the top of the third page, I guess; it's not numbered. It says that "the proposed legislative package provides that the minister may delegate planning approvals on his" -- it seems rather sexist there; isn't it supposed to be "his or her"? -- "own initiative to upper-tier municipalities and separated cities and towns." Could you explain a little more thoroughly what that means? Does that give the upper tier any sort of authority over approving lower-tier planning approvals?

Ms Dewar: Yes. The current Planning Act requires that a municipal council request the minister for delegation. This amendment merely removes the requirement that a municipal council must request it. The minister can pursue delegation on his own initiative.

Mr David Johnson: Let's try that again. The current Planning Act provides for what?

Ms Dewar: Under the current delegation legislation in the Planning Act, it requires that a municipal council request --

Mr David Johnson: Local or regional?

Ms Dewar: It would be any municipal council would request the minister to delegate his approval authority. This amendment simply removes that requirement that a municipal council request the minister to delegate. So the minister can delegate on his own initiative.

Mr David Johnson: Without the request of a municipality.

Ms Dewar: Without the request of a municipal council. But only capable municipalities with professional planning staff and approved official plans would be considered eligible for delegation.

Mr David Johnson: I think I need a little more clarification of that, but maybe I'll do it outside of this forum. It sounds to me as if the minister, on his or her own initiative, could give -- I don't know why regional. You're talking about upper-tier municipalities in the brief.

Ms Dewar: It would be to upper-tier municipalities and separated cities and towns.

Mr Jackson: Because upper-tier have regional plans; is that why?

Interjection: Yes.

Mr Jackson: That's what I thought.

Ms Dewar: The legislation would provide for delegation to upper-tier municipalities and separated cities and towns.

Mr David Johnson: It sounds like this gives the minister more authority than the minister has today.

Ms Dewar: Well, delegation could be undertaken on the minister's own initiative. In other words, the minister wouldn't need to request --

Mr David Johnson: Be requested.

Ms Dewar: Be requested; that's correct.

Mr David Johnson: Only by regional governments, or by local governments as well?

Ms Dewar: No, upper-tier municipalities and separated cities and towns.

Mr Jackson: A separated city as a municipal council, then.

Ms Dewar: Yes.

Mr Jackson: So it covers everybody.

Mr David Johnson: That covers all local -- for example, here it would cover the city of Toronto as well as Metropolitan Toronto?

Ms Dewar: Yes. It would not cover, for example, a local township that was outside of an upper-tier municipality.

Mr David Johnson: Okay. I have --

The Vice-Chair: Another two minutes.

Mr David Johnson: Did you want to do yours?

Mr Jackson: My critic colleague has to be at AMO tomorrow so I'm trying to yield to him. I have extensive questions; that's my problem.

Mr David Johnson: I'll just ask one more question, then. In terms of the loan fund, as I understand it, under hardship conditions an investor can withdraw the funding. Is that true?

Mr Burns: James, you can correct me, but I believe it's limited to the death of a holder and where the estate would like to redeem the note. Is that correct, that it's only in the case of death of a holder?

Mr David Johnson: So presumably that's the same under the share corporation as well, except with the share corporation we're looking at a seven-year period, which is a longer period than for the loan fund. I'm just wondering particularly, if people did invest RRSP money in something like this and they desperately needed that money four years after it was invested, what would happen?

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Mr Clay: Just a point of clarification: The share term could be as long seven years; it could be anywhere between three and seven years.

Mr David Johnson: Well, let's assume seven years.

Mr Clay: Then that money is pretty much in.

Mr David Johnson: So they're stuck.

Mr Clay: But you know that going in. I mean, when a share offering is put to a potential investor, they have to decide whether they're prepared to keep their money in the corporation for that period of time.

Mr Wiseman: It's discretionary.

Mr Clay: Yes, discretionary.

Mr Wiseman: You don't do it if you're going into retirement.

Mr David Johnson: In terms of the people involved, we're looking at board members, we're looking at investors, we're looking at the community startup group, and we're looking at the business that's going to be invested in. Can any citizen be on any of these? In other words, could an investor also sit on a board, be a member of the community startup and be a member of the business that's being invested in at the same time? What limitations do you have on --

Mr James Loken: The investor could be a --

The Vice-Chair: Would you introduce yourself, please.

Mr Loken: Sorry. James Loken from legal branch, Municipal Affairs.

An investor could be a member of a sponsoring organization and an investor certainly can be on the board of the investment share corporation. They're designed to allow the investors, in fact, to direct the board.

Mr Jackson: Will the conflict-of-interest matters be contained in the regs?

Mr Loken: The conflict-of-interest matters will be -- well, the act itself, in section 12, I believe, directs that no one can have more than 10% of the shares of the CISC. There will also be, in reg, restrictions on investors being investors in the business as well.

Mr David Johnson: So the investor could be in the business as well as being on the --

Mr Loken: No, sorry. No, could not, unless -- there will be a slight amelioration for cooperatives and widely held community businesses, but in general principle, no.

Mr David Johnson: Is that the same --

The Vice-Chair: Thank you very much. Mr Hope.

Mr Randy R. Hope (Chatham-Kent): The question I have is basically -- to use up a little bit of the time, first of all, I'd like to thank the staff for their in-depth briefing notes, because it is important as we're dealing with something that's very important.

I hear where some of the concerns from the larger municipalities may come from, but I've had extensive conversations with people from rural communities around this piece of legislation. We find there are going to be possibilities not only for creating jobs but for social revitalization in our communities, where a lot of our children are leaving our communities and going to larger centres and there's a social cost there.

I know through a number of conversations dealing with the economic development -- I understand the planning stuff because we do have some smaller municipalities which have been very careful around their municipal planning, giving them a little bit more power, and I hope the minister will approach these individuals because they have been very responsible around the planning.

The investment aspect is a key element. I heard comments earlier about when the provincial government wanted to touch pensions. I remember I always wanted to get my hands on my pension, so when the company I worked for -- instead of investing it in South Africa, I would sooner invest it in my own community for the potential of jobs that would be available in my community. That's the viewpoint I took from the labour movement, and still do. I believe there are opportunities for reinvesting your moneys into your own community, which helps stabilize the community much better. So the investment aspect is very important back in our own communities.

When you talk about companies, one of the ones we are having most of the major problems with is tool and die manufacturers around bridge financing. Currently, there's no program in place, and a lot of our companies in rural Ontario need bridge financing to make that transition to a new product line or new equipment that's there. Sometimes it's very hard for those companies to obtain the money, but if they don't obtain those moneys, that's the end of the jobs in the community. So there's always a negative impact that's there.

I'd be interested also -- I heard comments made on the United States, and you talk about how there's a book. If you have documentation, it would be greatly appreciated by myself and I take it by the rest of the members here of the committee.

All I can say is that when I looked at some of the initiatives behind this bill and some of the technical briefings that you've just done for us, I just wanted to make sure that I convey my thanks for the technical and in-depth part of it. I look forward to the presentations that will be made because I'm going to be carrying a message from a lot of people from rural Ontario who are not just into feed bags. We're also into high tech. I have Smart Talk Network, which is creating 200 more jobs in my community, and we are looking at the fish farms. There is possible manufacturing, because if you're producing a product that's in the manufacturing base, it could be a subsidiary of that company, so there are possibilities that are there, and for us in rural Ontario who are looking also at an ethanol facility, community investment from farmers getting invested in their lifestyles is a very important part, so it's what we see with Bill 40.

I'm interested in hearing the presentations from people who will come before this committee from the more technical end of it, and I look forward to hopefully being one of those communities. I guess King county wishes to be one of the first ones up and starting for its revitalization. I just wanted to make those comments known to the staff.

The Vice-Chair: Well, I didn't really detect a question here.

Mr Hope: There was one in there somewhere.

The Vice-Chair: I don't know if anybody wants to respond to this.

Ms Melnyk: I very much appreciate the comments.

The Vice-Chair: Were there any further questions from the government side?

Mr Wiseman: I do have one on the section here, that the proposed amendment will allow the minister, on his own initiative, to delegate approval functions to qualified and capable municipalities with professional planning staff, and it follows on the same comments that my colleague Mr Johnson was raising. What in real terms, in terms of planning in a community, does this mean?

Ms Dewar: A number of municipalities have already been delegated the ministry's approval authority. I have quite an extensive list here of a number of municipalities that actually carry out that function. Some do approve official plan amendments, a number approve subdivision and condominium development proposals.

Under the existing legislation, the minister can only delegate upon the request of a municipal council. This amendment merely removes that requirement, so it allows the minister to delegate without that request from a local council. That's the only change that this amendment makes.

Mr Wiseman: I might have missed this point, but did you say "official plan amendments" or did you say "official plans"? This wouldn't allow the minister, for example, to give a municipality that has no official plan the right to create its own official plan without it coming to the Ministry of Municipal Affairs.

Ms Dewar: No.

Mr Wiseman: Should somebody oppose an official plan amendment, it doesn't give the municipality power not to go to the Ontario Municipal Board?

Ms Dewar: No, it does not.

Mr Wiseman: And it doesn't change the power of the Ontario Municipal Board to strike down the official plan amendment if it doesn't conform to the official plan or the philosophy of the official plan?

Ms Dewar: That's correct.

Mr Wiseman: Does it have any impact -- for example, I know there are councils elected that completely ignore the recommendations of their planning departments and go ahead and do all sorts of strange things. This doesn't in any way give those kinds of councils any more power to do that than they already have.

Ms Dewar: Only capable municipalities with professional planning staff and an approved official plan are considered eligible for delegation. The decisions are monitored and will be.

Mr Wiseman: That will be continued to be monitored by the Ministry of Municipal Affairs.

Ms Dewar: Yes.

Mr Wiseman: You said earlier in this technical document that Sewell is a major player in all of this, in what he's recommending. How soon can we expect to see what the Ministry of Municipal Affairs is going to put forward from Sewell?

Mr Jackson: Maybe that's most appropriately responded to by the parliamentary assistant.

The Vice-Chair: The parliamentary assistant.

Mr Wiseman: I'm looking at the parliamentary assistant.

Mr White: I'm not sure that's an appropriate question --

The Vice-Chair: The question is always appropriate.

Mr White: -- for Ms Dewar to respond to. I believe there is an attempt to formulate a response. I know there is very active work in that regard, Mr Wiseman, but perhaps we can leave that for priority setting in the --

Mr Wiseman: With all due respect, Parliamentary Assistant, when you raised the issues of Sewell, and Sewell being part of this planning --

Mr Jackson: What part?

Mr Wiseman: Good question. That's exactly the question that I have.

Mr White: I think the idea was that --

The Vice-Chair: Just a minute. Mr Wiseman still has the floor.

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Mr Wiseman: My question is how soon we can expect this, and whether Mr Sewell is involved at the Ministry of Municipal Affairs on an ongoing basis, giving his expertise to the staff in terms of developing the recommendations on section 3 of the Planning Act and other areas.

Mr White: I think the point in regard to the Planning Act amendments was that they were consistent with Mr Sewell's commissioned report recommendations. They are, as was mentioned, interim staff there, primarily administrative and housekeeping, but they are none the less consistent with it. There is no statement at this point in time by either the ministry or any political officials of when those overall amendments to the Planning Act will occur. I think you will be participating in that at more or less the same time I will be, Mr Wiseman.

Mr Wiseman: I'm just curious as to the time frame on this, which you did not answer.

Mr White: That's right. Thank you.

Mr Hope: It says "future."

The Vice-Chair: Thank you very much. I thank the members of the committee and in particular the representative -- Mr Jackson?

Mr Jackson: Mr Chairman, if I might, on that point, perhaps it might be helpful to the committee and its understanding and Mr Wiseman with his question if we invite Mr Sewell to discuss those elements of his recommendations which impact on the legislation before the committee. If the government has the right to cherry-pick the Sewell commission report and play with any element or all elements of it, as it chooses, I respect that right. But as a committee, we're charged with the responsibility of amending and approving legislation which will have a significant impact.

I think we should provide Mr Sewell with an opportunity to comment, as well as for members of this committee. We are incapacitated to a degree because we do not have the minister with us and we have no assurances that he'll revisit the committee hearings at any point during our proceedings.

So, for my part, I'd like to recommend that. I notice that there are considerable gaps in our times in which we can accommodate that. With the committee's indulgence, I would put that forward as a direction for the committee to follow.

The Vice-Chair: Are you moving that?

Mr Jackson: It could be a motion. I think we're fairly flexible as a committee that we can proceed on the basis of a consensus among the committee to invite Mr Sewell.

The Vice-Chair: It would have to be a motion then.

Mr Jackson: It's your problem. You're the Chair. So I have to put that in the form of a motion?

The Vice-Chair: Yes.

Mr White: Could we allow the staff to leave the bench while we discuss this? I don't think this involves them directly.

The Vice-Chair: Okay, we'll just suspend discussion for a moment. Again I thank the officials from the ministry. We'll probably see some of you again in the clause-by-clause discussions. Thank you for coming, for preparing the presentation and for answering some of our questions.

Who would like to speak to the motion? Mr Jackson is correct that we do have some extra time available. Mr Sewell is presently not on the agenda of the committee, but as Mr Jackson says, of course the committee is free to extend that invitation.

Mr David Johnson: I think we'd all support that.

The Vice-Chair: Do you all agree?

Mr David Johnson: I'm sure, since I've seen a fair amount of interest.

The Vice-Chair: Does anybody want to say anything?

Mr Hope: I was listening to the comments and everybody was saying something --

The Vice-Chair: Who wishes to speak at this point? Normally, if you wish to speak, you raise your hand.

Mr Wiseman: It's just like in school. I for one would agree. I think that Mr Sewell coming to the committee to give us some indication of what he's managed to glean from his trek all over Ontario would be extremely helpful for this committee. I would support that.

Mr Norm Jamison (Norfolk): The government, at this point, hasn't finally dealt with the Sewell report itself; as the government we're in the midst of doing that. I would be opposed to that at this point on the basis that we wouldn't want something said in committee by Sewell to become what you could construe as being policy at that point. The Sewell commission report should be dealt with first by the government.

The Vice-Chair: Are there any further questions or comments on this matter, then?

Mr David Johnson: I have a question of the previous speaker. Are you suggesting that the Sewell report should be dealt with first, before we deal with Bill 40?

Mr Jamison: The Sewell report is separate. We talk about the Sewell report and some need for change, but the changes have not been finally decided upon at this point. The Sewell report is still a report at this point.

Mr David Johnson: I think the point that's being made is that the Sewell report should be dealt with first, which I think we would all agree to, since within the comments that are made today --

Mr Jamison: I'm saying before it's appropriate that Sewell come here.

Mr David Johnson: -- it is clear that some aspects of the Sewell report are part of this bill, but I'm afraid we don't have that particular luxury. The bill is before us over the next couple of weeks and we need to deal with it. I think it's only fair and I think many of the questions that will come up from municipalities, that sort of thing, can only be dealt with if we have the fullest knowledge. I frankly don't see any way of getting that, other than to invite Mr Sewell to come and speak to it. Then it will be abundantly clear what aspects of the Sewell report we're dealing with through Bill 40 and we'll understand the ramifications. I think that would be the sensible way to go at this point.

The Vice-Chair: Mr White, Ms Poole and then Mr Mammoliti, and if we can't conclude this today, perhaps you might want to consider this again and bring it up tomorrow. I don't think we necessarily have to make a decision on this, but I'll leave it up to the committee.

Mr White: First off, I would suggest that Mr Sewell's comments I'm sure would be very valuable. My understanding is, as I'd mentioned before, that the changes which are reasonably minor and of an administrative nature, as Ms Dewar commented, are consistent with his recommendations, and in fact that Mr Sewell was consulted in regard to them. I believe Mr Martin, the provincial facilitator, was as well and they are consistent, as was earlier mentioned, with some of his concerns and I believe have the general backing of most people in the municipal and in the development industry.

Mr Sewell's agreement that they are of an interim or minor nature and that they are consistent with his recommendations is something which I'm sure could be ascertained in letter form. The problem I would have with having a thorough discussion with Mr Sewell is that the intent of this bill is community economic development, and not the thorough-going reform of the planning process, which will be addressed I believe in the relatively near future.

The main thrust of this bill is of course the main thrust of our discussion this afternoon, the community loan funds, the community development corporations, the community investment share corporations, which I don't believe were the main aspects of Mr Sewell's commission.

I would suggest that Mr Sewell's testimony, while I'm sure it is very informative, would not be relevant to most of the bill and would somewhat distract committee members prior to a major reform of the planning process.

Mr Jackson: On a point of information and clarification: Is the parliamentary assistant suggesting that the Planning Act amendment sections are going to be withdrawn for this committee's consideration? I wouldn't be distracted by this.

The Vice-Chair: I don't think that's a point of information.

Mr Jackson: He indicated that was an area that was going to be covered.

The Vice-Chair: I think we all understand that this matter is before the committee.

Ms Dianne Poole (Eglinton): I'd like to support the motion to invite Mr Sewell. I think both Mr Sewell and Mr Martin have been working quite extensively in the planning area over the last year. It would be extremely helpful to get their comments when analysing the legislation prior to voting on the clause-by-clause. I think it would be helpful to find out the rationale for a few of the proposed amendments relating to the Planning Act.

Also, I did have some questions, which I was not able to ask today because of the time constraints, relating to the planning process, and I think other members had this problem as well. I think Mr Jackson indicated he had a number of other questions. It just seems to me that they're two valuable witnesses it would be extremely helpful for this committee to listen to prior to making a final decision.

The Vice-Chair: Thank you. Mr Mammoliti, can you then perhaps call the question, unless you want to defer a vote on this matter.

Mr George Mammoliti (Yorkview): I just want to mention, and remind the individuals who sat on the subcommittee, that the issue of witnesses came up at our meeting prior to the committee getting together and we determined that there would be a list of individuals who, from what I can gather, have all been accepted to come in front of the committee on certain dates. The issue came up and we talked about the potential witnesses we all might want to have in front of the committee, and at no time did I see Mr Sewell's name on any of those lists, the list for the Conservatives or the list that the Liberals had submitted.

Of course, having said that, and while I understand the member's motion, from what I can gather of the motion it's strictly information he's looking for. I think I speak for our committee, for the government side anyway, when I say that perhaps it's best at this point to defer it till tomorrow. That gives us a chance to not only talk about it but to look at the positives this might bring as well. So while I want to remind people of the meeting that took place before we started this process, I can understand the motion, but I think in all fairness you should give us an opportunity to discuss this before you put such a motion, and to agree.

The Vice-Chair: It seems to me that's fair and I appreciate that. I think we all understand that Mr Sewell wasn't on the agenda and that it is the subcommittee that does set the agenda for the committee. However, since there was some time and this matter has come up in the discussion, I think it was a reasonable proposal to put forward. I think we've got the viewpoints there at this point. As I indicated myself, I don't think we have to make a decision on this today, and since the whip for the government side has asked to consult a little bit on this still, perhaps we can vote on this matter tomorrow.

Mr Phillips and then Mr Hope.

Mr Phillips: Just to support the motion and to say that it wasn't the opposition parties that raised Mr Sewell's name; it was part of the rationale for the amendments that the government went over today. It was, to quote, "These are consistent with the recommendations submitted recently by the Commission on Planning and Development Reform in Ontario, also known as the Sewell commission." It was as a result of the testimony this afternoon that I think the motion was put, so I think it's unrealistic to accuse the opposition of not bringing his name forward. I think we have heard only now the testimony of why the amendment is in there and I would hope that we don't use --

The Vice-Chair: I think it's understood that it's fair, and if I understand the whip for the government side correctly, he understands the request. He just would like a little bit more time before coming to a final conclusion on this and I think that's reasonable as well. Mr Hope.

Mr Hope: From what I understand, you're just going to ask him if he wanted to make comments on the bill, and you can't force anybody to come before this committee.

The Vice-Chair: No, that's understood.

Mr Hope: He can always say, "Sorry, my schedule doesn't allow it." So you write him a nice little letter saying: "Would you like to come before the committee; you're getting a special privilege here," versus the normal public that writes an application.

The Vice-Chair: It's understood, of course, that this would be an invitation if he's available. That's understood.

Are we then agreed that we --

Mr David Johnson: Could we deal with it tomorrow morning?

The Vice-Chair: Yes. Is that agreeable? So if it's possible, we can deal with it first thing. If not, then perhaps at noon we'll find the appropriate time to look into this matter. Obviously, if Mr Sewell can come, we have to advise him as soon as possible. So if you can think about this, we'll deal with it tomorrow. Thank you very much. The committee is adjourned until tomorrow at 10 o'clock.

The committee adjourned at 1514.