Crown land rental policy

Subject: Crown Land Rental Policy
Policy: PL 6.01.02
Compiled by – Branch: Crown Forests and Lands Policy Branch
Section: Crown Lands Policy Section
Date issued: April 1, 2023
Replaces directive title: Same
Number: PL 6.01.02
Date issued: April 1, 2022

1.0 Introduction

Under the authority of the Public Lands Act (PLA), the Ministry of Natural Resources and Forestry is responsible for the management of Ontario’s public lands.

The Ministry manages Crown land in such a manner that Ontarians enjoy the province’s abundant resources; encourages economic development and ensures environmental sustainability.

The PLA provides the Minister of Natural Resources and Forestry with charge of the management, sale and disposition (e.g. issuance of leases, easements, land use permits) of public lands. The Minister may direct the sale or lease of any such public lands at such price or rental and upon such terms and conditions as the Minister considers proper.

While managing Crown land, the Ministry will respect basic principles and concepts of non-tax revenue including fair return to the Crown; fairness and consistency across the province and amongst stakeholders; administrative efficiency; and cost-effectiveness.

General direction as to how sale prices, rents and fees are set is outlined in Treasury Board and the Ministry's policies, and include the following objectives:

• maximize the Ontario Government’s non-tax revenues
• ensure that ministries keep non-tax revenue rates up-to-date and
• ensure that ministries review all services regularly and consider whether to establish new revenue rates or discontinue existing ones

The sale of Crown land, fees and rents are generally to be based on fair market value.

This policy applies provincially to the calculation of all rents and fees for the use of public lands administered under authority of the Public Lands Act, except for energy generation agreements (e.g. waterpower lease, wind energy lease), or where other rents or fees are established by specific provisions within existing occupational authority agreements and/or other PLA directives, including:

• PL 3.03.07 - Non-resident Crown Land Camping
• PL 4.06.01 - Commercial Outpost Camps
• PL 2.03.03 - Water Lot Evaluation
• PL 4.10.02 - Communication Tower Sites on Crown Land
• PL 4.10.03 - Utility Corridors on Public Land
• PL 4.11.04 - Easements (Grants of)
• PL 6.02.01 - Administrative Fees for Public Land Transactions

Table A is to be used for calculating applicable rents and fees for public land. Where public land values do not warrant the calculation of market value or market value information is unavailable, the fees/rents will be applied as specified in Table B.

Rents and fees will be kept current through cyclical reviews undertaken by the Ministry in accordance with Ministry Public Lands Act policy and the appropriate occupational authority document.

For major utility corridors, road networks, flooded areas, etc. which span more than one Ministry administrative unit, rents/fees and permit issuance will be coordinated.

The Residential Tenancies Act does not bind the Crown, however the Ministry will adhere to the Act in the spirit of fairness, where a disposition is for private residential purposes (i.e. a principal residence). This consideration does not include summer resort leases.

2.0 Goal

To maximize non-tax revenues in a fair and equitable manner through rents and fees that:

• are based on market value where market value can be readily determined in a cost effective manner
• value the goods/services and benefits with the disposition of Crown Land
• reflect compensation for the foregone public use of the public land where market value cannot be determined in a cost effective manner

3.0 Objectives

1. To establish and maintain rents and fees which are fair and defensible to tenants, permittees, licencees and the public.

   Public land is as valuable as comparable private land. This principle is fundamental to the concept of fair return to the public.

   The Crown will set rents and fees that recover a return equal to that which would be sought by a private owner of similar property. This fair rate of return has been established by comparison with the private sector and is reflected in Table A.

   Table B shall be used where market value information (e.g. zonal value reports or appraisal reports) is not available and/or land values result in a rent/fee that is less than those prescribed herein.

2. To establish rents and fees in an administratively efficient and cost effective manner.

   It is not appropriate to incur the expense of determining market value for public land in the following situations:

   • the estimated value of the land is less than $4,000.00, based on the opinion of the Ministry's staff knowledgeable in local land values, having regard to documented evidence (i.e. comparable sales of similar lands or previous valuations/appraisals), and taking into account local land use controls (i.e. official plan and zoning by-laws)
   • the market value cannot be readily determined in a cost effective manner in accordance with Public Lands Directive PL 2.03.01 – Appraisals and Valuation of Public Lands
   • the market value cannot be readily determined due to scarce or non-existent market data or
   • alternate approaches to rents or fees (e.g. resource rents) are expressly provided for in this policy (refer to Section 6.0 - Exceptions), or elsewhere (i.e. other Public Lands Directives, memorandums of agreement, regulations or occupational authority documents)

   In these cases, minimum rents/fees set in Table B reflect compensation for the foregone public use of the public land.

   In cases where the area authorized is 10 hectares or greater, zonal land values as set in the zonal reports shall be used. Determine the annual rent by using the percentage of market value as per Table A.

3. To maximize non-tax revenues from the use of Ontario’s public land and resources thereon, to account for full costs and ensure cost recovery from those who directly benefit from the services provided.

   Treasury Board policy requires ministries to ensure that all non-tax revenue rates are kept current.

   The ministry will therefore apply the minimum rents/fees set out in Table B only in accordance with Objective B above.

4. To encourage economic opportunities and reduce environmental risks.

4.0 Phasing in rent/fees

Where an increased annual rent/fee is more than $1,000.00 and is twice or more than twice the amount of the previous rent/fee, the increase may be phased in over a period of up to 4 years as follows:

• Phase in over 2 years, where the rent doubles or more than doubles, but does not triple
• Phase in over 3 years, where the rent triples or more than triples, but does not quadruple
• Phase in over 4 years, where the rent quadruples or more than quadruples

The formula for calculating the annual rent/fee increase is:

The formula for calculating the phase-in rent/fee for a particular year is:

Example of Phase In Calculation and Application:

Calculating new rents - phase in:

The phase in process only applies where the terms and conditions for rent/fee adjustment are not specified in the land use occupational authority.

5.0 Part years

In instances where land use occupational authority is granted for less than one full year, the rent/fee to be charged shall be prorated to reflect the fraction of the year over which the land is used or occupied according to the following formula:

The rent/fee shall not be less than the minimum rent/fee as per Table B, except in accordance with Section 6.0 - Exceptions.

6.0 Exceptions

6.1 Special resource harvests

Where a land use permit is issued authorizing the harvest of Crown resources, the following minimum annual rents/fees apply and are not eligible for part-year proration:

• cutting of grasslands: $25.00 per hectare (minimum of $50.00)
• grazing of livestock: $6.00 per hectare (minimum of $50.00)
• agricultural activities such as growing crops: as calculated using Table A
• tapping of trees: $0.50 per spile (minimum of $50.00) plus an annual rent/fee for the area covered by any processing facility as calculated using Table A
• harvest of peat: $0.20 per cubic metre for the first five years of operation, increasing to $0.30 per cubic metre beyond five years, plus land rent/fee for area authorized

Administrative fees (e.g. issuance of land use permit or lease) shall be applied to all of the above as per PL 6.02.01 Administrative Fees for Public Land Transactions. However, the annual administrative fees of the said policy do not apply to cutting of grasslands; grazing of livestock and agricultural activities.

6.2 Advertising signs

The fee for an advertising sign site will be:

• sign up to 10 square metres: $40.00
• sign greater than 10 square metres and up to 30 square metres: $60.00 and
• sign greater than 30 square metres: $80.00

Administrative fees (e.g. issuance of land use permit or lease) as per PL 6.02.01 Administrative Fees for Public Land Transactions shall apply to advertising signs. However, the annual administrative fees of the said policy do not apply to advertising signs.

6.3 Type ‘B’ commercial outpost camps

Consistent with Public Lands Directive PL 4.06.01 – Commercial Outpost Camps, land use permits for type ‘B’ commercial outpost camps are issued for a short term (i.e. 2 weeks to 2 months), are non-recurring and often do not involve on-site inspections by the Ministry. The fee for type ‘B’ commercial outpost camps is $75.00 per site. Individual land use permits may authorize more than one site. However, for the calendar year 2022, the fee is set to zero dollars for permittees to align with the government’s decision to provide relief to this sector in response to the COVID-19 pandemic.

Permittees holding Type ‘B’ commercial outpost camps LUPs are not subject to ‘Dispositions Fees’ specified in PL 6.02.01 Administrative Fees for Public Land Transactions.

6.4 Deviation from market value or prescribed rent/fee

Written approval of the delegated ministry authority is required to charge a rent/fee which is inconsistent (i.e. less than market value or contrary to other policy direction) with this or any other policy of the Ministry.

7.0 Definitions

In this policy,

“fee” means the annual payment required for a personal right to use public land under the occupational authority of a licence of occupation or a land use permit

“licencee(s)” means a person(s) occupying public land under the authority of a licence of occupation for which the payment of an annual fee is required

“market value” means the most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Implicit in the definition of market value is the execution of a sale as of a specific date and the passing of title from the seller to the buyer under conditions whereby:

1. Buyer and seller are typically motivated
2. Both parties are well informed and well advised, and acting in what they consider their best interests
3. A reasonable time is allowed for exposure in the open market
4. Payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto and
5. The price represents the normal consideration for the property sold, unaffected by special financing or sales concessions granted by anyone associated with the sale

“permittee(s)” means a person(s) occupying public land under the authority of a land use permit for which the payment of an annual fee is required

“rent” means the annual payment for a leasehold interest in public land

“tenant(s) or lessee(s)” means a person(s) occupying public land under the authority of a lease, for which the payment of an annual rent is required

8.0 Policy cross references

Public Lands Directives:

• PL 2.03.01 Appraisal and Valuation of Public Lands
• PL 3.03.07 Non-Resident Crown Land Camping
• PL 2.03.03 Water Lot Evaluation
• PL 4.06.02 Advertising Signs on Public Lands
• PL 4.09.01 Disposition of Public Land to Other Governments and Government Agencies
• PL 4.10.02 Communication Tower and Antenna Sites on Public Lands
• PL 4.10.03 Utility Corridors on Public Land
• PL 11.04 Easements (Grants of)
• PL 6.02.01 Administrative Fees for Public Land Transactions

Table A

Table A shall be used for calculating applicable fees and rents for public land where market value information is available.

Commercial

For the calendar year 2022, the rent for tourist camps and outpost camps is set to zero dollars for lessees and permittees to align with the government’s decision to provide relief to this sector in response to the COVID-19 pandemic.

Agricultural

Waterlots

Industrial

Rights of Way

Institutional

Special Uses

Private Non-Commercial Recreational

Residential

Miscellaneous

Notes:

1. In no case shall the fee/rent derived in accordance with Table A, be less than the minimum prescribed in Table B.
2. Consult the Lands and Business Services Section, Divisional Support Branch for percentages to be applied to rolling leases.
3. Refer to PL 6.02.01 Administrative Fees for Public Land Transactions for rents related to Beach Management.
4. Refer to PL 6.02.01 Administrative Fees for Public Land Transactions for the administrative fees to be applied to all dispositions.

Table B - Minimum rents and fees

1. Table B shall only be used where market value information (e.g. zonal value reports or appraisal reports) is not available and/or land values result in a fee/rent that is less than those prescribed in this policy
2. Other administrative fees may apply as per PL 6.02.01 Administrative Fees for Public Land Transactions
3. Annual rents/fees are determined using the below tables and formula.

Land contribution value (in dollars)

For land areas of 10 hectares or greater, use the zonal land values as set in the zonal reports.

Per metre of frontage on road or water (in dollars)

Annual Fee/Rent (Year 1) = Land Contribution Value + Frontage Value

Annual Fee/Rent (Year 2 and beyond) = Annual Administrative Fee + Land Contribution Value + Frontage Value

Annual Administrative fees are as indicated in PL 6.02.01 Administrative Fees for Public Land Transactions

For fractions of hectares (except for parcels under 0.5 ha) the land contribution value is to be proportioned.

Example: For annual fee (Year 2) associated with a land use occupation authorized by LUP for a 4.50 hectare lot that has 100 metre frontage)

Annual Fee/Rent (Year 2) = Annual Administrative Fee + Land Contribution Value + Frontage Value

• Annual Administrative fee = $35.37 (as per PL 6.02.01)
• Land Contribution Value for 4.50 ha = $205 + 0.50 × ($240-$205) = $205 + $17.50 = $222.50
• Frontage Value for a 4.50 hectare lot that has 100 metre frontage = ($0.70 × 100) + 0.5 × ($0.85 − $0.70) × 100 = $77.50

Annual Fee (year 2) = $35.37 + $222.50 + $77.50 = $335.37