The Province of Ontario has delivered a clear message with regard to its expectations for both the private and public sector. There is to be more housing supply, built faster and priced more affordably. This article covers the new Provincial initiatives brought forward since 2019, currently in force, with the intent of achieving the stated Provincial goal of building 1.5 million new homes in 10 years.
Progressive Development Application Fee Refunds
Introduced through the More Homes for Everyone Act, 2022, the Province implemented a framework, which ultimately has become effective for new applications submitted on or after July 1, 2023, requiring municipalities to provide full or partial refunds of application fees. Such refunds are required where municipalities do not adhere to the timelines to make a decision set out in the Planning Act and City of Toronto Act for zoning by-law amendments as well as site plan approval applications.
The intent behind the progressive development application fee refunds is to result in faster approvals of development applications. Whether this initiative has or will result in faster approvals is a point of controversy. Many municipalities have now front loaded the pre-application consultation process, thereby effectively delaying formal submission of applications (which would trigger the legislated timelines). An anticipated increase in municipal refusals of development applications (refused so as to avoid triggering refund requirements) may also result in forwarding matters earlier to the Ontario Land Tribunal.
Freezing of Development Charges, Phasing in of Development Charges and other Development Charge Changes
The More Homes, More Choice Act, 2019, introduced amendments to the Development Charges Act, 1997 intended to reduce the costs of development.
These amendments, in part, permit the freezing of Development Charges for certain development applications submitted after January 1, 2020. The total amount of the Development Charges are frozen as of the following date, depending on the nature of the development application submitted:
- Date a site plan application is submitted; or
- Where no site plan application is required, the date a zoning by-law amendment application is submitted; or
- Where neither application for zoning by-law amendment or site plan control is required, Development Charges payable will be frozen upon first building permit issued or in accordance with a Development Charge Agreement.
Municipalities are, however, permitted to charge interest on the frozen Development Charges from the date of the application to the date the Development Charge is payable. Interest is subject to maximums outlined further in the Development Charges Act, 1997. Projects must also obtain their first building permit within 2 years of approval to benefit from the Development Charges freeze.
Other initiatives to reduce or stabilize the costs associated with Development Charges that have been introduced through the More Homes, More Choice Act, 2019, or subsequent legislation include, but are not limited to:
- The Phase-In of Development Charges: Development Charge By-laws passed on or after January 1, 2022 and before November 28, 2022, as well as all subsequent by-laws, will be phased in over 5 years where charge payable on or after November 28, 2022. The amount of the Development Charge is phased as follows:
- 80% of first year the by-law is in force;
- 85% of second year the by-law is in force;
- 90% of third year the by-law is in force;
- 95% of fourth year the by-law is in force; and
- 100% of the fifth year the by-law is in force.
- Expansion of the maximum term of each Development Charge By-law: From 5 years to 10 years, improving stability.
- Removal of Background Studies: From the costs to be included as part of a Development Charge.
- Exemptions: To incentivize a broad range of housing types, exemptions are now provided for non-profit housing development, inclusionary zoning units, and certain additional residential units in new detached, semi-detached and rowhouses. Discounts to Development Charges are also provided for purpose-built rentals.
Community Benefit Charges replace prior section 37 height and density bonusing
The More Homes, More Choice Act, 2019 also replaced the previous section 37 height and density bonusing regime with a new tool: Community Benefit Charges. Capped at 4% of land value, Community Benefit Charges are intended to improve upon the predictability of the quantum and types of community benefit contributions to be required as part of development. Previously, these contributions were negotiated on a per-development basis.
Community Benefit Charges fund separate capital costs from those of Development Charges. In-kind contributions in satisfaction of all or part of the Community Benefit Charges levied against a project are also permitted.
Similar to the recent amendments to Development Charges, exemptions and discounts are provided to incentivise various forms of development, including small scale additions of dwelling units, non-profit housing, and inclusionary zoning units.
Reductions in required Parkland Dedication
The More Homes Built Faster, 2022 altered parkland dedication requirements with the apparent goal of reducing the costs of development. These changes brought into force various changes including the following:
Reductions and Caps for Alternative Rates: The alternative rates for both parkland dedication and cash-in-lieu were decreased. The alternative rate of parkland dedication was reduced from 1 ha / 300 dwelling units to 1 ha / 600 net new residential units. The alternative rate of cash-in-lieu was reduced from 1 ha / 500 dwelling units to 1 ha / 1000 net new residential units.
The alternative rates are subject to caps based on land size, a significant pro forma relief for large-scale developers. Where a development site is five hectares or less, the alternative rate is capped at 10% of the land or value of land, as the case may be. Where a development site is greater than 5 hectares, the alternative rate is capped at 15% of the land or value of land, as the case may be.
As with the matters above, the recent amendments provide exemptions designed to incentivize more-affordable housing.
What’s on the horizon
The brief summaries provided in this article do not incapsulate all recent measures enacted or to be enacted at both the Provincial and Federal levels to incentivize development. Additional measures include:
- Defining Attainable and Affordable Residential Units;
- HST exemptions for purpose-built rental; and
- Parkland Dedication of encumbered lands.
Ultimately, the above initiatives and future identified initiatives are not complete solutions to drive the supply for housing in Ontario. Continued iterations of these initiatives and development of others, including those with a focus to improve ongoing labour shortages, will be required to reach the Province’s goals of building more housing, faster and more affordably.
Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.