Canada: Province Introduces Bill 204, "Promoting Affordable Housing Act" To Permit Inclusionary Zoning

Last Updated: June 9 2016
Article by J. Pitman Patterson, Isaac Tang and Stephen F. Waqué

Most Read Contributor in Canada, November 2017

Bill 204 at First Reading

On May 18, 2016, the Minister of Municipal Affairs and Housing introduced Bill 204, Promoting Affordable Housing Act, 2016. Bill 204 is intended to address affordable housing issues by providing a legislative framework that enables inclusionary zoning in Ontario. Inclusionary zoning allows municipalities to require affordable housing units to be provided in new development projects and to ensure the affordability of these units over time.

In addition to Bill 204, the Ministry released the Inclusionary Zoning Consultation Discussion Guide. The Discussion Guide sets out a list of matters that the Ministry intends to address by regulation. The deadline to submit comments on Bill 204 and its regulations is August 16, 2016.

To address affordable housing issues, amendments to both land use planning and housing assistance legislation are required. As a result, Bill 204 proposes changes to six acts. This Bulletin provides a review of the key changes to the Planning Act and the Development Charges Act, 1997, a summary of the proposed Planning Act regulations and our initial thoughts on Bill 204.

Proposed Changes to the Planning Act

Inclusionary zoning is not currently permitted under the Planning Act . As a general principle, municipalities are not allowed to pass zoning by-laws that zone for the user, as opposed to the use, to avoid promoting discrimination. However, this general principle also precludes municipalities from requiring developers to provide affordable housing units as a condition of zoning approvals. Although the Bill 51 amendments to the Planning Act granted municipalities the authority to pass zoning by-laws with conditions, this authority was limited to "prescribed conditions". To date, a regulation proposed to define the prescribed conditions has not been established by the Minister.1

Bill 204 grants a narrow exception to this general principle for the limited purpose of providing affordable housing. In fact, the Province may through regulation require municipalities to adopt inclusionary zoning practices. There is no appeal of inclusionary zoning policies in official plans or zoning by-laws to the Ontario Municipal Board (the "OMB"), except by the Minister.

Significant changes to the Planning Act are required to implement inclusionary zoning. Key changes proposed by the First Reading of Bill 204 include:

  1. Prescribed municipalities must authorize inclusionary zoning through official plan policies. Other municipalities may choose to adopt this practice: Municipalities prescribed by regulation must amend their official plan to contain policies that authorize inclusionary zoning. Inclusionary zoning policies are official plan policies that a) authorize the inclusion of affordable housing units within buildings or projects containing other residential units, and b) provide for such units to be maintained as affordable housing units over time.
  2. Prescribed local municipalities must pass zoning by-laws to give effect to inclusionary zoning policies. Other municipalities may choose to adopt this practice: Subject to requirements as prescribed by regulation, a by-law passed by a municipality to give effect to inclusionary zoning policies (the "inclusionary zoning by-law"):
    • must include requirements as to the number of affordable housing units to be provided, the period of time affordability must be maintained and the requirements and standards that must be met for affordable housing units;
    • may include measures and incentives to support inclusionary zoning;
    • may set the price at which affordable housing units are sold or rented; and
    • must require that the owners of the new development enter into agreements with the municipality to implement the requirements set by the by-law. Such agreements may be registered on title and enforced on subsequent owners.
  3. If an inclusionary zoning by-law is passed, council must establish procedures to monitor and report on the state of affordable housing units: The monitoring procedure established must ensure that the affordable housing units are maintained as affordable housing units for the time period set by the by-law. Council must also provide reports and information on affordable housing units in accordance with the regulations.
  4. If an inclusionary zoning by-law applies to a new development, municipalities are generally prohibited from requiring a Section 37 agreement for that development, requesting cash-in-lieu, or requiring that affordable housing units be built off-site: Municipalities are prohibited from passing a Section 37 by-law with respect to the same property if an inclusionary zoning by-law applies, except as permitted by regulation. Municipalities also have no authority to accept cash-in-lieu of the affordable housing units or to require the developer to provide affordable housing units on properties other than those specified in the by-law.
  5. Only the Minister may appeal second unit policies and inclusionary zoning policies: Unlike most decisions under the Planning Act, there is no right of appeal to the OMB for decisions, by-laws and conditions relating to second unit policies and inclusionary zoning policies, except by the Minister. Challenges to such policies will typically require an application for judicial review. The power to quash a by-law for unreasonableness is narrowly defined under the Municipal Act; one could also challenge the by-law on the basis of illegality. 
  6. Minor variances cannot be granted to an inclusionary zoning by-law: Committees of adjustment are specifically prohibited from authorizing a minor variance from provisions of an inclusionary zoning by-law.
  7. New developments that are subject to inclusionary zoning may be required to comply with additional requirements: Depending on the municipality's inclusionary zoning policies, applicants:
    • must show on drawings the exterior access to each building containing affordable housing units, if the development is subject to site plan control and both the official plan and by-law designating the site plan control area contain exterior access requirements or standards related to inclusionary zoning;
    • must show the shape and dimensions of each proposed affordable housing unit and its approximate location in relation to other residential units, if the units are located in a plan of subdivision; and
    • may be required to enter into a shared facilities agreement to the satisfaction of a municipality, if the affordable housing units are located in a condominium.
  8. Maintenance of loading or parking facilities in a zoning by-law must include provisions prescribed by regulation. Affordable housing units may be exempt from minimum parking requirements: Zoning by-laws may require owners or occupants to provide and maintain loading or parking facilities on land that is not part of a highway. These by-laws must now contain the provisions, if any, that are prescribed by regulation. The Minister is also authorized to make regulations respecting minimum parking requirements, including providing that there is no minimum parking requirement.
  9. Long-term leases of new developments containing affordable housing units are exempt from subdivision and part-lot control: Lands that are leased between 21 to 99 years for the purpose of constructing or erecting a building or project that will contain affordable housing units are not subject to subdivision or part-lot control under Sections 50(3) and 50(5) of the Planning Act.

Proposed Planning Act Regulations

Many of the details for implementing inclusionary zoning may be addressed by regulation. Official plan policies and zoning by-laws must reflect the regulations unless specifically permitted to go beyond the requirements or standards set by the regulations.

The proposed regulations have not been released by the Province. However, the Ministry has provided a list of matters that it intends to address, which includes regulations that prescribe:

  1. the content of inclusionary zoning policies in an official plan;
  2. the content of inclusionary zoning by-laws;
  3. the content of agreements required to maintain the affordable housing units over time;
  4. the procedures for monitoring and ensuring affordable housing units are maintained for the required period of time;
  5. the circumstances under which Section 37 of the Planning Act may be used when an inclusionary zoning by-law is in effect;
  6. the content, timing and distribution of municipal reports and information on affordable housing units;
  7. a transition date in relation to proceedings started before or after the effective date and/or the date of municipal adoption of inclusionary zoning policies and/or zoning; and
  8. maximum fees for the processing of development applications where affordable housing units are provided.

The Discussion Guide mentioned earlier in this Bulletin provides further guidance as to the types of issues that the Ministry intends to address by regulation.

Proposed Change to the Development Charges Act

Bill 204 only proposes one change to the Development Charges Act, 1997. This change would prohibit municipalities from imposing development charges when a second dwelling unit is created in prescribed classes of proposed new residential buildings. The existing exemption only applies to prescribed classes of existing residential buildings.

Initial Thoughts

Inclusionary zoning is a form of conditional zoning. Although inclusionary zoning has been widely adopted by municipalities in the United States (where this term originates), this planning tool is still a relatively new concept in Canada and has been met with mixed results. For example, the City of Vancouver adopted this approach in 1988, but studies have shown that the subsidized housing units actually built due to this policy amounts to less than 1% of all housing constructed in Vancouver.2

Bill 204 has been met with both interest and skepticism from the public and private sectors. The City of Toronto is approaching the proposal with cautious optimism, with City Council recommending that Toronto's Housing Advocate lead the City's response in consultation with the City's Planning and Community Development committees. On the other hand, the Federation of Rental-housing Providers of Ontario (FRPO) has expressed its concern that inclusionary zoning will result in fewer rental housing units being built. The Ontario Home Builders' Association cautions against the elimination of official plan appeals to the OMB, noting that removing the right to appeal may create a "very toxic environment" when a municipality determines the location of affordable housing units.

In our view, many of the implications of Bill 204 will not be fully understood until the regulations are released by the Province. Although Bill 204 provides the framework for allowing municipalities to pass inclusionary zoning by-laws, many of the critical components are set by regulation. For example, the regulations may determine the "must-haves" in an inclusionary zoning by-law, including the number of affordable housing units, the requirements and standards for such units and the period of time such units must be kept affordable. They may also determine the limited circumstances when a municipality may "double-dip" and require a developer to enter into a Section 37 agreement, a municipality's monitoring and reporting obligations, and the types of incentives that may be offered to developers in exchange for affordable housing units. In our view, the viability of the regime will depend on the economic factors established via regulation. What does appear likely is that municipalities will inherit substantial ongoing administrative burdens in program implementation and management.

It is also interesting to note that despite the potentially large impact that inclusionary zoning policies will have on planning and development matters, only the Minister may appeal these matters to the OMB. In effect, inclusionary zoning will be dictated by the Ministry or by local municipalities, with limited opportunities for other stakeholders such as the development industry, community groups and existing residents to be heard. The balance between what the Ministry prescribes and what will be deferred to local decision-making has yet to be determined, but there is the potential for significant provincial regulation over inclusionary zoning policies and by-laws.

In sum, inclusionary zoning provides municipalities with a powerful tool in their planning toolbox to address affordable housing concerns. However, the effectiveness of this policy approach in increasing the amount of affordable housing in Ontario remains to be seen. The challenges faced by municipalities and developers alike in implementing inclusionary zoning as part of the development approval process are also difficult to assess at this time, although it is clear that the potential impacts can be significant. We will be reviewing the regulations with keen interest.


1. Although a Regulation Proposal Notice was posted on the EBR Registry in July 2006, the Minister has not made a decision on the regulation (see EBR Registry No. RF06E0004). Proposed prescribed conditions included measures identified in studies completed prior to enactment of the zoning by-law, measures that would ensure the orderly development of lands, buildings and structures and measures that relate to the provision of transportation and public transit infrastructure.

2. "The Potential Effects of Inclusionary Zoning in Canada, 2010 Report" prepared by Altus Group Economic Consulting for the Canadian Home Builders' Association, October 2010.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions