Canada: Will Ontario Green Light Mandatory Inclusionary Zoning?

Last Updated: June 28 2016
Article by Katarzyna Sliwa

An overview of the proposed legislation

From the beginning of its term, part of this Liberal government's mandate has been to improve access to affordable housing. On May 18, 2016, Bill 204, the Promoting Affordable Housing Act, 2016 passed First Reading in the Ontario legislature. The bill proposes a number of amendments to the Planning Act intended to enable inclusionary zoning in Ontario and address affordable housing issues.

Bill 204 requires that certain municipalities, as prescribed by regulation, include policies authorizing inclusionary zoning in their official plans. Municipalities that are not prescribed by regulation will be permitted to have inclusionary zoning policies in their official plan, but will not be required to do so. It is not yet known which municipalities will be prescribed and which will not.

Bill 204 states that the inclusionary zoning policies in an official plan must provide for the affordability of housing units, set out goals and objectives, and set out the procedures proposed to attain those goals and objectives. Those municipalities prescribed by regulation will be required to pass a by-law giving effect to inclusionary zoning policies. Conversely, municipalities not prescribed by regulation will be permitted, but not required, to pass such by-laws. Notably, only the Minister will be able to appeal decisions, by-laws or conditions related to policies that authorize inclusionary zoning.

Inclusionary zoning by-laws

Bill 204 prescribes matters that MUST be dealt with by inclusionary zoning by-laws and matters that MAY be dealt with. Owners of lands, buildings or structures will be required to enter into an agreement with the municipality regarding specified matters, including the number of affordable housing units to be provided, the amount of time they must be maintained, the standards the units must meet, and the price at which the units may be sold or leased. The agreements may be registered against the lands to which they apply and the municipality may enforce them against subsequent owners of the lands. Municipalities that pass inclusionary zoning by-laws will also be required to establish procedures for monitoring and ensuring the number of housing units registered as affordable housing is maintained for the required period of time. Municipalities may impose minimum parking requirements within their inclusionary zoning by-law, but the Minister is authorized to make regulations concerning minimum parking requirements, including stating that no minimum parking is required.

Importantly, where a municipality passes an inclusionary zoning by-law, Bill 204 will prohibit that municipality from passing a by-law as described in section 37 of the Planning Act with respect to the same lands, except as permitted by regulation. Moreover, the municipality will not be permitted to authorize payment in lieu of the provision of affordable housing units as specified in the by-law, nor will it be permitted to authorize an alternative location for affordable housing units on land or in a building that is not specified in the by-law. Also, minor variances from an inclusionary zoning by-law will not be permitted.

Requirements for plans and drawings

Bill 204 sets out additional requirements for the submission of plans and drawings for development proposals. Plans must show the shape and dimensions of each proposed affordable housing unit and its approximate location in relation to other residential units. If both the official plan, and the by-law designating a site plan control area, contain exterior access requirements or inclusionary zoning standards, plans that are submitted for those areas must display the exterior access to each building containing affordable housing units. Moreover, if the affordable housing units are to be located in a condominium, an approval authority may require that the shared facilities agreements are to its satisfaction.

Provincial direction

The province also posted a proposed regulation under the Planning Act and is seeking feedback through a discussion guide, which will be available for comment until August 16, 2016. The discussion guide identifies and seeks input on potential matters that may be considered by the Minister regarding future inclusionary zoning regulations. The majority of the questions in the discussion guide ask whether certain matters should be subject to provincial direction, through regulations, or left to each municipality to determine.

These matters include:

  1. Minimum/maximum affordability periods;
  2. The number or percentage of affordable units;
  3. The threshold size of developments at which inclusionary zoning requirements are triggered;
  4. Incentives;
  5. The requirements and standards of inclusionary zoning units;
  6. A description of what should be included in the inclusionary zoning agreements between developers and the municipality; and
  7. The administration, monitoring and reporting procedures.

The discussion guide also seeks input regarding the circumstances under which it would be appropriate for municipalities to subject a development to both inclusionary zoning requirements and community benefits under Section 37 of the Planning Act, and whether planning applications commenced prior to the adoption of inclusionary zoning policies should be subject to the new inclusionary zoning policies.

Public response

The public response to Bill 204 has varied from skepticism to cautious optimism. The Ontario Home Builders Association (OHBA) and the Building Industry and Land Development Association (BILD) are encouraging a partnership framework between the public and private sector as the only way to ensure that inclusionary zoning legislation is effective. A necessary part of the partnership is a continued dialogue between municipalities and developers to ensure housing affordability is not undermined. Among the concerns raised by BILD and OHBA are those over the prohibition on appeals to the inclusionary zoning by-law and policies, the prohibition on providing affordable housing in another project in the same ward, and the prohibition on providing cash in lieu contributions. BILD and OHBA members have also suggested that inclusionary zoning requirements should not be triggered by developments under 100 units. The Federation of Rental-housing Providers of Ontario is concerned that inclusionary zoning will result in fewer rental housing units being built altogether.

Other legislation amended

Bill 204 also proposes amendments to five other provincial acts. The Development Charges Act is proposed to be amended to include a prohibition on municipalities imposing development charges when second dwelling units are created. The Housing Services Act would be amended to give local service managers more flexibility in administering and delivering social housing in their communities. Proposed amendments to the Residential Tenancies Act aim to strengthen tenant rights by preventing unnecessary evictions from social housing and modernizing the process to enforce rental property standards. The Smart Growth for Our Communities Act is proposed to be amended by repealing an amending provision that has already been implemented through another statute. Lastly, Bill 204 proposes to repeal the Elderly Persons' Housing Aid Act.

This article was co-authored by Stuart Ruffolo, a student in Dentons' Toronto office.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com

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