On February 8, 2022, the Province's Affordability Task Force reported, making a series of recommendations that our Robins Appleby blog space called "breathtaking in scope and ambition". Over the past year and a half, the government has passed four new bills aimed at increasing the housing supply in Ontario, usually referred to by the names of their Bills: Bills 109, 23, 97 and 134, respectively.

This paper will explore how the amendments to various statutes, which are introduced in these bills, will affect the current housing affordability crisis. Before we dive in, it is important to note the difference between "housing affordability" and "affordable housing", the former referring to bringing down the ever-increasing price of market housing generally through an increase in supply, and the latter referring to affordable housing where price or rent is determined by formula. Both are at issue in this paper.

While predicting government actions can be a challenge, we don't think the government is finished with legislation relating to housing. And so, we are taking advantage of your attention to toss in a couple of suggestions of our own.

The Context – The Task Force

To a large extent, the policy context for these statutes was set in the Task Force Report. The Task Force recommended as a target the construction of 1.5 Million new homes in Ontario over the next 10 years. That's 150,000 new homes per year. In 2020, Ontario built 75,000 new homes. The Task Force's recommendation is effectively to do what is necessary to double the number of homes brought to market over the next 10 years. That's a tall order.

Government legislation and bureaucracy is not the only constraint on housing creation – increases in construction costs, higher interest rates, and labour constraints all conspire to make housing harder to deliver at affordable prices. Government legislation represents what the government can do.

Bill 108 – The Prequel

But first, Bill 108. Since we have chosen the Task Force as setting the policy context for government policy, readers may wonder if we are ignoring the government's first piece of related legislation - Bill 108 - The More Homes, More Choices Act. Bill 108 came into force in the first year of the government's mandate and represented significant changes to the planning regime in Ontario. It has been a common mantra among for-profit developers and non-profit developers for years that the planning process needed to be streamlined. Bill 108 goes some way to doing so. From the perspective of directly impacting affordability, Bill 108 is more limited, which is why it gets less attention here. Bill 108 did introduce the notion of development charge deferrals for non-profit developers1, a concept which would be replaced three years later with an exemption for non-profits in Bill 23. It is our view that non-profits who had received a deferral under Bill 108 or through an analogous means, should now have the benefit of the exemption. Unfortunately, Bill 23 did not make clear transition rules and municipalities have been reluctant to make that leap.

Bill 109 – The Appetizer

Bill 109, the More Homes for Everyone Act, was introduced on March 30, 2022 and received Royal Assent on April 14, 2022. This bill was intended to reduce "red tape", accelerate development application review timelines, and streamline the approvals process in order to build homes faster.

This bill amended six different statutes, including the Planning Act, the City of Toronto Act and the Development Charges Act. Some notable amendments arising from this bill include the introduction of:

  1. A requirement for municipalities to provide refunds for development application fees for zoning by-law amendment and site plan applications, if statutory deadlines for decision-making are not met.2
  2. A ministerial zoning tool called the Community Infrastructure and Housing Accelerator, which permits the Minister to make a zoning order at the request of the municipality, by Council resolution.3
  3. The discretionary authority of the Minister, when making decisions regarding certain official plan amendments and new official plans, to direct the matter to the Ontario Land Tribunal (the "OLT") for recommendations prior to rendering approval decisions, or for a final decision.4
  4. The Ministerial power to make regulations permitting the use of surety bonds as security for municipal requirements as part of the approvals process.5
  5. The requirement that municipalities with a community benefit charge by-law must review such by-law at least once every five years.6
  6. A tiered parkland dedication rate for development in "Transit-Oriented Communities" in order to provide greater certainty for development costs on these sites.7

Bill 109 was created on the premise that the housing affordability crisis is primarily the result of an insufficient housing supply to accommodate our increasing population, and that part of the way to fix this problem is to expedite the development approval process so that more homes can be built faster. Thus the name.

Eliminating red tape is good by definition, right? However, the principal criticism of Bill 109 was the opposite: that the reduction in public participation in the Planning process went too far. There is a difficult balance between efficiency and public participation. In this regard, the government follows the direction of the Task Force and reduces public participation in the entitlement process: when and how the public can participate is now more circumscribed. Be that as it may, there has long been room to reduce the awesome volume of frivolous and narrow objections to the development process. Given the nature of the crisis and the notion that non-profit developers receive as many (if not more) objections to their efforts, it is our view that this is an appropriate intervention.

The amendments introduced by Bill 109 have the potential to move the decision-making to the OLT and create an increased number of development application appeals. While the government has added resources to the OLT, it is yet to be seen whether it will be able to deal with the increased load efficiently, and not create its own delay.8

Time matters in development. A project that is slowed down not only means housing is delivered later, it creates interest and delay charges that impact developers and can impact pricing. It is yet to be seen whether the changes in Bill 109 will actually speed up development approvals. For example, though the government has made a genuine attempt to make the process more efficient, we are now starting to see unintended consequences. Faced with having to return fees if timelines are not met, some municipalities are simply not accepting applications until they know they can meet the timelines. While at first this may seem a crass response, on reflection, it is rational and almost predictable. What's more, payment has never been the complaint of the development industry. Simply put, for most developers, a more robust capacity to process applications is more important than getting a refund.

Bill 23 – The Main Course

If Bill 109 felt like a bit of an amuse-bouche, Bill 23, the More Homes Built Faster Act, provides a more fulsome meal. Bill 23 was introduced on October 25, 2022 and received royal assent on November 28, 2022 and focussed more heavily on reducing costs.

This bill builds on Bill 109 by further amending numerous statutes including the City of Toronto Act, the Municipal Act, the Planning Act, the Development Charges Act, and the Ontario Land Tribunal Act. Notable amendments include:

1. Reducing development charges:

a. Development charge rate increases introduced by any development charge by-law passed on or after January 1, 2022, will be phased-in over a 5-year period, beginning with a 20% reduction in the first year, with the reduction decreasing by 5% each year.9

b. Reduction in development charges for rental housing development by a percentage based on the number of bedrooms in the unit (reduction of 15% for less than 2 bedrooms, reduction of 20% for 2 bedrooms, and reduction of 25% for 3 or more bedrooms).10

c. Exemptions from development charges for "affordable residential units" and "attainable residential units,".11 Note this exemption is not yet in force.

d. Exemptions from development charges for housing developments developed by non-profits and for inclusionary zoning residential units.12

e. Development charge by-laws will expire every 10 years, instead of every five years.13

f. Capping the interest paid on development charges to prime plus 1%.14

g. Establishing a cap on the community benefit charge payable.15

h. Removal of "housing services" as a service in respect of which a development charge may be imposed.16

2. Limiting site plan control17:

a. Removal of a municipality's power to regulate exterior design through the site plan control process, with some exceptions.

b. Exemption from site plan control for residential developments with 10 or fewer residential units.

3. Establishing as of right zoning to build up to three residential units on a parcel of urban residential land to encourage "gentle density".18

4. Limiting third-party appeals with respect tominor variance and consent decisions.19

5. Elimination of public meeting requirement for applications for approval of a draft plan of subdivision.20

6. Expanding the OLT's authority to dismiss appeals without a hearing as a result of undue delay, to award costs, and to prioritize the resolution of specified classes of proceedings.21

7. Changing parkland dedications requirements22:

a. Capping the required parkland dedication.

b. Allowing developers to propose the portions of their land to be used for parkland.

c. Exempting non-profit housing developments from parkland dedication requirements.

8. Upper tier municipalities such as the Regions of Durham, Peel and York will be removed from the Planning Act approval process for lower tier official plans, official plan amendments and plans of subdivision. The Minister will become the approval authority for all lower tier municipalities.23

9. Permits will no longer be required within regulated conservation areas for construction that is part of a development authorized under the Planning Act.24

10. Limiting the existence of heritage properties by introducing additional criteria for new heritage designationsand requiring the removal of properties from the heritage register if certain criteria are not met.25

11. With respect to Inclusionary Zoning, setting an upper limit of 5% of the total number of units in a development that can be required to be affordable, and setting a maximum period of 25 years over which the affordable housing units would be required to remain affordable. And increasing secured prices and rents so that they no longer relate to household income but instead to a percentage of the average resale purchase price for ownership units or of the average market rent for rental units.26

Given the scope of these amendments, it not surprising that the bill has a number of detractors. Among the lead complaints:

  • Deletion of "Housing Services": While Bill 23 has been praised by the for-profit development community due to its focus on reducing development costs, these reductions in development charges, community benefits charges and parkland levies are predicted to result in an estimated $230M annual loss in revenues (about a 20% reduction) for the City of Toronto. The City's, and other municipalities', ability to support affordable housing directly through forgivable loans (which require cash) is thus compromised. This amendment is reflective of a long standing call of the development industry that the cost of affordable housing is a cost to society, not an individual building. While it would be refreshing to see the industry follow with a call for a higher income tax to cover that charge, the transfer of housing costs from the building to the income tax base is, in fact, what appears to be in progress. When the government says it will "make municipalities whole", that is effectively what is happening – but without the calculable transparency of a development charge. A second impact is a loss of municipal control to a more centralized regime. Where a municipality may have negotiated the length of affordability, for example, that is now centrally controlled.
  • "Affordable": Bill 23 introduces definitions for affordable housing that are problematic. Bill 134 changes the definitions but does not address the underlying problems. Let's review in the Bill 23 context first. The simplified definition – affordable rental is rent at 80% of market and affordable ownership is ownership at 80% of market – creates problems.

    • First, there is no known catchment area or guidelines for calculation of the market rent. If market rent includes all rent in a given area including protected rents and rents-geared to income, then including older areas will yield a rent too low to make a project viable or will require more subsidy.
    • The affordable ownership definition meanwhile focusses on "price", and so ignores how affordable ownership is actually delivered by its main proponents such as Habitat for Humanity and Trillium Housing. By ignoring the second mortgage method of delivering affordable ownership, a windfall will accrue to the owner at the end of the affordability period. This incentivizes households to stay in homes after families move out, which is not a desired policy outcome
  • Deferral of Development Charges: Bill 108 had amended the Development Charges Act such that payment of development charges was deferred until occupancy for non-profit housing providers, however it did not contemplate a specific agreement to be entered into to enact the deferral for ownership providers. As a result, some providers used a Section 27 Agreement to give effect to the deferral. Bill 23 now exempts non-profit housing developers from development charges entirely, but it does not address how a provider who had created a work around through Section 27 Agreements should be treated. In this way, the most creative non-profits are being penalized for having found a way to give effect to the deferral. The issue for ownership providers revolved around ambiguous language to the effect that a non-profit development had to be developed and "used by" the non-profit. Did « used by » mean that the non-profit had to operate the housing? Apparently not as the words "used by" were dropped from exemption rules in Bill 23, removing the ambiguity and confirming the government's intent. We would like to see municipalities give life to that intent by forgiving any outstanding development charges to non-profits who otherwise would have qualified.
  • Inclusionary Zoning: Bill 23 essentially gutted inclusionary zoning by decreasing (i) the percentage of required affordable units per development - set upper limit of 5% of the total number of units in a development that can be required to be affordable; and (ii) the required affordability period - set at maximum period of 25 years over which the affordable housing units would be required to remain affordable. It's a challenge not to see Bill 23's inclusionary zoning impact as a reaction to the City of Toronto's work in the area. We feel for the public servants in Toronto who spent the previous years working up the City's income based approach. However, there is at least one measure of irony in the change, since the government would reverse itself by adopting an income based definition in Bill 134.
  • Faulty Premise: This bill, like Bill 109, is premised on the belief that decreasing costs to developers and expediting development approvals will result in the increased construction of housing, which will automatically increase affordability. Lower government costs are likely to allow more projects to start given a developer's minimum returns are more likely to be met. However, the final price to the consumer is capped as much a function of demand (how much buyers are willing to pay) as cost.

Bill 97 - Dessert

Bill 97, the Helping Homebuyers, Protecting Tenants Act, was introduced on April 6, 2023 and received Royal Assent on June 8, 2023, and builds on the changes enacted by Bills 109 and 23. This bill makes changes to multiple statutes including the Planning Act, Municipal Act, Residential Tenancies Act and the Building Code Act. Key amendments include:

  1. Increasing tenants' protections against evictions due to renovations, demolitions, conversions and landlord's own use27 and clarifying tenants' rights to install air conditioners where not supplied by the landlord28.
  2. Granting the Minister regulatory power to limit the requirement for replacement rental housing to be provided when existing rental units are demolished.29

While we do not offer criticism of the increase in tenant protections, we encourage the government not to scrap rental replacement. First, it is an established policy which developers are accustomed to delivering. Second, it not only preserves affordable housing, it preserves existing housing in its geographical location.

Bill 134 –Dinner Again?

When you read these things for a living, you are always grateful for a short bill. And Bill 134 has really one action of general application - it changes the definition of "affordable" from a market based test (i.e. 80% of market average rent) to an income test (i.e. must be affordable to the 60th percentile income). For such a small bill, it definitely has some implications. That's why: small bill, big commentary.

Let's start by reviewing the definitions introduced by Bill 134 in more detail. For "affordable" rental housing, the rent must be no greater than the lesser of (i) 30% of the 60th percentile of income for rental households in the municipality; and (ii) the average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.30 For "affordable" ownership housing,the price must be no greater than the lesser of: (i) a price for which the cost of accommodation is less than 30% of the 60th percentile of income for ownership households in the municipality; and (ii) 90% of the average purchase price identified for the residential unit set out in the Affordable Rental Units bulletin.31

For rental providers, which part of the definition will be effective is dependent on the market conditions. Bearing in mind that average market rent is always lower than what you can actually rent for, the measures can come out pretty close. For example, the City of Toronto's 2021 affordable rents showed that two bedroom unit rents were capped by average market rents, while rent for a one bedroom unit was defined by the 60th percentile test.

The rules with respect to ownership remain a real problem. First, there are different impacts across Ontario depending on where you live. The 60th percentile income in Toronto is about $99,000. The price (we will come back to price below) is that price which can be supported on 30% of that income. So to get to an actual price you need to make some assumptions relating to down payments and financing terms. So let's say you put down 10%, are paying 6% per annum mortgage, amortized over 25 years. That will get you a price of about $275,000. So there is a problem. First, if the average sale price in Toronto is $1,000,000 or so, that's a $750,000 implied subsidy. Huge.32

Second, those numbers all vary across Ontario because the 60th percentile varies. So does the average home price. In Ottawa, the same assumptions get you a $340,000 purchase price in a market where the average home price is much lower than Toronto, so the subsidy is different. And if that is not bizarre enough, there is no relationship between price and household size. So, in Toronto: price of a one bedroom condo: $275,000; price of a detached home: $275,000. Step over the border to Vaughn, all those prices jump because the 60th percentile is higher. Yes, this needs to fixing.

Third, the legislation focusses on price. Yet all the existing programs focus on the carrying cost of the household, with the excess value caught in the second mortgage. If we buy a home for $275,000 and the underlying title restriction evaporates in 25 years, then we will never move and we will get a windfall on the 25th anniversary. That is a very problematic idea and throws out the way the private non-profits (Habitat for Humanity, Trillium, Options for Homes) do this. Further, since we should encourage a developer to do this on their own, the second mortgage should be applied to capture that value. When it comes due, the second mortgage can either be (i) returned to the developer as deferred profit; or (ii) placed into the hands of a non-profit provider who gets the long term windfall, thus creating a long term affordable housing fund.

As though there needed to be another issue with this, the legislation does not deal well with delivering units to a non-profit after construction. So a condo fulfilling its legal or moral obligations by transferring a unit to a non-profit would not qualify for the exemption on a unit basis. It should be that if you have a purchase agreement with a qualified non-profit (who would otherwise be exempt under Section 4.2 of the Development Charges Act), you are relieved of development charges.

More Focus on Low Income Needed

We appreciate the governments activism in Housing. Four bills in 18 months is an impressive run of legislation. We also appreciate the willingness to rethink and note in particular corrections made moving from development charge deferrals to exemptions, and moving to an income based definition of affordability.

All four bills have been focussed on building new homes but it is just as important to maintain existing housing stock, particularly affordable housing stock. The effort to increasing housing supply should not result in a net loss of affordable housing. And the government should be focussed on the delivery of housing across income bands.

Our largest overall criticism of government legislation we have discussed, is that it responds to a narrow slice of the housing crisis. It is primarily legislation for the those who are just barely not able to afford a home. Meanwhile, we have generally not built affordable housing at the rate at which it is bought and repurposed as market housing. This series of legislation only does so much to assist non-profits and public housing. To be clear, it does not do nothing: it reduces costs through development charge and parkland waivers, and non-profit developers are aligned with for profit developers in terms of speed of delivery and avoiding frivolous appeals. But that is not enough to bridge the equity gap faced by non-profit builders.

As we move out of market housing into low income housing, the economic proposition becomes less and less attractive and public intervention is more and more needed. While there is some real help for non-profits, this sector will need more assistance if it is to make a dent in generating low income housing. The elimination of development charges on non-profit housing developments both ownership and rental is helpful, but not enough. Recall that all savings for non-profits are plowed back into housing, so lets look at other things governments can do.

Our Suggestions

Some examples of changes that we think would actually incentivize the construction of affordable housing by non-profits and bring relief to the housing crisis among lower income Ontarians include:

  1. A property tax exemption and a land transfer tax ("LTT") exemption with respect to affordable housing units. In addition, if non-profit housing providers were exempt from property taxes and LTT, they would have more funds available to build more affordable housing.
  2. For Ownership units that were advanced under the Bill 108 Deferral program, a forgiveness of all deferred charges and refund of what was paid.

  3. An amendment to the Perpetuities Act to allow for an exception to the rule against perpetuities where it would provide for long term housing affordability. One model for providing affordable housing ownership is for a non-profit housing provider to sell a home to eligible purchasers at an affordable price with an "Option to Purchase" attached. An Option to Purchase provides the non-profit the option to buy the property back at a pre-determined price. As a result, if the homeowners ever chooses to sell the property, the non-profit would have the right to re-purchase it on the terms and conditions set out in the option and then re-sell it to new eligible purchasers at an affordable price, therefore ensuring that the long-term affordability of the property is maintained.

    However, the rule against perpetuities, which provides that a contingent interest in land, such as an Option to Purchase Agreement, must vest within 21 years or it becomes void, effectively forces the non-profit to buy back the home in 21 years. An amendment to the rule against perpetuities under the Perpetuities Act for this specific scenario would provide greater opportunities for affordable housing ownership. Our recommendation is that Non-Profit Developers, be exempted from the application of the Perpetuities Act.
  4. It is hard to see how the pressure on the shelter system, made obvious through both the existence of encampments and waiting lists for public housing, does not lead to the conclusion that we will need either additional government housing, or a more robust voucher system. Our preference has generally been an expansion of the voucher system, but this must be accompanied by additional supply so that the cost of the vouchers is contained.

  5. While primarily aimed at provincial legislation, continued CMHC engagement in the housing financing space is important. This may mean providing loans with guaranteed interest rates that are lower then market to encourage the construction of below market rental housing – together with long term operating financing. .

  6. The definition of non-profit developer does not include "local housing corporations" incorporated under the Ontario Business Corporations Act pursuant to the old Social Housing Reform Act, like Toronto Community Housing Corporation - it should. If the provincial concern is that a local housing corporation (which is not a non-profit, by the way) can dividend that benefit back to the municipality who can use it elsewhere, then we would say the concern is misplaced as housing providers are stretched making reallocations unlikely.

  7. We know that aggressive non-profits are out bidding on land (because we draft their agreements of purchase and sale). The City's Multi-Residential Acquisition program is making this possible and should be expanded to meet the capacity of the non-profits. Some form of deposit assistance is also needed to allow non-profits to tie up land as quickly as their for profit cousins.

  8. Ban above-guideline rent increase for 5 years after existing residential units are transferred. One way of keeping existing rental stock affordable, is to, well, keep existing rental stock affordable. If a rental buyer can not rely on an above guideline increase after purchase, then the cost of imminent repairs will be forced into the land price. Where it should be.

  9. All transits stops on the Ontario Line should be built to be able to support housing. No further explanation needed.

  10. Non-Profits have a borrowing disadvantage – there is rarely a wealthy patron or big balance sheet to guarantee a loan. That has to change if non-profits are to borrow and grow. If not, lenders will force the non-profits to hold cash on account as security. Money that is better used to build housing now. Its easy to look to municipalities for this kind of thing, so we would like to see the Philanthropic Foundation community come to the table offering guarantees as a form of mission based investment.

  11. Right now many private developers have projects that are shovel-ready but unable to commence since they do not make economic sense in this market. Meantime, the mayor has announced that she wants to build 65,000 new affordable units. There is an opportunity to convert unsold stock into affordable housing and get these projects moving at the same time. We propose the City support non-profits to buy units in private projects that are unable to go ahead – at a discount in exchange for the bulk buy. Since the builder is already in place, the time line to creation of these units moves from "who knows?" to 6-30 months depending on the state of the project.

While the non-profit housing sector is certainly in favour of the new legislation's goal of increasing the housing supply the Ontario, this alone will not solve the housing crisis.


1. Section 26.1 of the Development Charges Act.

2. Section 34(10.12) of the Planning Act.

3. Section 34.1 of the Planning Act.

4. Section 17(55) to (64) of the Planning Act.

5. Section 70.3.1 of the Planning Act.

6. Section 37(54) to (59) of the Planning Act.

7. Sections 42 and 51.1 of the Planning Act.

8. Subsections 17(55) to (64) of the Planning Act provide a process for the Minister as an approval authority to refer plans to the Ontario Land Tribunal for a recommendation or a decision.

9. Section 5 of the Development Charges Act.

10. Section 26.2 of the Development Charges Act.

11. Section 4.1 of the Development Charges Act.

12. Sections 4.2 and 4.3 of the Development Charges Act.

13. Section 9(1) of the Development Charges Act.

14. Section 26.3 of the Development Charges Act.

15. Section 37(32) of the Planning Act.

16. Section 2(4) of the Development Charges Act.

17. Sections 41(4) and 41(4.1) of the Planning Act.

18. Sections 16(3)(b) and 35.1(1)(b) of the Planning Act.

19. Sections 45(12), 45(12.1) to (12.4) and 53(19) of the Planning Act.

20. Section 51 of the Planning Act.

21. Sections 19, 20 and 29 of the Ontario Land Tribunal Act.

22. Section 42 of the Planning Act.

23. Section 70.13 of the Planning Act.

24. Sections 28.0.1 and 28.1.2 of the Conservation Authorities Act.

25. Sections 27(13) to (16) of the Ontario Heritage Act.

26. Sections 42(1.1) and 51.1 of the Planning Act.

27. Sections 50(3), 53, 57(1)(a) and 57(6.1) of the Residential Tenancies Act.

28. Section 36.1 of the Residential Tenancies Act.

29. Section 111 of the City of Toronto Act.

30. Section 4.1(2) of the Development Charges Act.

31. Section 4.1(3) of the Development Charges Act.

32. We are thankful to Habitat for Humanity, GTA for sharing their calculations in this regard.

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.