Bill 23: Seismic Changes to Ontario’s Land Use Planning Framework Proposed

On October 25, 2022, the day after municipal elections across the province, the Province of Ontario introduced the More Homes Built Faster Act, 2022, which proposes a host of significant legislative changes that would, if enacted, fundamentally alter key aspects of the land use planning landscape in Ontario with the stated intention of spurring the construction of 1.5 million new homes over the next 10 years to address Ontario’s housing crisis.

The scope of the legislation, known as Bill 23, is broad and the associated implications are far-reaching. If enacted as proposed, the legislation would, among other things:

• prohibit third party appeals of most planning decisions, including municipally-initiated amendments;
• reduce development charges (DCs) and parkland dedication obligations for most developments;
• expand opportunities for stratified and encumbered parkland dedications;
• remove planning authority from most upper-tier municipalities in the Greater Toronto Area (GTA);
• require municipalities to update their zoning by-laws in respect of certain matters mandated by provincial policy;
• introduce a “use it or lose it” approach for heritage listings;
• curtail the scope of site plan control;
• give the Minister of Municipal Affairs and Housing (the “Minister”) the power to impose limits and conditions on municipalities’ ability to regulate the demolition of rental housing and require the replacement of rental units upon redevelopment;
• allow for regulations that would require the Ontario Land Tribunal (the “Tribunal”) to prioritize the resolution of certain types of projects or proceedings;
• allow the Minister to amend a municipal official plan; and
• further narrow the role of conservation authorities in the development process.

In addition, the Province has indicated that further provincial policy changes are forthcoming, along with regulatory changes that will impose restrictions on municipalities’ ability to require affordable housing units through inclusionary zoning (IZ). The key proposed changes are described in more detail below.

Removal of Third Party Appeals

The Planning Act currently provides broad rights to appeal planning decisions, such that in many instances effectively anyone can appeal a decision that may affect them to the Tribunal. In particular, any person or public body can appeal most official plan amendment or a zoning by-law amendments, whether it results from a landowner’s application or a municipality’s initiative, provided they have made oral submissions at a public meeting or written submissions to the municipal council before the amendment was adopted or enacted. Similarly, any person or public body who has an interest in the matter may appeal a committee of adjustment’s minor variance or consent decision.

Bill 23 fundamentally alters this approach. In effect, the legislation would eliminate appeals from third parties (i.e., those who did not make the planning application at issue), except public entities and infrastructure providers. More specifically, the legislation as proposed would limit the right to appeal planning decisions to the applicant (if the decision results from a planning application), public bodies, the Minister, and a list of specified persons that primarily consists of infrastructure providers, such as utility companies, railways and telecommunications companies. Importantly, as currently drafted, this prohibition on appeals would prohibit landowners from appealing municipally-initiated amendments – a feature of the Bill which is likely to concern developers.

The elimination of third party appeals would also have retroactive effect. The legislation would deem all appeals already filed to have been dismissed if a hearing on the merits was not scheduled as of October 25, 2022, the day Bill 23 was first introduced. If Bill 23 is enacted as proposed, many who filed appeals under the existing legal regime would see their appeals extinguished. As currently drafted, these retroactive dismissals would also apply to appeals of municipally-initiated amendments if the appeal had not been scheduled for a merit hearing as of October 25, 2022.

The elimination of third party appeals would have far-reaching consequences for developers, landowners, municipal councils and committee of adjustment proceedings. It could give developers that file planning applications more confidence to work with municipal staff and council with the aim of obtaining an approval through council, rather than appealing to the Tribunal if council fails to make a decision within the legislated timeline, with the comfort of knowing that a council approval would not then be subject to appeal by neighbours or others who disagree with the decision to approve the application.

As currently drafted, Bill 23 would also give municipalities the power to change the planning permissions for a parcel of land through official plan amendments or zoning amendments, with no opportunity for the landowner to appeal council’s decision to the Tribunal. This would create a greater imperative for landowners to closely monitor council proceedings and potentially increase the stakes of municipally-initiated planning exercises, especially given existing provisions that prohibit privately-initiated official plan amendments within two years of a new official plan or secondary plan coming into effect. Further, as noted above, the retroactive effect of the prohibition would result in the deemed dismissal of many appeals of municipally-initiated amendments already filed.

Reductions in Government Charges: DCs and CBCs

Bill 23 proposes a number of amendments to legislation governing DCs and community benefits charges (CBCs) that have the effect of reducing the magnitude of such government charges:

• Mandatory DC reductions. The amount of DCs imposed under existing and future DC by-laws would be reduced by 20% during the first year the by-law is in force, 15% the second year, 10% the third year, and 5% the fourth year. The date on which a site plan application (or zoning application, if site plan approval is not required) is made would determine which discount applies, such that a 20% discount would be available if a site plan application is made during the first year the DC by-law is in force.
  
• Further DC reductions for rental housing development. DCs for rental housing development would be further reduced by 25% for units with three or more bedrooms, 20% for units with two bedrooms, and 15% for all other units.
  
• DC Exemption for additions to existing rental buildings with four or more units. The addition of one unit or 1% of the existing residential units in a rental housing development, whichever is greater, would be exempt from DCs.
  
• DC Exemptions for Non-Profit Housing, “Affordable Residential Units”, “Attainable Units” and IZ Units. Bill 23 would exempt non-profit housing development as well as the following categories of units from DCs:
  • “affordable residential units”, defined as those that have rents or purchase prices of 80% of average market rent or average purchase price, respectively;
  • “attainable units”, a new concept which pertains to ownership units that do not qualify as affordable residential units. Further criteria defining attainable units will be set out in regulations, though a draft is not yet available; and
  • affordable housing units required pursuant to an IZ by-law.
    
• Existing development, affordable residential units, attainable units and IZ units would not contribute to CBCs. CBCs, which are currently capped at 4% of land value, would not be payable for that portion of the total floor area that already exists on the site and will be retained or that is attributable to affordable residential, attainable or IZ units to be developed on the site.
  
• Elimination of housing services as a DC eligible capital cost. Housing services would be removed from the list of capital costs in respect of which DCs could be levied. This change would have retroactive effect, as any by-law that imposes DCs for increased capital costs because of increased needs for housing services would be deemed to be amended to remove that component of the DC.
  
• Maximum interest for DCs. The interest municipalities are entitled to charge for DCs fixed at the time of site plan application (or payable in installments for rental housing development and institutional development) would be capped based on a quarterly adjusted prime rate, plus 1%.

DC by-laws are also proposed to expire 10 years after the day they come into force, rather than 5 years under existing legislation.

Parkland

Bill 23 proposes to reduce parkland dedication requirements as well. If enacted as proposed, the legislation would:

• Reduce the maximum alternative rate of parkland dedication to:
  • one hectare (ha) per 600 units (down from one ha per 300 units) for the conveyance of land; and
  • one ha per 1000 units (down from one ha per 500 units) for cash-in-lieu;
    
• Provide for the deduction of any existing residential units on the lands prior to redevelopment from the determination of unit count for the purposes of the alternative rates outlined above;
  
• Cap parkland dedication requirements in circumstances where the alternative rate is used to:
  • 10% of the value of the land, if the land proposed for development is 5 ha or less in area; and
  • 15% of the value of the land, if the land proposed for redevelopment is greater than 5 ha in area.
    
• Fix applicable parkland dedication requirements as of the date a site plan application (or zoning application, if site plan control is not applicable) is made, provided that a building permit is obtained within two years of site plan approval; and
  
• Require municipalities to spend or allocate at least 60% of the funds in its cash-in-lieu of parkland account annually.

The proposed transition provisions generally provide that the provisions above would apply to any development that does not yet have a building permit.

In addition, amendments to the Planning Act would, if enacted, permit landowners to propose to provide land that is encumbered as parkland dedication, allowing for land conveyed on a stratified basis (for example with below-grade parking or other uses beneath), land encumbered with below-grade infrastructure, and privately-owned publicly-accessible open spaces (POPS) to be eligible as a parkland dedication. The Province may establish criteria for such encumbered parkland dedications through regulation. If the municipality refuses to accept the proposed conveyance as parkland dedication, the owner may appeal the municipality’s determination to the Tribunal. This new approach to parkland would also mean that a landowner could appeal to the Tribunal if it preferred to satisfy its parkland obligations through a dedication of land and the municipality instead sought cash-in-lieu.

Removal of Upper-Tier Municipalities’ Planning Authority

Another fundamental change proposed in Bill 23 is the removal of land use planning authority from most upper-tier municipalities in the GTA. Specifically, the Regions of Durham, Halton, Niagara, Peel, Waterloo and York, the County of Simcoe and any other upper-tier municipality that is prescribed in regulation would no longer have planning responsibilities as of the date the legislation comes into force. As a result, the above-noted upper-tier municipalities would not have the power to adopt official plans, make official plan amendments, approve lower-tier official plans or amendments, or approve plans of subdivision, nor would they have any right to appeal planning decisions. Instead, lower-tier municipalities would generally assume these functions and, to the extent the lower-tier municipality’s official plans or official plan amendments are subject to approval, the Minister would become the approval authority, including for lower-tier official plans or amendments that are already in process (subject to transition regulations which may be forthcoming).

To transition to this new regime, official plans or official plan amendments of the upper-tier municipalities listed above that are:

• in effect immediately before the legislation takes effect would be deemed to constitute an official plan of the lower-tier municipality, until the lower-tier municipality revokes it or amends it to provide otherwise;
• adopted but not yet in force on the date the legislation takes effect are deemed to have been adopted by the lower-tier municipality and would be subject to the approval of the Minister, unless exempt; and
• in process but not yet adopted may be continued by the lower-tier municipality.

The upper-tier municipality’s official plan that has been deemed to constitute an official plan of the lower-tier municipality would prevail in the event of a conflict with the official plan of the lower-tier municipality.

Mandatory Zoning Updates: PMTSAs and Official Plan Policies Required to Implement Provincial Policy

Bill 23 proposes to require municipalities to update their zoning by-laws within one year of official plan policies relating to protected major transit station areas (PMTSAs) coming into effect, to ensure their zoning by-laws conform with those policies. In particular, municipalities would be required to amend their zoning by-laws to conform with policies that delineate the PMTSA, identify the minimum residents and jobs per ha to be accommodated, and policies that establish minimum and maximum densities and heights. Such zoning amendments would only be subject to appeal if the municipality fails to enact them within one year of the relevant official plan policies coming into effect.

The obligation to update zoning would also apply to any official plan policies that are required to be included in an official plan to conform with a provincial plan or be consistent with a policy statement. Such policies can include minimum density targets to conform with those set out in the Growth Plan for the Greater Golden Horseshoe (the “Growth Plan”), meaning that municipalities may be required to update their zoning by-laws to ensure minimum density targets can be achieved. To the extent forthcoming changes to provincial policy (as discussed below) require updates to municipal official plans, updates to municipal zoning by-laws may likewise be required.

Heritage

Amendments to the Ontario Heritage Act are proposed that would introduce a “use it or lose it” concept for heritage listings. In particular:

• Municipalities would have two years from the date a property is listed on the heritage register to issue a notice of intention to designate the property. If it fails to do so, the municipality would be required to remove the property from the heritage register.
  
• Properties on the heritage register as of the date the new legislation comes into force would have to be removed if the municipality does not issue a notice of intention to designate within two years.
  
• If a municipality has issued a notice of intention to designate but subsequently withdraws the notice, does not pass a designating by-law, or passes a designated by-law that is subsequently repealed following an appeal to the Tribunal, the municipality must remove the property from the heritage register.
  
• If a property is required to be removed from the heritage register for any of the reasons outlined above, the municipality is prohibited from listing the property on the register again for a period of five years.

Further, Bill 23 precludes municipalities from defensively designating properties following the issuance of a notice of filing of an official plan amendment, zoning amendment or subdivision application, if the property is not already listed on the heritage register or more than 90 days have elapsed from issuance of the notice of application filing.

With respect to provincially-owned heritage properties, Bill 23 proposes to give the Minister of Heritage, Sport, Tourism and Culture Industries the power to review and revise determinations of cultural heritage value or interest, with retroactive effect. The Bill also gives the Province the power to issue orders exempting provincially-owned heritage properties from the requirement to comply with provincial heritage standards and guidelines if it is of the opinion that the exemption could advance provincial priorities such as transit, housing or health and long-term care.

Site Plan Control

Bill 23 proposes to exempt residential buildings with 10 units or less from site plan control. It also proposes to curtail municipalities’ authority to regulate matters of exterior design and appearance of buildings through the site plan process, seeming with the aim of speeding up the approval process. In particular, it removes matters pertaining to the exterior design of a building, including character, scale, appearance, design features and sustainable design from the scope of municipalities’ site plan control authority. If enacted as proposed, exterior design would only fall within the scope of site plan control to the extent that it is a matter relating to exterior access to a building that will contain affordable housing units. Further, the appearance of elements, facilities and works on the land would not be subject to site plan control, except to the extent the appearance impacts matters of health, safety, accessibility or the protection of adjoining lands.

Gentle Density

Bill 23 includes refinements to existing concepts in the Planning Act relating to planning permissions for a minimum of three residential units on a lot, but stops short of more significant legislative changes requiring municipalities to permit gentle density or “missing middle” forms of development.

The Planning Act already requires municipalities’ official plans and zoning by-laws to permit two residential units in house-form buildings (including detached houses, semis and rowhouses), plus a third unit in an ancillary building. Bill 23 refines this concept by precluding municipalities from prohibiting three residential units on a parcel of urban residential land, provided all three of the units are in the house, two are in the house and one is in an ancillary building, or one is in the house and two are in an ancillary building. The addition of a second or third unit to a residential property would also be exempt from DCs and parkland obligations.

Limits and Conditions on Municipalities’ Rental Replacement Powers

Section 111 of the City of Toronto Act and section 99.1 of the Municipal Act permit municipalities to prohibit and regulate the demolition or conversion of buildings containing six or more residential rental units. Certain municipalities use this authority to require the replacement of rental units upon redevelopment. Bill 23 proposes to give the Minister the authority to make regulations imposing limits and conditions on these municipal powers. Proposed regulations have not been released, so the nature of the limits or conditions that might be imposed is not yet known.

Ministerial Official Plan Amendments

Bill 23 proposes to provide the Minister with a new power to amend an official plan by order if in its opinion the plan is likely to adversely affect a matter of provincial interest. This new authority would supplement the Minister’s existing authority to exercise zoning powers through ministerial zoning orders.

Tribunal Administration and Procedure

Bill 23 proposes to allow the provincial government to make regulations requiring the Tribunal to prioritize the resolution of certain classes of proceedings – a power which could be used to require the Tribunal to prioritize the scheduling and determination of applications based on considerations such as the amount of housing units proposed. Regulations could also prescribe timelines for the Tribunal to meet in processing prioritized appeals.

In terms of procedure, Bill 23 would give the Tribunal expanded powers to dismiss an appeal without a hearing if the appellant has contributed to undue delay or fails to comply with a Tribunal order. The Tribunal would also have an explicit power to order an unsuccessful party in an appeal to pay a successful party’s costs. Such a “loser pays” model is common in civil court proceedings, but has not historically been used in land use planning matters at the Tribunal, where cost orders are rare and generally limited to circumstances where a party has demonstrated unreasonable, frivolous, vexatious or bad faith conduct. It is not clear when a “loser pays” cost order may be considered, so the implications of the Tribunal’s new power in this regard are difficult to discern, though the risk of facing a cost order if unsuccessful in a contested hearing may incentivize settlement.

Conservation Authorities

Amendments to the Conservation Authorities Act are proposed that would narrow the scope of conservation authorities’ role in the development process. For example, while conservation authorities are currently permitted to provide services on behalf of municipalities with respect to matters within its scope of expertise, Bill 23 would prohibit conservation authorities from reviewing and commenting on a proposal, application or other matter under legislation to be prescribed by regulation. While the regulations are not yet available, if the prescribed legislation includes the Planning Act, this amendment would effectively remove conservation authorities as commenting agencies in respect of development applications. The Bill would also provide that prohibitions on carrying out development activities in regulated areas such as hazardous lands, wetlands, rivers or stream valleys would not apply within certain prescribed municipalities, if the activity is part of development authorized under the Planning Act and certain conditions to be set out in regulations are satisfied. In addition, conservation authorities would no longer have authority to withhold a permit on the basis that the activity is likely to affect pollution or the conservation of land.

Further Changes Forthcoming: Provincial Policy and IZ

In addition to the legislative changes reflected in Bill 23, the Province indicated that it intends to commence consultation on integrating the Provincial Policy Statement and the Growth Plan into a single, province-wide planning policy document. This document provides further opportunities for significant changes to the Province’s planning framework.

In addition, the Province has indicated that it intends to propose changes to an existing regulation governing IZ that would limit the affordability period for 25 years, impose a 5% cap on the number of IZ units required and introduce standards for determining the price or rent chargeable for affordable housing units required under IZ.

Next Steps

Bill 23 is expected to proceed through the legislative process swiftly, with enactment expected before the end of 2022. We will continue to monitor the legislation as the legislative process unfolds. In the meantime, for more information, please contact any member of our Municipal and Land Development Group.