Bill 23: A re-build of foundation for housing and planning legislation

On October 25, 2022, First Reading of Bill 23 (the More Homes Built Faster Act, 2022) was carried. Bill 23 was introduced as a part of the Ontario government's larger Housing Supply Action Plan, aiming to have 1.5 million homes built over the next 10 years. If passed, it will make a number of significant changes to numerous planning and development statutes, including the Planning Act, Development Charges Act, 1997, and Conservation Authorities Act.

While this article is not intended to provide a complete analysis of the proposed legislation, a summary of some of the key changes and new policies are outlined below. We will be monitoring Bill 23 as it goes through committee debates and subsequent readings, providing updates as they are available.

1. Changes to the City of Toronto Act, 2006 and Municipal Act

The More Homes Built Faster Act, 2022 proposes amendments to the City of Toronto Act, 2006 and Municipal Act, which would allow the Minister of Municipal Affairs and Housing to impose limits and conditions on the powers of a municipality to prohibit and regulate the demolition and conversion of residential rental properties. These limits and conditions would be defined in regulations.

In addition, changes to the City of Toronto Act, 2006 in regards to site plan control provisions[1] are proposed in order to mirror those tabled in the Planning Act. Those amendments are discussed in more detail below.

If Bill 23 is passed, all the amendments to the City of Toronto Act, 2006 and Municipal Act would come into force on the day the bill receives Royal Assent.

2. Changes to the Planning Act

Bill 23 proposes a significant number of amendments to the Planning Act, and not all of them are summarized in this article. However, details of the key changes are provided below.

Overriding zoning by-laws to promote "gentle density" housing

Many of the legislative changes are intended to create more "gentle density" housing, by "increasing the number of units in urban areas with minimal impact on existing neighbourhoods."[2] Specifically, Bill 23 would override existing zoning by-laws across the province to allow up to three residential units per lot. This authorized development could be in the form of up to three units in the primary building, or up to two in the primary building and one in an ancillary building or structure. No appeal will exist in respect of the parts of a by-law related to these changes to allow for additional residential units.

If Bill 23 is passed, this change would come into force on the day the bill receives Royal Assent.

Restricting third party appeals to the Ontario Land Tribunal

Third party appeals to the Ontario Land Tribunal of official plans and amendments, zoning by-laws and amendments, consents, and minor variances will be limited. Bill 23 would impose similar restrictions for appeal rights for these planning instruments as already exist for plans of subdivision, and would create a prescribed list of "specified persons." Appeal rights would be maintained for key participants, except where appeals have been restricted elsewhere (such as a Minister's decision on a new official plan). These include applicants, the province, and public bodies like First Nations, as well as utility providers that participated in the process. These changes to third party appeal rights will extend to appeals of both residential and commercial projects.

The proposed amendments will have a retroactive affect, applying to any matter that has been appealed but has not yet been scheduled by the OLT for a hearing on the merits as of October 25, 2022. For clarity, an appeal will be considered to have been scheduled "on the date on which the Tribunal first orders the hearing to be scheduled."

Existing appeals involving third-parties will be maintained where a notice of appeal was filed by a listed person or public body under the relevant section, in respect of the same official plan/amendments, zoning by-law/amendments, consents and/or minor variances.

Third party appeals no longer allowed as a result of the More Homes Built Faster Act, 2022 will be deemed to have been dismissed on the day the bill receives Royal Assent. While these changes will have broad application, the greatest impact will be on neighbours and Community Associations, which will have no ability to challenge municipal approvals. We suspect that an effect of these changes may be for municipalities to turn down more applications, in order to give voice to these affected groups.

Limiting conservation authority appeals

Conservation authority appeals of land use planning decisions under the Planning Act will be limited to matters that affect land that they own, or where the conservation authority is the applicant. Similarly, a conservation authority may only act as a public body in specific appeals, which will be listed in the revised statute, where the appeal is made under a provision relating to natural hazard policies in provincial policy statements.

Where a conservation authority was a party to an appeal under an identified appeal, as will be provided in the revised statute, on the day before the bill received Royal Assent, the conservation authority may continue as a party until the final disposition of the appeal.

There are also additional proposed amendments to the Planning Act to broaden the ability of conservation authorities to sever and dispose of land.

One truism is that Conservation Authorities have, more and more, sought to extend their oversight to include true planning matters. These changes will bring that to an end.

If Bill 23 is passed, these changes are all scheduled to take effect on January 1, 2023.

Introduction of two classes of upper-tier municipalities

Bill 23 proposes to remove upper-tier municipal planning responsibilities from the County of Simcoe, and the Regional Municipalities of Halton, Peel, York, Durham, Niagara and Waterloo. This will mean that lower-tier municipalities in these areas will become the approval authorities for subdivisions and consents, and that the official plans would be approved by the Minister of Municipal Affairs and Housing (whose decision is not appealable). There are other related proposed changes detailed in the More Homes Built Faster Act, 2022.

If Bill 23 is passed, these changes would come into force on a day to be named by proclamation.

Site plan control changes

The More Homes Built Faster Act, 2022 also proposes various amendments to section 41 of the Planning Act, dealing with site plan control areas for residential development proposals. In particular, exterior design would no longer be a matter that is subject to site plan control, limiting the ability of municipalities to regulate aesthetic aspects of landscape design.

In addition, the proposed changes would exempt residential development proposals of up to 10 units from site plan control, except for land lease communities.

If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

Reduction in parkland requirements

While there are a number of amendments related to parkland requirements under the Planning Act, there are a few major highlights:

Higher density residential developments would see their parkland dedication requirements reduced by 50 per cent, with a cap at 15 per cent of the area or value of the land. This is important, because a number of municipalities have recently increased parkland dedication requirements well beyond the 15 per cent level.

The parkland fee would be determined much earlier in the planning process than it is currently, with the calculation occurring at the site plan stage, or in the absence of a site plan, at the time of zoning application. Developments where no site plan or zoning applications were made will continue to have parkland requirements assessed at the time of building permit issuance. These changes will apply to both residential and commercial projects.

In addition, affordable and attainable housing units, including those required under inclusionary zoning, will be exempted from parkland dedication requirements. The calculation will be based on the number of affordable and/or attainable units, relative to the total residential units in the development. Not-for-profit housing developments, as well as second and third residential units on a lot, will be exempt from parkland dedication requirements.

There are also new requirements on municipalities to allocate or spend at least 60 per cent of their parkland reserves annually, beginning in 2023. This is anticipated to have significant implications. For instance, in 2021, the City of Ottawa had over $74 million in cash in lieu of parkland[3].

If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

3. Changes to the Development Charges Act

The proposed amendments stemming from the More Homes Built Faster Act, 2022 are generally characterized as steps to reduce bureaucratic costs and red tape, which will in turn assist with delays in construction and increasing in home prices. Below is a summary of some of the key proposed changes to the Development Charges Act.

Exemptions for affordable and attainable housing

One of the key announcements has been the proposal to exempt affordable housing, non-profit housing and inclusionary zoning units from the three main charges municipalities levy: i.e. development charges, parkland dedication fees, and community benefit charges.

Affordable housing units will be defined in a new proposed s. 4.1 as those where:

In the case of a rental unit,

1. The rent is no greater than 80 per cent of the average market rent, as determined in accordance with subsection (5).
2. The tenant is dealing at arm's length with the landlord.

In the case of an owned unit,

1. The price of the residential unit is no greater than 80 per cent of the average purchase price, as determined in accordance with subsection (6).
2. The residential unit is sold to a person who is dealing at arm's length with the seller.

In both rented and owned affordable housing units, the calculation of average market rent and average purchase price will be based on the bulletin entitled the "Affordable Residential Units for the Purposes of the Development Charges Act, 1997 Bulletin."

Similarly, attainable residential units will be required to meet the following criteria:

1. The residential unit is not an affordable residential unit.
2. The residential unit is not intended for use as a rented residential premises.
3. The residential unit was developed as part of a prescribed development or class of developments.
4. The residential unit is sold to a person who is dealing at arm's length with the seller.
5. Such other criteria as may be prescribed.

If Bill 23 is passed, these amendments would come into force on a day to be named by proclamation.

Reductions to development charges for rental construction and additional units

The proposed amendments also include reductions to development charges for rental construction, based on the number of bedrooms. Specifically, if the More Homes Built Faster Act, 2022 is passed, development charges for rental housing will be as follows:

1. A development charge for a residential unit intended for use as a rented residential premises with three or more bedrooms shall be reduced by 25 per cent;
2. A development charge for a residential unit intended for use as a rented residential premises with two bedrooms shall be reduced by 20 per cent; and,
3. A development charge for a residential unit intended for use as a rented residential premises not referred to in paragraph 1 or 2 shall be reduced by 15 per cent.

Exemptions for additional residential units are also being introduced, where second and third residential units in existing or new detached, semi-detached homes and row houses would be exempt from development charges with no restrictions, as well as third residential units in an ancillary structure.

If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

Changes to method of determining development charges

Numerous changes have also been made to the method for determining development charges in section 5 of the Development Charges Act, including narrowing the list of capital costs that may be considered by the municipality. Further, there are reductions for development charges imposed by a by-law passed on or after June 1, 2022 and before the day Bill 23 receives Royal Assent. In particular, the amount of reductions ranges from 80-95 per cent, depending on whether the development charge was imposed in the first, second, third, or fourth year that the by-law is in force.

The proposed changes would also make changes to how an estimate for the increase in the need of a service attributable to an anticipated development is calculated. Specifically, the increase will only be permitted where the increase in need does not exceed the average service level provided by the municipality over a 15-year period preceding the preparation of the development charge background study (rather than the current 10-year period). This proposed change in the average service level would apply to all services except transit.

If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

Required annual spending/allocation, maximum interest rates, and renewal of by-laws

Municipalities will be required to spend or allocate at least 60 per cent of development charges reserve funds annually.

The proposed changes also include introduction of a maximum interest rate, based on an average of the Canadian banks' prime rates plus 1 per cent per annum, for development charges to be determined based on the by-law at the time of a planning application, and provisions where development charges are to be deferred until occupancy and paid in instalments. This change would apply to the calculation of interest as of June 1, 2022.

In addition, if the More Homes Built Faster Act, 2022 is passed, development charge by-laws would have to be renewed every ten (10) years, as opposed to every five (5).

If Bill 23 is passed, all of these amendments would come into force on the day the bill receives Royal Assent, but would be effective as of the date referred to above.

4. Changes to the Ontario Heritage Act

The proposed amendments to the Ontario Heritage Act are extensive, and aim to renew and update policies. In general, these changes will apply to both residential and commercial properties.

Under the More Homes Built Faster Act, 2022, changes will occur in regards to how non-designated properties may be included in a municipality's heritage register. Specifically, to include a non-designated property in the register, the property will be required to meet prescribed criteria for determining whether property is of cultural heritage value or interest. Currently, council only needs to believe the property to be of cultural heritage value or interest. The Minister will also be provided with the ability to review the determination, or any part of the determination, in the process for identification of properties that have cultural value or interest.

Additionally, new proposed amendments would provide for the removal of non-designated properties from the register in certain circumstances. Specifically, this would occur where the council of the municipality has given a notice of intention to designate the property under subsection 29(1), and any of the following circumstances exist:

1. The council of the municipality withdraws the notice of intention under subsection 29(7).
2. The council of the municipality does not withdraw the notice of intention, but does not pass a by-law designating the property under subsection 29(1) within the time set out in paragraph 1 of subsection 29(8).
3. The council of the municipality adopts a by-law designating the property under subsection 29 (1) within the time set out in paragraph 1 of subsection 29(8), but the by-law is repealed in accordance with subclause 29(15)(b)(i) or (iii).

Similarly, a non-designated property that was included in the register on the day that the Lieutenant Governor proclaims subsection 3(4) in force, will be removed from the register where the council of the municipality does not give a notice of intention to designate the property under subsection 29(1) on or before the second anniversary of the date of proclamation. Where the property is on the register as of the day before the Lieutenant Governor proclaims subsection 3(4) comes into force, it will be removed from the register if the council of the municipality does not give a notice of intention to designate the property under subsection 29(1) on or before the second anniversary of the date of proclamation.

Significantly, where a non-designated property is removed, it cannot be included by the municipality in the register again for a period of five years.

Further, changes to the standards and guidelines for provincial heritage properties include additions where the Lieutenant Governor in Council may, by order, exempt the Crown, or a ministry, or prescribed public body, from having to comply with some or all of the heritage standards and guidelines in respect of a particular property, where the exemption has the possibility of advancing one of the prescribed provincial priorities.

If Bill 23 is passed, all of the amendments outlined above would come into force on the day the bill receives Royal Assent. However, it is important to note that other provisions modifying the Ontario Heritage Act may have other coming into force dates.

5. Changes to the Ontario Land Tribunal Act, 2021

The More Homes Built Faster Act, 2022 proposes a number of amendments to the Ontario Land Tribunal Act, 2021. These mainly deal with clarifications regarding the process of an appeal, and related rules. For instance, there are proposed amendments to section 19, allowing the Tribunal to dismiss a proceeding without a hearing if the party who brought the proceeding has contributed to undue delay of the proceeding. There will also be additional language in the statute to clarify that the Tribunal has the power to order an unsuccessful party to pay a successful party's costs. In addition, appeals dealing with housing projects will be given scheduling priority.

If Bill 23 is passed, these changes would come into force on a day to be named by proclamation.

6. Changes to the Conservation Authorities Act

Reforms to the Conservation Authorities Act are also proposed, with amendments to consolidate the 36 conservation authorities[4], each having their own development regulation, into one single agency. The powers of conservation authorities have also been amended, to limit the type of municipal programs or services it can provide under section 21.1.1, prohibiting those related to reviewing and commenting on a proposal, application or other matter made under a prescribed Act. When Bill 23 is passed, changes related to the power of authorities would come into force on either the day the bill receives Royal Assent or January 1, 2023, whichever is later.

In regards to development permissions, the proposed amendments make foundational changes to the conditions a conservation authority may attach to a permission for development under section 28.0.1, by removing consideration of mitigation of pollution or land conservation, to focusing on natural hazards, like flooding and erosion. The Minister will also be able to make regulations limiting the types of conditions that may be attached to a permission or permit. Similarly, consideration of the effects on the control of unstable soil or bedrock will be been added to the factors a conservation authority must consider when considering permissions to carry out a development project or permits to engage in otherwise prohibited activities. If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

Also in regards to development, a prohibition has been added in carrying out a project where a regulation has been made to allow a development project authorized by a zoning order to begin prior to entering into an agreement with the conservation authority, and an agreement has not been entered into by the date set out in regulation. Again, this amendment would come into force on the day the bill receives Royal Assent.

The proposed changes would also see sweeping changes to streamline conservation authorities' processes to sell or lease lands they own, including those suitable for housing. Similarly, new technical requirements and processes have been introduced to disposing land where the Minister has made a grant to an authority under section 39. The Minister will no longer be required to provide its approval, rather authorities will be required to provide a notice of the proposed disposition. Similarly, a requirement for public consultation has been introduced for certain types of land, as prescribed in the statute. If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

Conservation authority fees for development permits will be temporarily frozen. The Minister has also been given power to provide written directions directing an authority to not to change the amount of any fee it charges under section 21.3. If Bill 23 is passed, these amendments would come into force on the day the bill receives Royal Assent.

7. Changes to the New Home Construction Licensing Act, 2007

The legislative announcement also includes proposals related to protection for new home buyers. In particular, there will a doubling of maximum fines for unethical builders who unfairly cancel a new home project, terminate a purchase agreement. Similarly, administrative penalties for contraventions of the Code of Ethics have also increased. The Minister will be provided with regulation making power "to establish, maintain and comply with a policy to govern payments to persons who have been adversely affected by contraventions from the funds the regulatory authority collects as fines and administrative penalties."

If Bill 23 is passed, changes related to the maximum fine for subsequent convictions, and those related to administrative penalties, would come into force on the later of the day section 75 of Schedule 1 (New Home Construction Licensing Act, 2017) to the Strengthening Protection for Ontario Consumers Act, 2017 comes into force and the day the More Homes Built Faster Act, 2022 receives Royal Assent. The remainder of the amendments to the New Home Construction Licensing Act, 2007 would come into force on the day the bill receives Royal Assent.