Bill 23

The provincial government of Ontario passed the More Homes Built Fast Act (Bill 23) in November 2022. Bill 23 received mixed reviews and caused some uproar by affected constituents. I believe there is a fair amount of misunderstanding on the premise and particular clauses of the bill. Many news outlets in Ontario have fed negativity about the bill and focused primarily on the impact on the greenbelt while misconstruing the true intent and purpose of the bill. The intention of this blog entry is to provide an objective view of Bill 23 and the series of problems it tries to resolve in Ontario related to housing. It is up to the readers to decide on the effectiveness, fairness, need, or lack thereof, of Bill 23.

Problem

Ontario faces a palpable housing shortage. The province needs to build 1.5 million new homes over the next 10 years (Ontario). The province of Ontario alone is more than 1.2 million homes (owned or rented) too short of the G7 average. For perspective, Canada plans to welcome 1.6 million new immigrants between 2021 – 2025, which equates to robust demand for new housing units. The roughly 400,000 new immigrants every year would create demand for 100,000 new units per year – of which Ontario accounts for 40%. As a result, in Ontario, there is roughly a deficit of 20,000 units per year. Feeling dizzy? Lets discuss: How we got here ?

 

• • The average price of a home in Ontario was $932,000 as at 2021. 10 years before, in 2011, the average price of a similar home was $329,000. While average house prices soared by 180%, income levels grew by only 38% during this period. Result: lack of affordability and a housing crisis!

• • High cost of housing pushed minorities and low income Ontario households away from the burgeoning job market.

• • The staggering average house price number is a result of a lack of sufficient supply, and inflation.

• • The lack of sufficient supply has led to increases in commute times and has catapulted Ontario’s economic powerhouse, Toronto, to become North America’s urban center with the longest commute times.

• • The previous administration governing Ontario did little to change the infrastructure and legislation around housing, which compounded the problem: leading to a lack of density across Ontario where billions have been spent on transportation infrastructure. We have simply failed to maximize the built-up transportation infrastructure in Ontario. In comparison, sprawling urban centers like London and Hong Kong have maximized residential and business activity along active transit zones.

• • A substantial proportion of land in Ontario is restricted to single-detached or semi-detached homes, which restricts potential for density (aka adding more units in areas that are already serviced with amenities and transportation links). For perspective, Ontario’s most dense city, Toronto, has 70% of its land zoned for single or semi-detached homes. This type of euclidean zoning restricts potential for density that is typically achieved by high-rise buildings.

• • Red tape riddled with lengthy applications and slow moving approvals process by municipalities greatly limits the ability of developers to complete projects in a economically viable time-frame. Some projects average up to 7 years from consummation to completion. Delay costs can add an estimated $193,000 to the cost per unit. Minimum parking requirements, shadow guidelines, decision delays, and unwarranted heritage value are some examples of the planning hurdles that add to the cost and timelines for developers.

• • NIMBYism (not in my backyard): community opposition can politicize the development planning process where councilors in several municipalities can force a vote and delay the process only for it to end up in the Ontario Land Tribunal (OLT). We maintain a democratic process for development in Canada, however, local politics inhibit pragmatism and progress. City planning staff are licensed professionals who bear the burden of ensuring guidelines are followed for developments to meet traffic, shadow, and environmental metrics before reaching approval. However, a council vote can deter this methodical and technical approach and cost the municipality and its tax payers hundreds of thousands of dollars if the development proposal is rejected and the developer appeals the decision at the Land Tribunal. The land tribunal decision is made by a judge who hears arguments from lawyers and experts of both the municipality and the developer. The OLT is backlogged due to consistent opposition by councils in several municipalities across Ontario.

• • Local community opposition against new development is contrary to the federal government’s immigration goal. If Ontarians want to welcome immigrants to Canada, then we must give the growing population an equal chance to seek housing in developed cities at a reasonable price. Restricting supply via NIMBYism exacerbates the housing crisis. A single resident can pay a fee as little as $400 to challenge a development and halt its progress for years; robbing hundreds of families the chance of securing much needed housing. Is that democratic ? or ridiculous ?

• • Exorbitant development charges can amount to as much as $135,000 per home in Ontario. Parkland dedication charges add another layer of cost to the price of units. A 2019 study by BILD found that average per unit charges for high-rise developments in the Greater Toronto Area are 50% higher than in comparable areas in the United States, and 30% higher than other urban areas in Canada. The fees and levies model works against the housing goals for the province.

• • The growth in condo market has restricted supply for purpose-built rentals that failed to attract investors like pension funds and developers alike. This is because the economics were not attractive for investors. As an example, municipal taxes for purpose-built rentals can be 2.5 times greater than property taxes for condominiums. Rent-to-own models in Ontario face the folly of double taxation where the home equity corporation pays the initial tax when it buys the unit from the developer, and then further tax is collected by the occupant when they are ready to purchase.

• • Lack of incentives and penalties for municipalities that make/miss planning deadlines and achieve/fail to achieve housing targets let the problem fester for years.

And now, on a more positive spin 🙂

Solutions ?

The intent of Bill 23 is to put gears in motion and confront the housing problem in Ontario head-on. The overarching theme of Bill 23 is to encourage action among several levels of government through reduction of red tape and greater transparency. Here are the key themes of Bill 23 that are worthy of review and analysis by all Ontarians to form a view of the bill’s need. In terms of effectiveness, we would be in better stead to ascertain in a few years once sufficient progress has been recorded.

Here are key highlights impacting different aspects of the development process:

Planning and Development (Source): 

 

• • Restricting rights to appeal for minor variances and consents to applicants, municipalities and certain public bodies.

• • Amending how community benefit charges are calculated and secured and providing exemptions for affordable units.

• • Setting an upper limit of 5% of the total number of units in a development that can be required to be affordable in inclusionary zoning by-laws. Capping the maximum affordability period at 25 years.

• • Reducing the scope of site plan control approvals, including exempting residential buildings containing no more than 10 units from site plan control, and removing exterior design from the list of matters to be addressed.

• • Reducing parkland dedication requirements and introducing a new framework for parkland to be identified by landowners.

• • Removing public meeting requirements from draft plan of subdivision approvals.

• • Requiring municipalities to adopt zoning by-law amendments that implement maximum densities and minimum/maximum heights around certain major transit station areas within one year of identifying such major transit station areas in an official plan.

• • Removing prohibition of amendments to official plans and secondary plans within two years of such plans coming into effect.

• • Removing planning responsibilities from certain upper-tier municipalities.

• • Removing appeal rights from third parties for minor variances and consents.

• • Community benefit charges do not apply to affordable residential units.

• • Parkland dedication requirements do not apply to: (1) the portion of development that includes affordable residential units, attainable residential units, and inclusionary zoning residential units, (2) non-profit housing development, and (3) development of up to three residential units on a single lot.

• • As of 2023, municipalities are required to spend or allocate at least 60% of the reserve funds collected for parkland.

• • Municipalities can make a decision on draft plans of subdivisions without holding a public meeting.

Development Charges (DCs):

 

• • The bill specifically encourages the development of purpose built rental housing with a further discount applied specifically to rented residential premises.

• • A new exemption from DCs is applicable to “affordable residential units”, “attainable residential units”, “non-profit housing units”, and “inclusionary zoning residential units”.

• • DC exemptions are expanded for the construction of rental units in existing rental residential buildings, existing houses, and new residential units/ancillary structures on land where residential uses are permitted.

• • Introduction of a maximum new interest rate that a municipality can charge on a DC.

• • Municipalities will be required to spend/allocate at least 60% of DC reserves for priority services (i.e. wastewater, and roads) annually.

Ontario Land Tribunal Proceedings:

 

• • Bill 23 expands the grounds upon which the Ontario Land Tribunal (OLT) may dismiss a proceeding without a hearing to also include instances where: the party who brought the proceeding has “contributed to undue delay” of the proceeding (s. 19(1)(b.1)), or has failed to comply with an order of the Tribunal in the proceeding.

• • Bill 23 makes express that the OLT may order an unsuccessful party to pay a successful party’s costs (s. 20(2)). In contrast, the OLT Rules of Practice and Procedure currently specify that the OLT may only order costs against a party “if the conduct or course of conduct of the party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith”.

Heritage Protection:

 

• • Providing for the introduction of additional criteria for new heritage designations and for the identification of heritage conservation districts.

• • Requiring the removal of properties from the municipality’s heritage register, if certain circumstances exist.

• • Prohibiting the designation of properties to be of cultural heritage value once applications for official plan amendments, zoning by-law amendments or draft plan of subdivision have been filed unless already on the register.

• • Permitting the province to override provincial heritage standards and guidelines where they conflict with provincial priorities such as transit, housing, health and long-term care and infrastructure.

In Conclusion

Its time for Ontario to tackle the housing affordability and supply challenge. One of the main reasons we find ourselves in this circumstance is a result of inaction by previous governments. Effective legislation can curb hurdles and bottlenecks in the development process to pave the way for greater housing units and affordability – that is ultimately the intent of Bill 23. Like any legislation, Bill 23 has its supporters and opponents. But ultimately, it is up to ordinary residents of Ontario to decide their fate and rate the need of the bill on its merits. As mentioned, the effectiveness of the Bill will be apparent once sufficient progress has been recorded . My personal view is that Bill 23 was an absolute necessity to put gears in motion for solving the housing crisis in Ontario. Do you agree or disagree? Please feel free to share your thoughts in the comments.

References and Disclaimer: Legislative Assembly of Ontario, Government of Ontario, BILD, BLG, and Ontario News. Please note that this briefing contains some original content, paraphrased summaries and attributes the original content to the news and research sources. Readers are encouraged to visit the online links to access the full article/paper in its original form for a thorough and complete view. You may need to subscribe to the news agency and source for access. This blog entry contains figures and statistics that may be inaccurate. The post also makes broad generalizations that must be reviewed with caution and demands further research.