Use it, or lose it policies: are developers in Ontario sitting on housing supply?

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| Published , updated April 23, 2024

A 2023 report stated there were 1 million proposed housing units that were either approved or in the development pipeline, but not moving forward. The developers have had their permits to build approved, but the homes have not yet been built.

In response, a 2024 report by two developer lobby groups countered that they were not “sitting on supply” amidst a housing crisis, pointing to: the existing use it or lose it policies in Ontario’s planning process, that the number of “shovel ready” lots was 331,600 instead of 1 million, and highlighted that the rate of residential construction was at a 33-year high in 2023.

In 2024, Bill 185 (press release) introduced changes to the Planning Act which requires municipalities to withdraw the approvals from developments with draft plans of subdivision, and gives them the option to withdraw approved site plans, if they do not receive building permits within 3 years.

What is a “Use it or Lose it” policy?

Use it or Lose it (UIOLI) policies are timelines or deadlines that municipalities can set for developers at certain stages of the development planning process. If milestones aren’t met, the approval they received (eg. building permit, draft plan approvals or servicing allocation) expires and has to be re-applied for, involving additional time and fees.

Some policies are mandated by provincial legislation, while others are optional for municipalities to implement.

These policies are a form of check and balance that can incentivize developers to make progress and discourage stagnant development projects.

If you don’t pull permits, you have to start at ground zero and pay the fees again, and make sure your development is still relevant

Burlington Mayor Marianne Meed Ward

Use it or Lose it policies prior to 2024

There are a number of ways in which Ontario’s planning system encourages progress by applying UIOLI-like policies at different stages of the process. These include:

Building permits can be revoked after 6 months if construction hasn’t seriously commenced

The Building Code Act regulates the process of building and construction in Ontario. A building permit is required to start construction and once it is issued, there is no expiry date, but Chief Building Officials (CBOs) can revoke a permit if construction has not commenced within 6 months, or where construction has been suspended, or discontinued for more than a year.

(10) Subject to section 25, the chief building official may revoke a permit issued under this Act,

(a) if it was issued on mistaken, false or incorrect information;
(b) if, after six months after its issuance, the construction or demolition in respect of which it was issued has not, in the opinion of the chief building official, been seriously commenced;
(c) if the construction or demolition of the building is, in the opinion of the chief building official, substantially suspended or discontinued for a period of more than one year;
(d) if it was issued in error;
(e) if the holder requests in writing that it be revoked; or
(f) if a term of the agreement under clause (3) (c) has not been complied with. 1992, c. 23, s. 8 (10).

Section 8 (10) of the Building Code Act

However, the Building Code Act, does not allow CBOs to impose conditions on existing issued permits to compel holders to carry out construction within a specific timeframe.

In addition, Section 25 of the Building Code Act provides developers with a process to appeal a revoked building permit if they “considers themselves aggrieved by an order or decision” made by a CBO.

Lapsing draft plan approvals after 3 years under the Planning Act

Municipalities may place a timeline on the lapsing of an approval to a draft plan of subdivision, except in cases where there is an appeal, in which case the time period for lapsing of approval does not begin until the date the Tribunal’s decision is issued:

Lapse of approval

(32) In giving approval to a draft plan of subdivision, the approval authority may provide that the approval lapses at the expiration of the time period specified by the approval authority, being not less than three years, and the approval shall lapse at the expiration of the time period, but if there is an appeal under subsection (39) the time period specified for the lapsing of approval does not begin until the date the Tribunal’s decision is issued in respect of the appeal or from the date of a notice issued by the Tribunal under subsection (51). 2017, c. 23, Sched. 5, s. 99 (1).

Section 51 (32) of the Planning Act permits an approval authority to provide for the lapsing of an approval to a draft plan of subdivision.

However, once a plan of subdivision is approved by municipalities, there is no set timeline for a developer to build the homes.

The City’s role in delivering housing is to review development applications and issue building permits,

It is the responsibility of the developer/builder to start construction after the permit is issued – the timing of which is outside the City’s control.

City of Mississauga spokesperson

For example, in the Region of Halton:

The Region has delegated the approval of plans of subdivision, plans of condominium, and part-lot control by-laws to the Local municipalities. The Region will continue to comment on the conformity of these applications to The Regional Plan. In the case of
Local Official Plans and amendments thereto, the Region has exempted them from its approval subject to conformity with the exemption criteria and matters of provincial interest.

(1) All approvals of draft plans of subdivision shall include a lapsing date as per Section 51 of the Planning Act.

(2) If an approval of a draft plan of subdivision lapses, or when a secondary plan is updated, the implementation of the Growth Plan principles and objectives shall be considered; and

(3) If a plan of subdivision or part thereof has been registered for 8 years or more and does not conform to the Growth Plan principles and objectives, the Region may request the Local Municipality to use its authority under section 50(4) of the Planning Act to deem it not to be a registered plan of subdivision, where construction or installation of Regional or Local services has not commenced.

Region of Halton’s Official Plan policy 184

Registered plans deemed to be not registered after 8 years

Municipal councils may cancel the registration of any plan of subdivision that has been registered for 8 years:

Designation of plans of subdivision not deemed registered
(4) The council of a local municipality may by by-law designate any plan of subdivision, or part thereof, that has been registered for eight years or more, which shall be deemed not to be a registered plan of subdivision for the purposes of subsection (3). R.S.O. 1990, c. P.13, s. 50 (4).

Section 50(4) of the Planning Act

Municipalities selling land: Prince Edward County uses restrictive covenants when selling land to developers

PEC’s standard offer form for selling industrial park lots includes a number of restrictions imposed on a Buyer, including requiring that they be allowed to buy it back from them for $1,000 less than they sold it for if the developer doesn’t substantially complete the development as agreed to:

2. No sale or conveyance of the Property or any part thereof may be made by the Purchaser to any person or corporation, prior to the substantial completion of the construction and erection of the building as aforesaid, unless the Corporation shall have first been given the option to repurchase the property, free of all liens, charges or encumbrances, whatsoever at a price equal to the purchase price paid by the original Purchaser from the Corporation for the Property, less One Thousand ($1,000.00) Dollars such option to be exercised by the Corporation within ninety (90) days of receipt by it of written notice of such option, provided that if the Corporation exercises the option, the transaction arising there from shall be completed within thirty (30) days of the exercise of the option and the provisions of paragraphs 1 (b), (c), (d) (e) and (f) shall apply mutatis mutandis and if the Corporation fails to exercise the option within the said ninety (90) days, the Purchaser shall be at liberty to sell or convey the property for the same or a greater price.

Notwithstanding such sale to a new purchaser, such new purchaser shall continue to be bound by all the covenants, terms, conditions and restrictions contained in this Schedule and any reference to purchase price shall continue to mean the purchase price paid by the original purchaser from the Corporation. For the purpose of this paragraph, if the Purchaser is a corporation, the word “sale”, in addition to its ordinary meaning, shall be deemed to mean and include a sale or disposition of the corporate shareholding of the Purchaser, if the Purchaser is a corporation which results in a change in the effective voting control of the Purchaser by the person or persons who, at the date of this indenture, holds or hold a majority of the corporate shares.

What is land banking?

Land banking is when investors buy vacant or agricultural land – typically between existing developments and the greenbelt/greenfield land in the expectation that demand for housing or other more intensive uses in the area will grow, and when it does, sell it to a developer for a big capital gain.

Timeline

April 2024 – Cutting Red Tape to Build More Homes Act (Bill 185)

Bill 185 (press release) introduces changes to the Planning Act which would expand municipality’s powers to apply lapsing provisions (“use it or lose it” deadlines) on site plan approvals, including:

  1. Requires municipalities to specify the expiry of draft plans of subdivision approvals (it was previously optional in Section 51 (32)). Approvals given before March 27, 1995 being subject to lapsing within 3 years from the effective date of these changes.
  2. Gives municipalities the option to specify the expiry of site plan approvals after 3 years:

Lapse of approval
(7.1) Subject to the regulations, in approving the plans and drawings referred to in subsection (4), the authorized person referred to in subsection (4.0.1) may provide that the approval lapses at the expiration of the time period specified by the authorized person, in accordance with subsection (7.2), and the approval shall lapse at the expiration of the time period. However, the approval shall not lapse if, before it has lapsed, a permit is issued under section 8 of the Building Code Act, 1992 to implement the site plan approval.

Same, time period
(7.2) For the purposes of subsection (7.1), the time period specified by the authorized person shall not,

(a) be less than such prescribed time period as may be applicable to the development;
(b) exceed such prescribed time period as may applicable to the development; or
(c) be less than three years, if a prescribed time period under clause (a) or (b) does not apply with respect to the development.

Section 41 (7.1) of the Planning Act

If there is an appeal, the lapsing of the approval would not begin until the Ontario Land Tribunal has issued its decision.

A municipality may provide for lapsing of previous approvals, subject to notice to the owner of the land.

February 2024 – Developers say they’re not sitting on building permits

Use It: Optimizing Municipal Development Pipelines (2024) commissioned by developer-lobby groups Building Industry and Land Development Association (BILD) and Ontario Home Builders’ Association (OHBA) identified that the residential development construction industry in Ontario is working at a 33 year high, as evidence that the residential development construction industry in Ontario not “sitting on supply”.

With over 160,000 new homes under construction, you would have to go back to the late 1980s and early 1990s to find a similar level of residential construction.

They say that instead of the 1.25 million claimed by the Regional Planning Commissioners of Ontario (RPCO), there are:

  • “shovel ready” lots/units: 331,600
  • lots/units are still in the application process, need additional approvals, servicing allocation or are awaiting a decision from municipal council: 731,000

The study also found that a number of municipalities in Ontario, including several in the GTA, already have “Use it or Lose it”’ (UIOLI) policies under Ontario’s Planning Act and Building Code Act, and that Ontario’s Planning Act already provides municipalities with several UIOLI powers for development and new housing.

March 2023 – Municipalities say developers are sitting on building permits

In March 2023, Inventory of Ontario’s unbuilt housing supply by the Regional Planning Commissioners of Ontario (RPCO) provided data showing there are already over 1 million approved and proposed housing units in the development approval process:

  • Development Ready (Registered and Draft Approved): 331,632
  • Under Application or Proposed: 731,129
  • Ministerial Zoning Order: 64,199
  • As-of-right units (proxy): 150,000
  • Total housing unit inventory now (year 2 of 10): 1,276,960
  • Provincial Target by end 2031 (year 10): 1,500,000

Examples in the City of Belleville

A very prominent address is 40 Yeomans Street, the old Ben Bleaker property at the North End. Originally we zoned the north half of that as one block in November 2021. Nothing happened, I’ve heard that the property has sold and then has now been repurchased and the north half has now been rezoned into two blocks in February 2023. There’s no site plan application to date, so that land sits.

In 2019, a capital budget item was walked on in the amount of $1.8 million dollars, adding the Avenue Road Sanitary Sewer Extension Project and it was funded from the Sanitary Sewer Reserve fund at $1.8 million and I know Councillor Thompson brings up water and wastewater all the time and you know this is a significant amount of money that goes towards the Village of Avonlea. The Village of Avonlea was approved for zoning for 750 homes. Right now, with the sanitary sewer leading that way, and the rezoning, that property is now up for sale, you can look on the listings locally, for $29 million dollars. So is that building or is that land speculation? It sits.

Another one is 660 Sidney St, two apartment buildings just near Battlefield. Building permits were actually requested pre-COVID and then were suggested or were asked to put on hold, and and now they’ve just been issued as of July 28th, and let me tell you as of this date that ground is as flat as flat can be. There is no development.

While builders have said – and I’ve got a long list here and I won’t go into it – they say they’re building, but yet we can point to examples where we’ve done what we have to do, or we’ve done what we can do, to the point where there’s nothing coming forward from a developer or a builder to move those approvals on, that’s a concern.

… So when I cite examples where we’re approving things, but yet it sits, that’s a problem in terms of the permits. In essence, we are getting evaluated, if you will, based on what’s being done in the private sector to get it to a building permit. That’s a concern. We should be evaluated on what we can control, not what others can control.

The next thing that needs to happen quite frankly and it’s not in this motion, but I think it’s important to say, is that the senior levels of government need to invest considerably in affordable housing.

Belleville Councillor Paul Carr

We don’t say no to zoning applications for new development. We don’t object to any of that. We’re batting 1,000 in terms of agreeing to it

The problem is, we have a lot of developments here where there is no building occurring,

So if the private sector doesn’t build, we don’t get that counted towards us in order to be eligible for the money.

Belleville Councillor Paul Carr

January 2024 – Housing starts expected to slow due to interest rates

A January 2024 policy report by the Ontario Real Estate Association (OREA) warned of a slowdown in housing starts due to factors such as high interest rates and construction financing:

Ontario has seen 285,377 housing starts since Premier Doug Ford set the ambitious 10-year goal in 2021. However, a yearly breakdown of housing starts – which is a metric that indicates when construction work on a building or unit begins – shows construction slipping.

However, starts have slipped since then: the province saw 96,000 housing starts in 2022, and early estimates for 2023 come in at 90,000 units.

A shortage of builders, tradespeople, and land is compounded by red tape and a widespread bias against development.

OREA, January 2024

At the current rate, the annual pace of construction would need to increase by roughly 66% to 150,000 by 2025 to come close to achieving the ambitious goal.

In Belleville, there has been a decline in housing starts by the private residential building sector in 2023, despite record approvals by the City of Belleville. This is the case in many municipalities across the province.

December 2023 – Ministry of Housing working on Use it or Lose it policy

Housing Minister Paul Calandra first promised to review the Minister’s Zoning Orders (MZOs) in September through a “use it or lose it” approach, and December the government announced they were consulting on a new “use it or lose it” approach to support improved municipal planning and resourcing while holding builders to account.

November 2023 – Municipalities advise province to create “Use it or Lose it” provincial zoning policies

Municipal lobby group Ontario Big City Mayors has suggested the province:

  • Tie bonus funding to the number of building permits issued by a city, not how many houses begin construction.
  • Add a sunset clause on housing projects, allowing municipalities to revoke planning approvals if construction hasn’t begun within a specified time period.
  • Allow municipalities to increase development charges if a developer delays construction post-approval. 

In Belleville, a motion was passed requesting similar changes:

Ontario government has not taken any specific actions through regulations to make developers develop and builders build.

there has been a decline in housing starts by the private residential building sector in 2023 despite record approvals by the City of Belleville.

the City of Belleville request that the Building Faster Fund be corrected so that municipal performance be based on housing start approvals for which the municipality has direct control, and that the Ontario government create “Use it or Lose it” provincial zoning policies so that it prevents land speculation, creating unnecessary delays in the development of land for residential housing

Motion of Proposed Changes to Building Faster Fund, Belleville City Council

2022 – Housing Affordability Task Force recommends implementing a ‘use-it-or-lose-it’ policy

Recommendation #43 of the Housing Affordability Task Force report recommended a ‘use-it-or-lose-it’ policy:

Enable municipalities, subject to adverse external economic events, to withdraw infrastructure allocations from any permitted projects where construction has not been initiated within three years of building permits being issued.

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