On September 6, 2023, the Ontario Land Tribunal (the "OLT") issued its decision in Calloway REIT (Mississauga) Inc. v Mississauga (City) (the "Decision").1 The OLT found that the Planning Act grants municipalities the authority to enact general policies encouraging and promoting affordable housing, but does not allow them to mandate specific requirements outside of inclusionary zoning.

BACKGROUND

The Decision arose from the Phase 1 proceeding of appeals to Official Plan Amendment No. 115 ("OPA 115"), adopted by the City of Mississauga (the "City").

OPA 115

OPA 115 forms part of the City's "Re-Imagining the Mall" initiative to establish policies to guide the redevelopment of six of the City's mall-based Community Nodes and Major Nodes.

Phase 1 of the appeals concerned specific policies relating to affordable housing requirements, including the following (the "Affordable Housing Policies"):

  • A minimum requirement for residential development proposing 50 or more units to provide 10 percent of housing units as "below-market", comprised of units targeted for a range of "middle income households" and at specific unit sizes (the "Affordable Housing Requirement");2
  • Affordable housing for low income households will be encouraged, recognizing that the provision of affordable housing is subject to landowners being able to secure access to adequate funding (the "Incentive Policies");
  • Below-market housing is to be comprised of a mix of rental and ownership across the Node, and individual development applications are encouraged to include this mix; and
  • other policies to incentivize the provision of affordable housing, including a consideration of reduced parking requirements and land conveyances to non-profit housing providers in lieu of the Affordable Requirement.

Certain landowners impacted by OPA 115 appealed to the OLT. The appellants argued that the Affordable Housing Requirement included in OPA 115 was invalid and should not be approved because they exceeded the City's authority under the Planning Act.

OVERVIEW OF MUNICIPAL AUTHORITY TO ENACT AFFORDABLE HOUSING POLICIES

At issue in the Decision is whether Section 16 of the Planning Act, which sets out the policies that an official plan must and may contain, authorized the City to adopt the Affordable Housing Policies. As it relates to affordable housing, Section 16 provides the following:

  • Section 16(1)(a.1) states that an official plan "shall contain...such policies and measures as are practicable to ensure the adequate provision of affordable housing";3
  • Section 16(4) mandates that prescribed municipalities must include policies that authorize inclusionary zoning in their official plans. The Planning Act specifies that prescribed municipalities shall authorize the inclusion of affordable housing units within residential projects and provide that these affordable housing units are to be maintained as affordable units over time. Currently, there are no prescribed municipalities under the Planning Act.
  • Section 16(5) allows all other municipalities to include the policies specified in (4), but only within the boundaries of a protected major transit station area ("PMTSA") or an area in which a development permit system ("DPS") has been adopted or established in response to a Ministerial order; and
  • If a municipality adopts inclusionary zoning policies, then Sections 16(6), (7), and (9) through (13) establish the requirements for adopting those policies. In particular, a municipality must prepare an assessment report that complies with regulated requirements, update that report every 5 years, and make those reports available to the public. The municipality must also adopt an inclusionary zoning by-law to implement these policies, in accordance with Section 35.2 of the Planning Act.

The appellants argued that the Affordable Housing Policies were not authorized under Section 16(1)(a.1) of the Planning Act and were ultra vires the City's authority. The Appellants argued that the City could only require a development application to include affordable housing through inclusionary zoning. As the City's inclusionary zoning framework generally did not apply to the lands subject to OPA 115, the Affordable Housing Policies were ultra vires.

The City conceded that the inclusionary zoning provisions were not applicable because the City had not followed the prescribed process, the Nodes subject to OPA 115 were largely outside the boundaries of a PMTSA and the City did not have a DPS. However, the City argued that Section 16(1)(a.1) authorized the Affordable Housing Policies and imposed a mandatory requirement on municipalities to include "practicable" policies and measures to ensure the adequate provision of affordable housing.

THE DECISION

The OLT allowed the appeals in part, and refused to approve the Affordable Housing Policies, other than the Incentive Policies. Although the OLT found that the Affordable Housing Policies did not constitute inclusionary zoning, the OLT found that the Affordable Housing Policies were not authorized under Section 16(1)(a.1) and were "tantamount" to inclusionary zoning.

SECTION 16(1)(A.1) OF THE PLANNING ACT

The OLT held that there is no statutory requirement in the Planning Act that required the City to enact the Affordable Housing Policies. Although the City argued that the legislation required the City to have affordable housing policies in its official plan, the OLT found that the City did not need to enact the Affordable Housing Policies in OPA 115, given other policies that already exist in City's OP regarding affordable housing which satisfy the underlying statutory requirement.4

Further, the City's interpretation of "practicable" also did not account for the fact that a prescriptive requirement may not be feasible in the future. Although the City commissioned a "high-level" economic feasibility study5 to support the Affordable Requirement, the OLT found that the study was "based on assumptions that are not static in time and potentially could change".6 A prescriptive requirement meant that the City was pre-determining what levels of affordable housing would be practicable, based on a point in time analysis.

As such, the OLT concluded:7

"the City has taken a leap of faith from high level feasibility studies based on the City's view of how potential owners would develop the Subject Sites with hypothetical development configurations and a variety of financial and demographic assumptions which may bear little to no resemblance to practicable assessment for any site specific developments. Even more troubling is the City's conclusion that somehow these high level, time impacted feasibility assessment allow it to enact OPA-115 and mandate a minimum 10% of below market housing as a practicable reality."

INCLUSIONARY ZONING

The OLT also agreed with the appellants' submissions that the City's interpretation of Section 16(1)(a.1) rendered other sections in the Planning Act regarding inclusionary zoning redundant. The OLT accepted that if a municipality could rely on Section 16(1)(a.1) to prescribe affordable housing requirements, then the municipality could do so anywhere within the municipality, including in areas outside of a PMTSA, and without following the requirements for inclusionary zoning.8 As the Planning Act is otherwise silent on affordable housing, the OLT concluded that a municipality could only prescribe affordable housing through inclusionary zoning.

The OLT accepted that the Affordable Housing Policies were "tantamount" to inclusionary zoning, which the OLT explained as being "equivalent in value, significance, or effect."9 As such, the OLT found that the City's failure to follow the requirements for inclusionary zoning rendered the Affordable Housing Policies invalid.

Footnotes

1. Please note that Goodmans LLP represented two of the appellants in the Phase 1 proceeding: Calloway REIT (Mississauga) Inc. and First Capital (Meadowvale) Corporation.

2. "Below-market" refers to ownership housing for which the purchase price results in annual accommodation costs that do not exceed 30 percent of gross annual household income, or rental housing where the rent does not exceed 30 percent of gross annual household income. "Middle income" is defined in OPA 115 as Mississauga households with annual earnings below the lowest 40 to 60 percent of income distribution.

3. Planning Act, RSO 1990, c. P.13, s 16(1)(a.1).

4. Decision at para 84.

5. Decision at para 98.

6. Decision at para 94.

7. Decision at para 112.

8. Decision at para 103.

9. Decision at para 123.

Originally published by Ontario Bar Association.

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