A New Dawn Awaits: Density Benefits & Inclusionary Zoning in a Nutshell (Bill 16 Summary, Part IV)

Due to the length of this piece of legislation regarding density benefits & inclusionary zoning, I’ve done my best to break everything down into an informal table of contents (and associated sections) below:

(A)?Density Benefits (“DB”) Zoning Bylaw (LGA s. 482 (1)) – AKA Revamped Density Bonusing

(B)?Affordable and Special Needs Housing (“ASNH”) Zoning Bylaw (LGA s. 482.7) – AKA the New Inclusionary Zoning Bylaw

(C)?Public Consultation Requirements (LGA Sections 482.1 & 482.8)

(D)?Required Analysis and Considerations (LGA Sections 482.2 & 482.9)

(E)?Payment-in-Lieu Compliance Option (LGA Sections 482.3 & 482.91)

(F)?ASNH Transfer Clause (LGA Sections 482.4 & 482.92)

(G)?In-Stream Protections (LGA Sections 482.5 & 482.93)

(H) Amenity Cost Charges (LGA Sections 570.4 & 570.6)

(I)??Transition Clauses (LGA Section 797)

The key thing to remember here is that there are now two types of zoning bylaw powers to worry about: (1) the Density Benefits Zoning Bylaw (“revamped density bonusing”); and (2) the Affordable and Special Needs Housing Zoning Bylaw (“mandatory inclusionary zoning”).

We’ll call them “BD” and “ASNH” bylaws in later sections identified below. Somewhat confusingly, a Density Benefits Zoning Bylaw also contains the conditional density power to require the provision of “affordable and special needs housing” alongside amenities. It’ll all make a little more sense once you’ve had a read, I swear.

If you'd like to read the legislation yourself, here's a hyperlink to Bill 16 (First Reading) . If you find any errors, or recommend any additions or amendments, please let me know forthright - I'd like this article to be as accurate as possible! You will be given credit!

Finally, I’d like to extend a genuine thank you to Peer-Daniel Scheer (Krause) for his assistance. Please consider him to be a co-author; I truly could not have done this piece without him.

And so, without further ado, let's begin!

(A) Density Benefits (“DB”) Bylaw (LGA s. 482 (1)) – AKA Revamped Density Bonusing

The DB bylaw is a complete rehaul of the existing density bonusing regime that most local governments and developers have some passing familiarity with. We’ll go over the details now:

(1)?A DB Bylaw may include conditions relating to either or both (a) the provision or conservation of amenities, including number, kind, and extent; or (b) the provision of affordable & special needs housing (as defined by bylaw), including number, kind, and extent.

(2)?Regarding the provision or conservation of amenities with a DB bylaw ... no double-dipping with ACCs! The DB bylaw may not establish conditions relating to conservation or provision of an amenity already covered by an amenity cost charge bylaw.

3)?Regarding the provision of “affordable and special needs housing” in a DB bylaw, a LG may impose the following conditions:

(a)?The definition of what ASNH actually is to said local government;

(b)?The portion of ASNH required to be provided within a given development (measured by either unit count and/or gross floor area);

(c)?The number of bedrooms in said ASNH units;

(d) The ownership, management, and form of tenure for said ASNH units;

(e)?The affordability of said ASNH units (we’re now moving past just rental tenure – proposed sales price may be stipulated by bylaw);

(f)?The duration of time associated with said ASNH conditions.

Otherwise, beyond the requirement for an approved housing agreement prior to building permit issuance, there is also one other curious addition for “affordable and special needs housing” in a DB bylaw. To quote: “a zoning bylaw may designate an area within a zone for affordable or special needs housing, as such housing is defined in the bylaw, if the owners of the property covered by the designation consent to the designation.”

(4)?In both cases for a DB bylaw, and where possible, a developer may pursue payment-in-lieu as an alternative means of conformance with the DB Bylaw. Additional details are provided below in the section titled: Payment-in-Lieu Option (LGA Sections 482.3 & 482.91).

(5)?An LG may not establish a conditional density rule that entitles a property owner to a higher density that is less than or equal to any higher density provided in a standalone ASNH zoning bylaw (described further below).

In other words, and I hope I’m reading this correctly: where an ASNH Bylaw (or associated provisions) is already in effect, a DB bylaw may only be imposed upon the densities above the ASNH identified density.

(6)?Additionally, while the Province has noted that LGs may use existing DB bylaws in TOA locations until mid-2025 , they have also noted that DB Bylaws may not impose conditional density rules upon minimum allowable TOA densities after such point.

(B) Affordable and Special Needs Housing (“ASNH”) Bylaw (LGA s. 482.7) – AKA the New Inclusionary Zoning Bylaw: This ASNH bylaw is sort of a “new” addition to the legislation. Even though density benefits zoning bylaws may use ASNH powers, the best way to think about a “standalone” ASNH Bylaw is to treat it as the mandatory inclusionary zoning tool. Let’s break down how it works:

(1) LGs may require residential developments (whether in part or whole) within a given zone to include a portion of ASNH units specified in said ASNH Bylaw.

(2)?An ASNH Bylaw may impose conditions on the following aspects of affordable and special needs housing units:

(a)?The definition of what ASNH actually is to said local government;

(b)?The portion of ASNH required to be provided within a given development (measured by either unit count and/or gross floor area);

(c)?The number of bedrooms in said ASNH units;

(d) The ownership, management, and form of tenure for said ASNH units;

(e)?The affordability of said ASNH units (we’re now moving past just rental tenure – proposed sales price may be stipulated by bylaw);

(f)?The duration of time associated with said ASNH conditions.

(3)??Key addition: Standalone ASNH Bylaws may stipulate mandatory inclusionary zoning requirements upon the minimum allowable TOA densities identified in the Transit-Oriented Area legislation (Bill 47 and associated regulations).

(4)??Where possible, a developer may pursue payment-in-lieu as an alternative means of conformance with the ASNH Bylaw. Additional details are provided below in the section titled: Payment-in-Lieu Option (LGA Sections 482.3 & 482.91.

(5)??Any redeveloping property subject to an ASNH Bylaw must receive LG approval of an associated housing agreement prior to building permit issuance.

(6)??ASNH Bylaws will not apply to developments in which all of the housing units are owned by the following: municipal housing corporations, regional health boards, non-member-funded societies, non-profit housing cooperatives, registered charities, agencies representing all levels of government (whether municipal, regional, provincial, or federal), and “a body within a prescribed class of bodies.”

(7)?This one’s a little spicy: The Province will also reserve the right to make additional regulations regarding the content and implementation of ASNH bylaws, including:

(a)?Prohibiting an identified LG from making an ASNH bylaw;

(b)?Establishing a maximum upper limit to the percentage of ASNH housing units within a given zone in said bylaw (under Bill 16, an LG could require 100% ASNH units…);

(c)?Restricting the form of tenure for ASNH units;

(d) Establishing requirements around the duration of time associated with said ASNH units; and

(e)?“Making provisions […] necessary or advisable for the purposes of preventing, minimizing, or otherwise addressing any transitional difficulties encountered in relation to ASNH zoning bylaws”.

(C) Public Consultation Requirements (LGA Sections 482.1 & 482.8): In both bylaw cases, the proposing LG must provide one or more opportunities it considers appropriate for consultation for persons, public authorities, and organizations that the LG believes may be affected by the zoning bylaw. No consultation is required for bylaw repeal.

The Province also reserves the right to make regulations regarding notice requirements, consultation processes, prescribed persons and entities that must be consulted, and those circumstances in which no consultation will be required.

(D) Required Analysis and Considerations (LGA Sections 482.2 & 482.9): In both bylaw cases, an LG must undertake a financial feasibility analysis (FFA) prior to the adoption of the associated bylaw among any other prescribed requirement. This FFA must take into consideration local housing market conditions, the cost of residential construction, the degree to which different factors affect the feasibility of meeting other legislative requirements, and the amount of density required for previously mentioned requirements.

ASNH bylaws, however, have more restrictive considerations: in addition to a FFA, an LG must considered the contents of their most recent housing needs report, along with a consideration over whether said ASNH zoning bylaw would deter development.

Interestingly, while “a local government must make available to the public, on request, the considerations, information and analysis used to adopt or amend a density benefits zoning bylaw”, LGs are not required to publicly disclose any information respecting the contemplated acquisition costs of specific properties (whether for ASNH or amenities purposes).

Finally, the Province may make regulations requiring that said FFAs must “be undertaken by an individual with a professional designation specified in the regulation.”

(E) Payment-in-Lieu Compliance Option (LGA Sections 482.3 & 482.91): If the LG permits this, developers may exercise an alternative option of compliance for either kind of bylaw: they may pay money to an LG in respect to a development equivalent to an amount of money equal to the estimated capital costs of construction for said amenity and/or ASNH units. In this circumstance, capital cost refers to “planning, engineering, legal, and interest cost”. These monies, payable at time of building permit, may be directed to three (!) new types of reserve fund described below.

The legislation contemplates the creation of three new kinds of reserve funds:

(1)?a Density Benefits Reserve Fund (Amenities) for “the purpose of conserving or providing amenities”;

(2)??a Density Benefits Reserve Fund (ASNH) for “the purpose of providing, constructing, altering or expanding affordable and special needs housing”, and

(3)?an ASNH Reserve Fund, which is also confusingly for “the purpose of providing, constructing, altering or expanding affordable and special needs housing”.

Monies collected for the DB Reserve Fund (Amenities) may only be used to pay for associated capital costs for amenities, for principal and debt interest for expenditures related to said capital costs, or to people or other public authorities under partnering agreement to pay for capital costs incurred by said entity for said capital costs.

In the case of the ASNH Reserve Fund and the DB Reserve Fund (ASNH), however, things are slightly different: LGs may only use monies collected for these reserve funds to pay for the capital costs required for providing, constructing, altering, or expanding ASNH units, along with principal and debt interest for expenditures related to said capital costs.

Additionally, these ASNH monies may also be directed towards a variety of other entities to assist them with paying for similar capital costs, including: municipal housing corporations, regional health boards, non-member-funded societies, non-profit housing cooperatives, registered charities, agencies representing all levels of government (whether municipal, regional, provincial, or federal), and “a body within a prescribed class of bodies.”

Finally, the authority to make payments from these reserve funds must be authorized by bylaw.

(F) ASNH Transfer Clause (LGA Sections 482.4 & 482.92): In both bylaw cases, specifically in relation to ASNH, a LG may enter into an agreement (by bylaw) with a person required to provide some or all ASNH units, and allow them to provide said ASNH units on one or more other parcels of land. The requirements of the agreement must meet or exceed the requirements under the associated ASNH zoning bylaw.

The agreement must also specify the parcels in which the ASNH units will be located, who will provide the ASNH units on each parcel of land, when they are to be provided, how the provision of ASNH units under the agreement will meet or exceed the requirements of the ASNH Bylaw, and any other prescribed information.

(G) In-Stream Protections (LGA Sections 482.5 & 482.93): Both types of bylaw maintain the same in-stream and precursor application requirements: if there’s an in-stream precursor application (zoning amendment or development permit) to the building permit for said development, then the bylaw in question will have no effect unless both parties (developer and LG) mutually consent to this arrangement in writing.

This is very distinctly different to how Amenity Cost Charge and Development Cost Charge in-stream & precursor protections work, which are only effective until the 12 month mark after original ACC / DCC bylaw (amendment) adoption.

(H) Annual Reporting (LGA Sections 482.6 & 482.94): In both bylaw cases, a local government must prepare and consider annual reports respecting DB bylaws and ASNH bylaws before June 30 of each year. These reports must also be made available to the public from time of report consideration to June 30 of the following year. Seeing as there are subtle differences between the two types of reports, I’ll describe them below:

(1)?Annual Report – ASNH Bylaw: This report must provide detail on the number of ASNH units required by said bylaw, and for which building permits were issued during the previous year. Additionally in relation to an ASNH Reserve Fund, the report must discuss the amount of monies received, the total expenditures, and the balance of that fund for said year.

(2)?Annual Report – DB Bylaw (ASNH and/or Amenities)

(a)?ASNH: This portion of the report must provide detail on the number of ASNH units required by said bylaw, and for which building permits were issued during the previous year. In relation to a DB Reserve Fund for ASNH, this report must discuss the amount of monies received, the total expenditures, and the balance of that fund for said year.

(b)?Amenities: This portion of the report must identify the amount of monies received, the total expenditures, and the balance of that fund for said year.

(I) Inspector Information (LGA Section 482.95): ASNH Bylaws also have a relatively unique requirement eerily similar to that of ACC Bylaws. Provincial inspectors may request quite a bit of information established in an ASNH bylaw from the associated local government. This includes how:

(1)????? the ASNH bylaw was developed (including consultation results),

(2)????? certain requirements were established in the bylaw,

(3)????? the proportion of ASNH units required was determined in said bylaw, and

(4)????? higher densities were set for developments subject to these requirements.

(J) Amenity Cost Charges (LGA Sections 570.4 & 570.6): In relation to ASNH bylaws, ACCs are not payable for ASNH units required under said bylaw. Furthermore, LGs must consider their most recent financial feasibility analysis for ASNH bylaws when it comes to preparing the “waivers and reductions” portions of their ACC bylaws.

(K) Transition Clauses (LGA Section 797) - Not applicable to ASNH-only bylaws, only DB Bylaws: If an LG has a pre-existing DB (‘bonus density’) zoning bylaw prior to the adoption of this LGA section, then the LG must amend the zoning bylaw to be in accordance with:

(1) s. 482 (1.1) [density in transit-oriented areas];

(2) s. 482 (2.2) and (2.3) [mandatory conditions for affordable and special needs housing units];

(3)?s. 482 (2.4) [permit payment of money instead of meeting conditions (if applicable);

(4)?s. 482.1 (1) [consultation on density benefits zoning bylaw]; and

(5)?s. 482.2 [analysis and considerations for density benefits zoning bylaw]

If an LG is actively working on a density benefits zoning bylaw (past first reading, prior to final approval), then said proposed bylaw must be amended in accordance with the above-mentioned legislative sections. Additionally, the annual report requirement will not apply to an LG before the prescribed date (likely on or after June 30, 2025).

Finally, an LG is not required to have a financial feasibility analysis for the purposes of this proposed bylaw unless they are undertaking (or have already completed) a comparable analysis on the date that this section comes into effect … that already essentially meets the requirements of an FFA.