Overview

Many factors affect the ability of a housing project to proceed. A wide range of changing market conditions can affect the timing of a housing development, such as:

  • interest rate increases
  • labour shortages
  • supply chain disruptions
  • low pre-construction sales

Most market-based housing projects proceed in a timely manner to construction once planning and other approvals have been received. In some cases, approved developments do not immediately proceed to construction.

Stalled housing

Stalled housing is where planning approvals have been received and servicing has been allocated, but the development remains inactive for an extended period of time. This can limit the ability of municipalities to optimize the use of their water and wastewater servicing capacity. It can also prevent other developments from moving forward by either holding on to their allocation of water and wastewater servicing capacity or blocking other projects from accessing housing-enabling infrastructure.

Why water and wastewater servicing capacity matters

Housing, like other forms of development, often requires one or more land use approvals from municipalities such as an amendment to the local official plan and zoning by-law. Larger housing projects can require approval of a plan of subdivision as well as site plan control. Apart from land use, other approvals (such as environmental, heritage and transportation approvals or permits) may also be required.

Water and wastewater servicing is essential infrastructure, and capacity must be available in the system for an approved development to proceed. The capacity of the water and wastewater system at any given time is finite and municipalities must make decisions about how to allocate the capacity they have to individual land development applications.

Once the necessary approvals have been secured, water and wastewater servicing infrastructure needs to be available in order for housing projects to proceed to the construction phase and get “shovels in the ground”. If that infrastructure has been allocated but is not being used, it may stop progress on other housing projects that are otherwise ready to build. Similarly, if necessary approvals have been secured but essential servicing is not made available, it may also delay construction. Both cases are detrimental to the province’s goal of building 1.5 million homes by 2031 and should be avoided wherever possible by prioritizing allocations to projects that are “ready to go.”

Current local processes

Municipalities have developed a range of approaches to plan for the distribution of sewer and water servicing allocation to approved developments. Some municipalities have developed formal processes with specific criteria to determine the priority status or queue of active development applications. Other municipalities have established formal protocols approved by Council, which set out a documented and tracked merit-based system to determine the allocation of servicing. Others rely on an informal first-come, first-served approach to capacity allocation.

Some municipalities have previously identified that they have proceeded cautiously or been hesitant to act, as a specific legislative authority to reallocate servicing did not exist prior to the changes made through the Cutting Red Tape to Build More Homes Act, 2024.

New framework for municipal servicing management

Ontario’s new “use it or lose it” process enhances and expands a municipality’s ability to address stalled developments so that projects ready to proceed encounter fewer barriers and delays prior to construction. This includes the authority for an assigned officer, employee or agent of the municipality (“municipal staff”) to allocate and reallocate water supply and sewage capacity.

The Cutting Red Tape to Build More Homes Act, 2024 added section 86.1 to the Municipal Act 2001 and section 69.1 to the City of Toronto Act, 2006 to set out explicit authority for municipalities to adopt a policy by by-law to allocate water supply and sewage capacity.

The changes set out a new servicing management framework promoting the efficient use of local servicing capacity through a “use it or lose it” approach for municipalities to pass by-laws providing for the allocation and, where needed, the reallocation of water supply and sewage capacity.

The new servicing management framework provides more certainty for municipalities and helps them optimize the use of housing-enabling infrastructure. Where it is needed, municipalities can now take specific actions to reallocate water and wastewater servicing capacity to other projects and to enable other “shovel-ready” housing projects that do not currently have servicing capacity to proceed in a more timely way.

The new servicing management framework is a discretionary tool for municipalities. If a municipality already has an established policy or by-law in place that was enacted prior to the enactment of the Cutting Red Tape to Build More Homes Act, 2024, they can continue to follow their existing policy, by-law and processes. In these cases, any requirements set out for the new framework created through the Cutting Red Tape to Build More Homes Act, 2024 (such as the requirement to delegate the administration of the policy to municipal staff) would not apply and municipalities can choose to continue using their existing processes.

The minister's intent for the new framework is to explicitly allow municipalities to re-allocate municipal servicing to projects that are ready to begin construction. Where municipalities choose to deviate from this intent, the minister may choose to intervene.

Under the Provincial Planning Statement 2024 (policy 3.6.1(e)), planning authorities are required to consider opportunities to allocate, and re-allocate if necessary, unused system capacity of municipal water services and municipal sewage services to support efficient use of these services to meet current and projected needs for increased housing supply, including the province’s goal of building 1.5 million homes by 2031. Use of the new servicing management tool described above would be one way to be consistent with this policy.

Municipal servicing management policies

Depending on local conditions, what is considered “stalled housing” in one municipality may not be considered a barrier to achievement of local housing supply in another municipality with different conditions. Local circumstances, such as pace of growth and development and overall economic and housing market conditions, can help municipal decision-makers determine the criteria to use to allocate water supply and sewage capacity.

Servicing management policies may include a system for tracking the water supply and sewage capacity available to support approved, “ready-to-go” developments. The intent is to provide municipalities with a framework that could help allocate and reallocate servicing to prioritize infrastructure for ready-to-go housing projects to address stalled development – where planning approvals have been received and servicing has been allocated, but the development remains inactive for an extended period.

Municipalities can consider a range of criteria for allocation and processes that suit community needs. For example, priority status can be set by placing approved applications in a “queue”. The development of criteria to guide local servicing allocation decisions can be considered in the context of a municipality’s general powers under sections 10 and 11 of the Municipal Act, 2001 or sections 7 and 8 of the City of Toronto Act, 2006, as applicable.

Servicing management policies may also set out criteria related to specific timeframes and conditions for servicing capacity to be allocated or reallocated, set out criteria for how a development could regain its previously reallocated servicing, or extend the timeframe and confirm servicing availability based on specified conditions being met.

Here too, the intent of the framework is to allow municipalities to re-allocate municipal servicing to projects that are ready to begin construction. The minister may choose to intervene where municipalities deviate from this intent.

Adoption by by-law

Municipal servicing management policies must be adopted by by-law under the Municipal Act, 2001 except for the City of Toronto, where a servicing management policy must be adopted under the City of Toronto Act, 2006.

Municipal servicing management by-laws are adopted in the same manner and follow the same processes as other local by-laws under these Acts. Unlike land use by-laws under the Planning Act, there is no appeal of the passing of a municipal servicing management by-law or a decision made under the policy/by-law to the Ontario Land Tribunal.

Once a municipal servicing by-law takes effect, municipalities are required to delegate the administration of the by-law to municipal staff. Delegating the administration of the by-law to staff helps facilitate and streamline decision-making, as servicing decisions no longer have to depend on available timing on local Council agendas.

Allocation decisions made by municipal staff are based on the framework and criteria set out in the servicing management by-law, promoting a more transparent and criteria-based process for decision-making. Decisions made by municipal staff under the policy to assign or reallocate servicing cannot be appealed.

Lapsing provisions in the Planning Act

Lapsing provisions provide a time period for carrying out the terms of an approval. This can include a timeline for an applicant to move ahead with certain steps in a development or a timeline to satisfy specific conditions that were imposed as part of the approval. If the terms are not satisfied within the time period specified as part of the approval, the approval lapses and can usually no longer be relied upon.

Various sections of the Planning Act set out authority for planning authorities to apply lapsing provisions for different types of planning applications. The Cutting Red Tape to Build More Homes Act, 2024 made changes to enhance lapsing provisions in the Planning Act for draft plans of subdivision/condominium and created a new discretionary lapsing authority for site plan approval.

The Minister of Municipal Affairs and Housing must impose lapsing provisions where the minister is the decision maker for plans of subdivision, plans of condominium applications (for example, certain planning applications in Northern Ontario).

Depending on local circumstances and preferences, municipalities can use lapsing provisions in conjunction with the new servicing management framework created under the Cutting Red Tape to Build More Homes Act, 2024 to help optimize their available servicing capacity and accelerate “ready to go” housing developments.

Draft plans of subdivision, plans of condominium and consents

Learn about subdivision of land in the Citizen’s guide to land use planning

Land division approvals

The Planning Act provides authority and direction related to lapsing provisions as an important component of land division approvals. Lapsing provisions are intended to provide a reasonable time limit on finalizing certain steps in developments and conditions related to the development. They are especially important where there are constraints on infrastructure.

Subdivision and condominium approvals

Approval authorities are now required to impose a lapsing condition for all draft plan of subdivision and condominium approvals of at least three years, subject to regulations (if any). This new requirement was set through changes made through the Cutting Red Tape to Build More Homes Act, 2024.

The Planning Act also sets out authority for municipalities and other approval authorities to extend a lapsing provision associated with an approved draft plan of subdivision or condominium. Approval authorities also have a one-time discretionary authority to reinstate draft plans of subdivision that have lapsed if certain conditions are met. For example, in cases where an approval has lapsed, approval authorities have authority to deem a draft approved plan of subdivision to have not lapsed if the draft plan had lapsed within the previous five years and if no agreements of purchase and sale have been entered into with respect to the proposed lots.

Lapsing authority for draft plans of subdivision/condominium and consents in the Planning Act

  • Subsection 51 (32) sets out the requirement for an approval authority to impose a lapsing condition for all draft plan of subdivision / condominium approvals (new requirement through the Cutting Red Tape to Build More Homes Act, 2024)
  • Subsection 51 (32.1) sets out that lapsing provisions must provide for a period of no less than 3 years from the decision, or where there are prescribed time periods, no more or less than any prescribed time period
  • Subsection 51 (33) provides the authority for extension of lapsing provisions as part of a draft plan of subdivision or condominium (provided that the initial time period provided by the lapsing provision has not itself lapsed). Approval authorities have discretion to apply any length or number of extensions to a lapsing provision
  • Subsection 51 (33.1) provides authority for a municipality to deem that a lapsed approval for a plan of subdivision meeting certain conditions has not lapsed
  • Subsection 53 (41) sets out a 2-year period for satisfying conditions imposed on a provisional consent (otherwise the application is deemed to be refused). There is no possibility of extension for lapsing provisions for consents
  • Subsection 53 (43) provides for the lapsing of consents in respect of which certificates have been issued on a date that is two years from the date of the certificate or an earlier time specified by the consent-granting authority

Site plan control

Site plan control is an optional tool under the Planning Act and the City of Toronto Act, 2006 that allows a local municipality to control certain matters on and around a lot (for example, walkways, access, lighting, waste facilities, etc.) to ensure that a development fits in with the surrounding uses and limits any negative impacts. In the case of residential development, site plan control generally applies only to developments of 10 units or more.

Read more in the site plan control guide.

The Cutting Red Tape to Build More Homes Act, 2024 created a new discretionary authority in the Planning Act providing for the authorized persons who approve site plans to determine lapsing periods for site plans based on the specific circumstances relevant to a proposal. Before these changes, there was no authority for authorized persons to impose lapsing provisions to establish a timeframe for conditions to be fulfilled.

Site plan applications are approved by the “authorized person”, being a municipally appointed officer, employee or agent of the municipality. An “authorized person” at a municipality can apply a lapsing condition when approving a site plan and can also provide for the lapsing of previous site plan approvals (such as adding a lapsing condition to site plans that have been previously approved). When a lapsing period is imposed on a previous site plan approval, the municipality is required to notify the owner of the land of the lapsing period.

If a building permit is issued before the end of the lapsing period specified for a particular approval, the site plan approval does not lapse.

The Minister of Municipal Affairs and Housing has authority to make a regulation under the Planning Act setting exemptions for different classes of development or setting different time periods that apply to different classes of development. There is no ability to appeal a lapsing provision when imposed.

Lapsing authority for site plan control in the Planning Act

Subsection 41 (7.1) of the Planning Act sets out a discretionary authority for municipalities to provide lapsing periods for site plan approvals

A note on use of these tools

Municipalities are responsible for making local decisions, including compliance with any applicable statutes or regulations. This guidance should not be relied upon as a substitute for specialized legal or professional advice in connection with any particular matter. While every effort has been made to ensure the accuracy of the information, the Ministry does not accept legal responsibility for its contents or for any consequences, including direct or indirect liability, arising from its use.

For more information

Please contact your local Municipal Services Office for questions about the use of these tools.