As of 2017, municipalities have the authority, under the Act respecting land use planning and development (the “ALPD“), to pass a by-law making the issuance of any permit for the construction of residential units subject to an agreement between the permit applicant and the municipality to improve the supply of affordable, social or family housing.
Despite the recent incorporation of this power in the ALPD, it should be noted that many municipalities often imposed such requirements on developers prior to 2017. However, this was done on a consensual basis. Now, upon the passage of their by-law, municipalities have the power to make it a condition precedent to the issuance of a residential unit permit.
On January 25, 2021, Montréal adopted its by-law under this power, entitled By-law to improve the supply of social, affordable and family housing, better known as the By-law for a Diverse Metropolis or By-law 20-20-20. According to its article 32, the by-law will take effect on April 1, 2021.
Affordable, social or family housing is not defined in the ALPD. Therefore, each municipality may propose its own definition. Montreal uses the following definitions:
- “affordable housing": means housing whose price or rent does not exceed 90% of the market value for affordable housing or a building transferred for affordable housing purposes. The market value must be established prior to the transfer or rental by a chartered appraiser mandated by the City, at the owner's expense;
- "family housing" means housing with three or more bedrooms, with a minimum area of 96 m2 located in Sectors 4 and 5 in Schedule A (outlying sectors) and 86 m2 in Sectors 1, 2 and 3 as outlined in Schedule A (central sectors), these measurements being taken from the exterior face of the exterior walls;
- "social housing": means housing that is eligible for or receives a subsidy under a municipal or provincial subsidy program for the construction of social, co‑operative and community housing implemented under the Act respecting the Société d'habitation du Québec.
It should be noted that the Montreal by-law also uses the notion of "affordable family housing", i.e. a family dwelling whose price is in accordance with what we previously mentioned.
Section 2 of the by-law provides that it applies to any residential project, with the following exceptions:
- a residence for CEGEP or university students, a non-profit organization or a co-operative;
- a project aimed exclusively at the construction of social housing;
- a project in which 80% of the housing units are built under a program of the government, the City, one of their agents or the Société d'habitation et de développement de Montréal (the "SHDM"), targeting certain objectives described in Article 18 of the by-law, which will not covered in this article;
- a project aimed exclusively at the construction of rental dwellings, benefiting from a program of the government, the City, one of their agents or the SHDM, requiring that the rent of at least 30% of the units be maintained at less than 80% of the median market rent over a period of at least 20 years;
- a project carried out on a building that is the subject of an agreement entered into with the City as part of the sale of a municipal building and that includes commitments to improve the supply of social, affordable or family housing.
In addition, Section 3 provides that family housing and affordable family housing requirements do not apply to student and senior residences.
Section 4 also limits the application of the by-law to residential projects over 450 square metres by providing that a building permit for such a project shall not be issued unless an agreement, consistent with the by-law, between the owner of the site and the City has been entered into to improve the supply of social, affordable and family housing.
Section 5 provides that when a project is carried out in several phases, each phase requires a building permit; a prior agreement before the first permit is issued must be reached. The by-law’s requirements will then be calculated based on the total number of phases.
Obviously, in the event of a change to the residential project, the agreement will also have to be amended, as provided in Section 6.
Finally, Article 8 provides for annual indexation of 5% of the amounts provided in the by-law on January 1st of each year. However, the amounts agreed upon in an agreement are not indexed.
The contribution required from the promoter may be paid in different ways as provided for in section 9:
- the transfer of land or a building to the City;
- the construction of housing that meets the by-law’s criteria in certain circumstances;
- the payment of a financial contribution;
- a combination of these methods, depending on the circumstances.
Under the ALPD, any amount paid to the City or any building transferred to the City must be used to implement an affordable, social or family housing program. The amount of this contribution varies according to the project’s location, as schedules provide divisions into value areas or affordable housing zones, or according to the size of the project in terms of area or number of units.
The City has put a calculation tool available to developers to determine the requirements they will be subjected to. We invite developers to use this calculation tool and be well supported in their interpretation of the application of the by-law to their project. Do not hesitate to contact our lawyer Isabelle Landry to learn more about the regulation for a Diverse Metropolis.
