As of April 12, municipalities in Ontario will be able to implement inclusionary zoning, allowing them to require affordable housing units in residential developments.

The province’s willingness to grant municipalities this authority reflects its broader commitment to modernizing Ontario’s planning regime.

But one relic of this old regime remains: Section 37 of Ontario’s Planning Act. As the province continues to overhaul its planning legislation, it is time to revisit Section 37 and either repeal it or significantly amend it.

Section 37 allows municipalities to secure “benefits” from developers in return for allowing buildings to exceed height and density restrictions. As I note in a recent report for the C.D. Howe Institute, over the past decade, Section 37 has grown in popularity throughout the province.

Although the benefits secured include important amenities, such as affordable housing, in many jurisdictions — particularly Toronto — councillors primarily use it to secure a wide array of “desirable visual amenities,” such as improvements to streetscapes.

While there are some important constraints placed on the use of Section 37, there are no clear guidelines for its use.

The vague nature of Section 37 and the often unco-ordinated nature of the benefits municipalities secure from developers are reasons why the province should review the planning tool. However, there are much deeper problems with how municipalities implement Ontario’s form of “density bonusing.”

Section 37 is vague as to its purpose, and the province provides no additional guidelines. Due to fears that the courts may interpret a formulaic and transparent method for determining the value of benefits as an illegal tax, municipalities, following Toronto’s lead, have chosen to employ an opaque process where the monetary worth of the benefits are negotiated on an ad hoc basis between developers and municipal planners.

At a minimum, the province should amend Section 37, requiring municipalities to implement a set formula for determining base and maximum restrictions on height and density and the value of benefits, while defining the benefits municipalities can secure.

Ideally, however, the province should repeal Section 37, as it lacks a clear planning rationale. The primary rationale for density bonusing maintains that developers should share the “windfall profit” they receive from the increased density with the public.

This argument, however, provides no planning grounds for its use and ignores the environmental benefits of building denser cities. Without a better argument for its continued use, and with tools like inclusionary zoning now available to municipalities in Ontario, it is time for the province to wean municipalities off Section 37.

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Aaron Moore is an associate professor in the Department of Political Science, University of Winnipeg and a fellow at the Institute on Municipal Finance and Governance, Munk School of Global Affairs, University of Toronto.

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