In 2020, the provincial government introduced amendments to section 37 of the Planning Act, R.S.O. 1990, c. P.13 (the “Act”). These amendments served to replace the former density “bonusing” regime with the current community benefits charge  (“CBC”) regime. At a very high level, the CBC regime permits municipalities to issue charges to fund capital costs for public services in connection with new growth where those costs have not already been recovered from development charges and parkland requirements.

While the CBC regime has now come into full effect, there remains some uncertainty as to how the Planning Act continues to deal with the transition from the former bonusing regime to the new regime.

Section 37.1 of the Act guides this changeover. The provisions of section 37.1 work by clarifying that, despite their repeal, the provisions of the Act which set out the previous bonusing regime continue to apply in certain circumstances. At a high level, the effects of section 37.1 may be summarized as follows:

• For the purposes of transitioning between the bonusing and CBC regimes, the key “applicable date” is the earlier of September 18th, 2022 and the day on which the municipality passed a CBC by-law under current provisions of the Act. Bonusing by-laws and agreements that were validly enacted and entered into by a municipality prior to September 18, 2022 continue to be valid after this date.
• Where a municipality had properly passed a bonusing by-law prior to September 18, 2022 which includes a requirement for the land owner to enter into an agreement with the municipality dealing with the provision of certain facilities, services or matters, the municipality’s ability to require the land owner to enter into that agreement continues beyond September 18, 2022. The municipality’s ability to register and enforce the terms of the agreement also continue to apply beyond September 18, 2022.
• A bonusing by-law and connected agreements may become unenforceable against the lands that are the subject of the by-law if the by-law has been repealed or amended to remove the requirement to provide facilities, services or matters. This may include, for example, upon the passing of a CBC by-law that repeals the bonusing by-law.
• While former bonusing by-laws and agreements may continue to be valid as summarized above, the special account containing the funds collected pursuant to any such by-law or agreement must be governed by the current provisions of the Act.
• The development or redevelopment of the lands that are the subject of a valid bonusing by-law is not subject to a community benefits charge by-law.

The enforceability of a bonusing by-law or agreement is an issue to be determined on a case-by-case basis. Moving forward, it will be important for municipal staff to give consideration as to whether existing developments should continue to be governed by an existing bonusing by-law or pursuant to the new CBC regime.