Will the coming into force of the 20-20-20 rule be postponed?

By Marie-Claude David

RELEASE OF THE CONSULTATION REPORT ON THE DRAFT BY-LAW OF THE CITY OF MONTREAL TO IMPROVE THE OFFER OF SOCIAL, AFFORDABLE AND FAMILY HOUSING

On May 14, 2020, the Office de consultation publique de Montréal (the “OCPM“) released its consultation report (the “Report“) on the draft “Règlement modifiant le Plan d’urbanisme de la Ville de Montréal afin de définir les orientations aux fins de l’adoption d’un règlement visant à améliorer l’offre en matière de logement social, abordable et familial” and the draft “Règlement visant à améliorer l’offre en matière de logement social, abordable et familial de la Ville de Montréal” (the “By-law“), commonly referred to as the “By-law for a diverse metropolis” or the “20-20-20 Rule”.

The OCPM is an independent organization responsible for gathering the opinions of citizens at the request of the City of Montreal city council or executive committee. Although the OCPM’s recommendations are not binding on the City of Montreal, since it is the City that requested the OCPM to survey the city residents with respect to the By-law, we can reasonably expect that at least some of its recommendations might be adopted and/or taken into consideration.

Summary of the 20-20-20 Rule

The 20-20-20 rule has been the subject of several discussions in the residential development sector for quite some time now. The following is a brief summary of the By-law:

1. The By-law applies:
   • to all residential projects,
   • subject to a permit for the construction of new residential units, or for the conversion of a building resulting in the addition of residential units on the same site,
   • with a permit area of 450 m² (4,843 ft²) or more,
   • with the exception of:
     • Student residences;
     • Residential projects for the construction of affordable rental housing by a non-profit organization or a cooperative that receives financial assistance from a government or the City of Montréal;
     • Residential projects where more than 80% of the units benefit from a program that reduces the down payment to less than 5% of the sale price; and
     • Residential projects for which the construction permit is subject to an undertaking taken in favour of the City prior the effective date of the By-law, to the extent such undertaking has been accepted by the Director of the Service de l’habitation of the City of Montreal (or its authorized representative) and complies with certain criteria described in the By-law.

2. The By-law is scheduled to come into force on January 1, 2021.
3. Pursuant to its adoption, the developers of such projects will have to enter into an agreement with the City of Montreal with respect to social, affordable and family housing before obtaining a construction permit. A developer may however submit a permit application and subsequently begin the negotiations with the City.
4. For the purposes of the By-law, the City of Montreal is divided into different territories that roughly follow the borough boundaries:
   1. Downtown: Ville-Marie, Griffintown and the southern part of Plateau-Mont-Royal;
   2. Central Neighbourhoods: L’Île-des-Sœurs (Verdun), the area of the South-West along the Lachine canal, parts of Côte-des-Neiges-Notre-Dame-de-Grâce, Rosemont-La-Petite-Patrie and Villeray-Saint-Michel-Parc-Extension, and the remaining part of Plateau-Mont-Royal;
   3. Periphery: the remaining part of Verdun, South-West, Côte-des-Neiges-Notre-Dame-de-Grâce, Rosemont-La Petite-Patrie and Villeray-Saint-Michel-Parc-Extension, Lachine south of Highway 20, Saint-Laurent east of Highways 13 and 40 and around Alfred-Nobel Boulevard, two areas of Pierrefonds-Roxboro around Gouin Boulevard, Mercier-Hochelaga-Maisonneuve, Ahuntsic-Cartierville, Montréal-Nord, Saint-Léonard and Anjou; and
   4. Outskirts: the remaining part of Lachine, Saint-Laurent and Pierrefonds-Roxboro, as well as Île-Bizard-Sainte-Geneviève and Rivière-des-Prairies-Pointe-aux-Trembles.
5. The objective of the By-law is to encourage a diversified supply of residential housing that contributes to the social diversity of neighbourhoods. To this end, residential projects subject to the By-law must meet certain minimum thresholds in terms of social housing, affordable housing and family housing.
6. In order to meet the By-law’s requirements for social housing, a developer may (i) transfer a vacant lot or a turnkey project corresponding to a certain percentage of the size of the residential project, (ii) pay a financial contribution calculated based on a rate determined in the By-law that varies according to the buildable area of the project, or (iii) combine these two options.
7. In order to meet the By-law’s requirements for affordable housing, the developer must reserve a certain percentage of the project’s residential units for units complying with the price and rent ceilings provided for in the By-law for each class of units, or pay a financial contribution calculated based on the applicable class of unit and territory.
8. In order to meet the By-law’s requirements for family housing, the developer must reserve a certain percentage of the project’s residential units for units having three or more bedrooms and an area of 86 m² or 96 m², depending on the applicable territory. The percentage of family units is divided between social housing, affordable housing and housing sold/rent based on market terms.
9. The combined requirements for all housing types are shown in the table below.

Release of the Report

The release of the Report follows the public consultations held from August 7, 2019 to October 27, 2019. After taking into account the opinions of the persons having participate in the public consultations, the OCPM arrived at the following conclusions:

1. The City of Montreal’s objectives receive almost unanimous support from the participants;
2. Many participants questioned the By-law’s ability to achieve the stated objectives;
3. Despite divergent interests, community organizations and economic players agreed on several points; and
4. Since community groups and real estate professionals are vital forces in the community and are eager to be involved in decisions affecting their daily reality, the City would benefit from taking their comments, suggestions and concerns into account and involving them in the process.

The OCPM’s main recommendation is to adopt both the draft “Règlement modifiant le Plan d’urbanisme de la Ville de Montréal afin de définir les orientations aux fins de l’adoption d’un règlement visant à améliorer l’offre en matière de logement social, abordable et familial” and the By-law, in so far as it relates to the social housing requirements, while deferring to a later date the application of the affordable housing and family housing components of the By-law.

Other OCPM recommendations include the following:

1. Revise the social housing component of the By-laws, by taking into account, among others, the following items:
   1. Specify the criteria that guide the City in determining social housing projects;
   2. Ensure that the share of family social housing exceeds the estimated percentage (i.e. 5% of the 20% of required family housing), by providing a minimum percentage or otherwise;
   3. Facilitate the cooperation between builders and future managers of social projects;
   4. Allow builders to pool the requirements with respect to the inclusion of social housing projects;
   5. Include the existing property portfolio within the By-law’s scope (rather than only newly built housing), in particular by allowing social housing projects with less than 30 units, by dedicating large public, institutional or industrial sites to social housing and in particular family social housing, and by including conversions of existing buildings for social or family social housing purposes.
2. Revise or specify the following items with respect to the affordable housing and family housing components of the By-law:
   1. The definition of affordability, to take into account the definitions found in the Stratégie d’inclusion or in the land use and development plan (in order to, among other objectives, standardize the percentage of different types of housing required and the negotiating power granted to developers);
   2. Eligibility requirements for renting or purchasing affordable housing and family housing (including a determination based on income);
   3. Guarantees of sustainability and affordability (currently limited to five years);
   4. The application of the By-laws to third-party models of inclusive housing; and
   5. Ways of prioritising the construction of family units in sectors with family-friendly infrastructure and public services already available.
3. Explore the possibility of applying the By-laws to projects involving the conversion of rental units;
4. Invite senior level of governments to offer to the City, in priority, their excess buildings, which would be put in a public pool of buildings available for social housing;
5. Ask the Government of Quebec to explore ways to ease the “Règlement concernant la redevance de transport à l’égard du Réseau express métropolitain” so that the portion of a real estate project dedicated to social housing located in the areas reserved for future REM stations could be exempted from said by-law;
6. Harmonize municipal social housing initiatives with those of the Montreal Metropolitan Community;
7. Include local partners in the project selection and monitoring process;
8. Study the possibility that social housing construction standards could be eased and harmonized, develop construction standards for universal accessibility and ensure that sustainable development standards, the architectural quality of projects and the heritage value of certain buildings to be recycled are taken into account; and
9. Study the possibility that the draft By-law could include clarifications as to the additional requirements that may come from the boroughs – immediately in its social component and afterwards in its affordable and family components.

It will be interesting to see over the next few months to what extent the City of Montreal will take into account the OCPM’s recommendations and what the final version of the By-law will look like. One thing is certain: we are not done with speaking about the 20-20-20 rule anytime soon!

A complete copy of the Report (in French) can be found at the following address:
https://ocpm.qc.ca/sites/ocpm.qc.ca/files/pdf/P104/rapport-metropole-mixte.pdf