On March 19, the Ville de Montréal (the ” City “) officially announced an amendment to the By-law for a mixed metropolis, more commonly known as the “20-20-20″ By-law (the ” By-law “), with the aim of easing some of the constraints imposed on real estate developers. This decision follows criticism from the Official Opposition and the Board of Trade of Metropolitan Montreal that the By-law has not achieved its objective of stimulating the construction of social and affordable housing in the city, and may even encourage the development of projects outside the metropolis. In response to these concerns, the City was forced to make adjustments to the By-law.

A laudable objective: taking steps to ensure access to affordable housing

In view of the significant problems surrounding access to affordable housing over the years, the city was considering introducing stricter legislation to govern the supply of affordable housing. It was committed to preserving the diversity of its neighborhoods and guaranteeing access to decent housing for all. Indeed, the By-law stipulated that anyone undertaking a project involving the addition of at least one dwelling unit and exceeding a specified residential area had to enter into an agreement with the City to contribute to the supply of social, affordable and family-friendly housing. Projects could include the construction of a new building, or the expansion or conversion of an existing building. The funds raised by the city were to be used for the construction of social and affordable housing. According to the latest available information, the total contribution raised by the City as at December 31, 2023 was $38.7 million. We refer you to our bloG article on this subject, written in 2020, which can be consulted here.

A very different reality: temporary adjustments made by the city to meet specific needs

The city has had little success in reaching agreements with developers to include social housing in their projects. Most chose to pay financial compensation, i.e. a penalty, rather than include these types of housing. What’s more, only one social housing project was built with the funds raised. As a result, temporary adjustments were deemed necessary by the city. In force until the end of 2026, these include reductions in developers’ financial contributions and exemptions for small projects, including :

• Increased residential surface area threshold: The Regulations set a threshold of 450 m² of added residential surface area, equivalent to around 5 dwellings. However, until December 31, 2026, this threshold is temporarily raised to 1,800 m², equivalent to around 20 dwellings, to take account of the economic context. After this period, the threshold will be reduced again to 450 m².
• Inclusion of conversions to residential use: The By-law provides for certain exemptions, notably for social or affordable housing projects. In addition, until December 31, 2026, any conversion of office space to residential in sector 1 of the By-law, which corresponds roughly to the downtown area, will also be exempt.

Conclusion

This recent announcement by the City highlights the complex challenges facing housing policy, in particular the need to reconcile the objectives of social mix and affordable housing construction with economic realities and the concerns of property developers. The financial burden on developers is a very current market reality. Development has stagnated in recent years in a context of inflation, labor shortages, supply challenges, restrictions on available municipal infrastructure and substantial delays in permitting. As real estate law has been in a constant state of flux in recent years, the Gascon & associates team will be pleased to keep you informed of any further developments, and remains available to assist you. By Selma Adam, lawyer