On November 2, 2023, the Ontario government released its fall economic statement entitled “2023 Ontario Economic Outlook and Fiscal Review.” The statement spanned a variety of areas, including a number of items focused on land development and infrastructure, with an aim to address economic uncertainty and provide a strong fiscal foundation. These investments are consistent with other legislative and regulatory proposals by the Province over the past year, and are in line with the Province’s plan to build at least 1.5 million homes by 2031.

Outlined below are the key details of the land development and infrastructure-related announcements.

(a) Ontario Infrastructure Bank

The Province is proposing to create a new arm’s length, board-governed agency designed to encourage institutional investor participation in the development of critical infrastructure. Similar infrastructure banks have been developed across the world including the Canada Infrastructure Bank and other similar ones in the US, the UK and Germany. The Province would provide an initial CA$3 billion in funding to get the bank started.

While few details are available to date, the proposal is to enable greater investment in large-scale infrastructure projects across the province and to attract institutional investors to help build critical infrastructure, recognizing that taxpayer funding alone is not sufficient to meet needs. The Province seeks to target “trusted institutional investors” such as public-sector pension plans and Indigenous communities, and that initial projects are focused on long-term care homes, energy infrastructure, affordable housing, municipal and community infrastructure and transportation.

The Ontario Infrastructure Board would have authority to select projects and project partners and one of the Board’s initial priorities would be to develop a detailed process for appropriate qualification and selection of projects and partners based on financial and public benefit criteria.

Currently, Infrastructure Ontario utilizes, among other methods, public private partnerships to deliver large, complex public infrastructure projects. This has been effective to leverage the expertise and competitiveness of the private sector to expand, modernize and replace Ontario’s aging infrastructure. Typically, in these arrangements, provincial ministries and/or project owners establish the scope and purpose of a project, while design and construction work is carried out and financed by the private partner. Generally, only after project completion will the Province complete payment to the private sector company. It is too early to know if a similar model would be used going forward or if the establishment and increased funding from the Ontario Infrastructure Bank is a means of reducing the cost impact of higher interest rates on its private sector partners.

(b) Building more rental housing

The Province plans to remove the entire 8% provincial portion of the Harmonized Sales Tax (HST) on qualifying new purpose-built rental housing. The intent is to encourage the building of more rental units, and is consistent with the Province’s overall plan to help people in Ontario find an affordable place to live. This follows the federal government’s September announcement to drop the 5% federal portion of the HST. Together, the provincial and federal changes would remove the full 13% HST on qualifying new rental buildings.

This proposed change to the provincial HST portion comes not long after the Province’s September 28, 2023, announcement in Bill 134, Affordable Homes and Good Jobs Act, 2023, for a definition of “affordable” in the context of development charge exemptions. Once implemented, that change would clarify the affordable units that will be exempted from development charges.

We look forward to seeing how developers and their partners will utilize these recent changes aimed at reducing development costs for certain product types.

(c) Water Fund

The Povince is proposing to invest CA$200 million over three years in a new Housing-Enabling Water Systems Fund (Water Fund) designed to protect communities and unlock new housing opportunities. In particular, the Water Fund is to be available for municipal water infrastructure projects to support the “repair, rehabilitation and expansion of core water, wastewater and stormwater projects that promote growth and enable housing development.”

The Province also noted that the Water Fund is intended to complement the recently announced Building Faster Fund that supports municipalities in achieving their housing targets.

(d) Building Highways, Transit and Infrastructure Projects

The province is also proposing to invest CA$184 billion over 10 years towards Ontario’s Plan to Build, which supports highways, roads, transit, hospitals, long-term care homes, schools, child care spaces, broadband and other critical infrastructure. This includes, for example:

• Investing in key highway projects to connect communities, fight gridlock and keep goods and people moving across the province, such as Highway 413, Bradford Bypass, Highway 401, the Queen Elizabeth Way Garden City Skyway Bridge Twinning project, Highway 7 and the Ontario Highways Program;
• Building transit-oriented communities as part of the Province’s plan to build mixed-use communities at or around transit stations to help increase transit ridership, create sustainable communities and build more homes, including more affordable housing, around GO Transit, light rail transit and subways;
• Bringing Ontario Place back to life with public access to a beach, enhanced waterfront, green space and parkland, plus a variety of experience and recreational activities; and
• Being on track to build more than 31,000 new, and over 28,000 upgraded, long-term care beds across the province by 2028.

Dentons will continue to monitor any further announcements or developments related to this announcement and provide updates. In the meantime, should you have any questions about the announcement and its proposed land development and infrastructure changes, please contact Katarzyna Sliwa or any member of Dentons’ Municipal, Land Use Planning and Development team.

For other information relating to policy and legislative changes implemented to increase housing supply in Ontario, please see our other insights here:

• Spring brings changes to Ontario’s land use planning framework – Deep Dive on Ontario’s proposed Provincial Planning Statement
• Spring brings changes to Ontario’s land use planning framework – Ontario announces a new “Provincial Planning Statement” and Bill 97, the Helping Homebuyers, Protecting Tenants Act, 2023
• Shovels in the ground for Ontario - The Province announces the More Homes Built Faster Act to address the “housing crisis”
• Part 2: Shovels in the ground for Ontario - The Province announces the More Homes Built Faster Act to address the housing crisis
• Part 3: Shovels in the ground for Ontario – Bill 23 receives Royal Assent, the Province announces the Better Municipal Governance Act, 2022, and the Stronger Mayors, Building Homes Act comes into force