Regulatory Change That Could Speed Up Office Conversions Proposed After Ford Government Voted Bill Down

Editor's Note: A previous version of this article indicated that the Province's regulation was "enacted" when it has only been proposed to date.

A regulation change included in a bill aimed at speeding up office to residential conversions in Ontario is poised to move forward after being voted down by the Ford Government in late October.

The original bill — Bill 102, The Commercial to Residential Conversion Act, 2024— was tabled by Liberal MPP Karen McCrimmon in May 2024 in response to high office building vacancies in Ontario. It sought to remove a section of the Environmental Protection Act (EPA) that exempts changes to building use based on building height. The successful amendment to the EPA is expected to cut red tape and speed up conversions by up to two years.

When the bill was voted down, McCrimmon had expressed confusion over the Ford Government's rejection, sharing with STOREYS that the bill had the support of the Ontario Real Estate Association (OREA) and the Ontario Society of Professional Engineers (OSPE), and that the amendment had been a recommendation of the Government's own Housing Affordability Task Force. "There was simply no good reason for the Ford PCs to turn this down," she said.

Now, the provincial government has proposed a regulatory change that would remove the barrier McCrimmon's original bill aimed to do away with — a bit of legislative red tape that city planners who collaborated on Bill 102 say is "a common barrier to building conversions," according to a press release from McCrimmon.

Proposed by the Ministry of the Environment, Conservation, and Parks, the regulatory changes involve removing barriers to redeveloping brownfields and commercial buildings by expanding exemption from Records of Site Condition (RSC) filing requirements for changes to existing commercial or community use buildings.

An RSC is a document that summarizes the environmental condition of a property and, under current legislation, is required when converting an office building of more than six storeys. Similar to McCrimmon, the Ministry is proposing to remove the six-storey height limit, "[allowing] a taller building, for example an existing office tower, to be changed to mixed use with residential on upper floors and commercial on the bottom level, without the need to have an RSC filed in the RSC registry first," explains the Proposal.

Additionally, restrictions on changes to the building envelope and on exterior additions would be modified to allow for additions to floors above the ground floor, enabling more buildings to take advantage of the six-storey exemption.

In the name of further cutting red tape, the Ministry has also proposed removing the ability to submit an RSC for filing in certain situations where an RSC is unnecessary to assess potential contamination, such as when land is transferred that has no known contamination or past activities that suggest potential contamination.

Overall, the proposed changes aim to reduce barriers to delivering more housing. "The proposed amendments would support development of residential units, particularly through the conversions of office space within existing buildings to residences," says the Proposal.

McCrimmon said today that despite her own bill being rejected, she's grateful action is now being taken. “I was disappointed when the government voted down my bill, but I’m happy to see that they recognize it was a good idea," McCrimmon said in her release. "This was a simple change that the housing industry needed, and I’m glad that I could bring it to the government’s attention.”

The regulatory change is still in a comment period and cannot be adopted until January, but its expected implementation will facilitate more efficient office conversions, boosting housing across the province.

Bill 102 awaits adoption as the office vacancy rate in Ontario's most populous city sits at a lofty 18.1% as of Q3 2024, according to a report from JLL, while housing starts across the province are down 18% year-over-year as of October, according to the Canadian Mortgage and Housing Corporation (CMHC).

“At a time when there is critical need for residential housing, and commercial vacancy is still very high, barriers prevent the conversion of previously commercial buildings to residential use,” said McCrimmon. “This bill would remove one significant barrier.”