The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/1544922
www.canadianlawyermag.com 43 to demolish buildings and are penalized anyway. The same disconnect appears in the non-resident speculation tax, which adds 25 percent to land transfer tax in Ontario for many foreign buyers; he recounts American clients who "gladly paid" the levy on a modest cottage, which he calls "another example of actions that did not necessarily translate to the outcomes that they're hoping for." Dentons infrastructure and PPP partner Ethan Sinclair sees the shift away from purely punitive measures and toward direct federal and provincial spending as promising. The big story is the arrival of new funding bodies and legal vehicles that aim to address bottlenecks in enabling infrastructure rather than just tweaking the tax treatment of individual projects. He points to the Canada Infrastructure Bank's infrastructure for housing initia - tive and the federal Build Canada Homes initiative, which together provide financing for water, wastewater, utilities, roads, and transit that must be in place before new housing can be built, while also engaging in direct building on federal lands, opening new sources of capital, and committing billions to affordable housing. " T he financial constraints around development, both for housing specifi - cally but also for the enabling infrastruc- ture needed to allow for housing builds, have been a serious hindrance. What we are seeing and navigating now are new sources of funds," Sinclair says, and clients are wrestling with new capital structures and procurement rules that come with that money. Those rules include "Buy Canadian" requirements for steel, wood, and aluminum that affect procurement for large infrastructure- and housing-related projects. Compliance has become a live legal issue for both authorities drafting RFPs and contractors seeking to avoid falling offside when sourcing and docu - menting their supply chains. Even with new financing and procure- ment tools, Sinclair says the familiar municipal chokepoints still matter most for approvals. Zoning, development approvals, and building permits remain the main drag on getting shovels in the ground, with timelines that vary widely by municipality. Provinces have started to intervene directly – British Columbia's municipal housing target program is a recent example – but he says the larger need is "a consistent and harmonized approach for municipalities" so builders can plan with some confidence across jurisdictions. Vancouver development lawyer Alex Fane is watching the BC experiment and says the province has forced municipalities to confront their role in the crisis. After "years of governments imposing additional taxes and restrictions on housing," he says, the new transit-oriented development mandates and housing targets show the province is trying to tackle local nimbyism head-on. That does not mean projects all come to fruition. Fane says the combination of construction costs, heavy municipal fees, higher interest rates, and restrictions on foreign capital has pushed many projects to the sidelines. Even where additional density is legally available under provin - cial law, "there's only so much that the province can do," he says, because munic- ipalities still control rezonings, extract the fees, and run the public processes that determine whether any given site moves ahead. Fane argues that access to foreign ca p ita l rem a in s "o n e o f the m o re important" factors if governments want private builders to launch large projects again, because offshore pre-sale buyers historically underwrote a share of multi- family development. At the same time, he says policymakers need to be more honest about how their own requirements drive up hard costs. Environmental standards, amenity contributions, and development cost charges all have policy rationales, but "those increase costs," he says, and if they are not re-examined, affordability targets will remain out of reach. Across these perspectives, a pattern emerges: the legal tools Ottawa and the provinces are deploying to hit housing targets now reach into financing structures, infrastructure procurement, tax design, and municipal governance more deeply than the blunt instruments of a decade ago. Each layer brings its own conditions, fric - tions, and unintended consequences. "The financial constraints around development, both for housing … [and] enabling infrastructure needed to allow for housing builds, have been a serious hindrance" Ethan Sinclair, Dentons Canada LLP THE 'STICK' TAXES Vacant home taxes: municipal surtaxes on homes left empty Underused housing tax: tax on certain underused residential properties Non resident speculation tax: land transfer surtax on foreign buyers