Some Ontario developers may be freed from one of the more complicated steps of securing approval for a land use change with proposed new provincial legislation that would strip municipalities of their ability to request a record of site condition (RSC) in specified circumstances. The amendment to Ontario’s Environmental Protection Act (EPA) is part of a package of proposed adjustments to 27 different statutes recently introduced in Bill 227.

RSCs are central to the provincially stipulated process for verifying the amelioration of the risk of contamination in the soil and groundwater of properties where people may live, work or carry out recreational pursuits. Under the authorizing legislation, RSCs must be prepared and filed with the Ministry of Environment, Conservation and Parks before a property can be approved to accommodate a more sensitive use, such as moving from industrial operations to commercial, institutional or residential development or parklands.

In practice, municipalities are the trigger for the RSC process since they grant approval for land use changes through amendments to their Official Plans and zoning bylaws. As well, lenders generally request an RSC as a condition of financing if it is reasonably expected that the site could be contaminated.

The proposed EPA amendment is intended to prohibit municipalities and lenders from compelling a landowner to file an RSC in cases where the authorizing provincial regulation does not strictly require one. Bill 227 simply provides regulatory authority to prescribe “circumstances in which an owner of a property is prohibited from submitting for filing in the Registry a record of site condition in respect of the property”. However, an associated explanatory summary filed on Ontario’s regulatory registry suggests that will likely be confined to cases where the site is not being changed to a more sensitive land use and a Phase 1 environmental assessment indicates that there is little risk of contamination.

“Stakeholders have flagged that in some cases, when another party requires an RSC and the EPA and RSC Regulation do not, the RSC may be unnecessary. For example, for land conveyances where there is no known contamination or past activities that suggest potential contamination,” the regulatory summary states.

“I wouldn’t say it’s a common occurrence that records of site condition are required when contamination isn’t an issue, but sometimes it’s required as part of a land use planning process that a municipality has put in place,” observes Alex Sadvari, a partner who practices law with Gowling WLG’s environmental and bioenergy group. “I’ve seen it used with severances, where they have discretion to require a record of site condition and they require one.”

In other cases, municipalities may request an RSC as a condition of approving a subdivision plan, for their own risk management purposes, before they assume ownership of roadways, parklands and other green spaces within that subdivision. Or, an RSC might be required as a condition of a grant or loan to the developer under the auspices of a community improvement plan (CIP) or for property tax related incentives such as tax increment financing (TIF) or upfront financing through property assessed clean energy (PACE).

The regulatory summary suggests that municipalities and lenders wouldn’t be prohibited from requesting the filing of an RSC in cases where the initial environmental assessment — known as Phase 1 — raises concern. That involves a review of the property’s history and a site visit by a qualified professional. From there, if a Phase 2 assessment is deemed necessary, qualified professionals would take soil and water samples and conduct other scientific testing to determine the types, amounts and location of contaminants on the property.

“You can’t understand what level of risk you’re walking into unless you have a Phase 1, but a Phase 2 is typically only required if the Phase 1 identifies actual or potential issues,” Sadvari says.

Phase 2 findings then drive the risk mitigation procedures that will ultimately be the substance of the RSC. Landowners have the option to remove the contamination from the site or undertake a risk assessment process, which allows them to leave the contamination in place with appropriate safeguards.

The latter option is typically less costly, but more time-consuming to meet the applicable standards for fully containing the contamination and ensuring it does not pose a risk to human health. That may also involve securing a certificate of property use, which will be registered on the title and dictate how the site can be developed and used into the future.

“It can be a really long process. It could certainly make a development process faster if the owner didn’t have to go through actually filing a record of site condition, but would still conduct the same studies, just not be required to do it to the extent that’s completely delineated to the satisfaction of the Ministry.” Sadvari advises. “I would not term it ‘necessary’ versus ‘not necessary’, but, where it’s lower risk, there may be other ways to manage it without going through the full RSC process.”

For now, she cautions that there is limited insight on what the proposed amendment may entail since there is just an overview of the government’s general intent and no draft regulations to study. Nor is that overview written in prose that is easy to decipher, but it indicates that landowners could still have flexibility to file an RSC if they chose to do so on their own accord.

“It is proposed that the RSC Regulation be amended to prohibit an RSC, that was not otherwise required by the EPA or RSC regulation, from being submitted for filing in the RSC registry if the RSC was prepared solely on the basis of a phase one ESA, meaning that no potentially contaminating activities or areas of potential environmental concern were identified for that property. An exception to this prohibition is proposed that would allow a property owner to submit an RSC for filing based on a phase one ESA if it is not as a result of a requirement of another person,” it states.

That could be an avenue to meet the needs of lenders who would be prohibited from directly making demands. “You’d have the ability to file one and then go to the lender,” Sadvari notes.

Industry insiders also hypothesize that municipalities should still be able to compel RSCs as a condition of their incentive programs given that the requirement would be part of an agreement that developers enter into voluntarily.

In addition to the proposed legislative amendment, the Ontario government is also proposing some changes to the RSC regulation to expand developers’ ability to incorporate a new residential and/or institutional component into an existing commercial or community building without the need for an RSC. Currently, an existing building qualifies if:

• it is no taller than six storeys;
• the new residential or institutional uses are located at a higher level than the ground floor;
• no alterations are made to the building envelope, nor exterior additions constructed; and
• the building site has never accommodated an industrial use, a garage, a bulk liquid dispensing facility or dry-cleaning operations.

It’s now proposed that the exemption be extended to buildings taller than six storeys and that exterior alterations be allowed on levels above the ground floor.

“This would allow 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,” the regulatory summary states. “The other conditions would remain in place, as they were designed to mitigate any risks associated with potential contaminants in the soil or groundwater beneath the building.”