Bill 185 and the “Use It or Lose It” Development Rule: What Property Owners Need to Know

Bill 185 introduced sweeping changes to development approvals across Ontario that directly affect property values and development potential throughout the GTA. The legislation gives municipalities new tools to push stalled projects forward or reallocate development capacity to properties ready to build immediately.

At Innovative Property Solutions, we’re seeing these changes impact property valuations in ways that many owners and investors don’t yet understand. A property with approved development rights no longer holds those rights indefinitely. The “use it or lose it” provisions mean that approvals can expire, capacity can be reallocated, and fees paid for applications are no longer refundable.

Understanding these changes matters for anyone who owns development property, holds site plan approvals, or is evaluating land purchases in Toronto, Mississauga, Vaughan, Markham, or across the GTA. The rules have shifted, and property values shift with them.

The Infrastructure Capacity Reallocation Power

Municipal water and sewage systems have limited capacity. When developments get approved, municipalities allocate portions of this capacity to those projects. Historically, approved projects held this capacity allocation indefinitely, even if construction never proceeded.

Bill 185 changes this by allowing municipalities to reallocate capacity from projects that have stalled to projects ready to build immediately. If your property has development approvals but construction hasn’t started within specified timeframes, the municipality can take back the water and sewage capacity allocation and give it to another developer ready to proceed.

This power addresses a real problem. Municipalities across the GTA have limited infrastructure capacity that constrains how much development they can approve. When approved projects sit dormant for years while holding capacity allocations, that capacity isn’t serving any productive purpose. Meanwhile, other developers with ready-to-build projects can’t proceed because capacity is committed to stalled developments.

The reallocation authority creates risk for property owners holding approvals without immediate construction plans. The approvals themselves might remain valid on paper, but without infrastructure capacity allocation, you can’t actually build. The development potential becomes theoretical rather than practical.

For property valuation, this changes how we assess development sites. A property with approvals but no construction activity now carries the risk that capacity could be reallocated. This risk reduces value compared to properties with active construction or properties positioned to build immediately upon receiving approvals.

Municipalities determine which projects are considered stalled and eligible for capacity reallocation. The criteria typically include a lack of building permit applications, absence of construction activity, and extended time periods since approval without progress toward construction.

Property owners can protect their capacity allocations by demonstrating progress toward construction. Filing building permit applications, completing detailed design work, and showing concrete steps toward breaking ground all help establish that a project is active rather than stalled.

The Three-Year Site Plan Lapsing Rule

Site plan approvals historically remained valid indefinitely once granted. A property owner could obtain site plan approval and hold it for five, ten, or even twenty years without losing the approval. This allowed owners to wait for optimal market conditions before proceeding with construction.

Bill 185 introduces a three-year lapsing provision for site plan approvals. If construction doesn’t commence within three years of approval, the site plan approval expires. Property owners must reapply and go through the approval process again if they want to proceed with development after the three years.

This provision fundamentally changes development site values and investment strategies. Previously, obtaining site plan approval created permanent value by establishing concrete development rights. Now, site plan approval creates temporary development rights that expire if not used within three years.

The three-year clock starts when the municipality issues final site plan approval. Property owners should understand exactly when their approvals were granted and when the three-year period expires. Missing this deadline means losing approvals and needing to restart the process.

Restarting the approval process carries costs and risks. Municipal requirements may have changed during the intervening years. Community opposition could be stronger the second time around. The property might not qualify for approval under current rules even though it was approved previously. These uncertainties reduce the value of approvals that are approaching their three-year expiration.

For appraisal purposes, we now evaluate site plan approvals based on their age and remaining validity period. A fresh approval with three years remaining provides full value. An approval with six months remaining before expiration provides substantially less value because the window to build is closing, and the risk of losing the approval is high.

Property owners holding older site plan approvals should evaluate whether to proceed with construction, sell to developers ready to build, or accept that approvals will lapse and reassess development strategies based on current conditions.

No More Planning Application Fee Refunds

Before Bill 185, property owners who withdrew planning applications could receive partial refunds of application fees paid to municipalities. This allowed applicants to test development concepts, withdraw if approval seemed unlikely, and recover some costs.

Bill 185 eliminates refunds for withdrawn planning applications. Once you pay application fees, that money is gone regardless of whether the application proceeds to approval, gets denied, or gets withdrawn.

Planning application fees are substantial. Rezoning applications can cost tens of thousands of dollars. Official plan amendments can exceed $100,000 in fees for larger projects. These fees represent real money that property owners previously could recover partially if applications didn’t proceed.

The elimination of refunds makes planning applications riskier. Property owners must be more certain that applications will succeed before submitting them because the fees are now sunk costs regardless of the outcome.

This changes due diligence requirements before filing applications. More extensive community consultation, detailed planning analysis, and political assessment become necessary to reduce the risk of filing applications that ultimately fail or need withdrawal.

For property valuation, this affects development site analysis. Properties requiring complex approvals with uncertain outcomes carry more risk because substantial fees will be lost if approvals don’t materialize. This risk reduces values for properties needing controversial approvals versus properties with straightforward approval paths.

The no-refund provision also affects negotiation dynamics. Municipalities know that applicants can’t withdraw and recover fees, which may reduce municipal willingness to compromise on application terms. Applicants are locked into the process once fees are paid.

Property owners considering development should budget for full application fees as expenses that won’t be recovered if projects don’t proceed. This affects feasibility analysis and investment decisions about whether to pursue development.

Combined Impact on Development Property Values

The three Bill 185 provisions work together to create new dynamics affecting development property values across the GTA.

Properties with fresh approvals and clear paths to construction maintain strong values because they can be developed within the three-year window, and infrastructure capacity is secure. These properties are positioned for immediate value realization through development.

Properties with aging approvals approaching three-year expiration face value discounts because the development window is closing, and capacity reallocation risk is increasing. Buyers purchasing these properties need to build immediately or risk losing approvals.

Properties requiring new approvals face increased risk from non-refundable fees and potential infrastructure capacity constraints. These properties require higher risk premiums and show reduced values compared to approved sites.

Properties in municipalities with constrained infrastructure capacity face the most significant impact because capacity reallocation is most likely where capacity is tightest. Understanding local infrastructure constraints becomes essential for accurate valuation.

When we appraise development properties at Innovative Property Solutions, we investigate approval status and timing, infrastructure capacity availability, municipal infrastructure constraints, fee exposure for required approvals, and development timeline feasibility given the three-year window.

Strategic Responses for Property Owners

Property owners holding development approvals should evaluate their positions in light of Bill 185 provisions and make strategic decisions about how to proceed.

Properties with approvals and clear development plans should move toward construction promptly to avoid expiration and capacity reallocation risks. The three-year window means timing matters more than previously.

Properties with approvals but no immediate construction plans face decisions about whether to sell to builders ready to proceed, proceed with construction despite imperfect market timing, or accept that approvals will lapse and reassess options.

Properties requiring new approvals need more rigorous feasibility analysis before filing applications because fees are non-refundable. Ensuring applications have a strong approval probability becomes more important.

Property owners should maintain detailed records of progress toward construction, including permit applications, design work, financing arrangements, and construction planning. This documentation helps demonstrate that projects are active rather than stalled if municipalities consider capacity reallocation.

Understanding municipal infrastructure capacity becomes essential. Properties in areas with adequate capacity face less reallocation risk than properties where capacity is constrained, and municipalities are actively looking to reallocate from stalled projects.

Municipal Implementation Variations

Bill 185 provides framework legislation that municipalities implement through local policies and procedures. Implementation varies across GTA municipalities in ways that affect property owners differently depending on location.

Some municipalities have moved aggressively to implement capacity reallocation and pursue stalled projects. These municipalities are actively identifying dormant approvals and warning property owners that capacity may be reallocated if construction doesn’t commence.

Other municipalities have been slower to implement the provisions or have focused on larger projects while leaving smaller developments alone. Understanding your municipality’s approach helps assess actual risk levels.

The criteria municipalities use to identify stalled projects vary. Some focus on time since approval. Others look at whether building permits have been applied for. Some consider whether developers are making progress even without formal permit applications.

Property owners should monitor municipal policies and engage with planning departments to understand local implementation of Bill 185 provisions and how those policies affect their specific properties.

Appraisal Methodology Adjustments

The Bill 185 provisions require adjustments to how we appraise development properties because the risk profile and value timing have changed.

We verify approval status and determine exact approval dates to establish how much time remains before the three-year expiration. This affects whether the full approval value can be recognized or whether discounts are necessary.

We assess infrastructure capacity availability for the property and municipality to evaluate reallocation risk. Properties in capacity-constrained areas require risk adjustments that properties in areas with adequate capacity don’t face.

We evaluate project readiness and the owner’s capability to build within the required timeframes. Properties owned by capable builders ready to proceed maintain full value. Properties owned by holders without construction capability or intention face value discounts.

We consider non-refundable fee exposure when valuing properties requiring additional approvals. The risk of losing substantial fees if approvals fail affects development feasibility and value.

We apply time-based discounting for older approvals approaching expiration because the practical development window is shrinking, and development timing flexibility is reduced.

Market Impact Observations

The Bill 185 provisions are creating observable changes in GTA development property markets that affect values and transaction patterns.

Development sites with approvals are trading more quickly as buyers recognize the three-year window means holding approved sites long-term is no longer viable. This has increased transaction velocity for approved sites.

Pricing for approved sites reflects remaining approval validity periods. Sites with fresh approvals command premiums while sites with older approvals approaching expiration trade at discounts reflecting the compressed timeline.

Builders are increasingly targeting sites with approvals approaching expiration because current owners may be motivated to sell rather than rush into construction. This creates opportunities for builders ready to execute quickly.

Properties requiring controversial approvals show wider value gaps between optimistic and pessimistic scenarios because the non-refundable fee risk makes approval uncertainty more costly.

Municipalities are seeing fewer speculative approval applications because the elimination of fee refunds makes testing marginal concepts more expensive. This may reduce approval volumes while concentrating applications on projects with a stronger approval probability.

Long-Term Value Implications

Bill 185 provisions change the long-term value dynamics for development properties across the GTA by reducing approval permanence and increasing execution risk.

Development approvals provide less value premium than previously because they’re now time-limited assets that expire rather than permanent rights. This reduces how much buyers will pay for approved but undeveloped sites.

Properties positioned for quick development maintain strong values because they can capture approval value before expiration and avoid capacity reallocation. Speed to market becomes more valuable.

Land banking strategies become less viable for approved sites because the three-year window prevents holding approved sites through multiple market cycles. This may reduce demand from passive investors and increase demand from active builders.

Infrastructure capacity becomes an independent value factor beyond just approvals. Properties with secure capacity allocations in capacity-constrained markets command premiums beyond approval value alone.

Professional Valuation Guidance

The Bill 185 changes create complexity in development property valuation that requires specialized expertise in municipal planning, infrastructure capacity analysis, and development economics.

At Innovative Property Solutions, we provide development property appraisals across Toronto and the GTA that properly account for approval timing, capacity constraints, municipal implementation approaches, and all factors affecting development property values under the new legislative framework.

Whether you own development property, are considering acquisition, need financing, or require valuations for legal or investment purposes, a professional appraisal from experienced specialists ensures accurate values that reflect current regulatory realities.

Contact Innovative Property Solutions for development property appraisal services that account for Bill 185 provisions and provide the analysis needed for confident decisions about development properties in Ontario’s changed regulatory environment.