Overview
Background
An office-to-residential conversion is a process of transforming a building that was previously used for commercial purposes and converting a portion or the entirety of the building for residential uses. This can help revitalize areas with high office vacancy rates, increase housing supply, and reduce carbon emissions.
Between 2013 and 2022, over 700 units were created through office-to-residential conversions, with over 200 additional units being created from other non-residential uses that were converted to residential uses.
In November 2023, Ottawa City Council unanimously approved new measures designed to streamline and incentivize office-to-residential conversions, including a pilot program in Ward 14 with additional financial incentives.
Objective
There are a number of opportunities that come from converting underutilized office space. In areas with high office vacancies, the addition of residential units can help revitalize the area. Additionally, re-use of existing buildings has been shown to have significantly lower carbon emissions compared to construction of new buildings.
Office-to-residential conversions had previously been subject to the same planning process as new residential construction. With Council approval of the November 2023 report, the process for office-to-residential conversions was streamlined to achieve quicker approvals, lower costs for applicants, and reduce the complexity of the application process.
Program details
Fee waiver for official plan amendments
Staff determined that in the rare case that an official plan amendment is required for an office-to-residential conversion, the application fee would be waived, provided that the application is staff-supported.
Zoning flexibility
To help eliminate the requirement for zoning by-law amendments or minor variance applications, staff have amended the Zoning By-law to provide greater flexibility for office-to-residential conversions.
In cases where non-residential or mixed-use buildings with a principal use of either office, school, place of worship or hotel are converted to a residential or mixed-use building without changing the existing building envelope, and where the building is not in an industrial zone, the conversion is deemed to comply with the Zoning By-law with the following exception:
- Converted buildings must still comply with the amenity area requirements described in Section 137 of the Zoning By-law but are not restricted as to how the amenity area is provided (indoor vs. outdoor, communal vs. private, etc.).
This change was approved by Council in February 2024.
Site plan control
For conversions where the building envelope is unchanged, the site plan control process can be streamlined and scoped down. Staff have identified a list of the minimum required materials for eligible conversions, which reflects the lower complexity of these applications:
- Zoning confirmation letter
- Survey plan (topographic)
- Site plan
- Servicing study (assessment of adequacy of public services)
- Record of site condition
- Architectural building elevation drawings
- Noise/vibration study
It’s important to note that this list is only the minimum required materials, and that depending on the application, staff may request additional material. The required material for any given application can be communicated during the pre-application consultation stage.
Due to the comparatively low complexity of conversions, eligible site plan control applications for conversions will be charged the standard fee as opposed to the complex fee, which represents savings of nearly $25,000.
Site servicing requirements
In the past, office-to-residential conversions in Ottawa have been required to install costly infrastructure for stormwater management (such as rooftop cisterns) despite making no changes to the building envelope. Staff are therefore no longer requiring additional stormwater management measures, provided that the post-conversion stormwater run-off rate is not greater than the pre-conversion rate.
Additionally, staff are committed to collaborating with applicants during pre-application consultation to share information on local water and wastewater capacity to ensure the existing infrastructure is sufficient for a change to residential use.
Record of site condition
The provincial requirement for the filing of a Record of Site Condition (RSC) has been frequently identified as a costly barrier to office-to-residential conversions. O. Reg. 153/04 under the Environmental Protection Act stipulates that the filing of an RSC is generally required when a land use changes to a more sensitive use (e.g., commercial to residential).
The regulation provides an exemption for RSCs if the change of use is from commercial to mixed-use with residential use above the ground floor, provided that the building envelope is unchanged, the land has never been used for industrial purposes, and the building is no more than six storeys in height.
In consideration of this exemption, City staff sent a letter to the Minister of the Environment, Conservation and Parks requesting that the six-storey height limit on the RSC exemption be re-examined to better support office-to-residential conversions.
Financial considerations
For office-to-residential conversion projects with an unchanged building envelope, the following financial considerations apply:
- Official plan amendment application fee: Waived, provided that the application is staff-supported.
- Site plan control application fee: Reduced from complex ($54,015) to standard ($19,063).
- Development charges: Exempt for the residential portion of any conversion. Commercial space created via conversion would still be subject to development charges.
- Community benefit charges: Exempt, provided that there is no increase in gross floor area.
- Parkland dedication: Eligible conversions in Ward 14 may be eligible for a reduction in their cash-in-lieu of parkland requirements by 2 per cent of the assessed land value.
- Property tax: Conversions may be eligible for a property tax reduction during construction, subject to the applicable conditions and requirements.
There also exists a number of external programs and incentives targeted at the construction of new rental construction, such as the new HST rebate announced by the federal and provincial government.
Eligibility
To determine eligibility for an office-to-residential conversion, perspective applicants are recommended to apply for pre-consultation with Planning Services.
Ward 14 pilot program
Details
On November 1, 2023, City Council directed staff to implement a financial incentive pilot program for office-to-residential conversions in Ward 14 – Somerset Ward. The program reduces the cash-in-lieu of parkland cap from 10 per cent to 8 per cent of the assessed land value, on the condition that a building permit is issued for the project within six months of site plan approval with the possibility of a singular extension of three months.
The pilot program will run until November 1, 2025 or until the office vacancy rate in downtown Ottawa as reported by Colliers falls below 10 per cent, whichever is sooner.