Community Improvement Plans in Ontario: Closing the Funding Gap on a Contaminated or Worn-Out Commercial Site

When the numbers on a brownfield or a tired commercial building don’t work, a municipal Community Improvement Plan is the one legal channel that lets a council put money or tax relief into the gap. Here is what that channel can pay for, and what it asks back.

I’m Arthur Zhao, a Toronto real estate broker. Picture the moment a Phase Two environmental site assessment comes back on an old commercial lot and the soil results sit above the standards needed to file a Record of Site Condition. Nothing about the location has changed that morning. What has changed is the cost stack: before anyone can build, there is now a cleanup bill, and the finished project may no longer pencil out. That gap between what it costs to make a site usable and what the site is worth once it is usable is exactly the space Ontario’s Community Improvement Plan rules were written for. This piece walks through that gap line by line: which costs the law lets a municipality help with, which of its two tools reaches which cost, how a single ceiling caps them together, and what the owner signs up for in return.

Where the Gap Comes From

Take a commercial site that is either contaminated or simply past its useful life. Before it earns a dollar of new rent, it can carry any combination of four cost layers:

1. Finding out. Environmental site assessment work, to learn what is in the ground and whether it meets the standards for a Record of Site Condition under the Environmental Protection Act.
2. Cleaning up. Remediation, if the assessment shows the site does not meet those standards.
3. Rebuilding. Redevelopment, construction or reconstruction of the land and buildings.
4. Upgrading. Work that makes the building or its systems more energy efficient.

A private buyer prices all four into what they will pay. When the total exceeds the value of the finished product, the rational private decision is to leave the site alone. A Community Improvement Plan is the statutory mechanism that lets a council decide the site is worth fixing anyway and put public money or tax relief toward the difference.

The Four Cost Layers, Read Against the Statute

Planning Act s.28(7.1) lists what the eligible costs of a CIP may include. Set against the four layers above, the fit is close:

Two cautions on reading this. First, the statute says eligible costs may include these items; it is the municipality’s own CIP that decides which ones it actually funds, and on what terms. Second, the rebuilding layer is tied to rehabilitation purposes. The statute is aimed at bringing a deficient site back, not at subsidizing any new construction that happens to be inside the area.

Tool One: Grants and Loans That Arrive During the Project

The first tool is in Planning Act s.28(7). To carry out a CIP that has come into effect, the municipality may make grants or loans, in conformity with the plan, to pay for all or part of the eligible costs. The statute names who can receive them:

• registered owners of lands and buildings in the community improvement project area;
• assessed owners;
• tenants; and
• anyone to whom such an owner or tenant has assigned the right to receive the grant or loan.

Two things stand out for a commercial project. A tenant is a named recipient, so a business leasing space and paying for improvements is not shut out by the statute simply because it is not on title. And the assignment language means the right to receive the money can move to someone else, such as a party financing or carrying out the work, if the CIP and the agreement allow it.

Because this is cash or a loan tied to specific costs, it speaks directly to the front end of the gap: the assessment, cleanup and construction bills that have to be paid before the site produces income.

Tool Two: Tax Cancellation That Runs After the Cleanup Starts

The second tool sits in a different statute. Municipal Act, 2001 s.365.1 lets a local municipality pass a by-law cancelling all or a portion of the taxes, for municipal and school purposes, levied on an eligible property during an assistance period. The section defines “tax assistance” as the cancellation or deferral of taxes under such a by-law.

An eligible property has to clear three conditions at once:

• a Phase Two environmental site assessment has been conducted on it;
• it is inside a community improvement project area whose CIP is in effect and contains provisions for tax assistance under s.365.1; and
• as of the date that assessment was completed, it did not meet the standards required to file a Record of Site Condition under the Environmental Protection Act.

So this tool is built for the contaminated site specifically. A building that is merely old, with clean soil, does not become an eligible property under s.365.1.

The tool is also narrower in what it measures. The assistance period ends on the earlier of the date set in the by-law and the date the tax assistance equals the sum of (i) the cost of reducing contaminants enough to permit a Record of Site Condition to be filed and (ii) the cost of complying with any certificate of property use. Rebuilding and energy upgrades, which can be eligible under Planning Act s.28(7.1), are not part of that s.365.1 measure.

A few mechanics from the section itself: the owner applies to the local municipality (s.365.1(8)); on approval, the municipality advises the start date and an estimate of the maximum assistance (s.365.1(9)); a by-law with conditions can let the taxes be levied but not collected until the municipality decides whether the conditions were met (s.365.1(3.1)); and the school-purpose portion has no effect without the Minister of Finance’s written approval, except in circumstances the Minister prescribes (s.365.1(6)).

One Ceiling Over Both Tools

It would be natural to think of the two tools as two separate pots. Planning Act s.28(7.3) says otherwise. For particular lands and buildings, the total of:

• grants and loans under s.28(7) and (7.2), plus
• tax assistance as defined in Municipal Act s.365.1 (or, in Toronto, City of Toronto Act, 2006 s.333),

shall not exceed the eligible cost of the CIP with respect to those lands and buildings.

In practice this means the cleanup-and-rebuild bill is the outer boundary of all public help on that site combined. Tax relief that has been granted uses up room that a grant could otherwise have filled, and the reverse. What counts as the eligible cost for a given property is set by the municipality’s CIP and the agreement, so the ceiling is a number to confirm with the municipality rather than to estimate.

What Stays With the Land Afterward

The money is not the end of the relationship. Planning Act s.28(11) allows an agreement concerning a grant or loan under s.28(7) to be registered against the land. Once registered, the municipality can enforce it against any party to the agreement and, subject to the Registry Act and the Land Titles Act, against subsequent owners or tenants of the land.

For anyone buying or leasing a site that has been through a CIP program, that turns the agreement into a title item: its conditions can outlast the person who signed it. Reading any registered CIP agreement before committing to the site is part of basic due diligence, and whether a particular obligation binds a new owner is a question for a real estate lawyer.

Two other long-horizon points from the statute: loans under s.28(7) pick up s.32(2) and (3) with necessary modifications (s.28(9)), which allow a loan and interest to be added to the tax roll and collected like taxes, and to be a lien or charge on the land until paid, with a certificate registered on title; and when council is satisfied that the plan has been carried out, it may dissolve the project area by by-law (s.28(13)).

Which Level of Government Can Step In

Local municipalities. Under s.28(2), where an official plan in effect contains provisions relating to community improvement, a local council may designate all or part of that area as a community improvement project area by by-law. The CIP itself then has to be adopted and brought into effect through the s.17 procedures that s.28(5) applies, with the Minister deemed the approval authority (s.28(5.1)). A site only gets access to s.28(7) money once all of that has happened.

Upper-tier municipalities. Subsection 28(2.1), added by the Fighting Delays, Building Faster Act, 2025 and in force since November 27, 2025, lets an upper-tier council designate by by-law the whole or part of any area within the upper-tier municipality as a project area. Its wording, unlike s.28(2), does not refer to an official plan with community improvement provisions. An upper-tier CIP may deal only with prescribed matters (s.28(4.0.1)), and upper-tier and lower-tier councils may make grants or loans to each other to carry out a CIP (s.28(7.2)).

On the tax side, s.365.1 by-laws are passed by the local municipality. A lower-tier municipality must give its upper tier a copy of a proposed by-law, and the upper tier may agree by resolution to have its share of taxes cancelled as well (s.365.1(4), (4.1)).

Why This Is Allowed at All

Ontario’s default rule runs the other way. Municipal Act, 2001 s.106(1) says a municipality shall not assist, directly or indirectly, any manufacturing business or other industrial or commercial enterprise through the granting of bonuses. Section 106(2) spells out what that covers, including giving or lending municipal property including money, guaranteeing borrowing, leasing or selling municipal property below fair market value, and giving a total or partial exemption from any levy, charge or fee.

Section 106(3) is the release valve: the prohibition does not apply to a council exercising its authority under Planning Act s.28(6), (7) or (7.2), or under Municipal Act s.365.1. That is why the CIP route matters. Help for a commercial site that goes through it has an express statutory footing; help that tries to go around it runs into s.106.

How to Find Out What Your Municipality Actually Offers

Everything above is the legal frame. Whether any money exists for a particular site depends on documents only the municipality can show you:

• whether a by-law designates the site’s area as a community improvement project area;
• whether a CIP for that area is in effect, and which cost lines it treats as eligible;
• whether that CIP includes s.365.1 tax assistance provisions (required before any property there can be an eligible property); and
• whether the program is currently open, and what the application and agreement require.

The practical starting point is the municipality’s website, for example its planning or economic development pages, and a call to its planning department. Ask for the designating by-law and the CIP document itself, not just a program summary.