Navigating Ontario's Development Bottleneck: The Role of Water Servicing Innovations

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As Ontario faces significant challenges in water and sanitary capacity, the real estate sector is adapting by exploring alternative servicing models. Industry leaders discuss innovative solutions to overcome development delays.

In Ontario's current development landscape, the journey from planning to construction has become increasingly complicated. Traditionally, once developers have cleared the planning department, secured zoning, and finalized urban design, they would be preparing to break ground. However, many find themselves sitting on unbuildable land for years, with the primary hurdle now being sanitary and water capacity rather than entitlement risk. This issue has led to extensive residential areas being frozen in development limbo due to the inadequacy or complete absence of municipal trunk lines.
During a recent Urban Land Institute (ULI) Toronto event at Crozier Consulting Engineers’ office, industry leaders convened to discuss how developers are leveraging alternative servicing models, municipal service corporations, and decentralized technology to navigate these challenges and get their projects moving forward.
The financial implications of stalled municipal servicing are significant, impacting developer pro formas. Richard Aubry, Vice President of Design, Development & Construction at Redwood Properties, highlighted a pertinent case study involving a 140-acre master-planned site intended for 3,000 units in York Region. This site has remained stagnant for over a decade, tied to the regional Upper York Sewage Solutions project. After $50 million was invested in engineering, the provincial government abandoned the project in favor of a long conveyance pipe leading to Lake Ontario, a multi-billion-dollar decision that has extended timeline guarantees by decades.
Aubry explained the financial burden on end-users: they are paying for the necessary infrastructure not just through development charges (DCs) but also through upfront funding and future tax implications. He emphasized that traditional public infrastructure systems are inherently expensive because they require significant initial investments to be viable. In contrast, smaller, targeted infrastructure projects are more cost-effective and scalable, offering a more feasible solution.
Localized package treatment plants provide an alternative by allowing for phased delivery. Instead of front-loading massive infrastructure costs years before project absorption, developers can utilize modular treatment units that grow incrementally as project sales and construction phases progress. This flexibility is particularly crucial for institutional developers like QuadReal Property Group, where managing private and communal servicing is essential in non-urban and land-lease markets.
Phil Busby, Director of Development at QuadReal, noted that traditional servicing constraints can suppress land values and delay entitlements. He remarked that the pace of entitlement processes slows significantly when infrastructure is lacking. Fortunately, legal and financial frameworks are evolving rapidly, with recent provincial updates under Bill 60 (Wastewater Public Corporations Act) and Bill 98 creating new opportunities for Municipal Service Corporations (MSCs).
These changes are shifting operational risks away from municipalities, which have historically been hesitant to adopt private communal systems due to liability concerns. With MSCs, publicly owned utility entities can now operate communal infrastructures on a cost-recovery basis, alleviating some of the financial burdens. Moreover, these communal systems often bypass the lengthy Municipal Class Environmental Assessment (EA) process required for larger infrastructure projects, significantly speeding up approval timelines.
In rural and peri-urban areas, this new framework serves as a powerful catalyst for development. Justin Bromberg, CEO of Frontenac Municipal Services, Ontario’s first rural MSC, characterized communal servicing as the 'missing middle' in infrastructure. He explained that it provides a professionally operated, municipally owned utility that serves clusters of developments, striking a balance between individual septic systems and larger conventional infrastructures.
As developers adapt to these changes, they are increasingly viewing localized water treatment not merely as a necessity but as a competitive advantage and asset class. Modern package treatment technologies yield high-quality reclaimed water on-site, enabling developers to redirect effluent from municipal overflow to local thermal loops, irrigation systems, or urban agriculture.
With the technology well-established and the legislative framework evolving, the critical question remains whether developers and municipalities will choose to act independently in controlling their servicing pathways or continue to wait for municipal pipe extensions. As Aubry poignantly stated, 'Ontario is a world leader in wastewater filtration — we export it all over the world, but we're not utilizing it enough in our own province.' Municipalities must find the courage to either assume control or relinquish it, and currently, many seem hesitant to take either step.

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