Downzoning - Panacea or a Dirty Word?

Within the suite of authorities granted to local governments by the province, land use regulation is perhaps the most important. And central to land use regulation is zoning authority. As demands have increased on the lands within British Columbia, it is natural for communities to consider how to increase the capacity of the lands within their jurisdiction. However, situations still arise in which councils and boards may conclude that limiting land use is in the best interest of the community, which may include reducing the intensity or density of land use or removing previously permitted uses of land by amending the applicable zoning. This process is commonly referred to as downzoning.

Land use regulation permits downzoning as a valid exercise of legislative authority. Section 458 of the Local Government Act provides that compensation is not payable to any person for any reduction in the value of that person’s interest in land or for any loss or damage resulting from the adoption of an official community plan or a zoning bylaw. Notably, the exemption from liability does not apply when a zoning bylaw restricts the use of land to a public use.

Despite this statutory protection, downzoning has garnered a checkered reputation for its potential to result in complaints and litigation. While this paper should not be understood as advocating for, or against, downzoning, knowing the limitations and risks associated with downzoning will help local governments understand and use this tool effectively and lawfully.

This paper is divided into two parts: first, a review of when a local government is prohibited from downzoning, and second, a review of the major risks that arise when downzoning. These risks include legal claims based on improper purpose, bad faith, improper procedures, unfair processes, unjust enrichment, and constructive taking. In most legal claims, the claimant is a property owner seeking to have the decision to downzone overturned, but in some cases the property owner is seeking compensation for the loss of value in their property.

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