Currently, there is no Inclusionary Zoning policy in Toronto, but regulations are under review and it could end up being a powerful tool for the municipality.
On May 28, 2019, the Inclusionary Zoning Official Plan Policy Directions will be considered by the Planning and Housing Committee, then pending the results, it will go to City Council on June 18.
Members of the new home building industry, non-profit organizations, and other stakeholders have been consulted with regarding the current policy directions. The three goals of the IZ policy include increasing the supply of affordable housing, continuing to support a diverse range of new housing types, and creating complete, inclusive communities.
At the moment, the directions say that IZ would apply to projects of more than 100 units in downtown Toronto and east and west of downtown. New residential developments with more than 140 units would be subject to IZ.
The IZ concept was introduced by the Liberal government, but the Housing Supply Action Plan (Bill 108) kind of throws a wrench into the plans. Bill 108 could make it so that IZ only applies to new residential developments near major transit nodes. This wouldn’t be a total loss since that’s where high-density developments should be built anyway, but it would take a little bit of power away from municipalities trying to get more affordable units in other parts of the city.
There are currently two ways of approaching IZ regulations and the required amount of affordable housing. The first proposed option is to apply the policy only to the increase in density above as-of-right permissions, and the second option is to apply the policy across the board for the whole development at whatever percentage necessary in order to achieve the same result as the first option.
For new condos in “strong” market areas, 20% of the units would have to be affordable, meaning they cost no more than average market value (with 10% of the units being available at 80% of market value). The share of affordable units would be 10% in “moderate” market areas. For purpose built rental buildings, 5% of the units would have to be affordable in strong market areas, and 2.5% for moderate market areas. These percentages would only be applied to the increase in density above the as-of-right permissions.
If the city proceeds with the second option, that would leave it open to require any percentage that would result in the same number of affordable units as the first option. It gets kind of confusing here. If a condo does not exceed density limits, how will the City know how many units there should be?
Moving forward, it’s possible that Bill 108 prolongs the approval of an IZ policy. The one other concern we have with IZ is that it could force condo developers to make other units in the huilding more expensive to cover the costs of the designated affordable units. We are interested to see how this is addressed.