Ontario supports developers more than affordable housing
Cities in our province are growing . . . fast. Despite the boom in housing being built, the cost of housing is increasing dramatically. Cities across Ontario are facing a housing crisis. The clear winners in the housing boom in Ontario are the developers and the banks that invest in them.
One important tool that cities around the world frequently use to increase the number of affordable homes being built is to require developers to build a percentage of affordable housing in all new developments over a certain size. This is called “inclusionary zoning.”
Inclusionary zoning has been used in cities across the United States to respond to shortages in affordable housing. New York City’s mandatory policy is implemented in select neighbourhoods, with 20 per cent to 30 per cent of housing required to be permanently affordable by controlling the sale or rental price to below market rates.
After years of municipalities and housing activists requesting action by the province, the Ontario government has proposed new inclusionary zoning rules. Sadly, the proposed rules are not adequate to address the different needs in our communities, and favour developers’ bottom lines over the health of city budgets and the needs of the people who are struggling to find affordable places to live.
First, the rules apply only to new condominium buildings and not new rental buildings.
Worse yet, developers get to choose if the new affordable units will be rental or ownership. While some communities might need to encourage rental buildings, others might need more affordable purchase units. It should be up to the municipalities to identify the need and direct growth to these needs, not the developers bottom line.
Second, the proposed rules will require cash-strapped cities to subsidize developers’ affordable units by 40 per cent of the value. You read that correctly. Cities will need to pay developers who are making millions off our shared municipal infrastructure. While incentives are routinely used as part of a development application, like additional density or lower development related taxes, the proposed law would limit what tools cities can use and require cities to pay developers.
The money cities would need to pay developers could come from fees collected for their development, but those fees would be taken from funds to build necessary new services, such as transit, libraries and parks. As cities grow, new services and infrastructure are necessary to accommodate the growth. If cities are forced to pay developers, either cities go without necessary infrastructure, or they are forced to pay for it with other sources of revenue, such as property taxes.
Developers will claim that the costs will be passed on to homeowners, but that is simply not the case. The housing market determines what housing costs, not municipal charges. Answer this simple question — would a developer charge less to sell a home if they knew they could get more? (hint: the answer is no; they are in the business of making profit).
Finally, the province has capped the total number of affordable units in a development to a meagre 5 per cent, or 10 per cent in high transit areas. This is far below other jurisdictions in North America. This cap unnecessarily restricts the possibilities of an inclusionary zoning initiative when the availability of affordable housing is decreasing in Ontario.
Furthermore, unlike in New York where the units are affordable forever, the province has set an affordability period of 30 years, which means this is a Band-Aid solution to a crisis that is not likely to get any better a generation from now.
Mandating affordable housing through inclusionary zoning is a step in the right direction for communities across the province concerned about housing affordability.
Cities are already playing a game of catch-up to residents’ needs. Limiting municipal control to target types of units, capping affordable units, and making municipalities pay developers limits will doom this policy to failure.
Every city has a unique context, and different needs. What works in London may not be best suited for Hamilton. Cities should be able to wield inclusionary zoning in ways that suit our respective residents, and to incentivize affordable development in affordable ways. Instead, the proposed guidelines serve as an unnecessary hindrance to implementing inclusionary zoning.
Mike Layton is a Toronto City Councillor. This article is also signed by Toronto City Councillor Gord Perks, Ottawa City Councillor Jeff Leiper, Hamilton City Councillor Matthew Green, London City Councillor Tanya Park, London City Councillor Mohamed Salih and Kingston City Councillor Mary Rita Holland.