Building affordable housing requires true partnership
The city of Toronto is currently developing its long-anticipated inclusionary zoning policy.
Inclusionary zoning is a term used by municipalities and industry planners for programs that are in place in a number of jurisdictions across North America. The basic premise is a partnership between developers, builders and municipalities to encourage the building of affordable housing units that would not otherwise be built.
In exchange for building units to sell or rent for below-market rates, builders and developers are provided with incentives or concessions that help offset the costs.
In a study prepared for BILD that reviewed inclusionary zoning practices already in place in 10 cities, only Toronto is omitting cost offsets as a starting point and thus taking a
markedly different approach to the norm.
It is a laudable goal is to encourage the development of more affordable housing. Unfortunately, the requirements in Toronto’s draft policy framework are so onerous that they will act as a disincentive and may, in fact, worsen the housing supply situation in what is already one of Canada’s most
constrained markets.
In the city’s draft policy framework, offsets and incentives only apply when a development exceeds the required inclusionary zoning contribution. Yet those requirements are already overly burdensome. The draft inclusionary zoning framework proposes that five to 10 per cent of the residential gross floor area in a new condominium development be secured as affordable and that it remain so for 99 years.
The requirement would apply to any development with more than 100 residential units in Toronto’s downtown or central waterfront areas, and to developments with more than 140 residential units in other areas.
Inclusionary zoning, as proposed, will act as a disincentive to building larger-scale projects, a particularly unfortunate outcome as the affected projects will be in major transit hub areas — precisely where we should be building as much new housing as possible.
Inclusionary zoning contributions are only the latest of the many government-imposed fees, taxes and charges that new development attracts. Development charges, parkland dedication and other levies support infrastructure, transit, police, fire and ambulance services, and social services such as child care and affordable housing.
These fees and taxes charged by all levels of government account for nearly a quarter of the cost of a new home in the GTA. Inclusionary zoning contributions, as proposed in Toronto, would only work to further erode affordability in our region.
Our industry acknowledges that inclusionary zoning can be a useful planning tool when implemented thoughtfully and in accordance with best practices.
However, the current proposed policy framework is likely to affect the viability of new development projects or raise the cost of market units to a point where new home buyers will effectively be subsidizing the “affordable” units.
To build more affordable housing, what we need is a true partnership between our industry and municipalities.