Good policy, terrible design

For more than a decade, as Ontario real-estate prices soared and the province’s wait-list for affordable housing grew tragically ever longer, urban advocates and anti-poverty activists called again and again on the province to introduce some version of “inclusionary zoning.” This policy innovation, they rightly argued, was doing wonders to ease affordability crises in many American cities with similarly booming housing markets.

When the Wynne government announced in March 2016 that it would finally adopt the approach here, it called the move “transformational.” At the time, we wrotethat “for once that’s no exaggeration.”

What we failed to predict, it turns out, was just how badly the government would botch the legislation’s design. The recently released draft proposal is far from transformational. It is instead a lost opportunity, so flimsy and loophole-riddled that it’s unlikely to do much good at all.

“Inclusionary zoning” is the unwieldy term for a simple concept: its provisions enable cities to demand that developers working on major residential projects set aside a percentage of units for low-income people. Making allowance for society’s lessfortunate thus becomes a required cost of doing what is, in places like Toronto and much of the province, very lucrative business.

Predictably, developers were not pleased by Queen’s Park’s plan. In other jurisdictions, to ease the burden on business, governments have offered various forms of compensation. In return for creating set-asides for affordable housing, builders are granted more favourable density allowances, fast-tracked approvals, fee reductions or some combination of benefits helping to offset their forgone profit. In this way, in Boston, San Francisco, New York and many other cities, thousands of new affordable housing units have been created and developers have done just fine.

So why has Ontario seemingly bent over backward to builders? Under the proposed law, Queen’s Park would require between 5 and 10 per cent of units in new developments to be offered at below-market prices. This is less than half the requirement of most U.S. programs.

Moreover, the rules would apply only to condominiums, not to rental buildings, though most low-income residents are renters. And it would apply for only 20 to 30 years. In New York, by comparison, 20 per cent to 30 per cent of housing, both for sale and rental, is required to be affordable — and permanently.

Worse still, rather than the usual means of offsetting the pain to developers, the province is instead proposing to force municipalities to cover 40 per cent of the cost of the affordable units or to exempt builders from the new rules altogether. This, at a time when Toronto, for example, has some $20 billion in unfunded councilapproved projects (many of which, by the way, would greatly benefit builders). The incentive for cities to opt out is great.

The purpose of inclusionary zoning is to force those who are profiting from extraordinary real-estate growth to help cities ensure that the most vulnerable residents are not being left behind. Sadly, Ontario has designed its policy in a way that does little, if anything, to advance that laudable aim.

That’s a shame. The wait-list for affordable housing in the province is at nearly 200,000 households, an all-time high. Housing experts estimate that Toronto could create more than1,000 affordable units per year by adopting inclusionary zoning rules like those in a number of comparable American cities. Under the proposed rules, on the other hand, we would create about one-tenth as many.

In recent weeks, amid a brutal cold snap, this city has experienced an overdue crisis of conscience over our failure to provide adequate shelter for those living on the streets. The municipal government has taken important steps to create more beds for homeless people and is now rightly looking at doing more still to prevent and address homelessness.

The province’s important role in this fight is less direct and the consequences of its failures less obvious. But don’t let the bureaucratic language of “inclusionary zoning” fool you. The province’s reluctance to fully embrace this potentially powerful policy, if the Wynne government insists on staying the course, will be felt in a great many households struggling or unable to afford food, clothing and a roof over their heads.

Why has Ontario seemingly bent over backward to builders?