Inclusionary zoning is only a partial solution to the affordable housing problem
By Sam R on May 24, 2016
Promised in March, legislation that would give municipalities the power to compel builders to include affordable housing in new residential projects is coming down the pipe. “Inclusionary zoning” would make builders set aside a percentage of new units for low- to moderate-income households as part of the updated affordable housing strategy released three months ago.
Toronto city officials have been seeking the zoning powers for a decade; planner Jennifer Keesmaat said at a community forum that they could have built 12,000 new affordable housing units in the past five years based on the mandating of 10% affordable housing in developments with more than 300 units. Fewer than 3,700 affordable rental and owned units have been built in the same time period through existing programs.
For their part, municipalities who take advantage of the new legislation will be required to offer development charge rebates, density bonuses and property tax waivers, according to the Toronto Star. Although Manitobans passed similar legislation in 2013, none of the municipalities there have yet put it to use. Vancouver and Montreal have policies that promote affordable housing but have not required developers to actually build the units.
Section 37 of the Planning Act already lets developers increase height or density of a project in exchange for community benefits, but that doesn’t necessarily mean affordable units — they can be anything from a cash payout to a playground, and are negotiated on a case-by-case basis. The Star says Ontario’s legislation will prohibit builders from trading cash for the required units, and they will not be able to avail themselves of Ontario Municipal Board appeals, nor move the development to a municipality that does not require the affordable housing element.
When the announcement was made in March, the Ontario Home Builders Association (OHBA) issued a statement noting that successful inclusionary zoning legislation, as used in some U.S. cities such as New York, San Francisco and Boston, has state and federally funded financial and planning incentives attached that support the development of affordable housing, so as to not undermine housing affordability in general.
Will the legislation just drive up prices for the rest of us? Developers, of course, aren’t going to foot the bill. It’s possible that other units in new condo developments could become more expensive to pick up some of the slack, even if there are ways of offsetting the cost.
Not all developers are balking. When the change was announced earlier this spring, Mitch Cohen, president of The Daniels Corporation, which is currently revitalizing Regent Park with new mixed-income developments, said, “Affordable housing will not be built by accident, by happenstance, or simply by virtue of good intentions.”
He said he thought inclusionary zoning was the only way to secure enough affordable housing for every Torontonian who needs it, but it will hardly do that; there are close to 100,000 lower-income individuals and families on active waiting lists for affordable housing in Toronto.
The definition alone is slippery. What does affordable even mean? The Bank of Canada uses the definition that a unit is considered affordable if it’s at or lower than the median market value for comparable houses, which doesn’t really address affordability at all in super-hot markets like ours.
A $1 million detached home isn’t affordable because it costs $900,000. In the U.S., affordable rentals are for those earning between 50% and 80% of the median income; ownership units require between 60% and 120% of the median income to buy. None of it addresses the problem of severe poverty.
It also raises the question of what becomes of those units after the original sale? In Chicago, affordable housing units are protected for at least 30 years; during that time, they can only be rented or sold at the originally established price plus a percentage of market appreciation, so buyers can’t turn around and flip the units at market price.
In Chicago’s model, developers can buy their way out at a cost of $100,000 per unit not built. The money is then dedicated to building new and repairing old affordable housing units or towards rental assistance for low-income households. Should our legislation contain a similar out? There are many run-down units in the existing affordable housing stock already — shouldn’t we be fixing them up?
I believe in the mixed-income model — creating lower-income housing on its own is how Regent Park became what it used to be. And just look at what it is now and what it’s becoming. But is legislation the answer?
It’s an admirable pursuit, but we don’t even know yet if the legislation has legs — although Toronto seems eager, will municipalities even take advantage of it? By the numbers, it will chip away at the affordable housing problem, but hardly begin to solve it. There’s a lot of work left to be done at all levels of government.
