Inclusionary Zoning -Great guest blog!

By Ray Sullivan-CCOC

On May 18, 2016, Bill 204, the Promoting Affordable Housing Act, 2016 passed First Reading in the Ontario legislature. If the bill receives Royal Assent, it will allow municipalities to require private sector developers to include affordable housing units in their development proposals through inclusionary zoning (IZ). Simply put, IZ policies require or encourage new private sector residential developments to make a certain percentage of the housing units affordable to low- or moderate- income residents and to provide for those units to be maintained as affordable over a period of time. Through Bill 204, the Government of Ontario has introduced legislative amendments affecting several existing pieces of legislation: the Planning Act, the Development Charges Act, the Housing Services Act and the Residential Tenancies Act. Specifically, Schedule 4 of the Promoting Affordable Housing Act, 2016 proposes amendments to the Planning Act that would enable municipalities to use IZ through the land-use planning system. Centretown Citizens Ottawa Corporation (CCOC) supports Schedule 4 of the Province of Ontario’s Promoting Affordable Housing Act, 2016. If passed, this legislation has the potential to become a useful planning tool at the municipal level to contribute to addressing the need for more affordable housing in both the rental and the ownership housing markets.

There are a variety of matters that are up for discussion given the number of Acts that Bill 204 affects. The efficacy of Inclusionary Zoning is dependent upon the existing context: the existing housing market structure and conditions, the regulatory context, and the design of the policy itself. That is why in May of 2016 the Ministries of Municipal Affairs and Housing sought feedback through a discussion guide, which was available for comment until August 16, 2016. In response, CCOC provided a letter with comments on the number of number of the potential inclusionary zoning regulatory elements identified by the Province. The following outlines CCOC position on key elements of the proposed bill.

Proposed Inclusionary Zoning Framework for Ontario

CCOC feels that the Province should not authorize municipalities to accept money in-lieu of inclusionary zoning units or allow the units to be built on off-site lands. The preferred approach is to ensure that affordable units are integrated as part of the development. If the Province decides to authorize municipalities to accept cash in-lieu or permit off-site units, provincial legislation should ensure the money and/or off-site affordable units stay within the same neighbourhood as the development for which they are required, in close proximity to the development site.

Program Targets

Ontario is made up of a diverse range of municipalities in terms of size, population, and need for affordable housing. The groups most in need of affordable housing vary among municipalities across the province. Some municipalities are in need of family-oriented affordable housing units (e.g., 2+ bedroom units). Some smaller municipalities where lower-density forms of housing prevail may be in need of more singles-oriented affordable units (e.g., one bedroom units). The specific target groups of inclusionary zoning programs would be most appropriately determined at the municipal level, based on local context and need. Provincial legislation should require that municipalities identify target groups for inclusionary zoning units when implementing an inclusionary zoning program.

Threshold Size and Trigger

A potential trigger identified for inclusionary zoning requirements is a major zoning amendment (e.g., a change in land use, or a significant increase in height or density). Rezoning as a trigger for inclusionary zoning requirements would limit the number of eligible projects in many Ontario municipalities (including Ottawa), and provides a clear means of avoiding inclusionary requirements (e.g., building in conformity with the existing zoning). It would be more effective for the trigger to be based on a set metric that could apply to any project, such as site area, development gross floor area, or the proposed number of dwelling units. Provincial legislation should include guidelines for setting a threshold related to a specific metric at the local level. Municipalities should be required to select a single, easily defined metric threshold, to ensure clarity and transparency.

Affordability Period

To make a meaningful contribution to the affordable housing supply and ensure long-term housing affordability, the provincial legislation should include direction for a minimum affordability period for units generated through an inclusionary zoning program. A minimum 35-year affordability period would be appropriate, given the general lifecycle of buildings and the general timeframe for requiring major capital investments for building upkeep. A 35-year timeline may also correspond well with the anticipated period of long-term home ownership for a single household.

Price/Rent and Unit Set-Aside

Provincial inclusionary zoning legislation should allow municipalities to combine price/rent and unit set-aside requirements on a “sliding scale” or points system, to allow for more flexibility at the local level. In this approach, municipalities would allow developers to decide whether to provide fewer units at more affordable prices/rents, or a greater number of units at modest prices/rents (but still below or at average market rent). Affordability should be assessed on a price per floor area basis ($/sq ft), to avoid situations where affordable housing requirements are being met solely through the delivery of small studio and one-bedroom units. This scaled approach may generate increased support for and greater implementation of inclusionary zoning programs, as it provides flexibility for developers to decide on number of units versus affordability, within a certain permitted range. The provincial legislation should also allow municipalities to set different scale requirements for different neighbourhoods or areas where appropriate (e.g., higher requirements at transit hubs). This flexibility could lead to a greater generation of affordable units overall, as it reflects the range of need through larger municipalities. The Province, however, should not allow municipalities to exclude any areas within their geographic boundaries from exclusionary zoning requirements all together.

Measures and Incentives

Provincial inclusionary zoning legislation should require that municipalities set a baseline requirement for the provision of affordable housing units through the program (using the scale system described above) that is achievable without the need for public subsidies or incentives. Incentives and measures could then be used to encourage an increased provision of affordable housing units, beyond the baseline inclusionary zoning requirement set by the municipality.

Several incentive measures have been identified, including the waiver or deferral of development charges or property taxes over the affordability period, application fee waivers, expedited approval processes, and alternative parking requirements to reflect the low parking demand by residents of affordable housing. Provincial legislation should enable municipalities to reduce parking requirements for all affordable housing projects, regardless of whether the units are generated through an inclusionary zoning program. Details of incentive measures should be determined at the local level.

Agreements

The provincial inclusionary zoning legislation should require agreements between the developer/owner and the municipality that must be registered on title for the property, to ensure affordability for a set period (e.g., 35 years, as suggested earlier). This will ensure affordability over the long-term, regardless of whether the property is sold.

Use with Section 37 (Height and Density Bonusing)

Inclusionary zoning provisions should exist independent of Section 37 provisions. Section 37 deals specifically with height and density bonusing. While some municipalities and local politicians prioritize affordable housing as a community benefit realized through Section 37 provisions (such as Toronto), this is not the case in many municipalities. The provision of affordable housing should not just be linked to height and density bonusing. Rather, inclusionary zoning requirements should be triggered by a specific metric that could apply to any project, such as site area, development gross floor area, or number of units that could (as suggested previously). With this metric threshold approach, not all projects triggering inclusionary zoning requirements would necessarily trigger Section 37 requirements.

CCOC looks forward to the introduction of legislation enabling municipalities across the province to implement inclusionary zoning programs. We are eager to work with the City of Ottawa to develop a local inclusionary zoning program that will contribute to the provision of affordable housing units in Ottawa.

Ray Sullivan | November 23, 2016 at 12:00 pm | URL: http://wp.me/p760IR-cZ

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