Inclusionary zoning: proceed with caution

NRU
Dec. 14, 2016
By Andrew Cohrs

Municipalities cautiously optimistic about newly enacted inclusionary housing legislation as they await regulations anticipated in early 2017.

With the passing of the Promoting Affordable Housing Act last week, paving the way for the introduction of inclusionary zoning, GTA municipalities are hopeful that it will help create more affordable units. However, implementation challenges and the potential for unintended impacts have GTA planners asking questions.

“It’s a good first step...I think the issue really comes down to: how does it get implemented?...The devil is in the details,” Mississauga chief planner Ed Sajecki told NRU.

While Mississauga will give serious consideration to introducing inclusionary zoning, Sajecki wonders about its potential for causing unintended impacts. “We know that there are still some financial gaps [for developers]...What could happen is those costs just get passed on, so while you get a certain segment of the units as affordable, you’re making other units less affordable.”

While acknowledging that inclusionary zoning would increase the number of affordable units in Mississauga, Sajecki wants to make sure their cost does not result in an increase in the cost of market units. He said that developers in Mississauga would likely need assistance in producing affordable units.

“What we are hearing from the [development] industry is that they are looking for true partnerships and so part of that is they are looking for some kind of financial incentives that will dovetail with the creation of [affordable] units.”

Sajecki suggests incentives could be anything from providing additional density, deferring development charges or some kind of levy dedicated to affordable housing.

Peel planning director Arvin Prasad told NRU that introducing a new policy has further challenges.

“One of the things with [inclusionary zoning] is that we don’t have a lot of experience with it...so without that experience it will be very difficult to get it going and get an administrative system in place. What does it look like on the ground? How do we put the policies in the official plan, the zoning by-law? How do we implement it on a site-specific basis?...What are the design standards of the units?...What kind of measures or incentives can municipalities or the province provide to developers to offset the cost of constructing these homes?”

Ryerson University Centre for Urban Research and Land Development director David Amborski is cautioning municipalities that are considering implementing inclusionary zoning.

“[Municipalities] need to understand the economic aspects and impacts on the market...If you are not careful you can have negative impacts on particular segments of the market like a negative impact on transit-oriented development or mid-rise development,” Amborski told NRU.

Both Amborski and Sajecki are concerned that the new legislation does not permit cash-in-lieu contributions. Sajecki said that it could be more beneficial to collect cash-in-lieu, particularly in areas with high property values, and create more units elsewhere. The same is true for the requirement that affordable units must be located on the same site, he said.

“There will be situations where, quite frankly, it probably doesn’t make sense to force units into a specific building, where you could probably get better return on investment by going to a different location.”

Nevertheless, municipalities in the GTA are hopeful. York Region long range planning director Paul Freeman told NRU in an email that the region is pleased with the provincial policy.

“Inclusionary zoning, while not a complete solution to affordable housing gaps, would provide another tool to help municipalities address housing gaps. It would increase the mix and range of housing options in York Region, and produce a greater number of affordable options.”

Amborski agrees but warns that municipalities need to know what type of affordability level they want to address with their by-laws.

“You have to understand what you are trying to achieve. Basically, you can either get more units that have less subsidy or fewer units with deeper subsidies. It’s been shown by studies in the U.S. that typically inclusionary zoning doesn’t provide housing for the lower-income strata, those in the deepest
need.”

It is anticipated that the province will release draft regulations in early 2017, which Freeman expects will include target income levels, percentage of affordable units in a development, the length of time the units remain affordable and the size of qualifying developments.