The following review looks at the earlier legislative status of inclusionary zoning in Ontario.  It was written before the passage of the current IZ legislation in December 2016.  It examines the provisions of section 37 of the Planning Act, the most relevant OMB decision and the two precursory private members bills.

Section 37

The closest provisions to inclusionary zoning that can be found in Ontario are in section 37 of the Planning Act. These provisions allow municipalities to pass by-laws increasing height and density in return for the provision of “facilities, services or matters”, or what are commonly called community benefits. They also can require the providers to enter into agreements that will ensure their long-term compliance.

There are significant differences between the s37 provisions and inclusionary zoning.

• The provisions are applied only to developments getting additional density or height, and not to all or most developments as in the case of inclusionary zoning.
• The value of the community benefits provided is assessed only against the added density or height, and not against the entire development.
• The community benefits that can be provided typically includes a long list of possibilities, and not just affordable housing.
• The type and value of the community benefits is determined typically case-by-case and through private negotiations, and not through clear, open and fixed rules that apply to all.

These provisions have been proven to be mostly ineffective in providing for affordable housing for many reasons. The obligation is imposed only on relatively few developments, and then it is charged only against the density uptake. On top of that, only a small proportion of the uptake’s value seems to be recaptured, and then in nearly all cases it goes into some community benefit other than affordable housing.

OMB Decision

The city of Burlington attempted to establish a mandatory inclusionary housing policy in 1989. It passed a policy imposing a 25% affordable housing requirement on all developments, along with related controls on income-eligibility and occupancy. This apparently was the last such attempt in Ontario.

These provisions were established in response to the then provincial housing framework set out in the 1989 Provincial Policy Statement. That statement called upon municipalities to establish planning policies and standards that would enable at least 25% of new housing to be affordable. (This 25% obligation was removed in 2005 when the subsequent statement was released).

The city policy was challenged by a local developer to the OMB. In its decision Reemark v. Burlington in January 1991, the Board essentially ruled that the Planning Act did not authorize this imposition, and at best, the city could only facilitate the provision of this housing but not make it mandatory.

In light of this decision, municipal governments in Ontario since that time have been reluctant to consider mandatory inclusionary policies without having explicit authority from the province.

Private Members Bills

Two private members of the Ontario legislature have introduced bills that would amend the Ontario Planning Act to authorize the use of inclusionary zoning.  As shown below, the provisions in both bills are very similar.

Cheri DiNovo, NDP MPP and opposition housing critic,  in June 2009 introduced a private  members bill (Bill 198) called Planning Amendment Act (Enabling Municipalities to Require Inclusionary Housing).  She introduced the same bill four more times in the succeeding new legislatures, most recently as Bill 37 in March 2013.  Two of these bills passed second reading and were referred to the Standing Committee on General Government.  Read the bill.

The ruling Liberal party has used their majority on the legislative committee to kill these bills. When asked why in the legislature on 28 October 2010, Dwight Duncan (then the Minister of Finance) said: “We’re very supportive of inclusionary housing … We want to make sure we get it right.” He went on to describe the bill as being “helpful input”.  This has been the last public statement of the Liberal party on the issue.

Peter Milczyn, Liberal MPP, has subsequently introduced his  private member’s bill, called the Planning Statute Amendments Act, on 18 November 2014.  It received second reading on 20 November.  This is an omnibus bill that contains various changes to Ontario’s Planning Act, including those authorizing inclusionary zoning.  Read the bill.

Key Provisions

Both of these bills include these important inclusionary zoning provisions:

1) that would enable the municipalities to specify a percentage of the total housing units that must provided as affordable housing.

2) that would affect residential developments of 20 or more units.

3) that would allow for the provision of the affordable housing without requiring the municipality to provide financial or other assistance in return.

4) that would enable the municipalities to enter into agreements with the developers dealing with the affordable housing requirements, including the ownership and occupancy of the affordable units, that would be binding on the developers as well as all subsequent owners of the land.

Affordable housing in both bills would be the same as that defined by the Ontario Provincial Policy Statement.

In addition, the provincial government would be able to make supplementary regulations regarding various matters:
∙   the size of the affordable units, including the number of bedrooms;
∙   the timing of the construction of the affordable units;
∙   the location and distribution of the affordable units;
∙   the design and construction standards of the affordable units;
∙   the eligibility requirements for ownership and occupancy of the units; and
∙  the alternative methods for satisfying the inclusionary requirements.

There is one notable difference between the two bills. The DiNova bill would apply to all developments of 20 or more units, whereas the Milcyzn would apply only to those that required “site-specific by-law or bylaw amendments”.

This represents a significant difference. It could reduce the affordable housing produced under inclusionary zoning by limiting the developments affected.  In the City of Toronto, this probably would have little impact because most developments need re-zoning.  But it could have a major impact in other municipalities where many or most developments proceed under the existing “as-of-right” provisions.

Outstanding Issues

There are two outstanding issues that must be addressed in both of these bills.

Affordable Housing Definition

Both bills rely on the PPS definition of affordable housing, which is deficient in many ways. First, it is too complex and unnecessarily so, depending as it does on two different competing standards – one based on price and other on income. Also, the thresholds in both cases are set arbitrarily and too high, and so they include housing that should not be considered affordable housing.

But the most serious problem is this: the PPS definition relies on census income data that is not differentiated by household size, and is only available only every five years and then two years late on top of that. These two deficiencies in effect make the definition non-functional.

Before going ahead with this legislation, and expecting the municipalities to use this new authority, the Province must come up with a better definition that addresses all of the issues. Specifically, it must develop a definition that:
∙ is based solely on a single – and particularly an income-based – yardstick;
∙ draws a line between what the market cannot do versus what it can do;
∙ relies on income data that is credibly up-dated every year; and
∙ provides income thresholds for households of different sizes.

Affordablity Agreements

The municipalities must have the authority to protect the affordability of the affordable units for a long time, if not permanently. This must include the ability to set enforceable price limits and income criteria on affordable ownership units whenever sold and resold in that period.

Both bills would appear to enable municipalities to use agreements serving this propose, but because of their importance, these provisions need further legal scrutiny to ensure that they actually provide for the necessary protections.

Ontario municipalities also should be given another legal mechanism for securing these agreements. They are now able to use second mortgages (coupled with a right to purchase). While second mortgages are effective, there is a cost associated with administrating the second mortgage that works against maintaining the affordability of these units.

There is another mechanism, used elsewhere but not available here, that is also effective while not having the same administrative burden. The main precedent for that mechanism can be found in the form of covenant – called ‘housing agreements’ – that BC municipalities are able to use by virtue of provincial legislation passed in the early 1990s. It is also relevant to note that these covenants, although different in origin, are very close to the covenants used in all of the inclusionary zoning programs across the US.

RD/28 Nov2014