The recently released regulations generally represent a positive step forward for IZ in Ontario. But these regulations, along with the legislation, leave unaddressed a number of critical issues that will need attention in order to ensure that fully effective IZ programs are adopted here.  The following is put forward as an initial check-list of those issues.

PRINCIPLES

The regulations are currently silent on a number of core principles that are fundamental to all successful IZ programs. The municipalities should be expected to adhere to these principles. So, consideration should be given to placing these principles in the regulations, or otherwise promulgating them in some binding way.

“Permanent” Affordability

The affordability of affordable housing should be maintained “permanently”. In practice, this has been generally taken to mean a period of at least 30 years. In the absence of this provision, the affordable units could be prematurely lost to the market, thereby diminishing the long-term benefits of these programs.

“Below-Market” Housing

Affordable housing should be conceptually defined as “below-market” housing – that is, housing provided at a price or rent below that available on the market for similar housing. The PPS definition of affordable housing does not guarantee this. As a consequence, the housing provided under IZ could go to households able to afford market housing.

Income Eligibility

The affordable housing should be available only to households with incomes that match the prescribed affordable price and rent limits. In the absence of this principle, the affordable housing could go as less expensive housing to households earning enough to buy or rent market housing., instead of going to those not now able to afford that housing.

ADVISORIES

There a number of complex issues that merit guidance by the Ministry. The guidance should not be directed at prescribing or dictating any particular course, but rather at assisting the municipalities in understanding the alternatives and addressing the issues in the most appropriate and effective way.

Best Practices

In developing their IZ programs, the municipalities will have to address a wide range of matters – compliance alternatives, development size thresholds, setasides, cost offsets, development standards, affordability controls and others. Best practices on all of these have evolved in the US over the years (and they are necessarily the same as the historic practices typically identified in surveys and the literature). An advisory on these matters would serve to facilitate the municipalities in developing the most effective programs.

Off-Site Provision

Off-site provision will provide a way to engage the non-profit and co-op providers in creating purpose-built rental housing through partnerships with the private developers. By exploring how this could be done, an advisory would serve to ensure that this opportunity is used to its fullest, and also done in a way that enhances the public interest.

Equity Sharing

Protecting the affordability of homeownership units raises a number of aspects that have not been fully understood or addressed in Ontario. One of the key ones is how to split the equity gain whenever the units are sold. The advisory would explore the pros and cons of the vailable approaches, and ensure that it is done in a way that protects the public interest while allowing the seller to benefit reasonably.

ACTIONS

The Ministry should also take appropriate actions to address the following issues.

Affordable Housing Definition

Inclusionary zoning will be subject to the definition of affordable housing set out in the Provincial Policy Statement. This definition is flawed in many ways, and cannot readily used in inclusionary programs. The definition must be comprehensively overhauled, or preferably entirely replaced.

Household Income Data

The municipalities in Ontario lack the necessary income data to set appropriate income limits. To be of use, that data must be renewed annually, specific to the jurisdiction and broken down by household size. Considering that this will be a province-wide issue, and there are advantages in a common approach, the Ministry is in the best position to organize the generation of this data. (Note: this issue must be addressed whether or not the PPS definition is changed.)

Positive Covenants

The affordability controls for the ownership units are typically registered on the title of each property, and then passed onto each new owner whenever it is sold. To facilitate this process, the IZ programs in the US use a “self-administering” contractual agreement. Similar provisions are available in BC but not here in Ontario. The Ministry should ensure that similar provisions are available here, and if necessary by arranging for the appropriate enabling legislation.

Cash-in-Lieu Payments

The payment of cash-in-lieu allows developers to buy-out their inclusionary housing obligation. These payments can provide a number of benefits, including particularly cash for special needs and deeper affordability rental housing. But Ontario’s IZ legislation currently bans this practice. The Ministry should work to lift that ban, and allow the practice under regulations that prevent any abuse.

Richard Drdla  18 Apr 2018