Ontario’s most recent planning legislation, More Homes, More Choice Act, 2019, made many changes to Ontario’s Planning Act, including significant changes restricting the use of inclusionary zoning (IZ). This omnibus legislation (formerly Bill 108) was passed and became law on 6 June 2019.
Changes to IZ Provisions
Under the new provisions, municipalities are now able only to apply IZ policies in two specific types of areas:
• a protected major transit station area; and
• an area subject to the development permit system (DPS).
The legislation describes a protected major transit station area as an area surrounding and including an existing or planned higher order transit station or stop. In turn, higher order transit is defined as transit that operates in whole or part in a dedicated right-of-way, including heavy rail, light rail and buses.
Neither the legislation nor its regulations provide any direction regarding how to determining the boundary of these areas. But municipalities will be bound by the provisions of the Growth Plan for the Greater Golden Horseshoe, 2017, which limits a major transit station area to an area within a radius of approximately 500m of an higher order transit station or stop.
The DPS is essentially a new pre-zoning approach introduced in Ontario in 2007 through amendments to the Planning Act. It is intended to offer an alternative to conventional zoning practices in selected areas – such as, those where intensive new development is expected, and/or special issues must be considered over many sites and ownership. It involves establishing an up-to-date and comprehensive “as-of-right” zoning regime for the area in advance of the anticipated development, rather than responding one-by-one to applications by developers.
The process addresses at least of the key problems associated with conventional approvals practices. It provides greater certainty about what can be built because the up-dated zoning is fixed after undertaking relevant planning and economic studies and also stakeholder consultations for each area. It also provides faster approvals once completed because it minimizes the need for further negotiations, and consolidates zoning, site plan, and minor variance approvals in one single approval.
The use of the term DPS in this legislation is curious because the approach was officially rebranded (along with some relatively minor amendments to the regulations) as the community planning permit system (CPPS) in Mar 2016. The names are apparently now considered to be interchangeable.
Impact on IZ Production
These changes to the Planning Act will have two significantly negative impacts on IZ. First and foremost, by severely limiting where IZ can be used, they will very substantially restrict the production of affordable housing. In addition, by introducing additional hurdles to implementation, they will further delay the adoption of IZ.
It is still too early to reliably determine the impact on production by these restrictions, but there is no doubt that it will be significant, If the City of Toronto used the current best IZ practices seen widely across the US, it could possibly secure as many as 2500 new affordable housing units annually. But under the restrictions imposed by the regulations, it is very likely that it will get no more than100-250 units per year. Considering the pressing need for affordable housing, that level of production – while certainly welcome – can only be viewed as pathetic.
In the City of Toronto, there could be something like 165 protected major transit station areas along existing or planned transit corridors. But many have been already extensively developed, while still others are years away from being pinned down and available for development. In any case, all of them taken together represent only a small portion of the entire city.
The work needed to identify the individual DPS areas and then update the zoning can be expected to add at least a year, if not much longer, to the implementation process.
There is no precedent in the US for taking such a restrictive approach. In virtually all of 500 or so inclusionary zoning programs there, IZ is applied at one stroke across the entire jurisdiction. While sometime special provisions are made for particular areas, like transit nodes and even DPS-like areas, these typically set more demanding affordable housing requirements for these areas than the standard municipal-wide requirements.
The only known example of a similar approach in the US is found in New York City. The City’s new mandatory program, passed in March 2016, applies IZ through a DPS-like process in 15 designated neighbourhoods where the zoning is comprehensively up-dated through planning studies, economic analyses and public consultations. The process, which generally takes about a year for each neighbourhood, is expected to take roughly 10 or more years in total to complete.
But what is different here is the IZ provisions are also applied across the entire city to all new developments whenever re-zoning is needed. In other words, all developments are obliged to provide affordable housing, whether the conventional re-zoning or the streamlined DPS-like approvals process.
It is notable that only four communities as of 2015 (Lake of Bays, Town of Carleton Place, Town of Gananoque, and City of Brampton for its main street corridor) have used DPS, although the province has been promoting the provision for a dozen years. (The City of Toronto approved the use of DPS in 2014, but implementation has been held up by appeals.) This apparent lack of interest to date does not bode well for its widespread use as a tool for securing affordable housing.
In summary, the key points are these. IZ does not need DPS to be an effective and productive tool in providing affordable. It can be readily and successively implemented municipal-wide in the absence of DPS. Then, where DPS is used, it can and should be used to impose a higher obligation than achieved through the standard municipal obligation. And while it is reasonable that the province would seek wider use of DPS, what seems entirely unreasonable is that the use of IZ should be tied to these provisions.
Overview
Viewed as a whole, only one reasonable conclusion can be reached by the provisions in the latest. The legislation has been designed to kow-tow to the development industry, and not to provide for affordable housing.
But the experience in the US shows that the concerns of the development industry are largely unfounded. IZ does not cause major or permanent harm to the developers. By and large, they are able to adjust to the inclusionary zoning obligations, and to continue to build housing without damage to their bottom lines.
The stated goal of the new legislation is to increase the supply, diversity and affordability of new housing. While it might increase the supply of housing to some degree, it most certainly will not increase the supply of new affordable housing.
IZ is potentially the most effective tool municipalities could have to produce affordable housing. But the legislation will now stifle that production.
Private developers, in the absence of any mandates like those used in IZ, have never shown any interest in providing affordable housing. Especially in hot markets like Toronto’s, they will always gravitate toward the upper-end of the market, where the greatest profits can be most readily made.
The legislation appears to be naively based on “trickle down”, a backward and thoroughly discredited notion. It essentially believes that the housing needs of lower-income households will be eventually served by the crumbs in the private housing market that no one else wants.
The legislation does introduce some potential cost savings – the short-term deferment of development charges for rental and non-profit housing, the consolidation and capping of growth-related development fees, and possibly the streamlining of the development process – but these remain limited and tenuous.
In any case, the legislation does not establish any provisions to ensure that these savings are permanently passed on to renters and buyers. In the absence of these provisions, any such savings are most likely to go to developers in the form of increased profits.
9 Oct 2019
