On May 18, 2016, the Ministry of Municipal Affairs and Housing (MMAH) tabled Bill 204, Promoting Affordable Housing Act, 2016 at the Ontario Legislature. This Bill fulfilled the Ministry's promise, made in March, to update Ontario's Long-Term Affordable Housing Strategy and introduce legislation that would grant municipalities new planning tools to implement inclusionary zoning policies and by-laws.

Inclusionary zoning refers to zoning requirements passed by municipalities that mandate the inclusion of affordable housing units in residential buildings and provide for these units to be maintained as affordable housing over time. To accomplish this, MMAH has proposed significant changes to provisions of the Planning Act and Development Charges Act, amongst other statutes. Some notable provisions proposed in Bill 204 include:

  • Mandatory authorization of inclusionary zoning in the official plan of every municipality;
  • Prohibitions of official plan and zoning by-law appeals to the Ontario Municipal Board in respect of inclusionary zoning policies passed by a municipality;
  • Where a municipality passes an inclusionary zoning by-law, a prohibition from passing a section 37 by-law with respect to the same lands, buildings or structures, except as may be permitted by regulation;
  • Prohibition of payment-in-lieu schemes; and
  • Prohibitions against municipalities imposing development charges on the creation of a "second dwelling unit" in prescribed classes of new residential buildings.

Experience in Other Jurisdictions

Vancouver and Montreal currently support affordable housing, providing land for social housing and low-end market rental properties. However, their strategies are less comprehensive than full inclusionary zoning regimes, and have been criticized for affordability problems.

The United States, on the other hand, is often looked to for success stories of inclusionary zoning policies, but like Canada has struggled with finding the right balance. Major cities such as New York City, Washington D.C., San Francisco, Chicago and Seattle have joined the chorus, implementing inclusionary zoning by utilizing a broad spectrum of options, from mandating that developers provide a percentage of new construction as affordable units to allowing them to offer payment-in-lieu. However, much of the success of the country's most feted program in Montgomery County, Maryland, is accredited to heavy incentives to developers, including a direct exchange of inclusionary units for a density bonus of up to 20%.

Concerns About Housing Costs

While restricting section 37 requirements where affordable housing is imposed will assist with alleviating the impact, Bill 204 could decrease housing affordability for new homeowners, who will ultimately bear much of the cost of affordable units in addition to all of the other charges that are imposed on new development.

Moving Forward

Municipalities will need to consider the effect of affordable housing strategies on their housing markets. Members of the development industry should be cognizant of the potential for new regulations and added costs that may apply to their development proposals.

The author of this article gratefully acknowledges the contributions of articling student Michael Mahoney.

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