Toronto Considers Making Affordable Units In New Projects Mandatory

The City of Toronto has a powerful planning tool at its disposal that could combat the housing affordability crisis, but advocates are concerned it won’t be used to its full potential.

Inclusionary zoning allows municipalities to require new developments have a certain number of affordable units. The provincial Liberals enacted the zoning strategy last year, and now the city is looking at how it will be realized in Toronto.

 It’s already used in more than 800 cities across North America to varying degrees, including San Francisco, New York City, Los Angeles, Boston and Vancouver. In Montreal , 8,000 affordable units have been built since 2013.

“Inclusionary zoning is a critical piece for addressing housing affordability in this city, not just today but decades ahead,” said Councillor Brad Bradford at the housing committee meeting Tuesday.

City staff have proposed requiring inclusionary zoning in developments with more than 100 units in downtown areas, assisting households looking to rent with annual incomes between $35,000 to $67,000. For condominiums, between 10 and 20 per cent of units would have to be affordable, depending on the location. For purpose-built rental projects, between 2.5 and five per cent of units would have to be affordable. The units must be affordable for 25 years. 

Advocates want more units to be more deeply affordable in perpetuity, as other cities have done. For example, New York City has made it mandatory that up to 30 per cent of new units be affordable in buildings with 10 or more units. There is no time cap.

The current assessment bows to pressure from developers, said delegate Alejandra Ruiz Vargas, chair of East York ACORN, a tenant advocacy group.

“Developers are claiming no one will build in Toronto if they’re required to provide affordable housing,” Ruiz Vargas said. “Really, this is ridiculous. Toronto is the hottest housing market in the country. We are the golden egg.”

Ebony Menzies, also an ACORN representative and mother of twins, said she can no longer afford rent in the northwest end of the city, which wouldn’t be part of the proposed inclusionary plan. She now has to rely on financial help from her family.

“The city report sets the bar way too low, and is far too cautious. The housing emergency will not be solved through caution,” Menzies told the city councillors.

“We must be bold.”

Councillors voted for staff to consider extending the affordability period beyond 25 years, and working with non-profit organizations.

In the last five years, only two per cent of units built in Toronto are considered “affordable” — at or below average market rent, according to city staff.

“We have lost so much opportunity,” said Councillor Mike Layton. He estimated if the city had put in place inclusionary zoning in 2011, Toronto would now have at least 12,000 affordable units.

Renters remain at a disadvantage. Twenty-three per cent of renters pay more than 50 per cent of their income on housing — double the percentage of homeowners and 21 per cent more than in 2006, the city report said.

A fifth of renters lived in housing that didn’t have enough bedrooms, whereas only six per cent of owners lived in unsuitable housing, said the report.

The average household that rents has an average income of $45,385, less than half that of households that own. However, the average asking price for a one-bedroom unit is $1,738 a month, meaning renters would have to make more than $69,000 a year for it to be considered affordable — they use no more than 30 per cent of income on housing.

Watch: Ontario’s most and least affordable housing markets. Story continues below.

Homeownership also remains out of reach. A bachelor unit on average costs $383,421, meaning the owner has to have a yearly income of $90,000 a year to carry a typical mortgage on this amount, city staff found.

Former Ontario Liberal housing minister Peter Milczyn, who spoke at committee and was in office when the province introduced inclusionary zoning, said the city is on the right track and can increase the affordable requirements over time. 

“Inclusionary zoning can be an extraordinarily effective tool to create affordable housing in the city,” Milczyn said. “I think you’re on the right track.”

The current Progressive Conservative government has introduced sweeping development legislation in early May — More Homes, More Choice Act —  that could restrict where municipalities are allowed to require affordable housing.

Milczyn said he doesn’t anticipate it impacting city staff’s current inclusionary zoning proposal.

The city will do public consultations beginning in June into next fall, and will provide the housing committee with a final report and recommendations in late 2019.