New report examines the feasibility and options for an inclusionary zoning policy in Toronto

To meet its affordable housing goals, the City of Toronto is currently developing an inclusionary zoning policy. The policy would require affordable housing units to be included in new developments across the city.

In a new report published by Maytree, housing policy expert Steve Pomeroy examines possible parameters for an inclusionary zoning policy that is not unfair or onerous for developers, while also ensuring that the city can gain affordable housing units through new development.

“There is considerable room for an inclusionary zoning policy in Toronto,” writes Pomeroy. “The policy could yield significant amounts of affordable housing being built as part of new developments.”

The report considers three example price “zones” in the city (high, medium, and low). For each zone, the analysis shows the degree to which typical development revenues can accommodate an inclusionary zoning requirement after allowing for costs and reasonable profit. For each zone, it also shows how the inclusionary zoning requirement could vary with and without rezoning to add density, and with and without any offsets (such as fee waivers and other concessions from Toronto’s Open Door affordable housing program).

In particular, the report shows that:

• In “as-of-right” (current zoning) development, there is room to require that 10% of new units in medium-cost sites and 25% of new units in higher-value sites be made affordable.
• In rezoned developments, 30% of all new units in higher-cost areas could be affordable, and 15% of all new units in medium-cost areas could be affordable.
• In lower-cost areas, the current market does not support the development of new affordable housing units through inclusionary zoning. However, as the market in these areas evolves toward higher values, intent to apply inclusionary zoning in the future should be adopted.

The report also provides five recommendations for the City of Toronto to maximize the benefits of its inclusionary zoning policy:

1. Toronto should set inclusionary zoning levels at variable rates, depending on the market capacity of different geographies across Toronto.
2. Inclusionary zoning should apply to as-of-right as well as rezoned sites.
3. An inclusionary zoning policy should balance trade-offs between the development of more affordable units and the number of inclusionary zoning units developed.
4. Affordable housing developed through Toronto’s inclusionary zoning policy should be perpetually affordable.
5. Toronto’s inclusionary zoning policy should be phased in.

Download the report at https://maytree.com/publications/examining-the-feasibility-and-options-for-an-inclusionary-zoning-policy-in-toronto/.

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About the report author
Steve Pomeroy is a housing research consultant based in Ottawa, and a Senior Research Fellow in the Centre for Urban Research and Education (CURE) at Carleton University. He is widely acknowledged as one of Canada’s leading housing policy experts.