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Report

Examining the feasibility and options for an inclusionary zoning policy in Toronto

Published on 30/07/2019

Download the report (PDF)

The City of Toronto is currently designing an inclusionary zoning (IZ) policy that would require affordable housing units to be included in new developments across the city. The policy is a way to address the lack of affordable rental supply in Toronto’s housing market.

To inform the parameters of its IZ policy, the City commissioned a feasibility analysis by N. Barry Lyons Consultants (NBLC). This report draws on NBLC’s work, and furthers the analysis to examine possible parameters for an IZ policy that is not unfair or onerous for development, while also ensuring that the city can gain affordable housing units through new development.

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 IZ requirement after allowing for costs and reasonable profit. For each of the three zones, it shows how the IZ 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).

The report finds that there is considerable room for an IZ policy in Toronto, and that the policy could yield significant amounts of affordable housing being built as part of new developments:

  • 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 IZ. However, as the market in these areas evolves toward higher values, intent to apply IZ in the future should be adopted.

The report also provides the following recommendations for the City of Toronto to maximize the benefits of its IZ policy:

  • It should set IZ levels at variable rates, depending on the market capacity of different geographies across Toronto.
  • It should apply IZ to as-of-right as well as rezoned sites.
  • It should balance trade-offs between the development of more affordable units and the number of IZ units developed.
  • It should require affordable housing developed through IZ to be perpetually affordable.
  • It should phase in its IZ policy over time.

Download the report (PDF)

Summary

This new report examines possible parameters for Toronto's new inclusionary zoning policy and offers recommendations to maximize the benefits of such a policy.

Topic(s)

Evidence-based policy, Housing and homelessness