The City of Toronto has adopted Official Plan and Zoning By-law amendments that would require a certain percentage of affordable housing in new residential developments, creating mixed-income housing. Inclusionary zoning is one policy solution to help address the housing needs of Toronto’s low-income and moderate-income households (earning roughly between $32,000 and $92,000 a year depending household size). Other City initiatives are being considered as part of the HousingTO 2020–2030 Action Plan to address the full spectrum of housing issues.

As our city grows, we want to ensure our neighbourhoods provide housing options for a full range of incomes and households. Creating mixed-income, inclusive communities is key to the City’s economic vitality and livability. Through inclusionary zoning, the City hopes to:

  • increase the supply of affordable housing;
  • continue to encourage market housing development by supporting a diverse range of housing supply; and,
  • create more inclusive, complete and equitable communities.

A circular graph with caption reading: Only 2% of housing built or approved in Toronto in the last 5 years has been affordable.

 

 

 

 

 

The City has developed inclusionary zoning requirements based on findings from an in-depth analysis of housing needs and demands over the past 10 years, current trends in market pricing for ownership and rental housing, and potential impacts of inclusionary zoning on the financial viability of market developments.

The Official Plan and Zoning By-law amendments for inclusionary zoning outline how this new affordable housing tool would apply in Toronto, including:

  • requiring developments located in a both a Protected Major Transit Station Area and an Inclusionary Market Area, as shown on Official Plan Map 37, to provide affordable housing;
  • requiring five to 10 per cent of condominium developments as affordable housing beginning in 2022, depending on where the development is located and whether affordable ownership units or affordable rental units are secured;
  • increasing requirements incrementally to eight to 22 per cent by 2030;
  • ensuring units stay affordable for at least 99 years;
  • setting rents and ownership prices based on new income-based definitions of affordable;
  • deferring inclusionary zoning requirements for purpose-built rental developments until 2026;
  • exempting mid-rise development proposing fewer than 100 units and less than 8,000 square metres of residential gross floor area;
  • monitoring and reporting of the affordable housing to ensure it remains affordable and an approach to distributing net proceeds of the sale of affordable ownership units;
  • circumstances and conditions under which offsite units would be permitted; and
  • phase-in and transition provisions.

We know that residents across the city are struggling with housing affordability. Areas of the city that have seen the greatest amount of new housing supply are also experiencing significant price escalation and rent increases. These same areas also have the highest number of households paying over half of their income towards rent, with many also living in overcrowded conditions. Inclusionary zoning is a land use planning policy tool to create mixed-income developments in areas of the city where the market has not provided for a mix of housing prices and rents on its own.

In April 2018, the Province of Ontario enacted legislation that allows municipalities to implement inclusionary zoning and outlines the process that needs to be undertaken.

The Provincial Regulation for Inclusionary Zoning (Regulation 232/18) outlines what the City needs to address in its Official Plan policies for inclusionary zoning and the information that must be included in the Assessment Report. The Assessment Report must include information related to housing need and demand and the potential impacts of inclusionary zoning on the housing market and on the financial viability of development. Provincial legislation requires that the City update this report every 5 years.

On September 3, 2019, the Province of Ontario made changes to the legislation for inclusionary zoning through Bill 108, More Homes, More Choice Act. The changes limit where municipalities can implement inclusionary zoning to protected major transit station areas (areas surrounding and including an existing or planned higher order transit station that have a detailed implementation framework in accordance with Section 16(15) of the Planning Act) or areas where a development permit system has been required by the Minister of Municipal Affairs and Housing.

On June 29, 2020, City Council approved a work plan for the “Growth Plan Conformity and Municipal Comprehensive Review of the Toronto Official Plan” which included a phased Major Transit Station Area prioritization approach. Updates on Major Transit Station Areas can be found on the City’s Official Plan Review webpage.

Inclusionary zoning typically creates housing for households earning too much to be eligible for social housing but not enough to be able to afford market rents or prices. These “low- to moderate-income households” generally fall between the 30th and 60th percentile of the income distribution. In the City of Toronto, this includes households earning approximately $32,000 and $92,000 per year, depending on household size. As a policy tool, inclusionary zoning is challenged to create deeply affordable units without additional funding.

The inclusionary zoning policy outlines new definitions for affordable rental housing and affordable ownership housing that implement City Council’s direction as part of the HousingTO Action Plan to develop income based definitions for affordable housing. Learn more about the new definitions.

Residents across Toronto are experiencing challenges at every stage of the housing spectrum, from homelessness and shelter use, to securing affordable rents, market ownership and everything in between.

Inclusionary zoning is one solution the City is pursuing to help low- and moderate-income households access affordably priced housing. The City has developed a new HousingTO Action Plan to address the full spectrum of housing in Toronto from now to 2030.

Inclusionary zoning would add to the toolbox of land use planning tools that the City currently implements to maintain existing housing supply, encourage a diverse mix of housing types and sizes, and advance policies to support the creation of new affordable housing, including:

  • Rental replacement policies – to protect the supply of existing rental housing from demolition and/or conversion.
  • Section 37 and Large Sites Policy – to secure new affordable housing as part of site-specific applications and within Secondary Plan areas. For example, when a developer seeks an increase in height or density on a site larger than 5 hectares, the City’s Official Plan policies require the first priority community benefit (known as a Section 37 benefit) be that 20 percent of the additional residential units will be affordable housing. From 2013–2017, over $31.5 million and 500 affordable housing units were secured through site-specific agreements.
  • Zoning changes to expand housing options in neighbourhoods, simplify and help facilitate the creation of secondary suites across the city and to increase the as-of-right zoning permissions for municipal shelters.
  • Official Plan policies and Zoning By-law changes permitting laneway suites in the Toronto and East York District.
  • A new regulatory framework to protect and maintain multi-tenant housing.
  • Official Plan policies to address the loss of dwelling rooms across the city.
  • Design guidelines for Planning for Children in New Vertical Communities to direct how new development can better support housing for families.

The City also has programs that support the development of new affordable rental and ownership homes through the provision of financial contributions and surplus public land:

Inclusionary zoning is new to Toronto, but has been used in varying forms in over 800 programs across the United States, Australia and Canada.

Many North American cities, including Vancouver, New York, San Francisco, and Boston have implemented inclusionary zoning with positive results. For example, after New York City adopted Mandatory Inclusionary Zoning in 2016, over 1,500 permanently affordable homes were approved in the first nine months of the program.

Each inclusionary zoning policy approach is tailored to the jurisdiction’s local housing needs, market conditions and planning frameworks. While policy requirements vary across different jurisdictions, some key trends stand out:

  • Affordability periods generally range from 30–99 years, with about a quarter of jurisdictions securing affordability in perpetuity;
  • Most policies provide for options to provide units on-site, payment in-lieu, and/or the provision of off-site units; and,
  • Geographic coverage of the policy ranges from the entire municipal boundary to applying in specific areas. However, it should be noted that for large cities such as New York and San Francisco, the policy applies only to specific areas of the city.

The Staff Report considered by the Planning and Housing Committee on October 28, 2021 included a summary of how inclusionary zoning has been implemented in other cities across North America.