STAFF REPORT
December 22, 1999
To: Planning and Transportation Committee
From: Acting Commissioner, Urban Development Services and Commissioner, Community and Neighbourhood Services
Subject: A Program to Generate a Housing Stock for Social and Supportive Housing Purposes: Proposal Review
Purpose:
To review a proposal for a "Social Housing Bonus" program to generate a housing stock for social and supportive housing
purposes.
Financial Implications and Impact Statement:
There are no immediate financial implications stemming from this report.
Recommendations:
It is recommended that:
1) City Council reaffirm its direction to the Commissioner, Urban Development Services that policies on urban
intensification and the inclusion of affordable housing in new residential developments be considered a high priority in the
preparation of a housing implementation plan as part of the Official Plan process;
2) this report be forwarded to the Community Services Committee for information; and
3) the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.
Background:
At its meeting on November 1, 1999, the Planning and Transportation Committee had before it a report from Councillor
Moscoe outlining a proposal to generate a stock of housing for social and supportive housing purposes. The Committee
requested that the Acting Commissioner, Urban Development Services and the Commissioner, Community and
Neighbourhood Services report back on the proposal to its meeting on January 10, 2000. This report is in response to the
request of the Committee and was prepared with the assistance of the City Solicitor.
Comments:
Overview of the Proposal
The proposal is to create a "social housing bonus" program as a means of increasing the supply of social and supportive
housing to assist in addressing the serious shortage of affordable rental housing in the City.
The proposed program includes the following elements:
1) the City would grant a density increase to housing developers in order to generate a small increment of additional
housing units. Typically, a developer would be granted sufficient additional density to create 5% more units. This would
mean that a 150-unit building with a 5% "social housing bonus" could generate 8 additional units;
2) the proposed program would operate on a voluntary or mandatory basis;
3) ownership of the units created through the proposed "social housing bonus" would be deeded to the City for
management by the Toronto Housing Company, or to private non-profit groups, or to groups which provide supportive
housing services;
4) the additional units created in "high-end" buildings could be sold to generate monies to help replenish the Capital
Revolving Fund for Affordable Housing or rented at market value to generate revenue which could be used for capital
repairs to existing affordable housing;
5) the developer would receive a charitable tax receipt for the appraised value of the units; and
6) the proposed program would be self-financing with rents charged to recover operating costs (e.g. condominium fees plus
property taxes).
The proposed "social housing bonus" program could provide lower-cost accommodation across the City without subsidy by
the municipality and without lengthy delays for approval. In addition, capital and operating funds could be generated to
assist with other City housing programs.
Precedents for a "Social Housing Bonus" Program
The increasing pressure on municipalities to respond to the serious shortage of lower-cost accommodation has resulted in
more emphasis being placed on the role of existing regulatory mechanisms. The policy precedent for the proposed "social
housing bonus" program lies in the practice of inclusionary zoning.
Inclusionary zoning for affordable housing is a land development control measure, enacted by way of municipal by-law,
which typically requires that a certain portion of the units within any new multiple-unit residential development be set
aside for low-to-moderate income households at below market prices or rents.
Inclusionary programs have been implemented in numerous U.S. communities as well as in British Columbia. In the U.S.
context, these programs have been used primarily to generate affordable ownership housing while in British Columbia they
have been used in the context of social housing programs (i.e. where federal and/or provincial funding is available to
support the housing developed) to create affordable rental units.
A range of issues related to the effectiveness of inclusionary zoning have been identified through its implementation in a
number of jurisdictions, including the following:
- inclusionary requirements may impact on the affordability of the remaining units as costs are passed-through;
- the provision of affordable rental housing through inclusionary zoning (for example in British Columbia) has been
seriously compromised recently with the withdrawal of joint funding of social housing programs by senior governments;
and
- there are extra hidden costs associated with the administration of inclusionary zoning requirements such as legal
agreements, inspections and monitoring.
Implementing a "Social Housing Bonus" Program: Key Considerations
The implementation of the "social housing bonus" program would require further actions by the federal and provincial
governments, as well as the City of Toronto. The following are some of the key considerations.
1. Federal Actions Required.
A key component of the proposed program is that it be revenue-neutral to the developer through the issuance of a federal
charitable tax receipt for the value of the "social housing bonus" units. The City Solicitor has advised that while the City
can issue charitable receipts for gifts received by it, the "bonus" units are unlikely to be treated as a gift by the Canadian
Customs and Revenue Agency (or CCRA, formerly Revenue Canada). The "bonus" units are created through an exchange
for a density increase and, therefore, do not represent a gift in the strict sense.
The CCRA's Interpretation Bulletin No. IT-110R3 establishes the following three conditions as a prerequisite for a transfer
of property to qualify as a gift:
- the property is transferred by a donor to a registered charity (or other organizations such as a Canadian municipality listed
in s.110.1 or 118.1 of the bulletin);
- the transfer is voluntary; and
- the transfer is made without expectation of return.
The last of these conditions poses a significant impediment to the implementation of the proposed program. According to
CCRA guidelines no benefit of any kind may be provided to the donor or to anyone designated by the donor, except where
the benefit is of nominal value (defined as an amount which is the lesser of $50 or 10% of the amount of the gift). The
proposed "social housing bonus" program contemplates a situation where a developer is receiving a benefit in the form of
increased density in exchange for the transfer of property to the City. Such a benefit would exceed the guidelines related to
nominal value.
The federal government would need to change the approach to charitable donations to enable developers to receive a
charitable tax receipt for donating housing units for affordable rental housing purposes in exchange for additional density.
2. Provincial Actions Required
Inclusionary zoning, which would mandate that a set proportion of units within a multi-residential development be offered
for sale or for rental at below market prices or rents, would require special amendments to the Planning Act by the
provincial government. It should be noted that inclusionary zoning as a potential tool has been reviewed previously through
a report prepared for the former Toronto and co-funded by the province in 1991. The outcome of the review was that this
kind of tool would have an impact on the economics of housing development in the City. As a result, it would appear
unlikely that this approach would be seriously contemplated by the province at this time.
3. Actions required by the City of Toronto
In implementing the "social housing bonus" program, the City would need to assess the potential for additional legal and
administrative requirements, such as agreements, inspections, and on-going monitoring. As well, possible additional costs
which may result from legal liability incurred by the municipality would need to be assessed.
Conclusion:
This report has provided a preliminary review of a proposed "social housing bonus" program and has identified a number
of further actions which would need to be taken in order to implement the proposed program. Staff are presently
developing a housing implementation plan which will include a more detailed assessment of policies on urban
intensification and the inclusion of affordable housing in new residential developments and it would be appropriate for the
proposed program to be given consideration in that context.
It is recommended that City Council reaffirm its direction to the Commissioner, Urban Planning and Development
Services, at its meeting on May 11 & 12, 1999, that policies on urban intensification and the inclusion of affordable
housing in new residential developments be considered a high priority in the context of developing the City's new Official
Plan.
Contact:
Katherine Chislett Tel.: 397-0260
Senior Planner Fax: 397-4080
City Planning Division kchislet@toronto.ca
Paul J. Bedford
Executive Director and Chief Planner
City Planning Division
James Ridge
Acting Commissioner,
Urban Development Services
Shirley Hoy
Commissioner,
Community and Neighbourhood Services
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