It is a planning tool used by cities in North America to encourage the creation of affordable housing. But the Toronto version of inclusionary zoning could have the opposite effect, according to the association that represents the area’s home builders.
The Building Industry and Land Development Association (BILD) says the city’s proposed policy will discourage construction of affordable and rental housing, potentially moving development away from transit hubs and out of Toronto.
It would also penalize market-priced home buyers of $ 66,000 to $ 116,000 over the life of the home and unfairly force the development industry to pay for affordable homes.
In a report released Tuesday, BILD accuses the city of “artificially keeping property taxes low and placing financial responsibility (for affordable housing) solely on the backs of new homeowners instead of the broad property tax base.”
“The proposals put forward by Toronto are unique in that they place the entire burden on an industry, on a group of consumers,” said BILD CEO David Wilkes.
Developers should be able to build more houses or fund other projects in place of houses to offset the costs of inclusionary zoning, and the policy should be implemented gradually rather than ruthlessly enforced. in a single year, he said.
“Toronto offers what would be the most aggressive initial inclusive zoning approach of any jurisdiction in North America,” said Peter Milczyn of PM Strategies.
A former Toronto city councilor and former provincial Liberal housing minister, his research shows that Toronto is the only jurisdiction that offers no financial incentives for builders to offset spending on affordable units.
BILD reports that 6.4 percent of the city’s development costs are allocated to “subsidized housing”: $ 2,900 for a large unit and $ 1,900 for a small apartment. The new community benefit fees that take effect in September 2022 will increase an additional $ 3,840 per unit.
Toronto has been discussing inclusive zoning for at least a decade, but final policy recommendations are expected to be submitted to the city’s planning and housing committee in September.
In May 2019, the city proposed inclusionary zoning in areas of the city where development supported the inclusion of affordable units. A month later, through Bill 108, the provincial Conservative government limited inclusionary zoning to developments located 500 to 800 meters from major transit centers.
The city is now proposing that developers set aside 5 to 10 percent of the gross area in condominiums at market price for affordable units and three to five percent of the area for specially designed rentals. The policy would apply to buildings with 140 units and 10,000 square meters of floor space, and smaller projects of 100 units and 8,000 square meters in downtown and waterfront neighborhoods.
BILD also advocates for a phased approach to the new policy rather than comprehensive implementation in the first year.
“Initially, there should be some level of compensation or incentives to be incorporated into IZ (municipal) regulations…
The two cities he found closest to Toronto’s goal of encouraging affordable development around transit hubs were New York and Los Angeles.
New York offers developers density bonuses for including affordable units in their buildings. This allows the developer to build more units as the building is zoned to offset the cost of the houses below the market. If they rent out buildings, they get a 35-year property tax holiday on the entire project and the state helps compensate the city for the loss of income.
In Los Angeles, there are automatic density bonuses for building affordable units.
In Toronto, said Milczyn, “there are probably some councilors who would be perfectly happy if no development happened and no affordable housing did either.
“You have to have an environment in which you encourage development,” he said.
Homebuilders aren’t the only ones opposing Toronto’s approach. Housing advocates say the proposed policy does not require enough units from real estate developers.
“The reality is that Toronto could set much more ambitious IZ requirements and developers would still be able to realize their buildings – and their profits -” said an opinion piece in the Toronto Star last year by the advisor. municipal Mike Layton and Alejandra Ruiz Vargas of East York GLAND.
Conversations are opinions of our readers and are subject to Code of conduct. The Star does not endorse these opinions.