Toronto’s proposed inclusionary zoning policy will increase costs, reduce supply: BILD

bild website inclusionary
BILD's website regarding Inclusionary Zoning in Toronto

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Ontario Construction News staff writer

The Building Industry and Land Development Association (BILD) has launched an advertising campaign and new website opposing Toronto’s proposed Inclusionary Zoning policy.

A BILD report released last June warns the proposed policy reveals increased costs to purchasers, decreased new housing supply due to market distortions, and a flawed approach unique to Toronto Inclusionary Zoning (IZ).

See: City of Toronto advances new IZ policy to speed up affordable housing

“Using this approach, the City of Toronto is essentially requiring purchasers of market rate housing units to subsidize affordable units at the rate of $65,000 and $116,000 per rental unit over the lifetime of the unit,” BILD’s president and CEO Dave Wilkes said in a statement.

“Helping to provide affordable housing is everyone’s responsibility and under this proposal the city is placing the burden solely on the back of purchasers of new homes. This, at a time when housing supply is already under great pressure and affordability is more elusive than ever.”

On the “fair plan” website page, BILD cautions that the cost of a typical one-bedroom condominium apartment will increase by $67,800 under the Toronto program.

“When $67,800 is added to the price for normal purchasers to account for the city’s IZ program, the total level of taxation on the 750 sq.ft. unit will rise to $247,800 or 26.4% of the purchase cost,” the website states.

“Out of the $247,800, the City of Toronto is taking $137,300 per unit in fees and charges (or roughly 55% of the quarter of a million dollars of taxation on a new home), with the balance being paid to the federal and provincial coffers”.

The City of Toronto’s planning and housing committee has approved a staff report proposing an inclusionary zoning official plan amendment, zoning bylaw amendment and draft implementation guidelines.

Proponents including Mayor John Tory, say the changes will help create affordable rental and ownership housing.

“This will get more affordable housing built in our city and the one-year review of the policy the committee supported today will ensure we strike the right balance,” Tory said in a statement.

“Moving ahead with comprehensive, equitable policies such as the proposed Inclusionary Zoning is the right move forward to ensure that our city supports its residents, builds inclusive communities and remains vibrant and strong.”

If adopted by council later this month, Toronto will be the first city in Ontario to implement the tool which will make it mandatory for certain developments to include affordable housing. Beginning in 2022, Tory said, inclusionary zoning could secure five to 10 per cent of condominium developments as affordable housing, increasing to eight per cent to 22 per cent by 2030.

However, the BILD report states that because the proposals lack the fundamental components of an IZ policy where offsets and incentives are included to counter potential market distortions, the proposed policies are really inclusionary zoning “in name only, not in function”.

“Government fees, taxes and charges already account for almost a quarter of the cost of a new home in the GTA,” said Wilkes. “It’s time for municipalities to realize that layering more costs into building housing is one of the root causes of our current housing crisis. Like any other industry, adding government taxes and fees into the cost of manufacturing a product, in this case housing, drives up the cost of the finished product. It is the responsibility of the industry to build complete communities, it is the responsibility of municipal government to provide the conditions and the policies to enable this to happen.”

The BILD report summarizes four studies conducted by independent experts. One study was funded by the City, three others by the industry.

Findings show:

  • While inclusionary zoning policies are in place in a number of cities in North America, Toronto is taking an unprecedented approach that does not provide offsets or density bonuses to compensate for the cost of building the affordable units. It rushes to mandatory implementation and does not provide a cash-in-lieu option.
  • The city already collects money for affordable housing from a new development through development charges and soon under the new community benefit charge. The current proposal does not compensate $6,000 (combined) per unit and adds an incremental $ 65,000 in capital cost per new purchase unit and $116,000 per rental unit over its lifetime.
  • Because of market distortions introduced by the proposal, many projects will become financially non-viable. This will limit the supply and choice of homes available for new home buyers, again impacting availability and affordability.

“When done right, as evidence by examples from municipalities in Canada and the U.S. that are contained in our report, IZ policies are an effective tool to facilitate the building of affordable units. At this stage the City of Toronto’s proposals do not reflect well established best practices and will not achieve this necessary and vital goal,” says Wilkes.

Inclusionary zoning is used in more than 800 jurisdictions in the U.S., Australia and Canada with policies tailored to each municipality’s local housing market and needs. Toronto’s proposed policy was developed based on detailed financial impact analysis, including a peer review, and input received through extensive consultation.


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