Item - 2020.PH16.6

The Planning and Housing Committee:

1. Endorsed the proposed Official Plan Amendment containing the Affordable Rental Housing and Affordable Rents definition, appended as Attachment 1, and the proposed Official Plan Amendment with the Mid-range Rents definition, appended as Attachment 2 to the report (September 8, 2020) from the Chief Planner and Executive Director, City Planning and the Executive Director, Housing Secretariat, as the basis for public consultation.

2. Directed City Planning staff in consultation with the Housing Secretariat to conduct consultations and meet with key stakeholders including housing advocates and the development community to obtain comments and feedback on the proposed Affordable Rental Housing and Affordable Rents definitions contained in Attachment 1 to the report and the Mid-range Rents definition contained in Attachment 2 to the report (September 8, 2020) from the Chief Planner and Executive Director, City Planning and the Executive Director, Housing Secretariat.

3. Requested the Chief Planner and Executive Director, City Planning to bring forward a Final Recommendation Report in the first half of 2021 with recommended Official Plan Amendments to revise the Affordable Rental Housing and Affordable Rents definition, Mid-range Rents definition, and the Affordable Ownership Housing definition.

The Project Manager, Strategic Initiatives, Policy and Analysis, City Planning gave a presentation on Proposed Official Plan Amendment to the City's Affordable and Mid-Range Rent Definitions.

This report presents a proposed Official Plan Amendment to change the definition of Affordable Rental Housing and Affordable Rents in Section 3.2.1 of the Official Plan for the purpose of public and stakeholder consultation by adding an income based approach to the definition. This report also presents an amendment to the definition of Mid-range Rents by introducing two mid-range rent bands to maintain the City's ability to replace existing rental units with replacement rental units at similar rents.

Affordable rental housing units are typically secured within new private, including non-profit, housing developments through various means. These units are meant to provide housing that is more affordable to low and moderate-income households than typical private market housing. The City intends to implement this new definition of affordable housing and mid-range rents through a number of policies and housing programs. Of note, Official Plan policies that employ the affordable housing definition include rental replacement policies, the large site policy, and when securing new affordable housing as a Section 37 community benefit. It is also proposed that the affordable housing definition would be used to identify maximum rents and eligible income ranges for new units secured through draft Inclusionary Zoning policies. Housing programs such as Housing Now and Open Door also use the affordable housing definition when setting rents. The City often works to layer together affordable housing policies and programs in order to deepen or extend the affordability of units secured through agreements with the City.

The Official Plan currently defines Affordable Rental Housing and Affordable Rents as housing where the total monthly shelter cost (gross monthly rent including utilities) is at or below the Average Market Rent (AMR) for the City of Toronto by unit type, as reported annually by the Canada Mortgage and Housing Corporation (CMHC).

The proposed Official Plan Amendment would revise this definition to better reflect both renter household incomes and current rental market data. The proposed definition would set rents and corresponding household income ranges on an annual basis where the total monthly shelter cost is the least expensive of 100 percent of Average Market Rent (AMR) by unit type (as published annually by Canada Mortgage and Housing Corporation), and which is affordable to:

- for bachelor units, households earning between the 20th and 50th percentile income for one-person renter households;
- for one-bedroom units, households earning between the 30th and 60th percentile income for one-person renter households;
- for two-bedroom units, households earning between the 30th and 60th percentile income for two-person renter households;
- for three-bedroom units, households earning between the 30th and 60th percentile income for three-person renter households.
 

The definition would calculate affordability based on a set income percentile paying no more than 30 percent of income towards shelter costs (inclusive of utilities).

The proposed change to the existing definition would:

- respond to feedback received during the consultation on HousingTO 2020-2030 Action Plan to reorient the affordable rental housing definition towards household income rather than average market rent.
- be more reflective of the ability of low and moderate-income renter households to pay for housing in Toronto's housing market by ensuring affordable rents are pegged to the least expensive indicator - low to moderate household incomes or average market rents - for a given year;
- reflect a range of household incomes that should be served by affordable rental housing units;
- enable the definition to respond to changes in both renter household incomes and market rents, as average market rents have risen significantly faster than income over the past twenty years, the proposed definition would protect against future market or income fluctuations; and
- be consistent with the definition in the Provincial Policy Statement.
 

The proposed Official Plan Amendment implements the HousingTO 2020-2030 Action Plan, which directs the City to review options for a definition of affordable rental housing and affordable rents based on 30 percent of gross household income, consistent with the federal government's definition of affordable housing.

The report also includes a recommendation to report back on a revised affordable ownership housing definition. A proposed definition was previously provided as the basis for public consultation as part of the proposed Inclusionary Zoning policy directions.

The report highlights a number of trends in income and rental growth. A fuller picture of the impacts on Covid-19 on Toronto's rental market is expected as part of Canada Mortgage and Housing Corporation's (CMHC) fall rental market report and will be used to inform the final recommendations to Planning and Housing Committee. Due to Covid-19 delays, CMHC estimates that this report will be released in January 2021.

Given the community interest in the affordable housing definition, a consultation approach to gather feedback on the proposed affordable housing and mid-range rent definitions would be advanced along with the proposed Official Plan Amendment and Zoning By-law Amendment for Inclusionary Zoning (report under separate cover) to enable comprehensive feedback on these two key affordable housing initiatives.