Item - 2021.PH28.1

The Planning and Housing Committee recommends that:

1. City Council adopt the Official Plan Amendment included as Attachment 1 to the report (October 15, 2021) from the Chief Planner and Executive Director, City Planning.

2. City Council adopt the Zoning By-law Amendment included as Attachment 2 to the report (October 15, 2021) from the Chief Planner and Executive Director, City Planning.

3. City Council authorize the City Solicitor to make such stylistic and technical changes to the Official Plan Amendment and Zoning By-law Amendment referred to above in Recommendations 1 and 2 above as may be required.

4. City Council endorse the Inclusionary Zoning Implementation Guidelines included as Attachment 4 to the report (October 15, 2021) from the Chief Planner and Executive Director, City Planning for consultation and report back with final recommended Implementation Guidelines in the first half of 2022, including identifying the terms and conditions for a third party administrator of affordable ownership units, and an additional analysis including a human rights approach on how the set-aside numbers based on the three Zoning Market Areas can be improved to create more affordability, how the significantly large range of set-asides numbers have been identified and the specific evaluation criteria to determine which percentage will be selected on a case-by-case basis.

5. City Council bring forward a zoning by-law amendment to add the Scarborough Centre Protected Major Transit Station Area delineation to the Inclusionary Zoning Overlay map no earlier than September 18, 2023, to provide additional time for the local land market to adjust.

6. City Council deem that a complete Site Plan application submitted under Section 114 of the City of Toronto Act, 2006 shall meet the requirements of Regulation 232/18 under the Planning Act for the purpose of an exemption based on submission of an application for approval of a Site Plan.

7. City Council request that the Minister of Municipal Affairs and Housing amend Section 16(5)(a) of the Planning Act to allow for Official Plan Inclusionary Zoning policies to be applied across the City and not limited to Protected Major Transit Station Areas.

8. City Council forward a copy of the report (October 15, 2021) from the Chief Planner and Executive Director, City Planning to the Minister of Municipal Affairs and Housing along with Attachments 1 through 10.

9. City Council forward a copy of the report (October 15, 2021) from the Chief Planner and Executive Director, City Planning to the Municipal Property Assessment Corporation with a request that property assessments for affordable ownership units take into account the requirements for ongoing affordability of these units over a 99 year period.

10. City Council request the City Manager work with the Municipal Property Assessment Corporation to identify potential options to ensure property assessments reflect the City's household eligibility, resale and price appreciation restrictions for Inclusionary Zoning affordable ownership units.

11. City Council direct the Chief Planner and Executive Director, City Planning to review the market impacts of Inclusionary Zoning one year after the implementation of the Inclusionary Zoning policy has taken effect and to bring forward further amendments to the Official Plan and Zoning By-law policies that may be required as a result of this additional analysis including:

a. the need for incentives;

b. changes to the Phase-in and/or set aside rate;

c. alterations to the minimum development size threshold; and

d. any other changes which may be necessary to ensure market stability and production of affordable units.

12. City Council direct the Chief Planner and Executive Director report in June 2022 after conducting additional market analysis in areas currently undergoing study such as Little Jamaica, the Sheppard Subway Corridor and any other areas where planning studies are currently being undertaken and which were not subject to the original detailed analysis to identify additional opportunities wherein Inclusionary Zoning may apply.

13. City Council request that the Chief Planner and Executive Director, City Planning to undertake additional market analysis in the area around both the Mount Dennis area and the Weston Road and Lawrence Avenue West area to determine if there are additional areas that should be added to the Inclusionary Zoning Map of the Official Plan policy and report back no later than June 2022.

14. City Council request the Chief Planner and Executive Director, City Planning to review the policy one year from implementation and assess the maximum number of affordable rental units and affordable ownership units that could be secured and review the percentage of affordable rental and affordable ownership units secured through the policy to ensure that the proposed set aside rates do not unintentionally secure only affordable ownership units.

15. City Council direct the Chief Planner and Executive Director, City Planning to report annually on an interim basis to the Planning and Housing Committee on:

a. the actual number of affordable rentals and ownership units approved and secured, including those that are universally accessible, compared to the anticipated projections tracked through the development pipeline to ensure that they are completed and permanently occupied by qualified tenants and owners;

b. the establishment of clear goals to obtain the maximum creation of affordable housing to end the housing crisis in five years and new financial tools to achieve this, if required; and

c. the creation of additional planning tools to ensure that affordable rental housing is developed in comparable percentages in both condominium development and purpose-built rental development.

16.  City Council direct the Chief Planner and Executive Director, City Planning, to develop a new framework to assess which areas are suitable for Inclusionary Zoning, and the percentage of units therein, based on a human rights approach to housing that considers:

a. local need for affordable housing;

b. community displacement; and

c. different models of housing provision.

1.  The Planning and Housing Committee referred the following motion to the City Solicitor with the request that the City Solicitor report directly to the November 9, 2021 meeting of City Council on the legal implications of the motion:

"1. City Council amend policies 13, 15 and 16 in the proposed Official Plan Amendment included as Attachment 1 to this report from the Chief Planner and Executive Director, City Planning, and reflect the same changes in the proposed Zoning By-law Amendment included as Attachment 2 to this report, so that the Official Plan Amendment now reads:

"13.a) ii. if a purpose-built rental development is proposed, a minimum requirement of 6% of the total new residential gross floor area shall be secured as affordable rental housing;

13.b) ii. if a purpose-built rental development is proposed, a minimum requirement of 3% of the total new residential gross floor area shall be secured as affordable rental housing;

15. The affordable rental housing required in Policy 3.2.1.13 a) i. will increase by 3.5%, b) i. will increase by 1.5%, and c) i. will increase by 0.5% per year beginning January 1, 2023 and until January 1, 2026. Affordable ownership housing requirements will be set at one point four times the affordable rental housing requirements.

16. Beginning January 1, 2022, the minimum affordable rental housing required in Policy 3.2.1.13 a) ii. will increase by 1% per year beginning January 1, 2023 until January 1, 2026” 

The Project Manager, Strategic Initiatives, Policy and Analysis, City Planning and the Partner with nblc Consultants gave a presentation on Inclusionary Zoning Official Plan Amendment, Zoning By-law Amendment and Draft Implementation Guidelines.

The Planning and Housing Committee held a statutory public meeting on October 28, 2021 and notice was given in accordance with the Planning Act.

This report recommends the adoption of Inclusionary Zoning (IZ) Official Plan policies, Zoning By-law provisions and tables draft Implementation Guidelines for consultation. The recommended Inclusionary Zoning policy and zoning framework will enable the City to initially require 5-10% affordable housing and a fully phased-in requirement by 2030 of 8-22% of affordable housing units to be provided in new developments alongside the development of market housing. The introduction of mandatory affordable housing requirements will positively contribute to transforming the delivery of housing in the City by ensuring that affordable housing keeps better pace with the delivery of market housing, contributing to social and economic cohesion in the years to come.

Inclusionary Zoning is a widely used planning tool used in hundreds of jurisdictions in the United States, Australia and parts of Canada. Inclusionary Zoning works best in cities where there is strong demand for housing and below market rents and prices can be accommodated through absorption in land values, or in areas where revenues are continually increasing. In support of the preparation of Inclusionary Zoning policies, the City undertook a series of financial assessments in 2019, 2020 and 2021 resulting in a robust financial analysis demonstrating where Inclusionary Zoning can be implemented in the city without negatively impacting overall development activity. Peer review of this work has also been undertaken through a third-party consultant retained by the City and through ongoing consultation on the analysis with development industry analysts. An in-depth analysis of demographic and market data has also been completed to understand housing need and demand across the City and by local neighbourhood. This work, coupled with extensive public and stakeholder consultation throughout 2019, 2020 and 2021, has informed the development of an Inclusionary Zoning policy framework that is balanced, forward-looking and equitable.

Since the provincial Inclusionary Zoning regulation was first enacted in 2018, the province undertook legislative changes to limit the potential areas that Inclusionary Zoning may be applied. The Province narrowed the implementation of Inclusionary Zoning to those areas within a Protected Major Transit Station Area (PMTSA) or areas where a Development Permit System has been ordered by the Minister. In addition, the Province introduced new community benefits and parkland rate requirements. These changes have been factored into the financial analysis and final recommended policies.

The recommended Official Plan Amendment and Zoning By-law includes a number of directions that reflect the City's specific context and build upon the provincial regulation and legislative framework including:

1. Establishing a minimum development size of 100 units to reflect both minimum required densities that would be required on many sites within PMTSAs, while also recognizing the importance of supporting a diverse range of housing types and sizes that could become financially challenged if Inclusionary Zoning were required on smaller developments;

2. Establishing three distinct market areas to recognize varying market viability in different areas of the City, to be included in the Official Plan as Map 37, each area with its own requirements for condominium projects delivering affordable ownership, condominium projects delivering affordable rental housing or purpose-built rental buildings delivering affordable rental housing;

3. Requiring affordable units to remain affordable for 99 years, ensuring that this stock of housing is not lost over the short term;

4. Setting rents and prices that will reflect the needs of low and moderate income households, providing affordable housing for households for whom market rents and prices are out of reach (e.g., registered nurses, early childhood educators, dental assistants earning between $32,000 and $92,000);

5. Phasing-in of affordable housing requirements from 5-10% in 2022 to 8-22% in 2030 in order to provide time for land values to adjust and the amount of affordable housing required to incrementally increase;

6. Providing for a clear transition period to provide time for developments well advanced to move through the development review process prior to Inclusionary Zoning coming into effect; and

7. Ongoing monitoring and assessment of all aspects of the approach starting in 2025, including reviewing the market areas where Inclusionary Zoning applies.

Over the past five years, the City has taken a strong leadership role in the delivery of affordable housing to ensure new housing supply reflects the City's current and future housing needs. Bold affordable housing targets set out in the HousingTO 2020-2030 Action Plan will only be realized through this leadership and partnership with developers and housing providers. Achieving a supply of housing that meets the broad spectrum needs within the city requires multiple policy and program actions. This report highlights many of the recent housing policy, service delivery and program initiatives the City has undertaken in recent years, including the Expanding Housing Options in Neighbourhoods work, policy and zoning changes to maintain and provide for the supply of multi-tenant dwellings or rooming houses, the Concept to Keys initiative, and the Housing Now and Open Door programs, which taken together are all critical in delivering on Council's housing targets.

Clarity is essential if the policy framework is to be implemented successfully. As a result, this report recommends that Council endorse for consultation the accompanying draft Implementation Guidelines, which build on experience the City has had over the past 15 years securing affordable housing as a community benefit, either on large sites greater than 5 hectares, within the Central Waterfront Secondary Plan, or as part of site specific developments. This existing policy framework is often described as a voluntary Inclusionary Zoning policy as a developer can elect to provide affordable housing within their development as part of a section 37 community benefits contribution. The results of the current voluntary framework have been uneven and highlight the need for a mandatory framework, as depending on the specific context, some developments have secured affordable housing while others have prioritized other community benefits.

The recommended Inclusionary Zoning policy framework was developed in consultation with input from the Housing Secretariat, Shelter, Support and Housing Administration, Corporate Finance, Legal Services, and CreateTO. The background materials and proposed framework meet the provincial requirements for Inclusionary Zoning set out in the Planning Act and Ontario Regulation 232/18.