BILD releases report on the City of Toronto’s proposed inclusionary zoning policy

A new report released by the Building Industry and Land Development Association (BILD) regarding the City of Toronto’s (City) proposed IZ policy reveals increased costs to purchasers, decreased new housing supply due to market distortions, and a flawed approach unique to Toronto Inclusionary Zoning (IZ).

The report summarizes four independent studies that found deep flaws in the City of Toronto’s proposed approach to building affordable housing units.

“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,” said Dave Wilkes, President & CEO, BILD. “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.”

In September 2020, the City released policy proposals that provide its framework to guide the implementation of the construction of affordable housing units by private developers, as part of their planned developments, in and around provincial major transit station areas (PMTSAs).

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

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

The key findings show:

  • While inclusionary zoning policies are in place in a number of cities in North America, the City of 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 City’s 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.

“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.” 

“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.

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