New Toronto Policy Mandates Affordable Housing

For many Torontonians, the cost of housing has consumed a growing percentage of their income. In an effort to address this, on November 9, 2021, Toronto City Council adopted amendments to its official plan and comprehensive zoning by-law to implement inclusionary zoning (IZ). This provincial land use planning tool enables municipalities to require the provision of affordable housing in certain types of new multi-residential development.

Below are five things you need to know about this new policy:

1. IZ will apply to development containing at least 100 new residential units and 8,000 square metres of new residential gross floor area (GFA). Student residence, retirement home, nursing home, residential care home and non-profit housing developments are exempt. Purpose-built rental housing will be exempt until January 1, 2026.

2. Only development in Protected Major Transit Station Areas (PMTSAs) will be subject to IZ. While no PMTSAs have been approved in Toronto, they will fall within a 500- to 800-metre radius of existing or planned higher-order transit stations. Toronto has identified three “IZ Market Areas” within anticipated PMTSAs, with each market area subject to different affordable housing requirements.

3. In IZ Market Area 1, a minimum of 10% of the total new residential GFA must be provided as “affordable ownership housing” or a minimum of 7% as “affordable rental housing.” In IZ Market Area 2, the minimums are 8% or 6%, respectively, and in IZ Market Area 3, the minimums are 7% or 5%, respectively. These minimums will increase over time, beginning January 1, 2025.

4. The definitions of affordable ownership housing and affordable rental housing have been updated and are now income-based. To fully appreciate the associated cost implications, these definitions should be reviewed directly (see below). There will be no government incentives to offset costs and affordability must be maintained for 99 years.

5. IZ will take effect on the later of September 18, 2022, or approval of a PMTSA. Transition-based exemptions will apply if on or prior to the effective date complete applications for a zoning by-law amendment and site plan approval were filed, a zoning by-law amendment came into force on or prior to the passing of a Community Benefits Charge by-law and a Section 37 Agreement was executed, or a complete application for site plan approval was filed.

Have more than five minutes? Contact Michael Cook or any member of our Commercial Real Estate group to learn more, or visit the following links: official plan amendment, zoning by-law amendment and affordable housing definitions.