Toronto Star: Toronto wants up to 22 per cent of new condos to be affordable. Is it leaving homes on the table?

Posted October 27, 2021

Toronto has released its final proposal for a new affordable housing system, which would require condo developments to set aside between eight and 22 per cent of their floor space for affordable rentals or owned homes by 2030 — with those lower costs guaranteed for 99 years.

It’s an effort, the city says, to make Toronto more livable for those who make it tick: its early childhood educators, its dental assistants and bank clerks. As housing costs have risen through the city, officials acknowledge that these essential workers are at risk of being priced out.

But as the pitch makes its way to council, new research shared exclusively with the Star suggests the city could enact toothier rules without leaving condo developers in the lurch, and presents the current plan as a missed opportunity for thousands more affordable units.

“It sets a very low bar for developers,” said Social Planning Toronto researcher Beth Wilson, who conducted the analysis with co-researchers Jeremy Withers from the University of Toronto and Sean Meagher from The Change Lab.

“For tenants and for residents who are just struggling with this housing crisis, they want to see their government do everything possible.”

The proposed rules — known as inclusionary zoning — would apply differently in three zones of the city, in developments with at least 100 units within proximity of major transit stations.

The affordable units will be based not on market costs, but on household income levels. For example, for a studio apartment, rent has to be kept under $812 to be affordable to a person making around $32,000 per year. For someone making around $44,000 annually, a studio apartment could be considered an affordable owned unit at a $151,000 price tag.

Zone One: Downtown, Central Waterfront and Bloor-Yorkville

• In the first zone, the proposal would see a minimum of seven per cent of new condo projects’ floor space dedicated to affordable rentals in 2022, with an increase to 16 per cent by 2030.
• If a developer chose owned units, the rule would be 10 per cent in 2022 and 22 per cent by 2030.
• In purpose-built rental buildings, the rule would be zero per cent in 2022 and five per cent in 2030.

Zone Two: Toronto West, Toronto East, North Toronto and Yonge-St. Clair

• In the second zone, the rules for condos would be six per cent for affordable rentals next year and 12 per cent by 2030.
• For owned units, the minimum would be eight per cent in 2022 and rise to 17 per cent.
• In purpose-built rentals, no requirement would be implemented right away, again, with a three per cent rate gradually eased in by 2030.

Zone Three: South Etobicoke, North York West, North Yonge Corridor, Scarborough Central and Scarborough City Centre

• In the third zone, condos would have to set aside five per cent of their space for affordable rentals or seven per cent for affordable ownership in 2022.
• That would rise to eight and 11 per cent respectively once fully enacted.

The minimum rates were tested, staff say, to ensure that the value of a piece of land wouldn’t drop so far as to eliminate the incentive to develop it.

While a consultant group tasked with assessing the city’s policies found, earlier this year, that higher rates could work in areas like the downtown core, it updated its report this fall with a new test that looked not only at the impact on as-is land value, but the impacts on expected land value. If inclusionary zoning rules changed the expected land value by 15 per cent or more, the consultant group recommended a “less aggressive” policy.

Wilson and her co-authors conducted their own examination based on the city’s commissioned feasibility study. While imperfect — their analysis looked at buildings with 80-plus units versus the recommended 100-plus, for example — their research suggested that Toronto could create 3.5 times more affordable housing without compromising development.

Using currently proposed developments as an example, she said, the gulf between what they believed was feasible and what was proposed for 2022 was around 18,000 units. Even if the 2030 rates were rolled out right away, she said it was a gap of around 10,000 units.

The city has already been facing pressure to roll out a more aggressive plan. In public consultations this year and last, it says the majority of feedback was asking for a bolder approach, with affordable housing targets between 20 and 30 per cent. Some within city hall are on side, with several councillors attending a press conference last week with ACORN Toronto.

“The proposal in front of council now is far less ambitious than it should be, and that raises question about who is shaping the policy and what the goal is: protecting developers’ profits or building more affordable housing for people across Toronto who need it?” Coun. Mike Layton said.

The city maintains any higher set-asides wouldn’t be financially viable. City planning, in an email, said the phase-in was adopted because the city isn’t proposing financial incentives for developers, which the industry had asked for.

“(Inclusionary zoning) is a new policy for Toronto, and the first in Ontario, and the City’s approach recognizes that land markets needs time to adjust,” staff wrote.

Mayor John Tory, last week, acknowledged that some felt the policy was cutting below what was possible. But others, he said, felt it went too far. “We will have that debate,” he said.

With the proposal headed to committee on Thursday, then to council on Nov. 9, Wilson is hoping it doesn’t have to be sent back to the drawing board to increase the minimums — noting the volume of work done by planning staff, and the stakes of getting the system up and running.

“The evidence is available,” she said. “They should not delay the passing of this policy.”

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Article by Victoria Gibson for the Toronto Star

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