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Inclusionary Zoning has been used extensively in the United States and some Canadian cities. While <br />several other Ontario municipalities are working to advance inclusionary zoning, no IZ policies have <br />been adopted yet. <br />How Does Inclusionary Zoning Work? <br />Inclusionary zoning works by leveraging increases indensity and value achieved through development <br />approvals, investment in LRT and increasing demand for centrally-located housing to provide affordable <br />housing. In this way inclusionary zoning programs canbe designed to work withoutgovernment subsidies. <br />Because inclusionary zoning programs result in lower revenues for developers through lower rents or <br />sales prices than would otherwise be the case, the provincial legislation requires thatIZ programs be <br />designed to ensure that residential development continues to be financially viable for private market <br />housing providers. Key considerationsthat affect the achievement of affordable housing objectives and <br />influence development feasibility include: <br />The <br />the duration of affordability, range of household incomes addressed by the affordable units, <br />and <br />the tenure of affordable units (rental vs. ownership). <br />Where the economics of site development cannot support inclusionary zoning on its own, programs can <br />include measures to offsetthe financial impact so thatthe development projectsbecome financially viable. <br />They can also be usedto deepen the degree of affordability to serve a broader range of household <br />incomes.Measures could include the phasing in of the program, increased height or density permissions, <br />or financial incentives. <br />REPORT: <br />Financial Impact Analysis Approach and Key Findings <br />financial impact study uses an approach called residual land value (RLV)analysisto testif <br />prototypical residential projectsin 10 Major Transit Station Areas across the Region are financially viable <br />under four scenarios: <br />1.No IZ policy <br />1 <br />2.10% of units are required to bepriced at the affordable benchmark <br />3.5% of units are required to be priced at 60% of the affordable benchmark <br />4.Determine the maximumviable set aside rate that could be supportedat the affordable benchmark <br />Fiscal Impact Analysis Highlights <br />The costs of inclusionaryzoning cannot be passed onto the market rate units in abuildingthrough <br />higher prices/rents because developers are already pricing units as high as the market will bear. <br />Developer profits are not reduced under IZ. Without the prospectforsufficient profit,developers <br />will not be motivated to build. <br />Instead, an inclusionary zoning policy will put downward pressure on land value. <br />If an inclusionary zoning policyistoo onerous, land valuewill be reduced by toomuch,so a <br />residential redevelopment project cannot displacethe existing land use andwill not be viable. <br /> <br />1 <br />Affordable Rental Benchmark: Bachelor $810/mo; 1 Bedroom $1,045/mo; 2 Bedroom $1,231/mo; 3 Bedroom <br />$1,300/mo <br />Affordable Ownership Benchmark: $350/square foot <br />2 <br />2 - 2 <br />