HomeMy WebLinkAboutDSD-2023-258 - Inclusionary Zoning - Policy and Implementation Directions
Development Services Department www.kitchener.ca
REPORT TO: Planning and Strategic Initiatives Committee
DATE OF MEETING: June 19, 2023
SUBMITTED BY: Garett Stevenson, Interim Director, Planning Division,
519-741-2200 ext. 7070
PREPARED BY: Tim Donegani, Senior Planner, 519-741-2200 ext. 7067
WARD(S) INVOLVED: Ward(s) 3, 9,10
DATE OF REPORT: June 8, 2023
REPORT NO.: DSD-2023-258
SUBJECT: Inclusionary Zoning - Policy and Implementation Directions
RECOMMENDATION:
That staff, in coordination with the Cities of Waterloo and Cambridge; and the Region of
Waterloo, be directed to use the Discussion Paper in Attachment 1 as the basis for further
consultation with the development industry, affordable housing providers, other affected
groups and the public; and,
That staff, in coordination with the Cities of Waterloo and Cambridge; the Region of
Waterloo, be directed to develop a draft Inclusionary Zoning Official Plan policy and
implementing Zoning By-law amendments, for C
the directions set out in the Discussion Paper (Attachment A) and with consideration of
the results of the consultation process and any subsequent analysis.
REPORT HIGHLIGHTS:
The purpose of this report is to release the policy and implementation directions for
inclusionary zoning (IZ) as the basis for further community engagement and drafting Official
Plan Policies, Zoning and implementation guidelines.
The proposed IZ policy directions outlined in this report would provide for a modest but
meaningful number of new affordable units every year to help address housing affordability
needs alongside other crucial initiatives and investments in affordable housing.
The financial implications are a moderate anticipated reduction in Development Charge,
Community Benefit Charge and Park Dedication revenue associated with affordable units.
Community engagement included in person and online engagement with 1,100 people
representing a broad range affected groups including the development industry, housing
providers, potential tenants of IZ units, and the public.
This report supports the delivery of core services.
BACKGROUND:
Housing affordability has become a significant challenge for residents in Waterloo Region and
across Ontario. Inclusionary Zoning (IZ) is a planning tool that can help address local affordability
challenges by enabling municipalities to require a certain percentage of affordable housing units
within new private developments containing 10 or more dwelling units in Major Transit Station
Areas (MTSAs). The Cities of Kitchener, Cambridge and Waterloo, in collaboration with the
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
near ION rapid transit stops.
While IZ must be implemented at the area municipal level, the Partners recognize the importance
of adopting a consistent, region-wide approach. A region-wide approach would support consistent
and clear policy requirements for the development industry; create efficiencies in implementation
across area municipalities through shared guidelines and agreement templates; maintain the
relative attractiveness for investment in residential development across the cities MTSAs; and,
centralize administration, monitoring and enforcement. Such an approach can be designed to
reflect differences in market areas across the region.
This report presents a set of directions for a region-wide IZ policy. The policy directions reflect
current trends in market housing prices and rents, housing construction costs, local housing
supply and demand, an assessment of financial feasibility of IZ and a review of best practices
across North America. A creative and flexible policy approach is recommended to ensure that an
IZ pr
market conditions and to enable market innovation while ensuring affordable housing outcomes.
The policy directions also reflect feedback from development industry, affordable housing
providers, people facing housing affordability challenges and the general public.
REPORT:
IZ has been used successfully in municipalities across North America to create a sustainable
affordable housing supply. It is different from other a
government subsidy. Instead, IZ works by capturing a share of the increased land value achieved
through development approvals, investment in the ION transit system, and increasing demand for
centrally located housing, and directing this toward the creation of affordable housing.
The reliance of IZ on the increase in land values to offset the cost of the affordable units means
that the program is best suited to provide moderately affordable units housing that is affordable
thth
to moderate income households whose incomes fall within the 30-60 percentile of the income
range. Moderate income households typically have incomes that are too high to be eligible for
subsidized or community housing, but are too low to compete in the market. Moderate income
renter households have annual incomes between $40,600 and $58,900. Ensuring the provision
of moderately affordable housing helps to support mixed-income complete communities and
overall community health and prosperity. It can also help create movement along the housing
continuum, freeing up units that are more deeply affordable for those who need them.
Because IZ is not reliant on government funding programs and is focused on moderately
affordable housing, it can complement other programs that focus on other parts of the housing
spectrum, such as emergency and transitional housing, deeply subsidized affordable housing,
and supportive housing. The adoption of an IZ policy would work alongside, not in replacement
of, these other programs and approaches. Staff estimate that an IZ program could result in new
affordable units being occupied starting in 2024-27 and increase to 60 affordable units per year
by 2031, including 27 in Kitchener. This modest but meaningful amount of new affordable housing
is one of the tools, and not the panacea for affordability challenges, that is needed alongside
initiatives and investments in affordable housing in outlined in Housing for All and the Region of
10 year Housing and Homelessnes Plan, Building Better Futures, and other strategic
initiatives.
The Planning Act and Ontario Regulation 232/18 regulate the process by which an IZ policy can
be adopted, and the contents of IZ policy and zoning by-law provisions. The Partners have
completed or are working toward the completion of all the necessary studies and assessments
required under the legislation. The studies and MTSA designations/delineations in Table 1 will
help inform the development of appropriate Official Plan IZ policies to they are are both financially
viable and effective.
Table 1. Provincial Requirements Prior to the Adoption of an Inclusionary Zoning Policy
Provincial Date Council reports /
Description
Requirement Completed Ministerial decision
Housing supply and demand
Housing
Kitchener: DSD-20-006.
information to be considered
Assessment 2020 Cambridge: pending
in the development of an IZ
Report Waterloo: IPPW2020-071
policy.
that housing affordability has declined in both cities and that low and moderate income
households are the most affected. In addition to planning for more supply in general, there is a
specific need for more non-market housing (including supportive housing) and more primary
rental housing to meet the needs of residents.
Analysis of the potential
Kitchener: DSD-20-150
impacts on the housing
2020 Cambridge: 21-130(CD)
market and financial viability
Financial
Waterloo: IPPW2020-071
of IZ.
Impact
Analysis and
Update to the inputs into the
Peer Review
Financial Analysis to reflect 2022 Attachment 2 of this report
market changes.
areas, and more challenging in the short term
Gradual increases to set aside rates and limiting IZ policies to larger buildings could help
minimize negative financial impacts. The financial model update was facilitated through and
supported by Provincial Streamline Development Approval funding.
Minister of Municipal Affairs
Delineation of MTSAs in the
and Housing approval of
Designation of
Region of Waterloo Official
2023 Region of Waterloo Official
MTSAs
Plan indicating where IZ can
Plan Amendment 6: ERO
be required.
019-5952
In addition to the required studies and MTSA policies, the Partners have:
1) Assessed the potential implications of Bill 23 on the feasibility of IZ,
2) Conducted a jurisdictional scan of best practices, and
3) Gathered feedback from the public and groups most likely to be impacted by IZ.
The results of this work are summarized here and detailed in the Discussion Paper in Attachment
1 to this report.
1. Bill 23 More Homes Built Faster Act, 2022: Proposed changes to O.Reg 232/18 will 1)
limit the proportion of units or floor area of a building that can be required to be affordable
to 5%, 2) limit the duration the IZ units are required to be affordable to 25 years, and 3)
1
limit the minimum required rents for affordable rental units to 80% Average Market Rent
and the minimum required ownership cost to 80% Average Market Resale Price. The
Development Charges Act was amended to exempt affordable units secured through IZ
from paying development charges (DCs). Community benefits charges (CBCs) and
parkland exemptions are anticipated. The recommended directions would comply with the
proposed regulations. Taking all of these proposed changes into account, staff are of the
opinion that the recommended IZ direction would provide a modest but meaningful supply
of affordable housing that would have a significant impact on the affordable housing supply
over time.
2. Jurisdictional Scan: Key findings from the jurisdictional scan suggest that IZ works most
effectively in strong housing markets and is best used to secure moderately affordable
housing. Financial and non-financial incentives are often used in tandem with IZ programs
to ensure financial viability. Centralized administration and enforcement are important to
ensure consistent and effective implementation over the long term.
3. Public and Interest Group Feedback: Staff consulted with representatives from the
development industry, housing advocacy groups, non-profit housing providers, moderate
income individuals likely to benefit from an IZ program and the public at large. There was
general support for establishing an IZ program. Community and housing affordability
parties encouraged the partners to maximize affordability outcomes. The development
industry urged a measured and flexible approach to mitigate impacts on financial viability
and housing supply.
Policy Directions
The proposed policy directions summarized in Table 2 seek to balance community objectives to
increase the supply of affordable housing with market feasibility to ensure continued viability of
residential development. They also reflect proposed amendments to Ontario Regulation 232/18
that set limits on the number of affordable units, minimum rents and prices and length of time that
affordable units that can be required. They are built around the following principles for an IZ
program:
1. Moderate Affordability - Secure housing that is affordable to moderate income households
and is not otherwise being provided by the market.
2. Partner with development community - To achieve housing targets the Partners need
developers to build new affordable units under IZ. Residential development projects must be
viable.
3. Minimize land market disruption - Provide early signals and transition time for the land
market to adjust to IZ.
4. Long term sustainability - IZ policy should be viable without subsidies or significant
incentives.
5. Capture Value in new density - direct some of the increased land value achieved through
development approvals, investment in the ION transit system toward affordable housing.
1
Average Market Rent (AMR) is a figure published by CMHC that represents the rents across the private
rental housing stock including older stock and unit rented below market due to rent control. Rents in new
market developments are significantly (approx. $700/mo) higher than AMR.
Policy Parameter Policy Direction Rationale
1. Location An IZ policy should apply to all 24 Provides consistent and clear policy requirements for
MTSAs in Waterloo Region, with the development industry, implementation and
Provincial Requirement: An IZ
different requirements for emerging, monitoring efficiencies across area municipalities while
policy can only be adopted within
established and prime market areas differing capacity
a MTSA or an area subject to a
(See #4). financial impact of IZ and create a
Community Planning Permit
for investment and development across the region.
System as directed by the
Minister
2. Size of Development
Buildings with 50 or more residential Focus program on larger developments to avoid
units potential negative impacts on the financial feasibility of
Provincial Requirement: Limited
missing middle and medium density housing types,
to buildings with 10 or more units
recognizing that these built forms already face
significant financial obstacles in MTSAs.
3. Affordable Unit Tenure Affordable units should be provided as Proposed amendments to O.Reg 232/18
rental units, either within a an ownership unit to be a minimum of 80% Average
condominium building or within a Market Resale Price (AMRP), which is affordable to
purpose-built rental building. only those households in the top 20% of the income
range. These are high income households whose
housing needs can already be met through the market.
Focusing on rental tenure would ensure that the
program addresses the needs of moderate rather than
high income households.
Policy Parameter Policy Direction Rationale
4. Set Aside Rate Proportion of GFA (gross leasable or Proposed amendments to O.Reg 232/18 limit
salable area) dedicated to affordable aside rate to 5%. A low initial set aside rate and
Provincial Requirement:
units should start low and transition relatively slow transition to the maximum rate will help
Proposed maximum 5% of total
slowly upward to a maximum of 5%, in avoid market disruption and signal to the market future
units or Gross Floor Area
accordance with the local market policy intentions. Financial feasibility modeling
conditions. suggests that stronger (prime) market
absorb the costs associated with an IZ policy
MTSAs within Prime Market Areas
compared with weaker (emerging) markets. This will
should start at 2% and increase to
help ensure development viability in MTSA
5% by 2031.
MTSAs within Established Market
Areas should start at 1% and
increase to 3% by 2031.
MTSAs within Emerging Market
Areas should start at 0% and
increase to 2% by 2031.
A list of which MTSAs are within the
prime, established, and emerging
market areas is within Table 3 and
Attachment 1.
Policy Parameter Policy Direction Rationale
5. Level of Affordability The proposed affordable rents balance objectives to
Affordable rental units in condo
maximize affordability with financial feasibility for
buildings should not exceed 100%
Provincial Requirement:
housing providers. 100% AMR is typically at least $700
Average Market Rent. ($1,063-
per month lower than what a renter would expect to pay
$1,590 in 2022 depending on unit
unit rents to be less than 80%
in market rent for a vacant unit, because the
size).
Average Market Rent or IZ unit
calculation includes older, rent-controlled units. As a
Affordable rental units in purpose-
prices to be less than 80%
result, 100% AMR is well below the rents available in
built rental buildings should not
Average Market Resale Price.
the market. The proposed rents would
exceed 30% of the median renter
that are affordable to moderate income households
household income in the regional
consistent with most other jurisdictions using IZ.
market area as defined by CMHC,
or Average Market Rent, whichever
generally not well served by the market or government
is greater (In 2023, this would be
funded housing programs. The higher proposed
$1425 - $1,590, depending on unit
affordable rent for purpose-built rental buildings aligns
size)
program for rental developments. The alignment would
streamline approvals processes, limits financial impact
on desirable purpose built rentals (which are typically
more financially challenging to develop than
condominium developments) and would ensure that
units that are affordable to moderate income
households are provided in purpose built rentals.
6. Eligible Households
Low or moderate income households, Eligibility requirements would ensure that affordable
having a gross annual income at or units are only available to low and moderate income
th
below the 60 percentile of households.
regional renter household income
range; and with a maximum income at
time of occupancy of 3.3 times the IZ
unit rent.
Policy Parameter Policy Direction Rationale
7. Duration IZ units should be maintained as Duration maximizes positive impact of the program on
affordable for 25 years. the affordable housing supply within the limits of the
Proposed Provincial
proposed regulations. The implementation program
Requirement: Maximum 25 years
could support options for affordability beyond 25 years
where IZ units are owned by a third sector provider
2
(see #10).
8. Incentives IZ units are exempt from development The high cost of providing structured parking has a
charges. Community benefits charges significant impact on the financial feasibility of a
and parkland dedication exemptions development and limits the potential yield of affordable
are forthcoming. and market units in areas well served by transit.
Reduction in overall residential parking rates,
Minimum required parking rates for
combined with the removal of parking minimums for
developments within MTSAs should be
affordable units would help to offset the cost of
reduced or eliminated, and no parking
providing affordable units and is appropriate given the
should be required for IZ affordable
proximity of the developments to rapid transit and
units.
alignment with other city objectives (e.g.,
Additional heights and densities for
gas reduction and active transportation targets and
developments in MTSA should be
commitments).
considered where appropriate.
Increases in permitted development heights and
densities in MTSAs concurrent with the introduction of
an IZ program can help offset the financial impact of
the program.
2
Third sector refers to non-profit, co-operative, and other types of mission-aligned affordable housing providers
Policy Parameter Policy Direction Rationale
9. Offsite Units The required affordable units in a new Enabling offsite units provides opportuniti
development application may be creativity, partnerships and cost
provided in a development located on efficiencies and minimize pro forma impacts of the
an alternative site, provided that the affordable units, while still achieving the intent of the IZ
alternative site is in an MTSA within the program to create high quality affordable units.
same municipality. Opportunities include developers par
sector organizations to create offsite units within a third
1
sector owned building and locating affordable units
within buildings having lower construction costs, on
lower cost sites and with more favorable financing.
This approach can leverage more affordable units,
more deeply affordable units, longer affordability
periods and opportunities for on
compared to onsite units alone.
10. Administration and The Region of Waterloo has expressed Centralized administration by government or a single
Implementation
an interest in taking a leading role in mission-aligned, arm's length organization with
monitoring, enforcement and waitlist sufficient operational funds is required to ensure
management. The Cities of Kitchener, consistent monitoring and enforcement of the program.
Cambridge and Waterloo will secure Enabling third sector ownership and operation of
affordable units through the affordable rental units within condo developments will
development review process, in
accordance with IZ Implementation capacity to operate affordable units and will ensure
Guideline Document (to be developed). affordability beyond 25 years.
Should the IZ program require rental as
the tenure for affordable units (see item
#3), implementation should include
pathways for a third sector to own
affordable units created in a
condominium building. The Region may
be able to assist with financing to
support third sector ownership.
Policy Parameter Policy Direction Rationale
11. Monitoring Report to council on successes and The financial impact model that supports the proposed
challenges of IZ and adjust policy policy direction is based on current market conditions
Provincial Requirement: Report
requirements as needed and proposed provincial regulations. Update
every two years (biennially) and
policy may be warranted to enable securing more of
Assessment report refresh every
fewer IZ units, different affordability levels etc. in
5 years
response to market and regulatory changes.
Table 3. Recommended Set Aside Rates
Set Aside Rate and Date of Occupancy
Market Area and MTSA
2024-2027 2028-2030 2031+
Prime Market Areas
University of Waterloo
Laurier - Waterloo Park
2% 3% 5%
Central Station
Victoria Park/Kitchener City Hall
Queen/Fredrick
Established Market Areas
Conestoga
Research & Technology Park
Waterloo Public Square/ Willis
Way
1% 2% 3%
Allen
Grand River Hospital
Kitchener Market
Main
Downtown Cambridge
Emerging Market Areas
Northfield
Borden
Mill
Block Line
Fairway
0% 1% 2%
Sportsworld
Preston
Pinebush
Cambridge Centre Mall
Can-Amera
Delta
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget As with affordable, attainable and non-profit housing units, IZ units are exempt from
City Development Charges and Regional Development Charges. Community Benefits Charges and
Park Dedication exemptions are anticipated in the near term. The mandatory incentives for IZ are
directionally aligned with existing City policies exempting affordable units from DCs and parkland
dedication. The incremental impact of IZ on these revenue sources is anticipated to be modest, but
will be monitored and considered through future budgeting and updates to relevant by-laws.
Operating Budget The draft approach to implementation would see administration and
enforcement undertaken by the Region. As the number of IZ units grows operating needs will emerge
for dedicated resources that will have Regional budget implications. The Cities intend to secure IZ
units through the development approvals process with existing resources. Consulting services may
be required to assist with biennial policy review and 5-year assessment report reviews.
These implications will be further detailed in future reports to council.
COMMUNITY ENGAGEMENT:
INFORM and CONSULT
The Partners commissioned the development of two videos to help explain affordable housing and
IZ in plain terms. The Partners have conducted in person and online consultation, including
interviews, surveys, focus groups, and presentations and meetings with development industry
representatives, the Waterloo Region Home Builders Association, moderate income earners,
affordable housing providers, housing advocates and the general public. Approximately 1,100
individuals have been engaged in the project. Key themes from the engagement activities
undertaken since December 2022 were included in report DSD-2023-071.
PREVIOUS REPORTS/AUTHORITIES:
DSD-20-006 Affordable Housing Strategy Phase 2: Housing Needs Assessment
DSD-20-150 Inclusionary Zoning for Affordable Housing: Background and Fiscal Impact
Analysis
DSD-2022-501 Bill 23 More Homes Built Faster Act Kitchener Comments
DSD-2023-071 Inclusionary Zoning for Affordable Housing: Status Update
Planning Act
CO-AUTHORS: Michelle Lee, Senior Policy Planner, City of Waterloo
Matthew Blevins, Senior Planner - Reurbanization, City of Cambridge
Judy Maan Miedema, Principal Planner, Region of Waterloo
REVIEWED BY: Natalie Goss, Manager, Policy Planning and Research
Ryan Hagey, Director of Financial Planning & Reporting
APPROVED BY: Justin Readman, General Manager of Development Services
ATTACHMENTS:
Attachment 1 Inclusionary Zoning Policy and Program Directions Discussion Paper
Attachment 2 Memo: Inclusionary Zoning Development Model Update
Inclusionary Zoning Policy and Program
Directions for Cambridge, Kitchener and
Waterloo
Discussion Paper
June 2023
Executive Summary ....................................................................................................................................... 4
Introduction .................................................................................................................................................. 9
IZ as a tool to create Affordable Housing ................................................................................................. 9
Benefits and Limitations of IZ ................................................................................................................. 10
Legislative Framework ................................................................................................................................ 12
MTSA Planning Framework ..................................................................................................................... 14
IZ Policy Parameters .................................................................................................................................... 23
Evaluation of Financial Impacts of IZ ...................................................................................................... 23
Set-Aside Rate ........................................................................................................................................ 26
Level of Affordability (Maximum Rent or Price) ..................................................................................... 28
Duration of Affordability ......................................................................................................................... 34
Tenure of IZ Units .................................................................................................................................... 35
Unit Size and Number of Bedrooms ....................................................................................................... 37
Location Within Projects ......................................................................................................................... 38
Design Criteria ......................................................................................................................................... 39
Timing of Construction and Occupancy .................................................................................................. 40
Exemptions ............................................................................................................................................. 41
Offsite Units ............................................................................................................................................ 43
Accessibility ............................................................................................................................................. 45
Incentives and Offsets ................................................................................................................................ 46
Mandatory or Voluntary (Incentive zoning) ........................................................................................... 46
Parking Requirements ............................................................................................................................. 48
Implementation and Administration .......................................................................................................... 51
Incorporating IZ Requirements into Development Approvals Processes ............................................... 51
Administering IZ Units ............................................................................................................................. 52
Appendix 1– Jurisdictional Scan of Inclusionary Zoning (IZ) Frameworks .................................................. 56
Appendix 2 – How Planning Act Requirements are Addressed .................................................................. 70
2
3
Executive Summary
The Cities of Kitchener, Cambridge and Waterloo, in partnership with the Region of Waterloo are
exploring Inclusionary Zoning (IZ) as a means to increase the amount of affordable housing near the ION
rapid transit stops. IZ is a tool that allows municipalities to require a certain percentage of affordable
housing units within new private developments containing 10 or more dwelling units in Major Transit
Station Areas (MTSAs). The tool has been implemented successfully in a number of jurisdictions across
North America.
IZ is unique from other affordable housing programs in that it can provide new affordable units over
time without reliance on significant government subsidies. It also can help ensure the creation of new
affordable units in areas near light rail transit, which can help to counter the impacts of rising land
values and gentrification that are typically associated with large transit investments. While IZ can’t
address all the region's housing challenges, it can be used to create a sustainable supply of affordable
units for moderate income households who are unable to afford market rents. More moderate cost
housing can take pressure off the subsidized housing system by providing affordable housing options for
those households who have the capacity and desire to leave the subsidized housing system. Used in
combination with other tools, such as ongoing government investments in emergency, temporary and
subsidized housing, and adopting planning policies and regulations that enable an appropriate housing
supply, IZ is a promising tool to support a healthy housing system.
This discussion paper reviews and recommends policy options for a coordinated, Regional IZ policy and
program. Policy recommendations are based on legislative requirements, a review of best practices from
other jurisdictions, feedback obtained through public engagement, and modelling of the potential
financial impacts on the local housing market. Key recommended policy and implementation directions
and rationale are identified below:
1. Locations: An IZ policy should apply to new residential developments in all 24 MTSAs in
Waterloo Region. Policy requirements should be tailored to the market for each MTSA.
Rationale: To ensure the program maximizes IZ unit potential in strong markets and signals
policy intentions to emerging markets to inform private market land transactions.
2. Building size: IZ should apply only to buildings with 50 or more residential units (exact threshold
to be determined as part of development of draft zoning). Rationale: Focus program on larger
developments to avoid potential negative impacts on the financial feasibility of missing middle
and medium density housing types, recognizing that these built forms already face significant
financial obstacles in MTSAs.
3. Affordable unit tenure: Affordable units should be provided as rental units within a
condominium building (see 10. Administration) , within a purpose-built rental building or offsite.
Rationale: Proposed Provincial IZ regulations set limits on minimum affordable rents and prices.
4
1
While the proposed minimum of 80% Average Market Rent (AMR)
is affordable to households
in the moderate income range, the proposed minimum of 80% Average Market Resale Price
(AMRP) for an affordable ownership IZ unit would be affordable to only those households in the
th
top 20
percentile of the income range. Ownership units within the 80% AMRP bracket are
already provided by the market without the need for an IZ policy and associated administration
and enforcement.
4. Set-aside rate: Proportion of units or Gross Floor Area to be affordable should start low and
transition slowly upward to a maximum of 5%, in accordance with the local market conditions.
MTSAs considered to fall within Prime Market Areas should start at 2% and increase to 5% by
2031; MTSAs within Established Market Areas should start at 1% and increase to 3% by 2031;
MTSAs within Emerging Market Areas should start at 0% and increase to 2% by 2031. Rationale:
Proposed amendments to O. Reg. 232/18 limit set-aside rate to 5%. A low initial set-aside rate
and relatively slow transition to the maximum rate will help avoid market disruption and signal
to the market future policy intentions. Financial feasibility modeling suggests that stronger
(prime) markets can better absorb the costs associated with an IZ policy compared with weaker
(emerging) markets.
5. Level of Affordability: Affordable rental units in condo buildings should not exceed 100%
Average Market Rent. Affordable rental units in purpose-built rental buildings should not exceed
the greater of MLI select rent (currently $1,425) or 100% of average market rent. Rationale: A
minimum affordability threshold of 100% AMR (proposed for condominiums) falls within the
limits proposed by the Province and provides rental units that are affordable to most moderate
income households. The proposed affordable rents balance city objectives for greater
affordability with financial feasibility for housing providers. The slightly higher proposed
affordable rent for purpose-built rental buildings aligns with Canadian Mortgage and Housing
Corporation’s (CMHC) Mortgage Loan Insurance Select program for rental developments.
Alignment with this program can help streamline project planning and design, and limit financial
impact on purpose-built rentals which are typically more financially challenging to develop than
condominium developments. This approach can ensure the provision of some units that are
affordable to moderate income households in purpose-built rentals.
6. Eligible households: Households eligible for the affordable units should be low or moderate
th
income households, having a gross annual income at or below the 60 percentile of regional
renter household income range; and with a maximum monthly income at time of occupancy of
3.3 times the IZ unit rent. In 2021, low and moderate income household would have a before tax
income of less than $58,900.
7. Duration that units would be affordable: Affordable units should be maintained as affordable for
25 years. Rationale: Proposed amendments to O.Reg 232/18 limit duration of affordability to 25
1
. Average Market Rent (AMR) is calculated yearly by CMHC through their annual rent survey. Average Market
Rent (AMR) represents the rents across the entire private rental housing stock and includes older stock and units
rented below market due to rent control. Typical new units rents are approximately $700 per month more than
AMR.
5
years. A shorter term of affordability would limit the positive impact of the program on the
affordable housing supply. The implementation program will support options for affordability
beyond 25 years where IZ units are owned by the third (non-profit, co-operative and other
mission-aligned) sector (see #10).
8. Incentives: Affordable units provided through IZ are exempt from Development Charges. IZ units
(prorated portion) will also be exempted from Community Benefits Charges and Parkland
Dedication Charges but these exemptions are not yet in force. The minimum required parking
rates for developments within MTSAs should be as low as possible and should range from 0 to
no higher than 0.7 spaces/unit where possible, with no parking requirements for IZ units.
Additional heights and densities for developments in MTSAs should be considered through
comprehensive updates to the planning framework as well as on a site-specific basis, where
appropriate. Rationale: The high cost of providing structured parking has a significant impact on
the financial feasibility of a development and limits the potential yield of affordable and regular
units in areas well served by transit. Reduction in overall residential parking rates, combined
with the removal of parking minimums for affordable units would help to offset the cost of
providing affordable units and is appropriate given the proximity of the developments to rapid
transit and alignment with other city objectives (e.g., greenhouse gas emissions reduction
targets and commitments). Increases to development heights and densities concurrent with the
introduction of an IZ program can help offset the financial impact of the program, particularly
for developers who purchased properties prior to IZ program adoption.
9. Offsite units: The required affordable units identified through a development application may be
provided in a development located on an alternative site, provided that the alternative site is in
an MTSA within the same municipality. Rationale: Offsite units are a crucial option to make IZ
rental units work for condominium developments. They provide opportunities for creativity,
partnerships and cost-sharing to create efficiencies and minimize pro forma impacts of the
affordable units, while still achieving the intent of the IZ program to create high quality
affordable units in mixed income communities near transit. Opportunities could include
developers partnering with non-profit organizations to create offsite units within a non-profit
owned building, and locating affordable units within buildings having lower construction costs,
or on lower cost sites. The provision of offsite units was a concept that was widely supported by
both representatives from the development industry and affordable housing providers as a tool
to create affordable units that could be constructed and maintained in a cost-effective manner.
This approach can leverage more affordable units, more deeply affordable units, longer
affordability periods and opportunities for on-site support as compared to onsite units alone.
10. Administration and implementation: The Region of Waterloo has expressed an interest in taking
a leading role in monitoring, enforcement and waitlist management. The Cities of Kitchener,
Cambridge and Waterloo will secure affordable units through the development review process,
in accordance with IZ Implementation Guideline Document (to be developed). Should the IZ
program require rental as the tenure for affordable units (see item #3), implementation should
include pathways for a third sector (non-profit, co-operative or other mission aligned housing
provider) to own affordable units created in a condominium building. The Region may be able to
6
assist with financing to support third sector ownership. Rationale: Centralized administration by
government or a single mission-aligned, arm's length organization with sufficient operational
funds is required to ensure consistent monitoring and enforcement of the program. Enabling
third sector ownership and operation of affordable rental units within condo developments will
address condominium developers’ concerns about capacity to operate affordable units and will
ensure affordability beyond 25 years.
11. Monitoring and reporting: An IZ program should be reviewed and modified as necessary, every
two years to respond to land development economics and changing market conditions. If
requirements are too lax during periods of strong development economics, the program will
miss opportunities to deliver on affordability outcomes. If it is too demanding in weak economic
conditions, it could stifle the development of much needed housing supply, affordable or
otherwise. The Partners will report biennially on the IZ program and table potential
amendments to these programs to optimize the program and respond to emerging issues and
trends.
Recommended Set-asideRates
Market Area and MTSASet-aside Rate and Date of Occupancy*
Station Area 2024-2027 2028-2030 2031+
Prime Market Areas
University of Waterloo
Laurier - Waterloo Park
2% 3% 5%
Central Station
Victoria Park/Kitchener City Hall
Queen/Fredrick
Established Market Areas
Conestoga
Research & Technology Park
Waterloo Public Square/ Willis Way
1% 2% 3%
Allen
Grand River Hospital
Kitchener Market
Main
Downtown Cambridge
EmergingMarket Areas
Northfield
Borden
Mill
Block Line
Fairway
0% 1% 2%
Sportsworld
Preston
Pinebush
Cambridge Centre Mall
Can-Amera
Delta
*Set-aside rate applies to total GFA of proposed development
7
RecommendedMaximum Rentsfor IZ units
2022 Maximum Rent for Affordable
Unit Type Rental Unit
Purpose-built Condominium
Unit Type
Rental Building* Building**
Bachelor $1,425$1,075
1 bedroom$1,425$1,245
2 bedroom $1,454$,1,469
3+ bedroom $1,689$1,689
*Calculated as the greater of 100% AMR or MLI Select definition of affordability (currently $1,425).
**Calculated as 100% AMR
8
Introduction
Over the next 30 years, Waterloo Region’s population is forecasted to grow to 923,000 people,
representing an increase of 306,000 new permanent residents and non-permanent residents or about
121,080 new households. The Region of Waterloo Official Plan directs 87% of this growth (105,975
households) to the Cities of Kitchener, Waterloo and Cambridge. A corresponding 105,975 new housing
units will be required to accommodate the forecasted growth, with the majority of units focused in
built-up areas, and in particular, within strategic growth areas such as Major Transit Station Areas
(MTSAs). To accelerate the building of new housing to address current supply challenges as well as the
forecasted growth, the Province has asked municipalities to commit to a housing pledge to achieve
70,000 of the total 105,975 units by 2031 (35,000 new units in Kitchener, 16,000 new units in Waterloo,
and 19,000 new units in Cambridge).
To meet the needs of current and future residents, The Region of Waterloo has set a needs-based target
of 30% of all new housing to be affordable to low and moderate income households. The magnitude of
the need for affordable housing now and in the future is great. Approximately 22% of existing
households (47,860 households) in the Cities of Kitchener, Cambridge, Waterloo live in housing that
costs more than 30% of their gross annual income , with tenant households more likely to live in
unaffordable housing (36.9%) than homeowners (13.9%). An additional 31,790 new affordable units will
be needed by 2051 to meet the Region’s 30% affordable housing target. These statistics likely
underestimate the magnitude of the housing affordability challenge – they do not account for
individuals who would prefer to live on their own but who must live with family or roommates to keep
housing costs down; households that would like to move to the region but can’t afford to; or households
that were forced to leave the region to find more affordable housing.
A portion of the new affordable housing units will need to be constructed within the region's 24 MTSAs.
Access to transit is an important, often necessary, housing consideration for households with low and
moderate incomes. Such households may not own personal vehicles or may choose to reduce their
household costs by relying on transit rather than cars. Housing near high-quality transit can provide low
and moderate income households with affordable access to jobs, shopping and amenities. In Kitchener-
Cambridge-Waterloo, about 14% of lower income households use public transit compared to 4% of
i
higher income households. The creation of affordable housing within MTSAs ensures that public
investments in higher order transit have the potential to benefit everyone.
Despite greater reliance of low and moderate income households on transit, areas served by high
quality transit also tend to be unaffordable places to live. Public Investment in rapid transit stimulates
private investment and the development of new, less affordable housing which displaces low income
households. Ontario municipalities have few tools available to them to ensure the provision of some
affordable housing within MTSAs. This discussion paper explores a tool called “Inclusionary Zoning” (IZ)
which leverages private and public investment for the creation of affordable housing in MTSAs.
IZ as a Tool to Create Affordable Housing
IZ is a tool enabled through the Planning Act that allows municipalities to require private developers to
include a certain percentage of affordable housing units within new developments containing 10 or
more dwelling units and located in an MTSA. The tool can be used to create affordable rental and/or
ownership units. The level of affordability, the proportion of affordable units, and the duration that
9
those units must remain affordable are determined by the municipality based on local housing needs
and market feasibility and must be set out in the IZ policy and regulations.
What differentiates IZ from other affordable housing planning tools is that it gives municipalities the
authority to require - as opposed to encourage or incentivize - private developers to build affordable
housing as part of their residential developments. Used in combination with other affordable housing
policies and incentives, this tool has been demonstrated in the United States and other jurisdictions to
be effective in providing affordable housing for certain types of households, such as working households
with moderate incomes that have been priced out of the market due to rising housing costs.
IZ works by allowing municipalities to leverage the additional land value achieved through public
investment (e.g. government investment in ION), increased density, development approvals and
growing demand for centrally located housing near transit (and other amenities) to require the provision
of affordable housing. IZ directs a portion of this enhanced land value toward the creation of affordable
units. Under the right economic conditions, IZ programs can sustain themselves over the long term
without reliance on government grants, although many programs do offer some form of cost offset for
the developer of IZ units, such as additional density or height permissions, modified development
ii
standards, and/or fee waivers.
Because IZ programs can reduce revenues for developers as a result of lower rents and sale prices for
the affordable units, the programs must be carefully designed to ensure that the overall residential
development continues to be financially viable for private market housing providers. Areas with strong
housing markets have been found to be best suited for IZ programs. Key program considerations that
affect the financial viability of IZ include:
Set-aside rate (proportion of units or floor area of a building required to be affordable)
Level of affordability (the discount in price or rent as compared to the market)
Duration of affordability (the length of time an affordable unit must remain affordable)
Tenure of affordable units (rental vs. ownership)
Where the economics of development cannot support IZ on its own, a municipality can adopt financial
and planning measures to assist in the financial viability of the project. These measures can also be used
to achieve greater program impact, such as increasing the set-aside rate, the level of affordability, or the
duration of affordability. Measures can include financial incentives such as reducing or deferring fees
and charges, and supportive planning permissions such as increased height or density, and/or reduced
parking requirements. The gradual phase-in of IZ policies and/or the use of temporary financial
incentives can also be used to offset development pro forma impacts until the market adjusts to the
new policy framework.
Benefits and Limitations of IZ
While IZ is a promising tool to increase the amount of moderately affordable housing within stations
areas, it does notreplace other tools and approaches that can help address the full range of housing
needs across the housing spectrum, such as emergency and temporary housing, deeply affordable
housing and supportive housing. IZ has been found in other jurisdictions to be best suited for the
creation of a sustainable supply of moderately affordable housing for people who can't afford market
rate rents and prices, but whose incomes disqualify them for subsidized affordable housing (e.g. Region
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of Waterloo community housing). Used in combination with other tools and programs, such as federally
and Provincially funded affordable housing, municipal grants and programs and supportive local
planning policies and regulations, IZ has the potential to create a sustainable supply of affordable
housing to support households that have been priced out of the housing market.
A key benefit of IZ is its potential to yield a meaningful supply of affordable housing over the long term
without reliance on municipal funding or subsidies. Because IZ requires affordable units to be created
within new residential developments, it is most effective in strong market areas that are experiencing
residential growth. Since 2011, the fastest growing areas within the Region have been located in close
proximity to a developing or established LRT stop. As much as 42% of the Region’s population growth
ii
occurred in the Central Transit Corridor between 2018 and 2019 alone. Strong demand for housing
within MTSAs is anticipated to continue.
Based on household growth forecasts, intensification targets and anticipated Provincial IZ regulations,
an IZ program could be expected to produce approximately 60 affordable units per year in the medium
term (starting in 2031) and 99 units affordable units per year over the long term across the Region.
Table 1 provides a further breakdown of the anticipated annual yield of IZ units by municipality under a
scenario that assumes a 2-3% set-aside rate in the medium term and a 5% set-aside rate in the long
term.
Table 1. Estimated annual yield of affordable units under IZprogram, by municipality
Estimated IZ units in
Estimated IZ units in
Total units in MTSAs*
medium term **
Municipality long term
(units/year)
(units/year)***
(units/year)
698 2735
Kitchener
741 2537
Cambridge
532 1227
Waterloo
1,971 6099
Total
* Forecasted number of units within 50+ unit buildings located within MTSAs
** Forecasted number of IZ units at proposed 2031 set-aside rates averaged across MTSAs
*** Forecasted number of IZ units at max (5%) set-aside rates
An additional benefit of IZ is that it can ensure the creation of affordable units in locations that are close
to services, amenities, and higher order transit. Non-profit affordable housing providers have reported
challenges with acquiring land in MTSAs due to high land values and an inability to compete with private
market builders. An IZ program can address this issue by ensuring that affordable housing is included in
all developments of a certain size within MTSAs. To help offset the cost of providing affordable units at
below market prices or rents, IZ regulations can put downward pressure on land prices, much like any
other zoning regulation or site conditions that reduce development value of a property. Exemptions
from development charges, community benefit charges and parkland fees for affordable units created
through an IZ policy can further help offset the cost of providing affordable units. Municipalities can
11
provide additional incentives to ensure development feasibility in certain market areas, or to achieve
specific affordable housing objectives.
While IZ can’t address all of the region's housing challenges, it can be used to create a sustainable supply
of affordable units for moderate income households who can’t afford market rents but whose incomes
are too high to be eligible for subsidized housing (e.g. Region of Waterloo community housing). By
increasing the supply of affordable housing for moderate income households, IZ can also help relieve the
pressure on the limited subsidized housing supply by providing affordable options for households who
have the desire and financial capacity to move out of subsidized housing. Used in combination with
other tools, such as investments in more emergency, temporary and subsidized housing, IZ is a
promising tool to support a healthier housing system
Legislative Framework
The legislative authority for IZ is included within Planning Act sections 16(4-13), 16(24.1.2-24.1.3);
16(36.1.2); 34(11.0.6); 34(19.3-19.3.1); 35.2(1-9) and Ontario regulation 232/18. Among other things it:
1. Prescribes that IZ can only be applied within approved Protected Major Transit Stations within
upper tier or single tier Official Plans; or within community planning permit areas that are
mandated by the Province
2. Prescribes IZ policies must be preceded by as assessment report that includes specified content
and analysis and must be updated every 5 years
3. Sets out the prescribed content and details of IZ Official Plan policies and Zoning By-laws
4. Allows for by-laws and policies to include incentives and other standards that are not prescribed
by the Planning Act
5. Requires municipalities to report on IZ biennially
In October 2022, the Province released proposed regulatory changes for comment. The detailed
language of these regulations has yet to be released and are not yet in force and effect.
The proposed regulation would:
Limit the set-aside rate (proportion of units that can be required to be affordable) to 5%
Limit the maximum time period for IZ units to be maintained as affordable to 25 years
Limit the minimum rent of IZ affordable rental units to 80% of average market rent
Limit the minimum price of IZ affordable ownership units to 80% of average resale price.
The proposed lower threshold for IZ unit rents is below the current shared definition of affordable
included in the PPS, Regional Official Plan and City Official Plans and generally align with staff’s proposed
approach to the maximum rent that can be charged for IZ rental units.
Currently, Affordable is defined as:
a) in the case of ownership housing, the least expensive of:
1. housing for which the purchase price results in annual accommodation costs which do not
exceed 30 percent of gross annual household income for low and moderate income households;
or
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2. housing for which the purchase price is at least 10 percent below the average purchase price
of a resale unit in the regional market area;
b) in the case of rental housing, the least expensive of:
1. a unit for which the rent does not exceed 30 percent of gross annual household income for low
and moderate income households; or
2. a unit for which the rent is at or below the average market rent of a unit in the regional
market area.
The proposed minimum ownership price for IZ units is expected to be significantly higher than current
shared definition of affordable from the 2020 Provincial Policy Statement, Regional and City Official
Plans and has had significant impact on staff’s proposed approach. Although uncertainty remains
regarding the details of price and rent limits, staff expect that the Table 2 values for 2022 will be
implemented by the Province.
Table 2. Affordable Rents and Prices under Current Definitions and Proposed Provincial O. Reg. 232/18
Current PPS,
Proposed Provincial
ROP, OP
Unit type regulationsmaximum IZ
definition of
unit price/rent
affordable
Affordable Rent
Bach$1,063$860
1BR$1,240$996
2BR$1,454$1,175
$
3BR$1,470
1,351
Affordable Price
$385,500*$512,309*
*price based on 2021 figures, rents based on 2022 figures
Details of the Partners’ analysis and comments on the proposed changes are included in Kitchener
Report DSD-2022-501. The recommendations in this discussion paper assume that the proposed
Provincial regulation will come into force as drafted.
As of November 2022, IZ units are exempt from paying Development Charges. Recent legislative changes
also exempt IZ units (prorated portion) from Community Benefits Charges and Parkland Dedication
Charges but the exemptions are not yet in force.
This discussion paper outlines how each of these legislative requirements for IZ was or will be
addressed. This is itemized further in Appendix 2.
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MTSA Planning Framework
The Planning Act requires municipalities to delineate MTSAs in their Official Plans prior to or concurrent
with the adoption of an IZ policy and by-law. In additional to delineating MTSAs, municipalities must also
identify: (a) minimum density requirements (residents and jobs) planned for each station area, (b)
permitted land uses, and permitted buildings or structures on lands in each station area, and (c)
minimum densities for buildings and structures on lands in each station area. Prior to the Province’s
enactment of More Homes Built Faster Act in 2022, the Planning Act required the MTSA provisions to be
addressed through the adoption of an amendment to the Region of Waterloo’s Official Plan.
MTSA boundaries
MTSA boundaries were delineated by the Region of Waterloo as part of an amendment to the Region of
Waterloo Official Plan (ROPA 6). ROPA 6 is now in effect, following the adoption by Regional Council in
August 2022 and approval by the Minster of Municipal Affairs and Housing on April 11, 2023. ROPA 6
identifies 24 Major Transit Station Areas across Waterloo, Kitchener and Cambridge. The station areas
include lands around transit stops for both Stage 1 and planned Stage 2 ION light rail transit route. Each
MTSA typically includes lands within a 500 to 800 metre radius of the transit stop, representing about a
10-minute walk. Their precise boundaries are shown in Figures 1, 2, and 3.
Once changes to Provincial legislation removing the Region of Waterloo’s planning responsibilities come
into effect, lower tier municipalities will be required adopt the MTSA provisions directly within their own
official plans to implement IZ. Based on communications with MMAH, staff anticipate that the timing
for removal of the Region’s planning authority will be winter 2024 at the earliest. The amended official
plans would then require approval by the Minister of Municipal Affairs and Housing (MMAH) before the
plan and any IZ policies can be implemented. Until such time as these changes are in effect, the
Minister’s approval of ROPA 6 enables IZ across all 24 MTSAs.
MTSA minimum required densities
In addition to delineating MTSA boundaries, ROPA 6 includes minimum density requirements for each
station area. All but three MTSAs are required to plan to achieve a minimum density of 160 residents
and jobs per hectare. In many MTSAs, the planned density would enable significant residential growth to
occur in medium and high density buildings where IZ can apply.
Permitted land uses, buildings and structures and associated densitieswithin MTSAs
The Cities of Kitchener, Cambridge and Waterloo will be required to identify the permitted land uses,
buildings and structures, and the minimum densities for those buildings and structures within each
designated MTSA. While some of these requirements are already in place through existing Official Plans
and zoning by-laws, the Cities will need to review the current permitted uses in the context of the
minimum required densities in each MTSA and amend their planning frameworks if necessary to meet
the targets.
City of Waterloo
City of Waterloo contains eight MTSAs.
1. Conestoga
14
2. Northfield
3. Research & Technology Park
4. University of Waterloo
5. Laurier - Waterloo Park
6. Waterloo Public Square
7. Willis Way
8. Allen
Figure 1. City of Waterloo MTSAs as per the Region of Waterloo Official Plan
15
Waterloo City Council adopted Station Area Plans for five of the eight MTSAs (Conestoga, Northfield,
R&T Park, University of Waterloo and Laurier-Waterloo Park) and incorporated these areas into the
Official Plan in 2017 (Region of Waterloo approval in 2018). The remaining MTSAs are located within the
City’s Urban Growth Centre and were deemed to already have a robust planning framework to support
intensification and a mix of uses, including residential uses. An updated Zoning By-law was approved in
2018 to reflect the changes introduced through the Station Area Plans.
Opportunities for residential development and the application of IZ is constrained in a number of
Waterloo’s MTSAs due to limited land available for residential uses. A significant proportion of the lands
within the Northfield, the Research and Technology Park and the University of Waterloo MTSAs are
designated for employment which prohibits residential uses. Employment lands and open space make
up a large proportion of the Laurier - Waterloo Park MTSA. The MTSAs with the greatest potential for
new residential development are Conestoga, Waterloo Public Square and Willis Way and Allen. The R&T
Park, Northfield and Conestoga MTSAs may have additional potential for a mix of uses that include
residential uses, subject to a review of employment lands that have been removed from the Regional
Employment lands as part of a recent Municipal Comprehensive Review.
16
Potential timing for the adoption of an IZ Policy and zoning regulation would align with the City’s review
and update of its Official Plan. These updates will include amendments to the station area boundaries
and the addition of the 3 Uptown station areas, in accordance with ROPA 6. Updates to the Official Plan
are proposed to be brought to council in three phases, starting the fall 2023 and continuing into 2024.
Detailed timing for the release of updated MTSA policies is outlined in Table 3.
City of Kitchener
The City of Kitchener has 12 transit stops and 10 MTSAs
1. Grant River Hospital
2. Central Station
3. Victoria Park/Kitchener City Hall
4. Queen/Fredrick
5. Kitchener Market
6. Borden
7. Mill
8. Block Line
9. Fairway
10. Sportsworld (planned for Phase 2 Ion)
Figure 2. City of KitchenerMTSAs as per the Region of Waterloo Official Plan
17
18
Kitchener’s MTSAs have been established through the approval of the ROPA 6. Kitchener has launched
Growing Together to update Kitchener’s planning framework in MTSAs in station areas 1-7. Growing
Together is the continuation of the ongoing planning review process that began with Planning Around
Rapid Transit Stations (PARTS) and advanced through the Neighbourhood Planning Review (NPR)
project. This work builds upon PARTS and NPR while also responding to new direction from the
Province, implementing the updated Regional Official Plan, and addressing new and emerging City
priorities.
City staff plan to coordinate IZ amendments as part of Growing Together, which will be presented to
council by the end of 2023 for approval. The timing of updating statutory planning documents for
station areas 8-10 has yet to be determined.
City of Cambridge
The City of Cambridge contains seven proposed transit stops and seven MTSAs.
1. Preston
2. Pinebush
3. Cambridge Centre Mall
4. Can-Amera
5. Delta
6. Main
7. Downtown Cambridge
19
Figure3.CityofCambridgeMTSAsaspertheRegionofWaterlooOfficialPlan
20
The City of Cambridge is currently working on secondary plans for the three core areas (Galt, Hespeler
and Preston) as well as identified nodes and corridors within the city. The secondary plans encompass
all seven MTSAs and will include policies to facilitate IZ.
Opportunities for residential development and the application of IZ is constrained in two of the MTSAs
within the Urban Growth Centre due to existing and proposed restrictions related to heritage
conservation as well as flood plain and a floodplain special policy area. The remaining MTSA areas are
generally surrounded by a mix of designations permitting multiple residential, commercial and some
employment uses. There are opportunities in the form of vacant and underutilized properties within the
MTSA areas that would allow for a significant increase in density with potential for a higher number of
units through IZ.
Table 3. Milestones for Delineating MTSAsto enable IZ
Milestone Cambridge Waterloo Kitchener
MTSA boundaries Anticipated Q4 2023 Anticipated Q4 2023Anticipated Q4 2023
delineated in City OPs for Pinebush, for MTSAs 6-8. for MTSAs 1-7. Timing
Cambridge Centre Mall on MTSAs 8-10 TBD.
and Can-Amera. MTSAs 1-5 already
Timing on remaining delineated in OP.
MTSAs TBD.
MTSA density targets in Anticipated Q4 2023 Completed. Anticipated Q4 2023
P+J/ha in City OPs for Pinebush, for MTSAs 1-7. Timing
Cambridge Centre Mall on MTSAs 8-10 TBD.
and Can-Amera.
Timing on remaining
MTSAs TBD.
City OP policies Anticipated Q4 2023 Completed. Some Anticipated Q4 2023
regarding permitted for Pinebush, for MTSAs 1-7. Timing
updates anticipated
usesCambridge Centre Mall on MTSAs 8-10 TBD.
Q4.
and Can-Amera.
Timing on remaining
MTSAs TBD.
21
Milestone Cambridge Waterloo Kitchener
City OP minimum Anticipated Q4 2023 Completed. Some Anticipated Q4 2023
densities applying to for Pinebush, for MTSAs 1-7. Timing
updates anticipated
buildings and land Cambridge Centre Mall on MTSAs 8-10 TBD.
Q4.
and Can-Amera.
Timing on remaining
MTSAs TBD.
IZ policies and zoning Coordinated with Coordinated with OPCoordinated with
approved by Cities Secondary Plans Q4 updates Q4 2023 – Q4 MTSA OP and Zoning.
2023-Q4 2024. 2024.Anticipated Q4 2023.
Assessment Report
Certain studies and analyses are required prior to adopting an IZpolicy and by-law, the contents of
which are set out in Ontario Regulation 18/232 under the Planning Act. These analyses are to be
included in an assessment report and considered in the development of Official Plan policies and
regulations that implement IZ.
The assessment report must contain:
1. An analysis of demographics and population in the municipality.
2. An analysis of household incomes in the municipality.
3. An analysis of housing supply by housing type currently in the municipality and planned for in
the official plan.
4. An analysis of housing types and sizes of units that may be needed to meet anticipated demand
for affordable housing.
5. An analysis of the current average market price and the current average market rent for each
housing type, taking into account location in the municipality.
6. An analysis of potential impacts on the housing market and on the financial viability of
development or redevelopment in the municipality from IZ by-laws, including requirements in
the by-laws related to the matters mentioned in clauses 35.2 (2) (a), (b), (e) and (g) of the Act,
taking into account:
i. value of land,
ii. cost of construction,
iii. market price,
iv. market rent, and
v. housing demand and supply.
7. A written opinion on the analysis described in paragraph 6 from a person independent of the
municipality and who, in the opinion of the council of the municipality, is qualified to review the
analysis.
The assessment report must be updated every 5 years.
The Cities of Kitchener and Waterloo have each developed a housing assessment containing an analysis
of items 1-5. The Kitchener Housing Needs Assessment was presented to Kitchener Council in 2020 as
background to Housing For All in report DSD-20-006. Waterloo’s Housing Needs and Demand Analysis
was presented to Waterloo Council in 2020 as part of report IPPW2020-071. An update report (21-
22
130(CD)) to Cambridge Council in 2021 directed staff to undertake a Housing Needs Assessment.
Cambridge will be initiating this work in 2024.
In partnership with the Region of Waterloo, the Cities of Kitchener Cambridge and Waterloo contracted
iii
land economists N. Barry Lyon Consultants Limited (NBLC) to carry out an IZ Financial Impact Study
iv
(item 6), and urbanMetrics to provide a peer review of the study (item 7). The Financial Impact
Assessment included a model that tested various policy parameters across a number of MTSAs to
determine the impact of these parameters on the achievement of affordable IZ units and development
feasibility. Policy parameters included set-aside rate, duration of affordability, depth of affordability,
tenure of affordable units. The Financial Impact Assessment and peer review were presented to
Kitchener city council through report #DSD-20-150, Waterloo city council through report IPPW2020-071
and Cambridge city council through report 21-130(CD). NBLC was contracted in 2022 to update the
financial model to reflect changes in material and labour costs and changes to the housing market. A
memo outlining the update and approach is included as an attachment to this report. This model update
was prepared with support from the Province of Ontario through the Streamlined Development
Approval Fund. The views expressed in the publication do not necessarily reflect those of the Province.
IZ Policy Parameters
IZ programs can vary widely across a range of policy parameters. Key policy parameters that influence
both the viability and effectiveness of an IZ policy include:
Set-aside rate (proportion of units or floor area of a building required to be affordable)
Level of affordability (the discount in price or rent as compared to the market)
Duration of affordability (the length of time an affordable unit must remain affordable)
Tenure of affordable IZ units (rental vs. ownership)
Additional policy parameters could include:
Unit size and number of bedrooms
Location within projects
Design criteria
Timing of construction and occupancy
Exemptions
Offsite units
Accessibility
Incentives and offsets
The subsequent sections describe the pro forma model, best practice review and affordability
assessments used to assess the housing and financial impacts of an IZ policy under a range of policy
scenarios and subject to a range of different parameters (above).
Evaluation of Financial Impacts of IZ
In 2020 the Partners hired N. Barry Lyon Consultants Limited to carry out a financial impact study as
required by the Planning Act and regulations. The study explains that IZ works by leveraging the value
created through increases in density, development approvals, investment in LRT and increasing demand
23
for centrally located housing and directing some of that value toward the creation of affordable housing.
In this way IZ programs can be designed to work without government subsidies.
Because IZ programs result in lower revenues for developers through lower rents or sales prices than
would otherwise be the case, the Provincial legislation requires that IZ programs be designed to ensure
that residential development continues to be financially viable for private market housing providers. Key
policy parameters that affect the achievement of affordable housing objectives and influence
development feasibility include:
Set-aside rate (proportion of units required to be affordable);
Duration of affordability (how long affordability must be maintained);
Level of Affordability (maximum IZ unit rents and prices), and
Tenure of affordable units (rental vs. ownership).
NBLC’s financial impact study uses an approach called Residual Land Value (RLV) analysis to test if
prototypical residential projects in a sample of 10 MTSAs across the Region are viable across several
policy scenarios. The policy scenarios tested the impacts of the key parameters above, along with other
factors (e.g. lot size, building heights, incentives). The analysis was based on the following principles:
1. Affordability – Secure affordable housing that is not otherwise being provided by the market.
2. Partner with development community – To achieve housing targets the Cities need developers to build
new affordable units under IZ. Residential development projects must continue to be viable.
3. Minimize land market disruption – Provide early signals and transition time for the land market to adjust
to IZ
4. Long term sustainability – IZ policy should be viable without financial incentives. Incentives may be used
to achieve affordability objective beyond what is supported by land economics
Study highlights include:
The costs of IZ cannot be passed onto the market rate units in a building through higher prices/rents
because developers are already pricing units as high as the market will bear.
Developer profits are not reduced under IZ. Without the prospect for sufficient profit, developers will not
be motivated to build.
Instead, an IZ policy will put downward pressure on land value.
If an IZ policy is too onerous, land value will be reduced by too much, so a residential redevelopment
project cannot displace the existing land use and will not be viable.
A modest and carefully designed IZ policy is financially viable in the near term in some MTSAs with the
strongest residential market conditions.
MTSAs are not all equally capable of delivering new units. A robust IZ policy was viable in a few MTSAs
but not others. A geographically uniform approach to IZ is not recommended. Instead, the initial focus of
IZ should be on MTSAs with strong residential markets.
In weaker submarkets, the policy framework should be set up now, with very low affordability
requirements in the near term. These requirements can increase gradually as weak submarkets improve.
IZ can deliver a modest but meaningful number of affordable units in the near term. There is significant
24
value however in setting up an IZ framework to prepare for a more ambitious policy as development
economics improve in the future. Frequent monitoring and adjustment of an IZ policy is critical.
The Cities should provide an early signal to residential developers and MTSA landowners that an IZ policy
is coming. When coupled with transition policies, this approach provides time for the market to adjust to
an IZ policy and minimize land market disruption.
UrbanMetrics undertook a peer review of NBLC’s study as required by the regulation. Their review was
supportive of NBLC’s approach and findings.
The above analysis is based on January 2020 data. There has been rapid change in the housing market
since that time, and the Partners identified a need to update the analysis. The Partners retained NBLC to
update the financial modeling to include all 24 MTSAs using Q3 2022 revenues, costs and
macroeconomic changes. This work was partially supported by the Provincial Streamlined Development
approvals fund. The deliverable of this work was a dashboard that the Partners have used to test the
impact on financial viability of different policy parameters, cost and revenue assumptions, affordability
levels, fee exemptions, incentives, etc. The key findings of the update is that development economics
are for more challenging now than in early 2020, primarily due to higher construction costs and interest
rates. More locations and types of development are now no longer viable even without an IZ
requirement.
The model compares the development value to the value of the land based on its existing use. This is
shown conceptually in Figure 4. Where the development value is higher than the existing use value,
development is likely to be viable. IZ policy requirements put downward pressure on development
value and if too stringent can make development unviable. This would reduce the supply of new housing
and is an undesirable policy outcome. The degree of change in development value in response to IZ
requirements is also important.
The development value is negative in all cases but condominium developments in prime market areas.
The fundamentals of site development economics are extremely challenging as compared to the past
decade. Accordingly, a modest IZ policy approach is recommended. Low set-aside rates in the short
term, with comparatively small impacts on development viability, are recommended for established and
emerging station areas to send clear signals to the market that IZ units will be required once market
conditions improve. Establishing a program of set-aside rates now will ensure that the program’s
requirements are taken into consideration in land transactions and will help reduce market disruptions.
The analysis cannot capture certain nuances arising from the nature of a historical land purchase or the
capitalization of land costs through the operation of an income-generating use. Nor can it contemplate
the acquisition of land at speculative values, not fully appreciating the magnitude of impacts from future
policy adjustments. Similarly, this analysis cannot account for all potential variations in the value of
alternative land uses in a given area. Actual valuations will vary from property to property according to a
wide range of site conditions and incumbent landowner expectations. Nevertheless, the model is a
helpful tool for evaluating the development economic and housing supply implications of an IZ policy.
25
Figure 4. Example of Development and Existing Use Land Value Across Different IZ Policy Options
Set-Aside Rate
What does this concept mean?
A set-aside ratereferstothe proportion of a market rate building that isrequired to be affordable. The
rate can be calculated as either the proportion of affordable units out of the total number of units in a
building, or the proportion of gross floor area dedicated to the affordable units out of the total gross
floor area of a building. Draft regulations have been proposed by the Province to limit the set-aside rate
to 5%.
What are best practices/options we have seen in other communities?
Set-aside rates vary widely across jurisdictions. Toronto and Mississauga have set-aside rates ranging
from 5-10% of gross floor area, although these programs will need to be modified to meet Provincial
regulations, if amended. US IZ policies tend to have higher set-asides. In some US programs, the
provision of IZ units is voluntary and higher set-asides are required when associated with site specific
zoning amendments to permit higher heights and densities than would normally be permitted.
Whatdoesthefinancialmodeltellus?
The financial model shows that the set-aside rate is one of the most impactful policy levers on project
viability. High set-aside rates reduce project revenue, and in turn reduce the development value of a
property. If the development value drops below the value of the property under its current use, a
property owner would no longer be motivated to sell, which could limit transactions in the market for
the development of new medium and high density residential buildings in MTSAs. Should a developer
purchase lands at a value that is higher than the true development value of the property, the lost
revenues due to IZ cannot easily be offset and the project may no longer be economically viable.
Market forces in early 2023 make development economics a challenge. Residual land values for high rise
condominiums are generally high enough to displace current land uses in prime MTSAs without the
requirement for IZ units. However, weaker submarkets and rental development typically do not typically
generate sufficient value to displace the current uses, even without IZ. Staff propose a low set-aside rate
26
that comes into force gradually so that affordable units can be delivered as the various markets mature,
and so that developers and landowners can plan for the impact of IZ.
What we heard
Feedback from both the Waterloo Region Home Builders Association and infill-focused developers
included a preference for a cautious and conservative approach to set-aside rates to limit potential
impact of reduced revenues on a development. They were concerned that IZ may not have the intended
effect of putting downward pressure on land values and could instead put upward pressure on the
rents/prices of market units or reduce the financial viability of development. They provided strong
support for a phased implementation of set-aside rates in order to allow time to build these
requirements into their investment decisions and to minimize land market disruption.
Individuals representing housing advocacy groups and members of the public generally supported
maximizing set-aside rates, including rates that exceeded the 5%, although some shared the same
concerns with the development industry regarding the possibility that high set-aside rates could put
upward pressure on the cost of market units.
Recommendations
1. Adopt set-aside rates that are proportionate to the strength of the market within each MTSA
ranging from 3-5% by 2031, with a plan to maximize the number of affordable units in the long
term. Set-aside rates should be tailored to the market strength of the MTSA/submarket where
they apply. Setting a uniform set-aside rate, either across or within municipalities, risks stifling
development. This could prevent the development of much needed market-rate housing.
2. Set-aside rates should be calculated as a percentage of the gross salable area (GSA) or gross
2
leasable residential areas (GLA) of a development rather than percentage of units. This
approach could provide flexibility to developers to determine the number of affordable units
and bedrooms, while ensuring a consistent proportion of a development is dedicated to
affordable units.
2
3. Where the set-aside calculation would result in the requirement for less than 57 m of GLA/GSA
for IZ units, no IZ units should be required. This area represents the average unit size.
4. Set-aside rates should start low and gradually increase to minimize land market disruption, allow
time for the developers to build IZ requirements into pro forma, improve policy acceptance and
reduce risks for negative impacts on the supply of new units. Transitions are important in all
markets including prime market areas where land transaction prices are close to the modeled
redevelopment land values. It will take time for the land market to adjust to the downward
pressure put on land value by the IZ program.
5. Adopt a set-aside rate that considers the tradeoffs between the other key policy levers (depth,
tenure and duration of affordability).
6. Monitor the performance of the IZ program frequently and tune policy requirements, including
the set-aside rate, as required.
2
Staff understand the GLA and GSA to be consistent but clearer than the Provincial terminology of “gross floor
area to be occupied by affordable housing units”
27
Table 4. Recommended Set-asideRates
Station Area
2024-2026occupancy 2027-2029occupancy 2030+occupancy
Prime
University of Waterloo
Central Station
Victoria Park/Kitchener
City Hall
2% 3% 5%
Queen/Fredrick
Kitchener Market
Downtown Cambridge
Main
Established
Conestoga
Waterloo Public
1% 2% 3%
Square
Willis Way
Allen
Grand River Hospital
Emerging
Borden
Mill
Fairway
0% 1% 2%
Sportsworld
Pinebush
Cambridge Centre Mall
Can-Amera
Delta
Nuances to reflect different planning frameworks across the three cities are considered in the Incentives
and Offsets section of this report.
Level of Affordability (Maximum Rent or Price)
What does this concept mean?
The definition for affordable housing is shifting as a result of newly introduced Provincial policy,
legislation and draft regulations, and these shifts will have implications for any IZ policy adopted by the
Partners. Broadly, the Canadian Mortgage and Housing Corporation (CMHC) defines affordable housing
as housing for which the cost doesn’t exceed 30% of a household’s pre-tax income. A similar but more
nuanced Provincial definition for affordable housing is contained within the current Provincial Policy
Statement 2020, however this definition is proposed to be eliminated from the Provincial Planning
Statement as per a draft released in the spring of 2023. Draft regulations for IZ released by the Province
in October 2022 propose a market-based rather than income-based definition for affordable housing
and set a maximum rather than minimum level of affordability. Affordable housing under the draft IZ
regulations is limited to:
Rental units with rents at or above 80% of average market rent
28
Ownership units at or above 80% of the average resale price.
The final regulations have yet to be released and they are not yet in force and effect. However, staff
assume that the regulations enacted by the Province will bring forward the proposed limits on
affordable unit rents and prices and that any future IZ framework will need to align with these limits.
Average re-sale prices in each regional market area are currently gathered by the Province using data
from Real Property Solutions. Average Market Rent (AMR) in each regional market area is calculated
yearly by CMHC through their annual rent survey. Average Market Rent (AMR) represents the rents
across the entire private rental housing stock and includes older stock and units rented below market
due to rent control. Rents in new market developments are significantly higher than AMR. NBLC’s
primary research found that rents in new development in MTSAs were $2.75-$3.30 per square foot. This
is approximately $700/mo more than AMR. CMHC rental market survey data from 2022 revealed that
\[i\]
AMR is about $500- $700 per month lower than what a renter would expect to pay for a vacant unit
.
\[i\]
CMHC. (2023). Rental Market Survey Data Tables for Kitchener-Cambridge-Waterloo. October 2022. URL:
https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/rental-
market/rental-market-report-data-tables
The Province has signaled that they will continue to provide these values through the release of an
annual housing bulletin to assist in the determination of affordable rents and prices.
A comparison of affordable rents and prices under the current PPS framework, and the proposed
regulations are shown in Table 2. Minimum rents for IZ units under the proposed Provincial regulations
are lower than what could be considered affordable under the current definition of affordable in the
2020 PPS and the shared definition of affordable in the Region of Waterloo Official Plan and City Official
Plans. These rents would be affordable to low (bachelor only) and moderate income renter households
thth
(Figure 5). Moderate income renter households (calculated as the 40-60 percentile of incomes across
renter households) earned $40,400-58,900 in 2021. Affordable rent for these households would be a
maximum of $1,010-$1,490.
Minimum ownership prices for IZ units would be affordable only to households in the top 20% of the
regional household income range (Figure 6) and would not meet the definition of affordable in the 2020
PPS. The minimum affordable home ownership price under the proposed IZ regulations would exceed
the affordable threshold (30% of household income) for moderate income households (calculated as the
thth
40-60 percentile of incomes across all households) who earned $71,100 – 104,800 in 2021.
29
Figure 5. Affordability of 80% Average Market Rents to Low, Medium and High Income Households (bars
represent rents at 30% of a household’s gross annual income)
Figure 6. Affordability of 80% Average Market Resale Price to Low, Medium and High Income Households
(bars represent prices at 30% of a household’s gross annual income)
30
What are best practices/options we have seen in other communities?
In accordance with the PPS 2020, the Cities of Toronto and Mississauga adopted anincome and market-
based definition for affordability. These definitions, along with many other income-based definitions
used in US jurisdictions, would no longer be possible under the proposed new Provincial regulations,
since they include a requirement for some rents to be lower than 80% AMR. The City of Ottawa’s draft
framework adapted the PPS definition to focus on only moderate income households, which could be
feasible under the draft regulations provided that the final rent is no lower than 80% AMR.
Notwithstanding the proposed market-based definition of affordability and limits on the level of
affordability, there may still be an opportunity for IZ to target households who face significant housing
changes. An IZ program could set minimum IZ unit rents for different unit sizes and establish eligibility
requirements for each based on household characteristics (e.g., household income and sizes). This
approach could help ensure that larger households with low per capita incomes are matched with
correctly sized affordable units and that smaller households can’t occupy units with an excess number of
bedrooms. A similar approach was used in the City of Toronto’s IZ program, as follows:
“Affordable rental housing and affordable rents means housing where the total monthly shelter cost
(gross monthly rent, inclusive of utilities for heat, hydro, hot water and water) is at or below the lesser
of one times the average City of Toronto rent, by dwelling unit type, as reported annually by the Canada
Mortgage and Housing Corporation, or 30 percent of the before-tax monthly income of renter
households in the City of Toronto as follows:
Studio units: one-person households at or below the 50th percentile income;
One-bedroom units: one-person households at or below the 60th percentile income;
Two-bedroom units: two-person households at or below the 60th percentile income; and
Three-bedroom units: three-person households at or below the 60th percentile income.”
A scan of American jurisdictions showed that the vast majority of IZ programs targeted affordability
toward 51-80% of area median income. In 2021 Waterloo Region’s area median income (AMI) across all
household sizes was $87,200. The Affordable rent at 50% of AMI would be $1,090/mo. The Affordable
rent at 80% AMI would be $1,744. Based on 2021 incomes, the proposed Provincial limits and definition
for affordable rents for bachelor and one-bedroom units would fall below 50% AMI, while affordable
rents for two- and three-bedroom units would fall between 51% and 80% AMI.
What does the financial model tell us?
Like set-aside rates, unit rents and prices are another policy lever that can have a significant impact on
the financial viability of IZ. NBLC financial modelling shows improved viability of an IZ program under a
100% AMR scenario (rather than 80% AMR scenario). IZ unit rents at 100% AMR would continue to be
affordable to moderate income renters. If rent increases continue to outpace renter incomes, the
proposed rent (100% AMR) and Provincially proposed minimum rent (80% AMR) could become
unaffordable to moderate income renters. The Partners should continue to monitor affordability levels
to ensure IZ rental units remain affordable to moderate income renters.
What we heard
31
Development industry representatives expressed concerns about potential impacts of very low IZ rents
or prices on pro forma. They generally expressed a preference for an IZ program to focus on moderate
rather than deeply affordable units to manage these impacts. Some developers expressed concern that
if IZ unit rents were too low, it could present marketing and operational challenges in a mixed income
building.
Builders of purpose-built rental housing communicated that alignment with CMHC funding programs
could help them deliver IZ units in a financially feasible way. CMHC’s Mortgage Loan Insurance (MLI
select) is a key program that is commonly used to deliver mixed income buildings with attractive loan
terms. MLI select requires developers to provide a certain percentage of units to rent at 30% of median
renter income. We also heard from most stakeholders that CMHCs’ Average Market Rent (which is
based on an average of the rents of both occupied units \[some of which are subject to rent control\], and
vacant units) is typically much lower than the average rents of vacant units alone. Since the former
calculation does not reflect the rents needed for an adequate return, development industry
stakeholders did not prefer the AMR method for setting rents.
Members of the broader community expressed a strong preference for deeply affordable units that
would support households in the low and very low income range. Despite frustrations around the
limitations of IZ to create deeply affordable units, some community members recognized value in
creating moderately affordable units in areas well service by transit and as a low-cost tool to enable
movement of households through the housing system.
Recommendations
Rental should be the only tenure for affordable units in an IZ program. Under the proposed
Provincial regulations, the minimum IZ ownership unit price would be $512,309 in 2021. This
price is only affordable to high income households making $125,600 or more in 2021, and who
are relatively well served by the market (See Tenure). This income range is not identified as an
area of need by either Kitchener’s or Waterloo’s housing needs assessments.
Staff recommend that the minimum affordable rent for an IZ unit be 100% AMR rather than the
anticipated Provincial minimum of 80% AMR. 100% AMR is far below the rents that are typically
charged in new purpose-built rental buildings or rented condominiums and below the rents that
tenants must pay for new tenancies of old stock. 100% AMR would provide affordable rental
housing to moderate income renter households making $40,400-58,900 in 2021. Furthermore,
while low income households are in deepest need, the viability of an IZ program is significantly
improved at moderate rather than low rents. Core housing need is not only a problem for low
income households, both also for moderate income households, particularly those households
that are large or that support extended family. Further, developers foresee significant
operational challenges in mixed income buildings marketed towards low income households.
An IZ program should work alongside (not instead of) government programs that support more
deeply affordable housing. Providing more units that are affordable to moderate income
households through IZ can indirectly benefit all low and moderate income households though
increasingthe supply of affordable units. Providing affordable housing to moderate income
households will help reduce pressure on market and non-market units that are affordable to low
income households.
32
Figure 7. Affordability of 100% Average Market Rents to Low, Medium and High Income Households (bars
represent rents at 30% of a household gross annual income)
Table 5. Comparison ofincomes and affordable rents basedon Ministry of Municipal Affairs and Housing
(MMAH)andCanadianMortgageandHousingCorporation(CMHC)definitionsandprogramcriteria
Renter Household MMAH 2021 MMAH CMHC renter CMHC
Income distribution income (census Affordable rent median income Affordable
derived) (30% of income) (CMHC MLI select rent (30% of
criteria)income)
th
40percentile$40,400 $1,010N/AN/A
th 3
50percentile$49,200 $1,230$57,000 $1,425
(median)
th
60percentile $58,900 $1,490N/AN/A
Staff recommend that the maximum rent charged for IZ units in condominiums be set at 100%
of average market rent. The rent for IZ units in purpose-built rental buildings should be the
greater of MLI select rent (currently $1,425) or 100% of average market rent. Bachelor-2
bedrooms would be affordable to moderate income renters. 3 bedrooms would be slightly
above the affordability threshold for moderate income renters but would be affordable to
3
Discrepancies in median income are primarily due todifferent data sources(Census for MMAH and Canadian
Income Survey and Survey of Labor and Income Dynamics for CMHC. Both are reputable Statistics Canada data
sources)
33
moderate income households considered across the income distribution of all types of
households. Although these higher rents for three bedroom units are not ideal from an
affordability needs perspective, they help mitigate the financial disincentives to build three
bedroom units. Proposed income criteria would ensure that these units be rented to moderate
income households, but they could be spending more than 30% of income on housing.
Condominium fees, property taxes, insurance and maintenance should be the owner’s
responsibility. Utilities and parking spaces tent could be in addition to the maximum permitted
rent.
Table6.RecommendedMaximumRentsforIZunits
2022 Maximum Rent for Affordable
Unit Type Rental Unit
Purpose-built Condominium
Unit Type
Rental Building* Building**
Bachelor $1,425$1,063
1 bedroom$1,425$1,240
2 bedroom $1,454$,1,454
3+ bedroom $1,590$1,590
*Calculated as the greater of 100% AMR or MLI Select definition of affordability (currently $1,425).
**Calculated as 100% AMR
Duration of Affordability
What does this concept mean?
Duration of affordability refers to the amount of time for which IZ units must remain at affordable rents
or prices before reverting to market rents or prices. In the case of an IZ rental unit, rent would need to
meet the required level of affordability for the specified program duration. Once the period of
affordability is expired, the owner of the rental unit would be able to increase the rent to a market rent.
For an IZ ownership unit, the resale price would be restricted for the specified program duration.
Restrictions on IZ ownership units could include a requirement that the owner return a portion of the
net proceeds of a unit’s sale to the municipality and/or maximum income criteria for new owners.
The regulatory approach proposed by the Province in the Fall 2022 includes a maximum affordability
period of 25 years.
What are best practices/options we have seen in other communities?
A survey of other communities shows that duration of affordability can range from 25 to 99 years. Los
Angeles, New York and San Francisco require affordability in perpetuity. Toronto’s affordability period is
99 years, and Vancouver’s is 60 years. Chicago and Los Angles both require a 30-year period of
affordability. Mississauga’s affordability period is 25 years for rental and 50 years for ownership.
What does the financial model tell us?
34
Duration of affordability is a moderately important driver of financial viability, but less important than
other policy parameters such as set-aside and level of affordability. The financial implications of
duration are described in the Tenure of IZ units section of this report.
What we heard
Almost all community stakeholders expressed a desire for long term affordability and a frustration with
the proposed 25-year maximum term.
Some developers expressed a desire for a short period of affordability to provide an incentive to build a
project (i.e. they were intuitively more sensitive to this variable than the model would suggest).
Recommendations
The recommended duration of affordability is 25 years, which is the maximum term under the
proposed regulations. Longer terms of up to 99 years could be appropriate if it were enabled by
Provincial regulation. A long period of affordability is recommended to ensure the affordable
housing can make a lasting impact.
Municipalities should explore partnership with non-profits to expand the period of affordability
beyond 25 years where possible, as described in the Implementation and Administration section
of this report.
Tenure of IZ Units
What does this concept mean?
IZ can be used to create both affordable ownership housing and affordable rental housing. Combined
with different building ownership models, IZ units can generally have any of the following three tenure
structures:
1. Affordable ownership units within a condominium building
2. Affordable rental units within a condominium building
3. Affordable rental units in a market rental building
Rental units typically support households with moderate and low incomes for whom ownership housing
is not an affordable option. The creation of IZ rental units, either within a purpose-built rental building
or within a condominium building, can provide direct support to households that face barriers to finding
affordable housing. An IZ program that emphasizes and supports the creation of IZ rental units as a
priority would provide affordable housing for moderate income households in need.
Under current economic conditions, condominium construction typically results in better financial
returns than new purpose-built rental housing. As a result, condominium development is preferred by
builders, in most cases. In certain markets, adding a requirement for IZ units within purpose-built rental
buildings could further reduce the financial feasibility of development. Despite the financial challenges
of constructing purpose-built rental housing, Waterloo Region has experienced new purpose-built rental
developments that target high income renters. An IZ program should balance the benefit to the
community of requiring affordable rental units with the possible negative financial impacts of IZ on
purpose-built rental housing that could discourage these types of development.
35
What are best practices/options we have seen in other communities?
Rental IZ programs are more common than ownership,but both are used widely.
Both Mississauga’s and Toronto’s IZ policy frameworks provide for affordable ownership and affordable
rental. The set-aside rate in these programs is lower for rental units than for ownership units. This
reflects the fact that the maximum affordable rental threshold of $1,580-1,650 per month represents
lower annual housing costs to households than affordable ownership units at the maximum affordable
price of $338,000-423,000 (due to the way these thresholds are defined in Provincial policy). Rental
units are more deeply affordable and have a greater impact on development pro forma than affordable
ownership units.
Toronto does not require IZ units in purpose-built rental buildings until 2026, and Mississauga’s
framework exempts purpose-built rental buildings from its IZ program entirely, presumably owing to
their challenging economics, even without an IZ policy, as compared to condominium apartments.
Furthermore, it does not prescribe whether affordable units be rented or owned. The approach is
v
similar in Mississauga. 90% of American IZ programs provide for both rental and ownership units
What does the financial model tell us?
Staff estimate the fair market value of the typical IZ rental unit under the proposed policy parameters
would be approximately $300,000 with variation based on unit size, building type and location. This
figure is calculated using an income-based approach to property valuation based on net operating
income for IZ units for 25 years and then reverting to market rents starting in year 26. This
approximates the value we expect IZ units transact at on the open market, rather than a price mandated
by policy. The financial impact of an IZ rental unit to a development pro forma is modelled as the
difference between this sale price and market price of a unit sold as a market ownership condominium
unit.
Requiring IZ units to be rental has more impact on financial viability than requiring ownership units. Staff
recommend this approach nevertheless because IZ ownership units priced according to proposed
Provincial regulations would be affordable to only high income households. Set-aside rates, rents and
duration of affordable requirements have been calibrated to address this finding.
The municipalities cannot control the sale price of IZ rental units. The preference is that they be sold to
third sector providers as described in the Implementation and Administration section of this report.
What we heard
A number of local rental housing providers consulted for this study confirmed that a modest set-aside
rate for IZ units within their purpose-built rental buildings could be financially feasible and suggested
that IZ program requirements align with CMHC’s financial support programs for rental construction,
such as MLI Select and Rental Construction Financing. These programs, which are typically required to
ensure the financial feasibility of purpose-built rental housing developments, set out minimum a point
system addressing affordability levels, set-aside rates and duration requirements and other criteria
unrelated to affordability. The alignment with CMHC programs would enable purpose-built rental
developments to count the affordable units that they are already creating toward the IZ requirement
36
but could also secure IZ units within purpose-built rental developments geared toward high end of
market rents.
In consultation with condominium developers around the concept of IZ units in a condominium building,
most expressed a strong preference to not own and operate IZ rental units long term. The typical
condominium development business model sees the developer ending its association with a project
shortly after ownership of all units is transferred. A successful IZ rental in condo program should provide
a pathway for condominium developers to cease their obligations to the site/project shortly after
condominium registration.
Recommendations
An IZ program should be used to create affordable rental units only. The affordable rental units
should be provided in a purpose-built rental or in a condominium building.
Condominium developers could hold and rent their IZ units, sell them to a third party at their
fair market value, or preferably, sell them to a third sector housing provider. Any rental IZ unit
owner should be required to uphold maximum rent, income eligibility, and reporting criteria.
Condominium fees, property taxes, insurance and maintenance would be the responsibility of
the owner. Utilities and parking spaces leases could be in addition to the rent. Leasing would be
a shared responsibility of the owner and administrator. These commitments will be secured
through agreements registered on title.
Condo and purpose-built rental developers should be provided with flexibility within an IZ
program to adopt a variety of ownership operations models, as needed (See Offsite Units).
Program requirements for IZ in purpose-built rental buildings should align with CMHC’s
affordability requirements for rental construction financing and grant programs.
Review and refinements of this policy approach should occur as part of the mandatory 2-year or
5-year review of IZ.
Unit Size and Number of Bedrooms
What does this concept mean?
An IZ program can specify the gross floor area of IZ affordable units as well as the number of bedrooms.
What are best practices/options we have seen in other communities?
To promote equity and inclusion, all IZ units should be livable, functional and integrated visually with
market-rate units within the same building. IZ affordable units should be comparable in size to market
rate units containing the same number of bedrooms unless it is demonstrated that a different unit size is
desirable to achieve a particular housing need. Where IZ and market rate units differ in size, IZ units are
sometimes required to meet minimum standards to ensure that they are functionally equivalent to the
market rate units. Table 7 shows a range of minimum IZ unit sizes adopted by other municipalities
Table 7. Minimum IZ Unit Size Requirementsby Municipality
37
Minimum IZ Unit Size Requirements (square metres)
City
Studio
1 BR 2 BR 3+ BR
Toronto, ON
87 100
Boulder, CO
2844
Los Angeles, CA
No less than 90% of average floor area of market units with same # bedrooms
San Francisco, CA
335174 93
Chicago, IL
395681 102
Some municipalities manage the financial impacts of requiring large bedrooms by allowing the housing
authority to authorize fewer IZ affordable units in exchange for units with more bedrooms in accordance
with a bedroom equivalency. For example, Portland Oregon permits the calculation of set-aside rates
based on number of bedrooms rather than units. A developer can satisfy an IZ requirement by creating a
few large units or many smaller units. Los Angeles sets out an equivalency table whereby a three-
bedroom unit is considered to be equivalent to 2 studio units, 1.5 one-bedroom units or 1.25 two-
bedroom units. IZ set-aside requirements that focus on percent of GFA rather than percent of total units
could provide additional flexibility to developers to offer larger unit sizes, where feasible.
What does the financial model tell us?
The Partners have modeled a program where the suite mix of IZ units mirrors that of the market units.
For high rise buildings this is 0-10% bachelors, 45%-50% one bedrooms and 40-50% two bedrooms.
Requirements for larger IZ units is expected to have a significant pro forma impact. Because of its
potential to significantly impact a development’s pro forma, any minimum bedroom requirements for IZ
units should be considered as part of the larger IZ financial impact analysis. Any requirements that IZ
units be larger than market units should be matched with less onerous requirements in other parts of
the policy.
What we heard
Local developers have reported that it is economically challenging under current (2022) market
conditions to provide family-sized units with three or more bedrooms. Consultation with housing
providers, moderate income households and organizations that support them, and the public at large
have differing opinions on what unit sizes are in greatest demand.
Recommendations
The unit sizes and number of bedrooms for IZ units should be generally consistent with the unit
sizes and number of bedrooms of market units.
Location Within Projects
What does this concept mean?
Affordable housing units created through an IZ program are typically located within a building with
market rate units (But also see Offsite Units). The location of affordable units refers to whether the
affordable units are concentrated within the building (e.g. located on a single floor) or dispersed
throughout the building.
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What are best practices/options we have seen in other communities?
Most IZ programs require that IZ affordable units be dispersed throughout a development, with no
single building or floor containing a disproportionate number of IZ affordable units. Some exceptions
may apply where there are programming and supports that can be more efficiently or effectively
delivered to tenants who share specific needs, such affordable units that are specifically geared to
seniors and who would benefit from being close to certain amenities or accessibility features.
What does the financial model tell us?
The financial model does not consider thelocation of affordable units within buildings. Thelocationsof
IZ units within a development is unlikely to have significant financial impact on its pro forma.
What we heard
Feedback from both the development industry and members of the community emphasized a desire for
IZ units not to be concentrated. In contrast, some affordable housing providers saw the potential for
administration and service efficiencies if the IZ units could be grouped. These providers were particularly
interested in the possibility of grouping IZ units within offsite units (See Offsite Units).
Recommendation
Where possible, IZ units should be dispersed throughout a development. However, there should be
some flexibility to consider concentration of units where such an approach will benefit the IZ affordable
unit occupants.
Design Criteria
What does this concept mean?
Additional design criteria include building and unit performance standards and design guidelines that
ensure a minimum standard of quality and design for IZ affordable units and equitable access to
common building amenities. Examples include minimum standards for storage areas, closets, balconies,
kitchen cabinets, counters, flooring, furnaces and appliances, and/or equal access to building entrances,
common areas and amenities.
What are best practices/options we have seen in other communities?
A number of jurisdictions have adopted design criteria for developers to ensure that affordable IZ units
are livable and that IZ unit occupants have reasonable access to building features. For example, Boulder
Colorado has adopted “Livability Standards” to guide the design of IZ units. These standards include
minimum room dimensions, layouts for efficient floor plans that enable functional furniture
configurations, minimum kitchen cabinetry requirements and closet sizes. Finishes and appliances in IZ
units are permitted to be “functionally equivalent” to those provided in market units, which means they
must be able to provide the same function, but do not need to be an identical brand, finish, or product.
For example, IZ affordable units could have laminate countertops, while market-rate units could have
granite countertops, provided that both offer the same functionality.
What does the financial model tell us?
The financial model did not provide pro forma analyses for different interior design options.
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What we heard
Feedback from developers indicated that interior unit design and finishes have a relatively minor impact
on pro formas and IZ feasibility and there was limited interest in exploring functionally equivalent design
options because of the limited financial offset that such an approach could provide. Community
feedback indicated a preference for equitable approaches to interior design, finishes and access to
amenities.
Recommendations
Affordable IZ units should share the same entrances, common areas, and amenities as market-
rate units and additional fees or charges should not be applied to affordable unit residents for
access to these amenities.
Given the administrative and cost burden of implementing and monitoring interior design,
minimum interior design standards for IZ units should be considered only where it has been
demonstrated through a biennial program review that they are necessary to ensure equitable
and functional designs and finishes in IZ units.
Timing of Construction and Occupancy
What does this concept mean?
Timing of construction refers to the time frame that any IZ affordable units must be constructed and
available for occupation within the sequencing and context of the broader development. The timing
requirements are usually set out in the legal agreement between the municipality and the developer
and are registered on title. They ensure completion of the affordable units by creating a financial
incentive for the developers to fulfil their IZ unit obligations.
What are best practices/options we have seen in other communities?
Most IZ programs surveyed have established timing requirements that require the IZ units to be
constructed and occupied before or concurrent with the market rate units. These programs include
Toronto, Montreal, Vancouver, Chicago, and Los Angeles.
Whatdoesthefinancialmodeltellus?
The financial model did not provide pro forma analyses for construction timing.
What we heard
No feedback was provided about the timing of construction.
Recommendations
IZ units should be constructed and occupied concurrently or prior to the construction and
occupancy and in proportion to market rate units. Similar timing requirements should also
apply to offsite units. If the IZ unit timing requirements for offsite units cannot be met, (due to
construction delays at the offsite for example), IZ units requirements should be met in the
building generating the IZ requirement until such time as they can be met offsite.
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Requirements for construction and occupancy should be incorporated into the IZ zoning by-law,
implementation guidelines, and individual legal agreements.
Exemptions
What does this concept mean?
There may be certain situations in which it is not necessary or does not make sense to require affordable
units through IZ. Establishing exemptions ensures that certain developments are not discouraged as a
result of the IZ requirements.
The Planning Act (O. Reg. 232/18) exempts the following developments from IZ requirements:
An IZ by-law does not apply to a development or redevelopment where,
a) The development or redevelopment contains fewer than 10 residential units;
b) The development or redevelopment is proposed by a non-profit housing provider or is proposed
by a partnership in which,
a. a non-profit housing provider has an interest that is greater than 51 per cent, and
b. a minimum of 51 per cent of the units are intended as affordable housing, excluding any
offsite units that would be located in the development or redevelopment;
c) On or before the day an official plan authorizing IZ was adopted by the council of the
municipality, a request for an amendment to an official plan, if required, and an application to
amend a zoning by-law were made in respect of the development or redevelopment along with
an application for either of the following:
a. approval of a plan of subdivision under section 51 of the Planning Act, or
b. approval of a description or an amendment to a description under section 9 of the
Condominium Act, 1998; or
d) On or before the day the IZ by-law is passed, an application is made in respect of the
development or redevelopment for a building permit, a development permit, a community
planning permit, or approval of a site plan under subsection 41 (4) of the Planning Act.
Whatarebestpractices/optionswehaveseeninothercommunities?
Municipalities are permitted to provide further exemptions beyond those included in the Planning Act.
The City of Toronto’s adopted IZ framework provides exemptions for:
developments containing fewer than 100 dwelling units and less than 8,000 m2 of
residential GFA;
developments that will be owned and operated by:
o a non-profit housing provider with 100% ownership interest; or
o a non- profit housing provider in a partnership in which:
the non-profit housing provider has an ownership interest that is greater
than 51%; and
a minimum of 51% of the dwelling units will be affordable housing units;
student residences, retirement homes, nursing homes, and residential care homes.
The City of Mississauga’s adopted IZ framework provides exemptions for:
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Portions of a development or redevelopment containing long-term care buildings, retirement
buildings, hospices, staff/student residences, or group homes
Region of Peel or Peel Housing projects
Developments subject to an existing affordable housing contribution secured before the date of
passage of an IZ Official Plan Amendment through a S.37 (density bonusing) agreement,
development agreement, S.51 agreement, S.45 agreement or other form agreement with the
City, to the satisfaction of the Commissioner of Planning and Building
Purpose-built rental buildings
What does the financial model tell us?
Staff explored insight from the financial model in determining an appropriate threshold for the
minimum project size to which IZ should apply. Mid rise developments are generally more financially
challenging than high rise developments. However in weak markets, Residual Land Value for low and
medium rise development can be stronger than high density. On smaller sites and in smaller projects,
such as tall towers on small lots or in missing middle and mid rise housing typologies, the development
economics tend not be more challenging.
What we heard
The Partners did not receive significant feedback on exemptions.
Recommendations
To eliminate circumstances where IZ would be overly financially challenging , the following should be
exempt from IZ requirements:
Buildings with 50 units or less. This figure seeks to strike a balance between maximizing the
number of units that can be provided through an IZ program and not disincentivizing missing
middle housing forms. The recommended threshold is lower than in Toronto or Mississauga in
recognition that small projects may be economically preferred to larger ones in weaker market
areas.
Staff anticipate that exempting building of 50 unit or less will provide an incentive, on the
margin, for development just under this threshold. Staff considered but have not recommended
a varying set-aside rate by project size. This was not supported by the financial model, could be
confusing and because of the relatively narrow band of set-aside rates (1-5%). Staff will monitor
the potential impacts of this threshold effect and recommend adjustments as needed.
Residential and long-term care facilities, including retirement homes, group homes, and
hospices
Student residences built or operated by a post-secondary institution
Region of Waterloo Housing, including Community Housing, Alternative Housing, and Supportive
Housing
Exemptions already specified in O. Reg. 232/18 under the Planning Act
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Offsite Units
What does this concept mean?
Permitting offsite units may be one way to reduce financial impact on development and increase the
feasibility of IZ. It could enable developers to construct IZ units in lower cost areas and/or in buildings
with lower construction costs. It also provides opportunities for developers to partner with other
developers and with affordable housing providers for the construction of offsite IZ units. Offsite units
can help solve the business problem of requiring IZ rental units in condominium buildings.
The Planning Act (O. Reg. 232/18) places the following restrictions on municipalities regarding the
permission of offsite units:
1. Offsite units shall not be permitted unless there is an official plan in effect in the municipality
that sets out the circumstances in and conditions under which offsite units would be permitted.
2. Offsite units shall be located in proximity to the development or redevelopment giving rise to
the by-law requirement for affordable housing units.
3. The land on which the offsite units are situated shall be subject to an Inclusionary Zoning by-law.
4. Offsite units shall not be used to satisfy the by-law requirement to include a number of
affordable housing units, or gross floor area to be occupied by affordable housing units, that
applies to the development or redevelopment in which the offsite units are permitted.
What are best practices/options we have seen in other communities?
Toronto requires an agreement registered on title for both sites when offsite units are on land not
owned by the same person as the original site.
The City of Toronto’s adopted IZ framework permits offsite IZ units at the discretion of the City. Builders
must meet the following requirements:
The offsite affordable housing units provide for an improved housing outcome;
The offsite affordable housing units shall be ready and available for occupancy on a timely basis
commensurate with completion of the residential units in the proposed development or
redevelopment; and
The offsite affordable housing units shall be located in proximity to the proposed development
or redevelopment. The requirements for proximity will be met if the offsite development is
located within the same market area category
The City of Mississauga’s adopted IZ framework also permits offsite IZ units, once again at the discretion
of the City. Builders must meet a similar set of requirements:
The offsite housing must be located within an IZ area (MTSA)
Offsite IZ units shall be located in proximity to the proposed development or redevelopment
giving rise to the affordable housing requirement. Proximity is deemed to be a site located
within the same IZ area.
The offsite contribution results in an improved housing outcome, such as:
o Delivery of units occurs sooner than if the units were delivered in the development
giving rise to the affordable housing requirement
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o The provision of affordable rental housing, or the provision of more deeply affordable
units than required
o The provision of a greater number of affordable GFA than required
Offsite units shall not be used to satisfy affordable housing requirements that apply to the
development or redevelopment in which the offsite units are permitted
What does the financial model tell us?
The financial model is not structured to analyze offsite units. The option for offsite units can only
improve financial viability.
Whatweheard
Both developers and non-profit housing providers see offsite units as an exciting opportunity for
innovation in a way that meets the affordability goals of an IZ program while potentially avoiding some
of its downfalls. It could:
Provide economies of scale for administrative costs whereby the region only needs to manage
relationships with a few nonprofit housing providers
Provide opportunities for non-profits, who have a mandate to provide long-term affordable
housing, to partner with developers for the ownership and operation of buildings containing IZ
units. Non-profit ownership could support a longer term of affordability than the proposed
maximum of 25 years.
Provide opportunities to build units in low-cost locations or using lower cost construction
methods
Leverage additional funding to potentially create more units or deeper levels of affordability.
Non-profit partners are well positioned to secure CMHC funding and financing, long
amortization periods and have ability to fundraise to deliver more affordable units via offsite IZ
units than the private sector could, either onsite or offsite.
Provide a steady pipeline of new units into the nonprofit sector that is not dependent on senior
government funding programs
Provide opportunities for on-site supports at scale
Conversely, we heard from the community at large that mixed income buildings that would be secured
through on-site IZ units is an important goal that should be upheld. Community members expressed
concerns about the possibility of creating poor quality housing in offsite buildings and stigma regarding
offsite units.
Recommendations
Offsite units should be permitted to provide flexibility in an IZ program and to facilitate, where
possible, the transfer of IZ unit ownership to the third sector. Building and maintaining
relationships with non-profit and affordable housing providers in the region will be important to
facilitate offsite units. Developers are not permitted to provide Cash In Lieu (CIL) of IZ units but
the regulations do not prohibit partnerships with affordable housing providers or other
developers. Agreements will be needed on title to secure the units and there may be benefits to
coordinated agreements with multiple developers if they are providing IZ units for different
developments in the same offsite building.
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Offsite IZ units should be provided in an MTSA within the same municipality as the donor
development
Offsite IZ units can be within a mixed income building or a building with only affordable units
Units could be built by a non-profit, developer or consortium of developers
Offsite IZ units need to be in addition to affordable units that a developer would otherwise be
required to provide.
The timing of occupancy of IZ units, whether on site or offsite, must be coincident with market
units. In the case of offsite units, construction timing of the offsite unit project may not align
with the building generating the IZ requirement. In the cases where the occupancy of the
building generating the IZ requirement (donor site) precedes the construction of the project
receiving the offsite units (recipient site), IZ units must be provided at the donor site until IZ
units at the recipient site are ready for occupancy. If the recipient site project does not proceed
for whatever reason, IZ units would be provided at the donor site long-term.
Enabling offsite units generally supports the community goal of creating mixed income communities in
MTSAs, even though not all offsite units will be located in mixed income buildings. Community concerns
about ensuring a high quality of design and amenities for offsite buildings can be managed through
appropriate urban design and development review processes. The offsite unit option will be critical to
achieving market acceptance of requiring IZ rental units in condominium buildings. Offsite units,
properly secured by agreements, will allow the private and non-profit sectors to innovate in the delivery
of affordable units. Staff intend to report back on the successes and challenges of offsite unit provision
biennially and will adjust this approach as needed.
Accessibility
What does this concept mean?
Accessibility is defined by CMHC as the manner in which housing is designed, constructed or modified to
enable independent living for persons with diverse abilities. In this discussion paper, accessible units are
those that meet or exceed Building Code accessibility requirements. Such units are designed to provide,
among other things, adequate turn spaces, minimum doorway and corridor widths, and power door
operators. They are supported by other accessibility features throughout a building that permit a
barrier-free path of travel and access to and from public areas such as entrances, hallways and amenity
areas. A minimum of 15% of units within a multi-unit residential building must be designed with basic
accessibility features.
What are best practices/options we have seen in other communities?
Individuals with disabilities are more likely to live in households that spent more than 30% of their total
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household income on shelter. The proportion of unaffordable housing was higher for persons with
disabilities in renter households with a subsidy (41.4% compared with 34.9% for the total population)
and without a subsidy (45.0% compared with 34.5% for the total population). Notwithstanding the
correlation between income, housing and disability, a recent review of the Region of Waterloo’s
community housing waitlist reveals that only 123 out of 7642 (1.6%) of households on the waitlist
required accessible units. The reasons for the low proportion of individuals with a disability on the
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waitlist are unclear and may not be representative of need (e.g. individuals with disabilities may be
choosing not to register with the housing waitlist for a variety of reasons, such as long wait times). It
could also reflect that the disabilities reported in the broader population are not all physical disabilities
that require accessibility housing.
The City of Toronto’s Draft Implementation Guidelines states that “Reasonable efforts shall be made to
provide at least twenty percent (20%) of IZ affordable housing units within a proposed development as
fully accessible housing units.” Several CMHC housing grant programs require an accessibility standard
of 20% of greater, and common areas that are barrier free.
Whatdoesthefinancialmodeltellus?
The financial model did not provide pro forma analyses for accessible units over and above the 15%
required by the Building Code.
Whatweheard
Members of the public generally expressed a desire for at least 15% of IZ units to be accessible. Some
members of the public expressed an interest in requiring a higher proportion of accessible units for the
IZ units than is currently required by the Building Code.
Development industry did not provide feedback on accessibility requirements, although it is understood
that increasing the accessibility requirements for IZ units beyond the Building Code requirement could
result in additional costs and impacts on a development’s pro forma. In a review of accessibility features
added to newly constructed buildings, including apartments, CMHC concluded that the costs: “although
not insignificant, are nonetheless much lower than the cost of converting an existing dwelling in order to
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make it accessible.”
Recommendations
An IZ program should require that the Building Code’s 15% accessibility requirements be
distributed proportionally throughout market and IZ units. Developers should be encouraged to
achieve a minimum of 20% accessibility in IZ units, where possible, and to ensure that IZ units
are adaptable to enable later retrofit if needed.
Incentives and Offsets
IZ programs can be supported by a range of incentives or “offsets” that mitigate financial impacts of
providing the affordable units. They can include, but are not limited to, additional height and density in
exchange for the IZ units, flexible or reduced planning regulations (e.g. reduced parking) and waivers or
reductions in municipal fees and charges. The Planning Act requires that incentives be considered in
developing an IZ framework.
Additional Height and Density
What does this concept mean?
Under the Planning Act, a developer or builder can seek permission from council through a zoning by-
law amendment for additional height or density than what is permitted for their property as of right in
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the zoning by-law. Assuming all other costs remain fixed, additional height or density can increase the
revenues of a development and make a development project more lucrative.
A development’s as-of-right approved heights and densities can be combined with different set-aside
rates to achieve different outcomes. For example, a zero or low set-aside rate can be applied to the as-
of-right height and density of a building, while a higher set-aside rate can be applied to the additional
height and density. IZ programs that only apply a set-aside rate to the additional height and density
portion of a building can be considered voluntary, since no IZ units are required as part of the as-of-right
height unit permissions. Conceptually, these types of programs work in a similar manner to the former s.
37 bonusing provisions of the Planning Act.
The Planning Act allows for mandatory IZ. The Act requires municipalities to consider incentives, and a
voluntary approach to IZ may be contemplated.
What are best practices/options we have seen in other communities?
Historically many Ontario communities, including Toronto, Waterloo and, to a limited extent, Kitchener
have used the former community benefits (height and density bonusing) provisions of s. 37 of the
Planning Act to secure affordable housing or funds for affordable housing through developments that
request height or density above and beyond what is permitted by the base zoning. The ability to use this
tool was removed from the Planning Act in 2019. Vancouver has successfully used a height and density
bonusing approach to secure affordable units.
Many American IZ programs use height and density bonusing to help offset the cost of IZ units. Density
bonusing has been found to work well in areas zoned for lower density, but can have diminishing returns
in areas that are already zoned for high-rise construction. According to a 2016 study by the Centre for
Housing Policy “After a certain height and density, land costs become an increasingly smaller portion of
overall development costs, and the benefits of the extra density do not provide the same level of
viii
subsidy that they would in a smaller-scale project.”
Neither Toronto nor Mississauga IZ frameworks proposed additional height or density in association
with the IZ by-law.
What does the financial model tell us?
The financial model analysis in this report assumes a mandatory IZ program and a single set-aside rate
for developments with a range of built forms that are associated with a relatively fixed height and
density. It does not test scenarios that involve different set-aside rates applied to additional height or
density. In practice, it is not uncommon for a developer to seek additional height and density to help
improve project viability.
What we heard
Some industry stakeholders noted that requests for increased density are typical for most sites that will
be redeveloped. A mandatory system with a single set-aside rate was generally preferred because it is
more clear and simple to calculate than the voluntary or incentive systems discussed. This increases
certainty that is crucial to project viability. Most community stakeholders also preferred a mandatory
system. Community engagement did not reveal a strong majority opinion on the idea of permitting
higher heights and densities to secure more affordable housing.
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Recommendations
A mandatory IZ program is recommended as it sets clear expectations and is simpler to
understand and administer. A mandatory system allows developers and land owners to clearly
understand what is required and build these assumptions into their investment decisions. A
mandatory system also ensures that IZ units will be provided. A voluntary system is not
recommended since it is more effective in relatively stable low density zoning environments
where land transactions tend to align closely with zoning permissions.
The implementation of an IZ policy should be coordinated with comprehensive updates to
planning frameworks within MTSAs that include greater height and density permissions.
Additional height and density permissions can help offset the financial impacts on the land
market in many cases.
Parking Requirements
What does this concept mean?
The zoning bylaws of all three cities require a certain number of off-street vehicle parking spaces be
provided in association with the development of new residential units. This varies between
municipalities, location and structure type and other factors. Municipalities can reduce or eliminate
vehicle parking requirements for IZ units, or for the entire development that includes IZ units to help
offset the cost of IZ. Major Transit Station Areas are well served by higher order transit that provides a
rationale for lower parking requirements.
What are best practices/options we have seen in other communities?
Mississauga reduces the parking required for IZ units by 30-50% and Toronto exempts IZ units from
parking requirements.
What does the financial model tell us?
Structured parking has been reported by a number of developers as costing $50,000-$100,000 per
space, depending on if it is located in the podium of a building or below ground. Any requirement to
provide parking above and beyond what the market demands has significant implications on financial
viability. Reductions in parking requirements for both IZ units and for the entire development that is
subject to IZ requirements can significantly improve the financial viability of a project. The revenue
associated with the sale or rental of parking spaces does not cover its costs.
The financial impact model assumes a parking ratio of 1.0 space per unit in emerging market areas, 0.7
spaces per unit in established market areas and 0.5 spaces per unit in prime areas. All market areas
assume an additional 0.1 visitor spaces per unit. These assumptions approximate a market -based
demand for parking and do not reflect the parking required by zoning. Parking requirements more than
these can negatively impact financial viability.
Exempting IZ units from parking in a prototypical high rise within a prime market area at a 5% set-aside
rate can yield approximately $200,000 in value to the project. Exempting all units in the same project
would generate approximately $2.1m in value. These increases in value can help offset the financial
implication of IZ and improve financial viability and new supply.
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What we heard
We heard broad support from both developers and community members for eliminating parking
minimums for IZ units. There was some support for reducing or eliminating parking requirements for all
residential development in MTSAs as a way to support affordability in general.
Recommendations
No parking should be required for IZ units. The minimum required parking rates for
developments within MTSAs should be as low as possible and should range from 0 to no higher
than 0.7 spaces/unit, where possible.
Financial Incentives
What does this concept mean?
Municipalities can provide financial incentives to developers to help offset some of the financial impact
of providing IZ units. In November 2022, changes were made to the Planning Act and Development
Charges Act that exempt IZ Units from City and Regional Development Charges (DCs).
A regulatory proposal to exempt IZ units from Community Benefit Charges (CBCs) and Park Dedication is
not yet in effect
Additional financial incentives could include the waiver or reduction of:
Planning application fees
Building permit fees
Property taxes
Municipalities could also offer one time capital grants or ongoing subsidies. Additional incentives to
private developers would need to be administered through a Community Improvement Plan, Municipal
Capital Facilities Agreement or similar provision to address anti bonusing provisions of section 106 of the
Municipal Act.
What are best practices/options we have seen in other communities?
Neither Toronto norMississauga offer financialincentivesthrough their IZ programs.Prior to Bill23,
Ottawa was investigating the potential for financial incentives in the form of fee waivers or tax
increment equivalent grants and reduced taxes for those who own/rent an affordable unit to mitigate
impacts from assessed value that do not reflect affordable prices.
An American study found that financial incentives to support IZ programs were relatively uncommon.
“…\[I\]ncentives include waivers, reduction or deferral of development and administrative fees and/or
financing fees (17%), expedited processing (13%), concessions on the size and cost of finishes of
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affordable units (11%), tax relief abatement (6%), and direct public subsidy (4%).”
What does the financial model tell us?
Financial incentives have a direct positive impact on the financial viability of development. Every dollar
of upfront fee waivers or capital subsidy has approximately one dollar impact on costs, residual land
value and development viability (with some devaluation based on timing of the incentive in the
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development lifecycle.) The impact of ongoing incentives like property tax waivers or operating
subsidies are proportional to their net present value.
The mandatory incentives are incorporated into the pro forma model. These incentives have a modest
positive impact on the financial viability of the IZ program. The total value of the mandatory fee
exemptions, assuming a one-bedroom IZ unit in a condominium tower in Kitchener, is approximately
$30,000 per IZ unit (Table 8).
Table 8. Value of Mandatory Incentives
Fee or ChangeValue(Kitchener)
Regional Development Charges$20,044
City Development Charges $8,399 Central,
$10,854 Suburban
Community Benefits Charges$0 CBCs have been established in Waterloo but
not in Cambridge or Kitchener
Parkland Dedication Fee$2,020 typical per Bill 23
Total $30,463-$32,918
What we heard
Through public engagement with the development industry and public, staff have conveyed the
principle that to work, an IZ policy would need to be financially sustainable over the long term. This
means that it can’t rely on significant municipal subsidy.
Possibly as a result of messaging that significant municipal subsidy would not be available for an IZ
program, the development industry did not express significant interest in financial incentives beyond the
mandatory incentives.
There was no public consensus on providing financial incentives to help offset the impacts of
inclusionary zoning on development viability. Some expressed concern with providing any incentives,
including the mandatory incentives. The most interest in additional financial incentives was for
developments that provide better affordability outcomes than under the mandatory policy.
Recommendations
Staff do not recommend additional financial incentives for IZ units in addition to the mandatory
Development Charges, Community Benefit Charges and Parkland Dedication Fee exemptions.
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Implementation and Administration
IZ programs, like all affordable housing programs, require active and ongoing administration, monitoring
and program adjustment to ensure that they continue to provide affordable housing to eligible
households over the affordability term. Without appropriate oversight and enforcement, affordable
units secured through IZ programs can be lost through increased rents, subletting, illegal sale or
foreclosure. Reports from some jurisdictions suggest that inconsistent administration can make it more
difficult for certain eligible households to obtain IZ units, which can undermine program effectiveness,
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public support and trust. In extreme cases, inadequate monitoring and enforcement has led some
xi
municipalities to release the affordable units back into the market and abandon the program entirely.
Program monitoring and data collection are important to meet the legislative requirements of IZ,
evaluate how well the program is meeting its objectives and to inform any program modifications in
response to changing housing needs or land and development economics.
Implementation and administration of IZ generally involves the following key tasks:
Incorporating IZ requirements into development approvals processes
Help developers understand their options/obligations to meet IZ requirements
Review and approve developments that are consistent with IZ policies and regulations
Coordinate municipal approvals with IZ housing administrators
Establish legal agreements and register agreements on title
Administering IZ units
Set and monitor affordable rents or prices
Select owners/tenants who meet the eligibility requirements
Monitor eligibility over time and manage unit turnover
Enforce IZ agreements
Monitoring and reporting program outcomes
Track key housing metrics to inform program evaluation and updates
Report annually on IZ program
Review and refine program in accordance with regulations and changing housing needs/land
economics
Incorporating IZ Requirements into Development Approvals Processes
Area municipal planning staff implement Official Plan policies and Zoning By-laws that set out the
requirements for IZ through the development approvals process. Many jurisdictions develop IZ
Implementation Guidelines which can help municipal staff communicate how program parameters such
as the number of IZ units or affordable rents and prices will be calculated and where there may be
flexibility for different development scenarios. Examples of Implementation Guidelines include City of
xii
Toronto’s Draft Inclusionary Zoning Implementation Guidelines, City and County of San Franciso’s
xiii
Inclusionary Affordable Housing Program Monitoring and Procedures Manual, and the City of
xiv
Chicago’s Affordable Requirements Ordinance Rules.
51
Contents of the IZ Implementation Guidelines should communicate in plain language any IZ provisions
set out in Ontario Regulation 232/18 under the Planning Act along with other program requirements as
deemed appropriate, including:
Size of developments or redevelopments subject to the IZ by-law
Geographic areas subject to IZ by-law
Any exemptions from the by-law
Income range for households that would be eligible for IZ affordable housing units
Housing types and sizes of units that would be authorized as IZ affordable housing units
Tenure of units subject to IZ policies
Number of affordable housing units, or the gross floor area to be occupied by the affordable
housing units
Duration that affordable housing units will be maintained as affordable
Measures or incentives to support the creation of IZ units and how they will be calculated
Rents or prices of IZ units and how they will be calculated
The approach to determine the percentage of the net proceeds to be distributed to the
municipality from the sale of an affordable housing unit, including how net proceeds would be
determined.
The circumstances in and conditions under which offsite units would be permitted
Accessibility requirements for IZ units
Location of IZ units within buildings
Timing of IZ unit construction
Municipalities can also consider requiring developers to submit an affordable housing plan as part of a
complete application that demonstrates how the developer plans to address the requirements set out in
the IZ Implementation Guidelines. The plan and the details therein would form the basis of an
agreement registered on title of the lands proposed to be (re) developed pursuant to Section 35.2 (2)(i)
of the Planning Act.
Recommendations
The Partners should develop IZ Implementation Guidelines in conjunction with an IZ program.
The Partners should work with area municipal and Regional solicitors to create a template for
basic terms and conditions and signatories for any legal agreements that will be required as part
of an IZ program.
Administering IZ Units
Successful IZ programs in the US and Canada are typically administered by government agencies or
publicly funded non-profit housing organizations (e.g. arms-length Housing Authorities or Land Trusts)
and supported with adequate and scalable revenue sources to reflect the size and complexity of the IZ
i
program over time. Publicly coordinated,administered and funded IZ programs have been found to
result in better tracking and monitoring of IZ affordable units compared to programs administered by
the private sector. IZ programs administered by a government agency, or arm's length housing
organization benefit from the alignment of organizational mandates with the objectives of IZ, as well as
52
a centralized and consistent monitoring approach. In some cases, the public sector may be able to
leverage existing affordable housing administration expertise and resources to support implementation.
Some development industry representatives interviewed for this project indicated that they do not have
the capacity, resources or interest to manage IZ units over the long term. Their preference would be for
a single administrative body across Waterloo Region to oversee and manage the units. The Region of
Waterloo has expressed an interest in administering an IZ program.
Table 9. Comparison of Administrator Options
Advantages / DisadvantagesRegion of Waterloo Non-profit
AdvantagesEfficient - Could leverage Potentially Lower Cost – Non-
existing staff expertise and some profit may be able to operate at
extra capacity (in short term) lower cost (lower salaries) or
secure additional outside
funding
Predictable - Existing positive Capacity building –Opportunity
working relationship and trust to build capacity and expertise
between Region and area in Non-profit housing sector
municipalities
Easy -Could be established fairly
quickly and easily through Joint
Service agreement or similar
model (precedents exist)
High Stability over Long Term -
ROW and municipal mandates
unlikely to change, lower staff
turnover etc.
Accountability and Control –
ROW staff more directly
accountable to senior
management council
Disadvantages Potentially Higher Cost –Region Low Capacity –Existing housing
may have higher salaries and non-profits already facing
may not have access to external capacity challenges
funding opportunities
Capacity building –reduced Uncertain Interest/Expertise -
opportunity to build community Confirmation needed that NFPs
capacity for program would be interested and could
administration develop the expertise to carry
out the work
Low stability over long term -
Changing NFP priorities and/or
potentially high staff turnover
may reduce capacity and
program stability
53
Eligibility and Waitlists
Eligibility requirements are maximum income levels and other criteria that households must meet to
rent or own an IZ unit. These criteria help ensure that affordable units are available to those who need
them. A waitlist is a list of prescreened individuals and households that is maintained by an
Administrator to create a transparent and efficient process for matching those needing housing with
available IZ units. Waitlists are typically used to support the tenant selection process for IZ rental units.
Toronto’s Draft Inclusionary Zoning Implementation Guidelines require that an eligible household’s
gross annual household income cannot exceed four times the annual rent of the IZ unit. Toronto also
identifies additional household eligibility criteria to ensure appropriate allocation of units, including:
a. Minimum age of 18;
b. Have legal status in Canada;
c. Not be in arrears with a social housing provider or are in arrears but have an active
payment plan in good standing;
d. Have good credit history
e. Not have a lease for another rental unit at the time of occupation (some flexibility to
overlap may be needed)
f. Not own, in whole or in part, any form of residential real estate in Canada or abroad.
g. Have limited assets and wealth
h. Occupancy standards, including a minimum of one and a maximum of two persons per
bedroom; A maximum of one bedroom for spouses.
Many US jurisdictions use Area Median Income (Average) to determine eligibility. While the
measurement of income differs, the same general principle used by Toronto typically applies: that is,
eligible households must have a maximum income that corresponds with the level of affordability of a
unit.
The City of Toronto and several US jurisdictions have adopted IZ programs that rely on private rental
building owners or unit owners to identify eligible renters and owners. While this approach has the
benefit of reducing administrative cost to the administrator of the IZ program, there are risks to leaving
tenant or owner selection entirely in the hands of property management companies or private unit
owners, including lack of consistent or transparent application of eligibility rules. Lack of transparency
and oversight in the selection process could lead to problems with fair access to units, including the
possibility that IZ units will be made available to eligible friends and family first before they are available
to the broader community or that units may be made available to ineligible households.
Requiring IZ unit owners to select tenants from a centralized waitlist of eligible tenants is a more
efficient approach for both tenants and administrators. It enables advance screening and speedy tenant
selection, and reduces the sign up burden for tenants by enabling them to sign up to a single centralized
waitlist rather than multiple waitlists. Administrators benefit from more consistent and compliant
implementation which can help reduce the need for enforcement. The process by which IZ affordable
units are awarded to eligible households should be open and transparent and set out in publicly
available guidelines; selection options could be either through first served basis or by lottery.
Feedback from rental housing providers operating in the Region of Waterloo demonstrated a willingness
to work with an IZ administrator to identify potential eligible tenants (e.g. from a waitlist) but they also
54
expressed a preference to retain decision making authority over final tenant selection. Rental housing
providers felt it was important than they had a final say on the tenant to reduce financial risk and
minimize possible landlord-tenant or tenant to tenant conflicts.
Recommendations
The Partners should continue to explore options, costs and capacity for the Region of Waterloo
to serve as the administrator of an IZ program.
The IZ Administrator should be responsible for developing a waitlist of eligible tenants and
owners in accordance with the IZ Implementation Guidelines.
Approaches to select from the waitlist should consider first come first served and by lottery.
Owners of rental buildings should maintain final decision making authority over tenant selection
from the waitlist.
th
Eligible households should be those who are within the moderate income range (below the 60
percentile of the income in the regional market area). In addition, the gross annual income of an
eligible household should not exceed 3.3 times the affordable rent of an IZ rental unit. Other
eligibility criteria should be considered.
Monitoring and Reporting
The Planning Act requires municipalities to establish a procedure for monitoring to ensure that the
required number of affordable housing units, or the required gross floor area to be occupied by
affordable housing units, is maintained for the required period of time. The primary tool to ensure
compliance with the terms of IZ policy and by-law is the legal agreement that developer is obliged to
enter into with the subject city (and potentially also the administrator – e.g. The Region of Waterloo).
Ongoing monitoring and enforcement of the agreement would occur through the annual reports by the
property owners regarding unit rents/prices, to be submitted to the administrator.
Under the Provincial regulations, municipalities are also required to publicly report on the status of the
affordable housing units required in the IZ by-law every two years. The report must contain:
1. The number of affordable housing units.
2. The types of affordable housing units.
3. The location of the affordable housing units.
4. The range of household incomes for which the affordable housing units were provided.
5. The number of affordable housing units that were converted to units at market value.
6. The proceeds that were received by the municipality from the sale of affordable housing units.
The Planning Act further requires municipalities to update their housing assessment reports within five
years of IZ official plan policies coming into effect. The purpose of this regular update is to determine
whether any aspects of the IZ program need to be modified.
Recommendations
The Partners should continue to work to create a consistent approach and centralized location
for monitoring reporting.
55
Any IZ program should be regularly reviewed and adjusted in accordance with any findings from
the biennial IZ housing reports and 5-year housing assessment updates.
56
Appendix 1– Jurisdictional Scan of Inclusionary Zoning (IZ) Frameworks
City of Toronto City of Vancouver
Require IZ as a percentage of large-scale developments and incentives in the form of bonusing for affordable
Approach
Require IZ within PMTSAs at an assigned set-aside rate rentals/ownership in specific areas of the City
The City of Toronto has adopted an IZ policy that would require new - In 2019 it was found that the City of Vancouver was not meeting is rental housing ta
residential developments to include affordable housing units, creating vacancy has been less than 1% since 2014
mixed-income housing. In areas that are designated IZ Market Areas and - The City of Vancouver has density bonusing measures in place as an incentive for developers to
BackgroundPMTSAs a subset of the MTSAs.include affordable housing and amenities
-In 2017 the City of Vancouver also implemented Inclusionary hou
developments that are required. Intended to deliver deeper affordability for moderate and lower
income households
Mandatory or Mandatory for all large developments
Mandatory
Voluntary Voluntary for all developments within the specified areas
Median Total Income (2020) (CAD $)Median Total Income (2020) (CAD $)
Income All families: $96,700All families: $98,640
Figures Couple families: $104,960 Couple families: $104,350
Lone-parent families: $59,120Lone-parent families: $60,710
For developments within MTSAs Large Developments:
Toronto OP IZ Map - Involve a land parcel or parcels having a total site size of 8,000 m2 (1.98 acres) or more, or
Toronto ZB IZ Amendment- Contain 45,000 m2 (484,375 ft.2) or more of new development floor area
- Meet at pre-app phase to discuss the appropriate mix of incomes, household types and tenures
Developments
- Required as a condition of development approval – applicant will enter into a Housing Agreement
Impacts
- Unencumbered dirt sites are the priority mechanism to enable 20% social housing
Bonusing:
- In specific zones set out by Density Bonus & Public Benefits
- Figure 1: Shows Density bonus Zones in Vancouver
-Tabe 2: Density Bonus Contributions Rates
-Bonusing comes in the form of cash in lieu for social housing
-Purpose built rental project with fewer than 140 units (until 2026)Large Developments:
2
- Condo with fewer than 100 units or 8000mGFA - Where an unencumbered dirt site is and cannot be provided, the transfer of ownership in the for
- Non-profits, student residences, and residential care homes of an Air Space Parcel may be required – upon evidence that the applicant cannot provide such
Bonusing:
Exemptions
Found in Table 3: Exemptions from Density Bonus Contributions
- Retention of pre-1940s houses – subject to meet the Zoning & Development By
- Secured market rental housing – subject to meet the Zonin
-For-profit affordable rental housing –subject to meet the Development Cost Levies (DLC) By
City of Toronto City of Vancouver
- Social housing – subject to meet the DLC By-law definition and receiving approval from the Housing
Policy group
-Seniors supportive or assisted housing that is secured market rental
rental increase limit and meeting the Zoning & Development By
- 35% below market rental units covering 35% of secured market rental floor area
- Financial Incentives are only permitted should the application propose Buildings with 100% residentialGFA as secured rental housing and 20% of the floor area as below market
additional affordable housing units (above-and-beyond IZ set-aside rental are eligible for negotiated (case-by-case if a contribution is needed) community amenity contributions
requirements) and/or units with deeper levels of affordability. are reasonable to secure rental housing
For below rental projects the Faily Room: Housing Mix Policy for Rezoning Projects apply
- 35% defined as 2 or more bedrooms
Typical approach to bonusing is cash is contribution to the City for the provision of social housing ranging from
$39/m2 to $1,410/m2 for development above and beyond permissions in base density
Incentives &
- (without inflation index calculated) https://vancouver.ca/home
Bonusing
development/annual-inflation-index.aspx (so with the 2022 inflation rate it would be
$42.43/m2)
Bonusing:
- The City of Vancouver’s IZ zoning uses bonusing to provide affordable housing in the form of:
- Base density with no density bonus
- Additional density in exchange for affordable housing or amenities
-Cash in-lieu – for specific zones that allow for extra density, up to a specified maximum FSR. They are
determined by the density bonus contribution rate
2022 –require 5-10% of condo developments as affordable housingLarge Developments:
By 2030- increase requirements t 8-22% - 30% of total residential floor area (20% social housing target and 10% moderate income housing
target
Set-aside Rate
-Unencumbered dirt sites are the priority mechanism to enable 20% social housing
Bonusing:
- based on the net additional floor area above base density in
Unit Mix section 6 of the draft IZ Large Developments:
- 6.1. - Reasonable efforts shall be made to satisfy Section 3.0 (Unit The design of the social housing must comply with the Housing Design
Guidelines) of the City's Growing Up urban design guidelines with following:
respect to the unit mix and sizes of IZ affordable housing units-Location and Site Planning
Unit Design - 6.1.1 - 25% of IZ affordable housing units are 2-bed or 3-bed units - Indoor and outdoor Amenity Spaces
Requirements
and at least 10% of IZ affordable housing units are 3-bed - Dwelling Unit Floor Areas
- 6.1.2 – minimum is 87 sqm for 2-bed IZ affordable housing and - Wheelchair Accessible and Adaptable Units
100 sqm for a 3-bed IZ affordable housing average IZ affordable -Energy and Environmental Design
housing unit is 90 sqm for 2-bed units, 106 sqm for 3-bed units - Crime Prevention Through Environmental Design
- Construction Standards
58
City of Toronto City of Vancouver
- 6.2 – unit share shall be proportional to those of those units at For below market rental projects, the Family Room: Housing Mix Policy for Rezoning
market-rate- 35% defined as 2 or more bedrooms
-6.3 – 1-bed units are preferred over studios – 1-beds may replace
studios to satisfy 6.2
- 6.4 – minimum unit sizes by bedroom type are at least
proportional to market-rate unit sizes
- 6.5 – For minimum unit size see section 6.5.1 and 6.5.2
- 6.6 - indistinguishable – in appearance, access, quality, and
functionality – from market units
- 6.7 – must have central heating and cooling with individual
controls
-6.8 – the number of affordable units with a balcony, patio, and/or
terrace shall be proportional to the number of market units
- 6.9 – laundry facilities with the same access and conditions as
market-rate (ensuite or common laundry)
- 6.10 - shall have equivalent finishes, fixtures, and features to
market-rate – do not need to be identical but need to be new and
of good quality in terms of performance, durability, and
appearance
Setting rents and ownership prices based on new income-based definitions Large Developments:
of affordable housing in the official plan. This link defines affordability: - Moderate incoming housing: $30,000 to $80,000/year for rental
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-- Affordable rental rates
172507.pdf-If development provides units at the outlined prices cash in lieu is not required
Recommended Affordable Rent Definition:
- To be eligibility for new tenants: 25% of income spent on housing and household income cannot
Affordable rental housing and affordable rents means housing where the
exceed 4 times annual rent
total monthly shelter cost (rent plus utilities) is at or below the lesser of:
Building operator will verify eligibility for existing tenants in Moderate Income Rental Units
(1) one times the average City of Toronto rent; or
the Vancouver Charter
Depth of
(2) 30% of the before-tax monthly income of renter households in the City
- Will test tenants every 5 years after initial occupancy
Affordability
of Toronto as follows:
- Existing tenants cannot have a household income that exceeds 5 times the annual rent (20% of
- studio units: one-person households at the 50th percentile
income)
income; ($32,486)
- If a resident fails to qualify operator will issue a notice to end tenancy with BC Residential Tenancy
- one-bedroom units: one-person households at the 60th percentile
Act
income; ($43,600)
- two-bedroom units: two-person households at the 60th percentile
income; ($73,901)
-three-bedroom units: three-person households at the 60th
percentile income. ($74,301).
Option for Affordable units can be provided as either affordable ownership or Large Developments:
affordability affordable rental at the discretion of the developer.
59
City of Toronto City of Vancouver
Ownership or - Rental units can be privately owned but units will be secured as renta
Rental rents through a Housing Agreement with the City of Vancouver
Affordability 99 years60 years or the life of the building, whichever is greater for all social housing through legal agreements such as
Period section 565.2 of the Vancouver Charter
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-https://bylaws.vancouver.ca/bulletin/bulletin-density-bonus-zoning
172128.pdfhttps://bylaws.vancouver.ca/zoning/policy-below-market-rental-
City of Toronto IZhttps://vancouverplan.ca/wp-content/uploads/Vancouver-Plan-2022-09-23-
https://www.toronto.ca/wp-content/uploads/2021/10/8672-CityPlanning-https://vancouver.ca/people-programs/creating-new-market-rent
Sources Draft-Inclusionary-Zoning-Implementation-GuidelinesOct2021.pdf https://guidelines.vancouver.ca/guidelines-technical-housing-design.pdf
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-https://vancouver.ca/home-property-development/density-bonus
172507.pdf ,Density%20Relaxations%20for%20Amenities%20(in%2Dkind),referred%20to%20as%20inclusionary%20zoning
https://www.toronto.ca/legdocs/bylaws/2021/law0941.pdfhttps://vancouver.ca/home-property-development/annual-inflation
https://www.toronto.ca/legdocs/bylaws/2021/law0940.pdf
60
61
City of Ottawa Montgomery County, MD
Mandatory to require a set-aside rate that uses AMI that requires MPUDs to be a part of
Approach
Require IZ within PMTSAs via an assigned set-aside rate development within four major categories of development
IZ is currently under review -final report due in 2023-Montgomery County’s moderately priced dwelling unit (MPDU) program is one of
-Ottawa had the third highest rents for major urban centre in Ontario (2018-the US’s first, IZlaws. It was implemented in 1973 to help meet the goal of providing
2020) a full range of housing choices in the county for all incomes, ages and household
- intention of IZ is to provide more purpose-built rentals sizes. An MPDU is a county government-regulated unit that is required to be
affordable to households earning 65 percent of area median income (AMI) for
- Target to have 20% of all new res units be affordable (70% of which are within
garden-style apartments and 70 percent for high
the definition of core affordability and 30% within market affordability) terms
-The program’s implementation involves both the public and private sectors, with the
- IZ not to target households with the definition of “core affordability”
local government performing regulatory and administrative functions, and the
building industry producing the housing.
Affordability Targets: Low to moderate - those people in the lowest 60% income
Background- Between 12.5 and 15 percent of the total number of units in every subdivision or
distribution for regional market
high-rise building of 20 or more units must be moderately priced, according to the
-Ownership calculation will include households with incomes in the lowest 60%
MPDU regulation.
of the income distribution
- Effective October 31, 2018, developments with less than 20 but more than 10 units
- Rental 60% for renters of the income distribution
are required to make a payment to the Housing Initiative Fund in lieu of an MPDU
requirement on-site.
-Three agencies within Montgomery County are key to the implementation of the
MPDU program: Montgomery County Planning Department, Department of,
Housing and Community Affairs (DHCA), and Housing Opportunities Commission
(HOC).
Mandatory or
MandatoryMandatory
Voluntary
Median Total Income (Ottawa-Gatineau) (2020) (CAD $)-The most recent 5-year estimate for Montgomery County’s median household
Income All families: $107,290income is $100,352 (source: 2012-2016 American Community Survey 5
Figures Couple families: $117,110 Estimate).
Lone-parent families: $65,050 - AMI figures
For developments in MTSAs and lands subject to Community Planning Permit Systems In Montgomery County, affordable housing generally falls into four categories:
PMTSA Map26 PMTSAs12.5-15% is based on building typology for the four categories
zoned one-half acre or smaller that are served by sewer or water lines. Subdivisions not
serviced are exempt
*Considering including an Official Plan policy pursuant to paragraph 10 of subsection 3(1)
- Income-Restricted Affordable Housing: A moderately priced dwelling unit (MPDU) is
Developments
of Ontario Regulation 232/18 that would allow off-site units only where those units are to
built under a government regulation or a binding agreement requires the unit to be
Impacts
be assumed by a non-profit housing provider.
affordable to households at or below the income eligibility for the MPDU program.
Under this program, income requirements are usually 65 percent of area median
IZ will apply to new developments and additions to existing buildings for 50 units or more
income (AMI) for garden apartments, and 70 percent (AMI) for high
residential units or 3,500 square metres of residential GFA even if there is less than 50
apartments.
units
- Income-Restricted Workforce Housing: Chapter 25B of the Montgomery County
Code defines housing that is affordable to households earning up to 120 percent of
Offsite units
62
City of Ottawa Montgomery County, MD
-must be in the same PMTSA as parent developmentAMI or less as workforce housing. Income
-must be an added benefit (set-aside exceeded) or mix of unit types must be government regulation and workforce housing is negotiated on a project
better than on parent development basis. When a master plan refers to workforce housing as a part of its affordable
- similar quality (similar finishes) housing goals or requirements, household incomes are limited to 100 percent of
- off-site must be ready for occupancy before or contemporaneous the parent area median income. Workforce housing rents must be 20 percent lower than
developmentmarket rents.
- do not need a ZBA but need to prove intent of Op is maintained
- Market-rate Affordable Housing: Market-rate affordable dwelling units rent at prices
affordable to households earning no more than 80 percent of area median income,
based on unit and household sizes. These units are typically found in older buildings
and their rents are lower than the median rent for the planning area. Market
affordable dwelling units are not income-restricted by government regulation and
not defined in the Montgomery County Code.
- Rent-Restricted Affordable Housing: This term is not currently defined in the
Montgomery County Code or commonly used but describes housing where rent
increases are limited and no income tests are required for the tenants.
preservation of market-rate affordable housing may require an agreement that both
establishes the baseline rent (priced to be affordable at 80 percent of AMI) and rent
restrictions (such as requiring a rent increase only according to the voluntary ren
guideline).
N/A-If you provide 25 percent MPDUs, you are exempt from paying transportation and
Exemptions school impact taxes under §52-49 and §52
- Other exemptions are outlined within various sections such as unit design.
Investigating the potential for financial incentives in the form of fee waivers or tax - If you provide 20 percent MPDUs, you are not required to provide any other
increment equivalent grants offered through a Community Improvement Plan category of public benefit points for optional method projects in the C/R and
Incentives &
employment zones.
Bonusing
Possible reduced taxes for those who own/rent an affordable unit to mitigate impacts -If you provide 25 percent MPDUs, you are exempt from paying transportation and
from assessed value that exceeds affordable pricesschool impact taxes under §52-49 and §52
Determined by GFA not number of units10% for ownership across all PMTSAs *pre Bill 23- 12.5% - 15% is mandatory in the Bethesda Downtown Sector Plan area through the
10% for purpose-built rentals in PMTSAs *pre Bill 23 Bethesda Overlay Zone.
-Effective on October 31, 2018, planning areas where 45 percent of the United States
City of Ottawa staff was directed to consider a 20% set-aside rate but found 20% was Census tracts have a median income of 150 percent of Montgomery County’s
Set-asideRate
unfeasible.
median income will have a legal requirement to provide 15 percent MPDUs.
- A third-party financial assessment recommends harmonized requirements - The planning areas currently included in the requirement are Goshen, Lower Seneca,
across all PMTSAs Darnestown, Travilah, Potomac, North Bethesda and Bethesda
63
City of Ottawa Montgomery County, MD
-Unclear on most aspects of unit designTo help make MPDUs available at an affordable price, DHCA allows, among other things:
-Requiring set-aside rate by GFA gives more flexibility to require larger unit sizes -MPDUs may be smaller in terms of square footage than market rate units, not to
and accessible unitsexceed maximum sizes specified in the applicable regulations.
- Unit mix requirements in the OP policies or zoning regulations to ensure that a - The finishes of MPDUs may be of a lower standard than for market rate units (for
sufficient number of multi-bedroom units are set-aside as affordable example, Formica countertops instead of granite, and/or standard builder grade
cabinetry instead of hard wood finishes, standard builder grade plumbing fixtures
instead of top-of-the-line fixtures, etc.).
- In single-family detached subdivisions, MPDUs may be single
- Some interior space, such as basements, third bedrooms, and lofts, may be left
unfinished, and extra bathrooms may be roughed
minimum specifications are met per the applicable regulations.
Unit Design Further design guidelines for MPDU developers:
Requirements -Unit types (promote but not required, duplexes or singles in a single detached only
subdivision
- Bedroom mix – single family subdivision must have 3 or more bedrooms unless
waived
- Multi-family dwellings must match the market
- Ensure liveability requirements are met (i.e. bedroom to ba
- Townhome regulations (i.e. back-to-back towns MPDU are prohibited unless
otherwise demonstrated)
- Garden apartments – a mix of MPDU and market rate units are encouraged on a
single garden apartment stairwell
-Locational features, innovative site and building configurations, facilitate access to
MPDUs, permit enough cluster of singles and duplexes, phase construction (MPDUs
are to be built along or before other dwelling units), etc.
thth
IZ Targets: Moderate income households are within the 40 to 60 distributions Maximum Income Limits for MPDU Rentals:
th
- 60 = 30% of total income to be affordable Link:
Depth of - Target is 40-60 See Table 1: (Targets)
-Do not renew leases where earnings are higher than the applicable levels outlined in
Affordability -Ownership = $420,000
the AIM
- It is desired that non-profit could purchase these units and then convert the
units to affordable rentals
Affordable units can be provided as either affordable ownership or affordable rental at Both Rentals and Sale Ownerships.
the discretion of the developer.-The Montgomery County Department of Housing and Community Affairs lists the
Option for income eligibility for the MPDU programs on its website. The agency categorizes
affordability
eligibility by for-sale dwellings and rentals (generally 65 percent of area median
Ownership or income for garden-style, 70 percent of area median income for high
Rental apartments) and for workforce housing (80 to 120 percent of area median income).
-Income limits are based on the area median income set by the United States
Department of Housing and Urban Development (HUD) for a particular fiscal year.
64
City of Ottawa Montgomery County, MD
99-year affordability period for ownership unitsIn 2004, the Montgomery County Council amended the MPDU control period governing for
-Non-profit may purchase the units from for-profit developers and move sale MPDUs from 10 years to 30 years and for rental MPDUs from 20 years to 99 years
Affordability ownership units to rental if possible
Period 25-year affordability period for purpose-built rentals (if and when subject to IZ)After
period ends the City is allowed to take 50% of the proceeds of the sale of an affordable
unit
https://pub-ottawa.escribemeetings.com/filestream.ashx?DocumentId=73819https://montgomeryplanning.org/planning/housing/
https://pub-ottawa.escribemeetings.com/filestream.ashx?DocumentId=73817https://www.montgomerycountymd.gov/DHCA/housing/singlefamily/mpdu/produced.html
https://pub-ottawa.escribemeetings.com/filestream.ashx?documentid=90399 https://www.montgomerycountymd.gov/DHCA/MPDU/mpdu
https://pub-ottawa.escribemeetings.com/filestream.ashx?DocumentId=73822https://www.montgomerycountymd.gov/DHCA/MPDU/mpdu
https://ottawa.ca/en/planning-development-and-construction/official-plan-and-master-memorandum
Sourcesplans/new-official-plan/volume-1#section-7fe49ebf-c933-4670-9794-c17c11fa1235AMI figures
https://documents.ottawa.ca/sites/documents/files/section4_op_en.pdf https://www.housingfinance.com/policy-legislation/montgomery
created-bymontgomery-county-program_o
https://www.montgomerycountymd.gov/DHCA/MPDU/index.html
https://www.housingfinance.com/policy-legislation/montgomery
created-bymontgomery-county-program_o
New York City, NYBoston, MA
Mandatory for all developments that meet criteria for size and number of units.
A combination of mandatory and voluntary IZ policies. Mandatory until zoning changes are
Approach
Based on an AMI calculation. Bonusing is a method of action.
needed to facilitate development otherwise voluntary.
New NYC MIH Program Implemented in 2016 for Mandatory, but originally started as
Known as an Inclusionary Development Policy – first created in 200
Voluntary in 1987. https://www.toronto.ca/wp-content/uploads/2019/11/981e-
CityPlanning-Mandatory-Inclusionary-Housing-in-NYC.pdf
- Since 2022 Mayor Wu has been working with a consultant to lower the threshold
requirements forIDP from 10 to 7 for rental projects and increase the set
from 13% to 20% and deepening affordability.
The City has separated itself into three housing zones (A, B, and C) to recognize price differences
across the City. The three zones were revised in 2015 to set different buyout and off
Background
requirements. The zones determine the amount of on
from 13% to 20% is now required in Zone A and B categories.
Zone category determines a value in calculations for properties. For example, for rental projects
Zone A, contribution for the equivalent of 18% of the total number of units is
Zone Factor of $380,000 per unit; Zone B 15%, $300,000, and Zone C, 15%, $200,000.
https://www.bostonplans.org/getattachment/91c30f77
65
New York City, NYBoston, MA
-Zone A: the neighbourhood median fell in the top third of sales values per square foot
- Zone B: the neighbourhood median fell in the middle third of sales values per square
foot
- Zone C: the neighbourhood median fell in the bottom third o
Mandatory or
Mandatory Mandatory
Voluntary
Median household income USD $70, 663 (2017-2021) in 2021 dollars Median household income USD $81,744(2017-2021) in 2021 dollars
Income Figures
https://www.census.gov/quickfacts/fact/table/newyorkcitynewyork# https://www.census.gov/quickfacts/fact/table/bostoncitymassachusetts/INC110221
Under the proposal, the City Planning Commission and ultimately the City Council
Applies to any residential Proposed Project of ten or more units either:
would apply one or both of these two requirements to each Mandatory Inclusionary
Housing area:
-Financed by the City
-On property owned by the City or the BRA; or
- 25% of residential floor area must be for affordable housing units for
-That requires zoning relief.
residents with incomes averaging 60% AMI ($46,620 per year for a family
of three), or 30% of residential floor area must be for affordable housing
Proposed Policy: IZ
units for residents with incomes averaging 80% AMI ($62,150 per year for a
- Developments that do not need zoning relief (built “as of right”) will still have to
family of three
support income-restricted housing.
- *In addition to one or both of the options above, the City Council and the
- The trigger for participation will be lowered from 10 units to 7 units.
City Planning Commission could decide to apply one or both of the
- Under the new policy, rather than require a set number of inclusionary units,
following options:
requirements will be calculated in square footage, to allow for more flexibility and the
production of family-sized units.
Deep Affordability Option
Developments
Impacts - 20% of the total residential floor area must be for housing units for
Asset Limits
residents with incomes averaging 40% AMI ($31,080 per year for a family
Properties set-aside for incomes of less than 80% AMI: $75,000
of three) No direct subsidies could be used for these units except where
Properties set-aside for incomes more than 80% AMI: $100,000
needed to support more affordable housing
Applicants for rental units where all household members are over the age of 65 years: $250,000
Workforce Option
Income guidelines vary by development, but most BPDA opportunities are available to renters
- 30% of the total residential floor area must be for housing units for
with incomes up to 70% and homebuyers with incomes up to 100% of are
residents with incomes averaging 115% AMI ($89,355 per year for a family
(AMI).
of three)
- No units could go to residents with incomes above 135% AMI
($104,895/year for a family of 3)
Options selected will be chosen by the City Council during their vote on the rezoning
of the subject property.
- The Workforce Option and Deep Affordability Option can only be mapped
in conjunction with one of the other options, and no public funding, as
66
New York City, NYBoston, MA
defined in the Zoning Resolution, is permitted for the Workforce Option.
The Workforce Option is not available in Manhattan Community Boards 1-
8.
No direct subsidies could be used for these affordable housing units
- This could not apply to Manhattan Community Districts 1-8, which cover
south of 96th Street on the east side and south of 110th Street on the west
side
N/A-The Proposed Project is financed as one entity and 40% or more of the units within the
proposed project are income restricted or otherwise preserved as affordable;
- The Proposed Project is a Dormitory
- As specified in applicable sections in the zoning code
Exemptions
Proposed projects may choose to meet their IDP requirements by contributing the equivalent of
18% of the total number of units multiplied by the greater of either the Zone Factor for (Zone A,
B, or C) or half the difference between the average actual market rate price and the affordable
price per unit, by unit type
Affordable housing is mandatory and permanent. N/A
Incentives &
Bonusing is available for developments
Bonusing
Mandatory Inclusionary Housing will result in more affordable housing for a wider Citywide, Proposed Projects subject to IDP may meet their requirements by designating 13% of
range of New Yorkers, all of it required as a condition to build housing on the land. It the total number of units On-site. (a higher rate is being st
is responsive to neighborhood needs, with a set of income mix options that the City
Planning Commission and Council can work together to apply within each rezoned
area through the land use process.
Set-asideRate
- 25% of residential floor are (RFA) 60% AMI ($46,620 per year for a family of three),
or
- 30% of RFA 80% AMI ($62,150 per year for a family of three)
-additional policies can be put in place (said in development impact section)
Unit design follows the HPD design guidelines for New Constructionthat address the All IDP Units are comparable in design and quality to the market
following needs: - Not be stacked or concentrated on the same floors
- Accessible design + construction - Be consistent in bedroom count with the entire proposed project
- Equitable & healthy buildings - Have comparable square footage as units in the rest of the Proposed project
Unit Design
-Sustainability
Requirements
- Flood resistant
- Active design
- Aging in place
-Commercial and retail spaces
67
New York City, NYBoston, MA
Generally speaking, Inclusionary units must be affordable to low income households Affordable to households earning between 80% to 120% of the Boston Area Median Income
Depth of earning up to 80% of Area Median Income (AMI) and rents capped at 30% of 80% of (AMI). AMI found here: Find out if you qualify
Affordability AMI. However, in some Special Districts, depending on the district, a density bonus
may be granted for moderate and/or middle income units (125% -175% AMI).
Option for Both rental and ownership Both rental and ownership
affordability
Ownership or
Rental
Permanent30 years, with a subsequent extension of 20 more years at discretion of BRA, for an effective
Affordability Period
total of 50 years.
https://www1.nyc.gov/assets/planning/download/pdf/plans-
https://www.bostonplans.org/projects/standards/inclusionary
studies/mih/mih_report.pdf
IHP
https://www.jpnc.org/development-guidelines/inclusionary
https://www.nyc.gov/site/planning/zoning/districts-tools/inclusionary-housing.page
zoning/#:~:text=To%20ensure%20that%20there%20are,Area%20Median%20Income%20(AMI)
https://zr.planning.nyc.gov/article-ii/chapter-3#23-012
http://www.bostonplans.org/housing/income-asset
https://zr.planning.nyc.gov/appendix-f-inclusionary-housing-designated-areas-and-
Sources
mandatory-inclusionary-housing-areas
https://www.bostonplans.org/news-calendar/news
https://www.nyc.gov/assets/hpd/downloads/pdfs/services/hpd-design-guidelines-
strategy-for-inclusive-growth-b
for-new-construction.pdf
https://www.bostonplans.org/getattachment/da67d384
https://www.bostonplans.org/getattachment/91c30f77-6836-43f9-85b9-f0ad73df9f7c
City of Mississauga
Approach
Require IZ within PMTSAs via an assigned set-aside rate
To provide a range of affordable prices and rents, the City, in consultation with the Region of Peel, will establish maximum
annual basis during the affordability period for affordable ownership housing units and affordable rental housing units as follows, and in
accordance with Implementation Guidelines:
- one-bedroom units will be priced at or below the maximum purchase price for the 4th income decile or rented at or below the maxim
Backgroundthe 4th renter income decile;
- two-bedroom units will be priced at or below the maximum purchase price for the 5th income decile or rented at or below the maxim
the 5th renter income decile; and
- three-bedroom units will be priced at or below the maximum purchase price for the 6th income decile or rented at or below the maximum rent
for the 6th renter income decile. The City also receives a portion of the net proceeds from the sale of affordable ownership
Mandatory or Mandatory minimums and funding/incentives
Voluntary
68
City of Mississauga
Median Total Income (Toronto) (2020) (CAD $)
All families: $96,700
Couple families: $104,960
Income Figures
Lone-parent families: $59,120
Developments ImpactsRequires affordable housing units in new developments in the Major Transit Station Areas (MTSAs). More specifically new/redev
proposing 50 or more residential units, or 3,600 sqm or more of GFA, and located within specified IZ Areas. The percentage of GFA in Ownership
Housing and rentals vary depending on each specific IZ Area, and the time period. This will provide a range of affordable pri
IZ By-laws will not apply to:
- long-term care buildings, retirement buildings, hospices, staff/student residences, group homes, or not-for profit buildings;
- Region of Peel or Peel Housing Corporation projects;
- approved development, as specifically identified as exempt in the zoning by-law, that is already subject to an affordable housing contribution
requirement as of June 22, 2022. IZ By-laws will apply to additional development permissions for such lands;
- development or redevelopment meeting the exemption criteria under the Planning Act or related Ontario Regulations; and
Exemptions
- notwithstanding 7.3.2, in no case will IZ By-laws apply to development or redevelopment of less than 10 residential units.
- Projects where non-profit housing provider has an interest that is > 51% and > 51% of units are affordable.
- Projects with rezoning and / or OPA application(s) along with a subdivision or condominium application at the time the IZ OP
adopted.
-Projects with a building permit or site plan application at the time the IZ By-law is passed.
Financial incentives will not be provided for affordable housing units provided in accordance with Policy 7.3.2 of this Plan.
Incentives & Bonusingidentify reductions to parking rates for affordable rental housing units and affordable ownership housing units in accordance with
recommendations of City-wide parking studies.
- Mississauga’s IZ Official Plan Policy (August 10, 2022): After an initial phase-in period, Mississauga’s Official Plan requires set
that range from 5% to 10% depending on the location in the city.
Set-aside Rate - Proposed Change to Provincial Regulation O.Reg. 232/18: Currently, there is no upper limit to the set-aside rate in the Provincial
Regulation. The Province of Ontario is proposing to limit the maximum set-aside rate a municipality can require to 5%.
-See Table 2
Unit Design N/A
Requirements
- Mississauga’s IZ Official Plan Policy (August 10, 2022): Mississauga’s current Official Plan policies indicate that housing is affordable if i
costs no more than 30% of gross annual household income. The IZ policy is targeted to housing for moderate
-For affordable ownership units, this equates to prices that are no greater than about 50% to 60% of resale market prices.
- For affordable rental units, this equates to rents that are no greater than Average Market Rent as established by Canada M
Depth of AffordabilityHousing Corporation (CMHC).
- Proposed Change to Provincial Regulation O.Reg. 232/18 : Currently, there are no price/rent requirements in the Provincial Re
Other Provincial policy documents define affordability as housing that costs no more than 30% of gross annual household income.
-The Province is proposing to require that municipalities cannot set the affordable price any lower than 80% of resale prices
ownership units
69
City of Mississauga
-The Province is proposing to require that municipalities cannot set the affordable rent any lower than 80% of Average Market Rent for
rental units.
Option for affordability N/A
Ownership or Rental
- Mississauga’s IZ Official Plan Policy (August 10, 2022): Currently, ownership units must stay affordable for 99 years and rental units must
stay affordable for 25 years (plus a 5-year phase out).
Affordability Period
- Proposed Change to Provincial Regulation O.Reg. 232/18: The current Provincial Regulations do not set any limits to the affordability
term. The Province is proposing to change the regulation so that the maximum affordability period a municipality can require
https://yoursay.mississauga.ca/inclusionary-zoning-policy-for-affordable-housing
Sources Next steps doc
https://www.mississauga.ca/city-of-mississauga-news/news/more-affordable-housing-for-mississauga-inclusionary-zoning
70
Appendix 2 – Planning Act Requirements and HowAddressed
The Table below sets out a comprehensive list of the provisions and requirements and outlines how
each issue is or will be addressed
Planning Act RequirementsHow Addressed
16(4) Official Plan may include IZ policies where Region Official Plan Amendment No 6 Includes
MTSAs have been identified or in community Identifies PMTAS. It was adopted in August 2023
Planning Permit Areas and approved by the Minster in April 2023.
Lower tier municipalities (now forming part of an
upper-tier municipality without planning
responsibilities) will be amending their Official
Plans to identify PMTSAs in ROPA 6 as per the
Planning Act
16(6)OP must include IZ goals and objectivesand Needs to be included in Cities’ Official Plans
measures and procedures to attain these
16(9) Prepare an assessment report before See Assessment Report section of this report
adopting IZ policies
16(10) Assessment reports must be updated The Partners must plan, and budget assessment
every 5 years to determine if IZ policies should be report updates as described in the monitoring
amended and reporting section of this report
16(16) where there is upper planning authority IZ Current regime to be replaced by bill 23 on a date
can only apply where upper tier OPs have PMTSA to be proclaimed. It is expected to be no earlier
identified, delineated and include minimum than Winter 2024.
targets for person and jobs per hectare; as well as
policies requiring lower tier OPs to regulate land
use and minimum building densities in upper tier
official plan
16(15) Where there is no upper tier planningAssuming the regime will be in effect. IZ must be
authorityIZ can only apply where (Area co-incident with or follow updated lower tier OP
Municipal) OPs have PMTSAs identified, policies for MTSAs that include these provisions
delineated and include minimum targets for
person and jobs per hectare, regulations
regarding use and minimum densities for
buildings
17(24.1.2-24.1.3); 17(36.1.2); 34(11.0.6); No action required
34(19.3-19.3.1) IZ zoning by-laws and OP
policies, requirements and standards cannot be
appealed except by the Minster
35.2(1) Council may pass zoning by-laws to give (There are no prescribed standards)
effect to IZ policies under section 16(4). It must
include any prescribed Provincial standards
35.2(2)a an IZ bylaw shall require and specify the See Set-Aside Rate section of this report
number of affordable housing units required or;
the gross floor area required
35.2(2)b an iz by-law shall require that units be See discussion of Duration of Affordability section
maintained as affordable for a period of time of this report
71
Planning Act Requirements How Addressed
(c-d)may require that the affordable housing See discussion onUnit Size and Number of
units meet additional requirements and Bedrooms section of this report
standards specified in the by-law
(e-f) may provide for measures and incentives to See discussion of Incentives and Offsetssection
of this report
support those policies
g)shall require that when the affordable housing See Unit Ownership and Occupation sectionof
units are sold or leased, they be priced or leased this report
at the rent determined under the by-law
(h) shall include the prescribed provisions and Various
provisions about the prescribed matters; and
Ii) shall require that the owners of any to enter See Implementation and Administration section
into agreements with the municipality, dealing of this report
with the matters mentioned in clauses (a) to (h)
and ensuring continued compliance
35.2(3-4) council shall establish a procedure to See Implementation and Administration section
ensure that affordability is maintained of this report
35.2(5) council may authorize the provision of See Incentives and Offsets section of this report
required affordable units offsite
35.2(6) Council may not accept cash in lieu of Cash in lieu not included in by-law or policy
affordable units
(7) Agreements may be registered on titleSee Implementation and Administration section
of this report
(8) The remedies for non-compliance with an See Implementation and Administration section
agreement outlined in section 446 of the of this report
Municipal Act are Applicable (viz right of entry,
adding cost to tax roll, charge interest and apply
liens)
(9) municipalities shall provide prescribed reports See Monitoring and Reporting section of this
and information concerning affordable units. report
O. Reg. 232/18 Requirements How Addressed
1 An analysis of demographics and population in An analysis of all the requirements is addressed
the municipality. in the 2020 NBLC report, The Kitchener Housing
Needs Assessment Report (2020), City of
Waterloo, Need and Demand Analysis (2020), and
Region of Waterloo Housing and Homelessness
Assessment (2019). Cambridge is intends to
ensure are these requirements are addressed
through the Regional Official Plan, A Cambridge
Official Plan Official Plan review, and ongoing
housing studies.
2 An analysis of household incomes in the An analysis of all the requirements is addressed
municipality. in the 2020 NBLC report, The Kitchener Housing
72
O. Reg. 232/18 Requirements How Addressed
3 An analysis of housing supply by housing type Needs Assessment Report (2020), City of
currently in the municipality and planned for in Waterloo, Need and Demand Analysis (2020), and
the official plan. Region of Waterloo Housing and Homelessness
Assessment (2019). Cambridge is intends to
4 An analysis of housing types and sizes of units
ensure are these requirements are addressed
that may be needed to meet anticipated demand
through the Regional Official Plan, A Cambridge
for affordable housing.
Official Plan Official Plan review, and ongoing
5 An analysis of the current average market price
housing studies.
and the current average market rent for each
housing type, taking into account location in the
municipality.
6 An analysis of potential impacts on the housing
market and on the financial viability of
development or redevelopment in the
municipality from IZ by-laws, taking into account:
i. value of land,
ii. cost of construction,
iii. market price,
iv. market rent, and
v. housing demand and supply.
7. A written opinion on the analysis described in This is addressed in Urban Metrics’ peer review
paragraph 6 from a person independent of the dated September 16, 2020.
municipality and who, in the opinion of the
council of the municipality, is qualified to review
the analysis.
Official Plan Policies How issues are addressed
Official plan policies described in subsection 16 (4) of the Act shall set out the approach to authorizing
IZ, including the following:
1. The minimum size, not to be less than 10 See Exemptions section of this report
residential units,of development or
redevelopment to which an IZ by-law would
apply.
2. The locations and areas where IZ by-laws IZ is anticipated to apply to all 24 MTSAs in
would apply. Waterloo Region. Policy requirements are
proposed to be tailor based on the market of
each individual MTSA
3. The range of household incomes for which See Eligibility and waitlist section of this report
affordable housing units would be provided.
4. The range of housing types and sizes of units See Unit Size and Number of Bedrooms section of
that would be authorized as affordable housing this report
units.
73
Official Plan Policies How issues are addressed
5. the number of affordable housing units, or the See discussion of Set-Aside Rate section of this
gross floor area to be occupied by the affordable report
housing units, that would be required.
6. the period of time for which affordable See discussion of Duration of Affordability section
housing units would be maintained as affordable. of this report
7. How incentives would be determined See Incentives and Offsets section of this report
8 how the price or rent of affordable housing See Maximum Rent of Price section of this report
units would be determined
9. the approach to determine the percentage of See Unit Ownership and Occupation section of
the net proceeds to be distributed to the this report
municipality from the sale of an affordable
housing unit, including how net proceeds would
be determined
10. The circumstances in and conditions under See Incentives and Offsets section of this report
which offsite units would be permitted,
11. the circumstances in which an offsite unit See Incentives and Offsets section of this report
would be considered to be in proximity to the
development or redevelopment giving rise to the
by-law requirement for affordable housing units.
12. the procedure required under subsection 35.2 See Monitoring and Reporting section of this
(3) of the Act to monitor and ensure that the report
required affordable housing units are maintained
for the required period of time
13. net proceeds of sale Affordable Ownership not recommended
A by-law and registered agreement may require a
portion of the proceeds of a sale of an affordable
ownership housing unit be distributed to the
municipality (no more than 50%)
14. Offsite Units See Incentives and Offsets section of this report
Offsite units cannot be provided unless there are
circumstances and conditions that need to be
satisfied spelled out in the official plan.
Offsite units must be in proximity to the subject
development, located on lands where IZ policies
apply, and not be double counted
74
Citations
i
Cui, B., Boisjoly, G., Miranda-Moreno, L., & El-Geneidy, A. (2020). Accessibility matters: Exploring the
determinants of public transport mode share across income groups in Canadian cities. Transportation Research
Part D: Transport and Environment, 80, 1-16.
ii
Sturtevant, L.A. (2016). Separating Fact from Fiction to Design Effective Inclusionary Housing Programs. Centre for
Housing Policy. URL: https://ihiusa.org/wp-content/uploads/Seperating-Fact-from-Fiction.pdf
iii
NBLC. (April 2020). The Cities of Cambridge, Kitchener, Waterloo & Region of Waterloo Evaluation of Potential
Impacts of an Affordable Housing Inclusionary Zoning Policy. URL:
https://www.engagewr.ca/13136/widgets/52675/documents/39907
iv
urbanMetrics. (September 16, 2020). RE: Evaluation of Impacts of Inclusionary Zoning Policy – Peer Review
(Kitchener / Cambridge / Waterloo, Ontario) URL:
https://www.engagewr.ca/13136/widgets/52675/documents/39908
v
Wang, R. and Balachandrian, S. (2021). Inclusionary Housing in the United States. URL:
https://groundedsolutions.org/sites/default/files/2021-01/Inclusionary_Housing_US_v1_0.pdf
vi
Randle, J., and Thurston, Z. (2022). Housing Statistics in Canada. Housing Experiences in Canada: Persons with
https://www150.statcan.gc.ca/n1/pub/46-28-
disabilities. Statistics Canada. Release date: June 10, 2022. URL:
0001/2021001/article/00011-eng.htm
vii
CMHC. (2016). Cost of Accessibility Features in Newly-Constructed Modest Homes. URL: https://assets.cmhc-
schl.gc.ca/sf/project/archive/publications/research_insight/68668.pdf?rev=996c7fa5-83b4-4d55-81cb-
863403e3748c
viii
Sturtevant, L.A. (2016). Separating Fact from Fiction to Design Effective Inclusionary Housing Programs. Centre
for Housing Policy. URL: https://ihiusa.org/wp-content/uploads/Seperating-Fact-from-Fiction.pdf
ix
Wang, R. and Balachandrian, S. (2021). Inclusionary Housing in the United States. URL:
https://groundedsolutions.org/sites/default/files/2021-01/Inclusionary_Housing_US_v1_0.pdf
x
City of Chicago. (2020). Inclusionary Housing Task Force Staff Report. September 2020. URL:
https://www.chicago.gov/content/dam/city/depts/doh/ihtf/doh_ihtf_report.pdf
xi
Jacobus, R. (n.d.). Delivering on the Promise of Inclusionary Housing: Best Practices in Administration and
Monitoring. PolicyLink. URL:
https://www.policylink.org/sites/default/files/DELIVERINGPROMISEINCLUSIONARYZONING_FINAL.PDF
xii
\[1\]
City of Toronto. (2021). Draft Inclusionary Zoning Implementation Guidelines. URL: https://www.toronto.ca/wp-
content/uploads/2021/10/8672-CityPlanning-Draft-Inclusionary-Zoning-Implementation-GuidelinesOct2021.pdf
xiii
San Francisco (City and County). (2018). Inclusionary Zoning Affordable Housing Program Monitoring and Procedures
https://sfplanning.org/sites/default/files/documents/legis/inclusionary-affordable-
Manual. URL:
requirements/Inclusionary Affordable Housing Program Manual.pdf
xiv
City of Chicago. (2021). Affordable Requirements Ordinance Rules. URL:
https://www.chicago.gov/content/dam/city/depts/doh/aro/ARO Rules_Oct_2021.pdf
Memorandum
City of Waterloo
To: City of Kitchener
City of Cambridge
Region of Waterloo
From: N. Barry Lyon Consultants Limited
Date: September 22, 2022
Inclusionary Zoning Development Model Update
RE:
User Manual
1.0 Introduction
N. Barry Lyon Cocollectively by the Cities of Waterloo,
Kitchener, Cambridge and the Region of Waterloo to update a financial model that was
previously prepared for the same client group to consider opportunities for Inclusionary Zoning (IZ) in 2019.
This financial model is intended to aid key staff and decisionmakers in testing inclusionary zoning policy
parameters and their impacts on underlying development economics. This memorandum provides further
information on how to utilize the attached financial model, but also how to interpret its results.
2.0 Disclaimer, Model Use and Distribution
The attached Excel file contains spreadsheets related to research and analysis conducted in support of an
assessment of IZ throughout the study area. These spreadsheets have been provided to select staff at the Cities
of Waterloo, Kitchener, Cambridge, and the Region of Waterloo for internal review and testing purposes only.
Any structural changes made may cause the model to cease to function correctly.
The distribution of this material beyond the client group is prohibited. These spreadsheets and their results are
highly sensitive to changes in formulas or data. NBLC assumes no responsibility for the contents of these
spreadsheets after distribution to key staff in the client group. Moreover, NBLC makes no representation with
respect to financial modelling results without detailed study and independent verification.
Inclusionary Zoning Model Manual pg. 1
Kitchener Waterloo Cambridge, Septmeber 2022
NBLC Docket #22-3586
The conclusions and results contained in this analysis have been prepared based on both primary and secondary
data sources. NBLC makes every effort to ensure the data is correct but cannot guarantee its accuracy. It is also
important to note that it is not possible to fully document all factors or account for all changes that may occur in
the future and influence the viability of any development.
A major variable affecting the outcomes of this analysis is the rapidly changing cost of construction. The findings
of this analysis reflect market conditions (revenues and costs) as of mid-2022. The hard costs of high-density
housing have seen dramatic increases over the past two years because of supply chain and labour constraints
related to the COVID-19 pandemic. Combined with rising interest rates, there is currently a significant degree
of uncertainty in the near-term outlook for residential development projects. More importantly, while we have
developed hard cost assumptions using up to date industry information, the actual costing of each project could
vary significantly for many reasons including geotechnical complexity, environmental remediation, site scale
and location, among others. Additionally, the selection of the test sites and typologies, while intended to be
reflective of common forms of development in some of key market areas, are not able to capture
the nuance of all development forms, ownership conditions, and site-specific characteristics across the cities.
Also related is the nature of development or redevelopment potential throughout some areas of the cities. This
analysis isolates evaluation to one single development phase. However, in some locations, the nature of
redeveloping areas is such that larger sites will result in multi-phase developments. Project pre-development
approval timelines are also consistent throughout the test sites in this review, however, we acknowledge that in
practice, some projects could get delayed while others may proceed faster. The pace at which a project proceeds
from conception to building permit can be a particularly important consideration.
This analysis cannot capture certain nuances arising from the nature of a historical land purchase or the
capitalization of land costs through the operation of an income-generating use. Nor can it contemplate the
acquisition of land at speculative values, not fully appreciating the magnitude of impacts from future policy
adjustments. Similarly, this analysis cannot account for all potential variations in the value of alternative land
uses in a given area. Actual valuations will vary from property to property according to a wide range of site and
incumbent landowner expectations.
NBLC, therefore, assumes no responsibility for losses sustained as a result of implementing any recommendation
arising in this analysis. This analysis has been prepared solely for the purposes outlined herein and is not to be
relied upon, or used for any other purposes, or by any other party without the prior written authorization from
NBLC.
3.0 Key Changes From Previous Model
Since the completion of our initial analysis (Spring 2020), several key changes have been made within our model
that are worth highlighting.
Revenue Inputs
New condominium apartment pricing in Waterloo Region has undergone substantial growth since the previous
study, as shown in Figure 1. During the previous study, our testing assumed average index values ranging from
$480 to $675 psf, which was based on market comparables at the time. Our current model utilizes significantly
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higher project index pricing, with values ranging from $847 to $1,044 psf. These assumptions are supported by
several new projects that have successfully pushed pricing thresholds in Waterloo Region. Similarly, it is
increasingly common for new condominium apartment projects to charge an additional fee for parking. We have
included a separate parking fee at all of our test sites, whereas previously, many of the softer market areas
included parking in the purchase price.
As pricing has continued to grow, many new projects are offering increasingly compact unit sizing to keep end
pricing down for purchasers. Given this, we have modelled slightly smaller unit sizing than in the previous
iterations of this model. Most of the sites were previously modelled with an average unit size between 750 and
850 square feet. Our current model uses average unit sizing of between 618 to 713 square feet, depending on the
market area.
Finally, market evidence suggests that the level of demand for new condominium apartment units has grown
considerably since the previous study, likely as an increasing number of would-be low-rise purchasers have been
priced out of the market. This change has resulted in us using higher absorption rates than in the previous model.
Figure 1 Condominium Apartment Project Average Opening Index Price, KCW, 2013 to 2022 (Weighted by Number of Units)
Source: Altus Group
Cost Inputs
The cost of construction has experienced considerable escalation since the previous study. WhileStatistics
Canada does not produce a Building Construction Index for KCW, Figure 2 illustrates the rate of cost escalation
for new apartments in the GTA a reasonably proxy for KCW. After modest growth for several years, supply
chain challenges and labour shortages have pushed the cost of construction up significantly since 2020. From
Q2 2020 to Q2 2022, the average cost of construction has risen by 36% for 5+ storey apartments and 61% for
apartments under five storeys. Our current model has utilized the most up to date costing information from the
2022 Altus Canadian Construction Cost Guide. However, we note that this is published in the first quarter of
each year, and costs have continued to inflate throughout 2022.
Our current model has also used the most up to date soft costs, including the most up to date municipal fees,
many of which have increased since the previous analysis. This includes planning fees, building permit fees,
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parkland dedication rates, and development charges. Further, we have utilized a Community Benefit Charge
f the land value in our model. This charge was not present in the previous model.
Finally, it is worth noting that the current model uses construction loan interest rates that are much higher than
in the previous model. The current model uses a construction loan interest rate of 6.45% (prime plus 100bps),
whereas the previous model utilized a construction loan interest rate of 4.50%.
Figure 2 Building Construction Price Index, GTA, Indexed to Q1-2017
4.0 Development Value vs. Existing Use Value
Underpinning our analysis is the concept that each parcel of land has both a Development Value (DV) and an
Existing Use Value (EUV). The DV is the to someone who wants to build something on the land.
In our circumstances, this refers to what a residential developer would be willing to pay to acquire the parcel.
The EUV is the value of the land based on its existing use. When the DV is greater than the EUV, redevelopment
is likely. When the EUV is greater than the DV, redevelopment is unlikely.
On their own, inclusionary zoning policies developer would be required to
construct a portion of units at a production cost that is below the market value of those units. This reduction in
DV can be sustainable if a , however, the rate and magnitude of change can
also be notable and significant as it relates to projects which are currently in the development pipeline, and/or
where developers have already acquired parcels with intentions for near-term development. If the policies
become so onerous that the DV falls below the EUV, this parcel would no longer be considered a candidate for
redevelopment. This would reduce the supply of land that could be used for new housing an unintended and
undesirable consequence.
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Conversely, municipalities can offer incentives, both financial and non-financial, that help to offset the reduction
in DV brought on by the introduction of inclusionary zoning policies. These offsetting measures can help ensure
that the municipality is still able to achieve its affordable housing objectives through inclusionary zoning,
without negatively impacting the supply of land available for redevelopment. In many jurisdictions where IZ
policies are considered to be successful, offsetting measures play a significant role in policy design and
calibration.
5.0 Interpreting the Dashboard
Understanding this economic concept of DV and EUV, our model attempts to quantify the impact that
inclusionary zoning policies and offsetting measures may have on the DV value of typical sites across a variety
of geographies in Waterloo Region. In the chart at the bottom of our dashboard, DV is shown as a
bar for each of the four adjustable policy arrangements. This DV can then be compared against EUV,
as input by the user, which is displayed as a line in the same chart. From this, two key findings should be
considered:
The DV Relative to the EUV.
Most importantly, if the DV of the test site falls below the EUV value, this would be considered an undesirable
outcome. It would mean the inclusionary zoning policy has sterilized the site from redevelopment, thereby
restricting the potential supply of new housing, both market and non-market.
The Rate/Magnitude of Change in the DV From the Status Quo.
The rate of change in the DV is also important. Too significant of a drop in a short period of time could lead to
landowners withholding their lands from the market, even if the DV remains above the EUV, until pricing has
recovered. Again, this too could mean that the inclusionary zoning policy has restricted the supply of new
housing, both market and non-market.
6.0 How to Utilize the Dashboard
and User Inputs tab of the workbook, existing land values can be input for each of
the ten MTSAs. This value should be expressed on a $million per acre basis. These values could represent the
value of a prevailing land use typology, more general averages, or a specific site value within tha
market area, presumably based on data provided by realty services or appraisals. However, it is also important
to acknowledge instances where a premium could be required as part of a land transaction in order to entice an
existing land/ business owner to sell their site.
Once these existing land use values have been entered, various policy parameters can be adjusted under the
in the workbook to arrive at a DV for each scenario. To begin, the MTSA to be tested can be
selected in cell H10. Various policy parameters and offsetting measures can be selected in columns C through
Column F. As these parameters are adjusted, the DV bar will adjust in real-time.
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Of note, while the parameters can be adjusted in the first Column (Column C), it is optimal to leave this column
represents the existing baseline policy. This allows the user to easily see the impact of
inclusionary zoning policies and offsetting measures on the DV.
Figure 3 All Four Policy Scenarios Produce a DV that is Higher than the EUV (Redevelopment is Likely)
Figure 4 Three of the Four Policy Scenarios Produce a DV that is Lower than the EUV (Redevelopment is Unlikely)
Some Scenarios May Not be Viable
In some instances, a
there were no land costs associated with the development, the costs of the project would outweigh the potential
revenue. In these instances, a developer would not go ahead with the development under any circumstance.
When this happens, the DV bar will display as a negative and the residual land value shown in row 45 will be
highlighted in red.
Solving Calculation Errors
As the utilizes multiple circular references (e.g., often elements related to
parkland calculations/ property tax/ land transfer tax), there may be instances where iterative calculations
produce an errorulation error can be
he drop-down
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Kitchener Waterloo Cambridge, Septmeber 2022
NBLC Docket #22-3586
If this does not properly fix the broken calculations, please ensure that iterative calculations are turned on within
Excel. To do this gpage
7.0 Model Parameters Descriptions
The following section describes the selection parameters from our dashboard.
Development Selections
MTSA Selects one of the ten MTSAs. Each MTSA has been assigned market parameters that best reflect
its local area.
Lot Size (Site Area) Can be set between 0.5 acres and 1.5 acres. Of note, in order to accommodateparking,
smaller lot sizes may result in some high-rise building typologies surpassing the standardized 24-storeys.
Information regarding building height is shown in row 28 in the Dashboard tab of the workbook.
Development Type This selects the building typology to be tested. This is based on a high-level review of
recent apartment projects in Waterloo Region, with input from staff. The following table highlights key built-
form parameters.
Principle Tenure This selects the principle tenure for the market units in the development. Of note, due to
not represent the DV of these hypothetical developments.
Commercial Space At-Grade This selection determines whether the hypothetical development includes
commercial space at grade, or if the building is entirely residential.
Table 1
Built Form Inputs
Low-Rise Mid-Rise High-Rise Comments/
Input
Apartment Apartment Apartment Source/Units
Site Area 43,560 43,560 43,560 square feet
Gross Floor Area (GFA) 90,000 130,000 225,000 square feet
Residential GFA 85,000 125,000 217,000 square feet
Commercial GFA 5,000 5,000 8,000 square feet
Total Storeys Before Bonus Density 6 12 24 storeys
Construction Period 1.5 2.5 3.5 estimate
Podium Storeys 6 4 6 estimate
AH Set Aside Rate ated to non-
market housing.
IZ Unit Tenure This selects the tenure of the non-market housing units with options for either
condominium ownership, purpose-built rental, or rented condominium units. Of note, affordable
condominium ownership rates have not
these values can be input manually.
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Duration of Affordability Selects whether the non-market housing units will be maintained at affordable
rates for 25 years or in perpetuity. This only applies to rented non-market units, not affordable ownership
units.
Set Aside Application Selects whether the affordable housing s total
residential GFA or just to any bonus residential GFA that may be provided as an offsetting measure.
Depth of Affordability Selects the depth of affordability for the non-market housing units as a percentage
of AMR (CMHC average market rent).
Additional Density Sometimes additional density can offset the negative impact of inclusionary zoning
policies. This allows bonus density to be applied to the project as a percent of the total residential GFA.
Parking Ratio (Relative to Market) This selection allows a reduction in the number of parking units that
are required for the non-market units relative to what is required for the market rate units. For example, if a
parking ratio of 1.0 is utilized for the market rate units, a 50% reduction would mean the non-market units
have a parking ratio of 0.5.
DC Waiver These selections allow for a percentage reduction in the Development Charges (both local and
regional).
Parkland Waiver This allows for a percentage reduction in the parkland dedication fees.
BP Fee Waiver This allows for a percentage reduction in the building permit fees.
Planning Fee Waiver This allows for a percentage reduction in the planning fees.
Waiver Rebate Application This determines whether the DC waiver, the parkland waiver, the BP waiver,
and the planning fee waiver are applied to all units in the development or just the non-market units only.
Property Tax Abatement This allows for a percentage reduction in property taxes (either local or regional)
for the non-market units for the duration of their affordability period.
Capital Subsidy This allows for an upfront, one-time capital subsidy contribution to any of the
development scenarios.
Market Areas
Finally, while not a selectable parameter, our model has three categorical market areas Prime, Established, and
Emerging with each MTSA being assigned one of these market areas. Each of market areas comes with a set
of parameters that best reflect existing market conditions in Waterloo Region. These parameters are shown below
in Table 2 and the market area assigned to each MTSA is shown in Table 3.
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Table 2
Market Area Inputs
Prime Established Emerging
Unit Mix and Size
Avg. Unit Size 618 650 713
Studio (%) 10% 10% 0%
One-Bedroom (%) 50% 45% 50%
Two-Bedroom (%) 40% 45% 50%
Three-Bedroom (%) 0% 0% 0%
Parking & Locker
Residential Parking Ratio (Market) 0.5 0.7 1.0
Commercial Parking Ratio 2.0 2.0 2.0
Visitor Parking Ratio 0.1 0.1 0.1
Storage Locker Ratio 0.75 0.75 0.75
Pricing and Absorptions
Market Index Price (Condo) $1,040 $920 $850
Parking Sale Price (Condo) $50,000 $40,000 $30,000
Locker Sale Price (Condo) $7,500 $7,500 $7,500
Sales Absorption Rate 40 30 20
Market Index Price (Rental) $3.30 $3.05 $2.75
Parking Price (Rental) $150 $120 $100
Locker Price (Rental) $75 $75 $75
Net Lease Rate $30 $25 $20
Rented Condo OpEx Excl. Property Tax $5,311 $5,590 $6,128
Table 3
MTSA Market Areas
MTSA Municipality Market Area
Conestoga Waterloo Established
University of Waterloo Waterloo Prime
Uptown Waterloo Waterloo Established
Midtown Waterloo Established
Downtown Kitchener Kitchener Prime
Rockway Kitchener Emerging
Fairway Kitchener Emerging
Preston Cambridge Emerging
Hespeler Road Cambridge Emerging
Downtown Cambridge/ Main Cambridge Prime
Disclaimer: The conclusions contained in this analysis have been prepared based on both primary and secondary data
sources. NBLC makes every effort to ensure that data is correct but cannot guarantee its accuracy. It is also important to note
that it is not possible to fully document all factors or account for all changes that may occur in the future and influence the
viability of any development. NBLC, therefore, assumes no responsibility for losses sustained as a result of implementing any
recommendation provided in this analysis.
This report has been prepared solely for the purposes outlined herein and is not to be relied upon, used for any other purposes,
or by any other party without the prior written authorization from N. Barry Lyon Consultants Limited.
Inclusionary Zoning Model Manual pg. 9
Kitchener Waterloo Cambridge, Septmeber 2022
NBLC Docket #22-3586