HomeMy WebLinkAboutDSD-2024-029 - Official Plan Amendment OPA23/015/K/TD - Zoning By-law Amendment ZBA23/027/K/TD - Inclusionary ZoningStaff Report
Development Services Department www.kitchener.ca
REPORT TO: Planning and Strategic Initiatives Committee
DATE OF MEETING: January 29, 2024
SUBMITTED BY: Rosa Bustamante, Director of Planning and Housing Policy, 519-
741-2200 ext. 7319
PREPARED BY: Tim Donegani, Senior Planner, 519-741-2200 ext. 7067
WARD(S) INVOLVED: Wards 3, 9, 10
DATE OF REPORT: January 12, 2024
REPORT NO.: DSD -2024-029
SUBJECT: Official Plan Amendment OPA23/015/K/TD and Zoning Bylaw
Amendment ZBA23/027/K/TD — Inclusionary Zoning
RECOMMENDATION:
That the City -initiated Official Plan Amendment OPA23/015/K/TD for the purposes of
introducing Inclusionary Zoning within Protected Major Transit Station Areas be
adopted, in the form shown in the Official Plan Amendment attached to Report DSD -
2024 -029 as Attachment `A' and accordingly forwarded to the Region of Waterloo for
approval; and
That the City -initiated Zoning By-law Amendment ZBA23/027/K/TD to amend Zoning
By-law 2019-051 and Zoning By-law 85-1, be approved in the form shown in the
"Proposed By-law Amendment" attached to Report DSD -2024-029 as Attachment `B'
and Attachment `C' respectively; and further
That staff be directed to enter into a memorandum of understanding with the Region
of Waterloo outlining roles and responsibilities in administration of Inclusionary
Zoning, to the satisfaction of the Director of Planning and Housing Policy.
REPORT HIGHLIGHTS:
• The purpose of this report is to recommend the approval of planning instruments and
guidelines to implement an Inclusionary Zoning (IZ) program that would require some
affordable housing units to be included within new private developments within
Protected Major Transit Station Areas (PMTSAs).
• A region -wide approach is recommended to ensure a consistent framework across
all PMTSAs. At this time, it is expected that City of Waterloo Council will be
considering the proposed IZ program in early 2024 and that City of Cambridge staff
will be providing their Council with updates on the program as soon as possible in
2024.
As proposed, the IZ program would:
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o Apply to all new residential and mixed-use developments in PMTSAs of 50 or
more units;
o Require subject developments to set aside 0-2% of their gross leasable residential
floor area (GLA) to affordable units, starting in 2025, with all PMTSAs requiring a
5% set aside rate by 2031 or before;
o Require that the affordable units be rented, whether located in a condominium or
purpose-built rental building;
o Set maximum rents at levels that are affordable to low-income households
(earning $43,000 - $65,000 in 2022);
o Require that affordable units be maintained as affordable for a minimum of 25
years;
o Benefit the tenants of newly built affordable homes; and
o Add more affordable homes contributing to movement within the housing system
and a more diverse and responsive housing system overall.
• The proposed IZ program balances the competing objectives of delivering the
maximum number of affordable units with minimizing impact on development
feasibility and the creation of new housing supply in PMTSAs.
• Growing Together is more permissive than the current planning framework around
ION station stops especially with respect to height and density. This complimentary
change is crucial to help offset the negative financial impacts of inclusionary zoning
on site development economics that could otherwise slow housing construction.
• Based on growth forecasts, the program is expected to create an estimated 23
affordable rental units per year in Kitchener within the first few years, increasing to
approximately 80 affordable rental units per year by 2031. Region -wide the program
is expected to create approximately 144 units per year by 2031.
• Community engagement included in person and online engagement with 1,100
people representing a broad range of groups including the development industry,
housing providers, potential tenants of IZ units, and the public.
• This report supports Building a Connected City Together: Focuses on
neighbourhoods; housing and ensuring secure, affordable homes; getting around
easily, sustainably and safely to the places and spaces that matter.
• Inclusionary Zoning is just one tool that can increase affordable housing supply in
Kitchener.
EXECUTIVE SUMMARY:
In response to the housing crisis and the need for affordable housing, the City is working
with a set of housing tools prioritized in Housing for All and the City's Housing Accelerator
Fund application and beyond. Inclusionary Zoning (IZ) is a planning tool that requires a
certain percentage of affordable housing units within new private developments. The
program does not rely on government subsidies, but instead captures some of the increased
value arising from high density development and directs it towards affordable housing.
Kitchener, Cambridge, Waterloo and Region of Waterloo staff have developed a consistent
approach to IZ implementation that reflects market differences across the region.
This report recommends Official Plan and Zoning By-law amendments that would require
affordable rental housing units to be included in new private developments within Protected
Major Transit Station Areas (PMTSAs) along the ION route. The program is expected to
create approximately 23 affordable rental units per year in Kitchener initially, increasing to
80 units per year by 2031, and approximately 144 units per year region wide. This would
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help contribute to the development of complete, vibrant, mixed income communities along
the ION route.
The program would apply to residential and mixed-use developments of 50 or more units.
These developments would need to set-aside rate of 0-2% of units starting in 2025 and
increasing to 5% by 2031 or before.
Rents in these units would be regulated for at least 25 years. The maximum monthly rents
would be $1,075-1,631 in 2022. Bachelor apartment rents would be affordable to the 15th
percentile of household incomes, and 3+ bedroom would be affordable to the 28th percentile.
These rents fill a gap in the housing continuum, generally serving households who earn too
much to be eligible for community housing but cannot afford market rents.
The program seeks to balance the goals of increasing affordable housing supply with
financial feasibility and minimizing disruption to the land market. The negative financial
implications of IZ on typical development proforma could disrupt new housing supply. As
such, the financial feasibility and land market disruption were carefully considered in the
development of the program. These impacts are mitigated though moderate rents, modest
initial set aside rates with gradual increases, waiving growth related fees and charges,
exemptions from parking requirements and crucially, increases in as of right development
permissions in PMTSA through Growing Together.
Staff consulted with the development industry, non -profits, potential tenants of affordable
units and the community at large in the development of this program. In response to this
feedback, the program provides for flexible and innovative solutions to delivering affordable
units that work from the development industry and the community including delivering units
offsite and/or partnering with non -profits.
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 Protected Major Transit Station Areas (PMTSAs). The Cities of Kitchener,
Cambridge, and Waterloo with support from the Region of Waterloo ("the Partners") have
collaborated on the development of a common IZ framework that will increase the amount
of affordable housing near ION rapid transit stops.
IZ has been used successfully in municipalities across North America to create a continuous
supply of affordable housing. It is different from other approaches in that it doesn't require
significant 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 program also signals future IZ requirements to the market so that
developers and homebuilders can incorporate the regulations and potential impacts on pro
forma into land purchase decisions. Since IZ can operate without significant subsidy, it works
alongside other local and regional housing programs rather than competing with those
programs for limited resources.
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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
provides consistent and clear policy requirements for the development industry; creates
efficiencies in implementation across area municipalities through shared guidelines and
agreement templates; maintains a relatively consistent regulatory playing field and
associated attractiveness for investment in residential development across the cities'
PMTSAs; and, centralizes administration and monitoring to support a consistent and
adequately funded approach to implementation and program tracking. Although a region -
wide approach is recommended, the program is designed to reflect differences in market
areas across the region.
The Partners have been working to advance a coordinated IZ program since 2019.
Proposed policy and program directions were outlined in DSD -2023-258, and the majority
of these directions are carried forward in the recommended approach. This report provides
a summary of the proposed IZ program and recommends that Council approve the planning
instruments through an amendment to the Official Plan (Appendix A) and, zoning by-law
amendments (Attachments B and C).
This report is one of many housing -related reports considered by Council since Council's
endorsement of Kitchener's Housing Pledge in March 2023, as seen in the diagram below.
Figure 1 A diagram showing Kitchener's housing related studies and initiatives.
REPORT:
The proposed IZ program seeks to balance the objective of increasing the supply of
affordable housing with market feasibility to ensure continued viability of residential
development. The program also reflects proposed amendments to Ontario Regulation
232/18 that set limits on the number of affordable units, minimum rents and prices and the
length of time that affordability can be required. The program is built around the following
principles:
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F 2023
2029+
113, Bill 23, Bill 109
Evictions &
Municipal Housing
Pledge
Implementation Plan
Lower Doon Land Use
Study Implementation
Displacement Toolkit
Missing Middle and
Growing Together
Eviction &Displacement
Implementation
Affordable Housing
Engagement Summary
Webpage & Online
Rental Replacement By -
Study Update
Inclusionary Zoning
Reporting Update
law Implementation
Direction
Proposed Lodging House
Shared
Official Plan and Zoning
Accommodations
Implementation
Licensing By-law
Eviction &Displacement
Updates
Toolkit Options
Lodging House Official
Lived Expertise__`I
Rental Replacement By-
Plan and Zoning
Working Group Year 2
law Information Report
Approval
Work Plan
Growing Together
Development
Inlementation
Inclusionary Zoning
Implementation
Figure 1 A diagram showing Kitchener's housing related studies and initiatives.
REPORT:
The proposed IZ program seeks to balance the objective of increasing the supply of
affordable housing with market feasibility to ensure continued viability of residential
development. The program also reflects proposed amendments to Ontario Regulation
232/18 that set limits on the number of affordable units, minimum rents and prices and the
length of time that affordability can be required. The program is built around the following
principles:
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1. Moderate Affordability - Secure housing that is affordable to households whose
incomes do not exceed the 60th percentile of the regional income range. Supporting the
creation of moderately affordable housing that is affordable to low- and moderate -income
households is important since many of these households have incomes that are
generally too high to be eligible for subsidized housing but are too low for market
housing.
2. Partner with development community - To achieve housing targets the program must
enable developers to continue to build both new market units and affordable units.
Residential development projects under an IZ program must continue to be viable.
3. Minimize land market disruption - Provide early signals of IZ requirements and
transition time to allow the land market to adjust.
4. Minimal fiscal impact — The IZ program policy should be viable without subsidies or
significant financial incentives.
5. Capture value in new density - direct some of the increased land value achieved
through development approvals and investment in the ION transit system toward
affordable housing.
In alignment with the above principles, Table 1 outlines key policy parameters of the
proposed IZ program.
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Table 1. Proposed IZ Policy Parameters
Policy Parameter
Recommendation
Rationale
1. Location
IZ should apply to all 10 PMTSAs in
Provides consistent and clear policy requirements for the
Provincial Requirement: An IZ
Kitchener, with different requirements
development industry, implementation and monitoring
policy can only be adopted
for PMTSAs within Emerging,
efficiencies across area municipalities while reflecting
within a PMTSA or an area
Established and Prime market areas.
station areas' differing capacity to absorb the financial
subject to a Community
IZ requirements are recommended to
impact of IZ. Creates a level playing field for investment
Planning Permit System as
come into force for seven station areas
and development across the region.
directed by the Minister
in alignment with Growing Together in
Q1 2024 and for the remaining three
PMSTAs east of the expressway to
coincide with updated planning
framework currently targeted for
completion in 2025
2. Size of Development
Buildings with 50 or more residential
Focus program on larger developments to avoid
Provincial Requirement:
units
potential negative impacts on the financial feasibility of
Limited to buildings with 10 or
missing middle and medium density housing types,
more units
recognizing that these built forms already face significant
financial obstacles in PMTSAs.
3. Affordable Unit Tenure
Affordable units should be provided as
Proposed amendments to O.Reg 232/18 would require
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 only
purpose-built rental building.
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 low and moderate rather than
high income households.
4. Set Aside Rate
Set aside rates should be measured as
Proposed amendments to O.Reg 232/18 limit the set
Provincial Requirement:
a percentage of Gross Leasable
aside rate to 5%. A low initial set aside rate and
Proposed maximum 5% of
Residential Area (GLA). GLA
relatively slow transition to the maximum rate will help
total units or Gross Floor
dedicated to affordable units should
avoid market disruption and signal to the market future
Area
start low and transition slowly upward
policy intentions. Financial feasibility modeling suggests
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Policy Parameter
Recommendation
Rationale
to a maximum of 5%, in accordance
that stronger (Prime) markets can better absorb the
with the local market conditions.
costs associated with an IZ policy compared with weaker
• PMTSAs within Prime Market
(Emerging) markets. Set aside rates that align with
Areas should start at 2% and
market strength and that gradually increase will help
increase to 5% by 2029.
ensure development viability in PMTSAs, that is crucial
• PMTSAs within Established Market
to meeting the City's housing pledge.
Areas should start at 1% and
increase to 5% by 2031.
• PMTSAs within Emerging Market
Areas should start at 0% and
increase to 5% by 2031.
5. Level of Affordability
• Affordable rental units in condo
The proposed affordable rents balance objectives to
Provincial Requirement:
buildings should not exceed the
maximize affordability with financial feasibility for
Proposed policy can't require
lesser of 100% Average Market
housing providers. 100% AMR is typically in the range of
IZ unit rents to be less than
Rent for the regional market area
$700 per month lower than what a renter would expect
80% Average Market Rent or
according to the number of
to pay in market rent for a vacant unit, because the AMR
IZ unit prices to be less than
bedrooms or 30% of the 60th
calculation includes older, rent -controlled units. As a
80% Average Market Resale
percentile household income for
result, 100% AMR is well below the rents available in the
Price.
renter households for the regional
market. The proposed rents would provide units that are
market area. In 2022 this would be
affordable to low-income households (if considering the
$1,075-$1,425 depending on unit
incomes of all households), and moderate -income
size.
households (if considering only renter household
• Affordable rental units in purpose-
incomes) consistent with most other jurisdictions using
built rental buildings should not
IZ. Moderate income renter households' affordability
exceed 30% of the median renter
needs are generally not well served by the market or
household income in the regional
government funded housing programs. The higher
market area as defined by CMHC,
proposed affordable rent for purpose-built rental
or Average Market Rent, whichever
buildings aligns with CMHC's Mortgage Loan Insurance
is greater. In 2022, this would be
Select program for rental developments. The alignment
$1425 - $1,631 depending on unit
would streamline approvals processes, limits financial
size.
impact on desirable purpose-built rentals (which are
typically more financially challenging to develop than
condominium developments) and would ensure that
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Policy Parameter
Recommendation
Rationale
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
below the 60th percentile of
households.
regional renter household income
range (under $78,400 in 2022); and
with a maximum income at time of
occupancy of 3.5 times the affordable
unit rent ($45,000-%69,000 in 2022).
7. Duration
Affordable units should be maintained
Proposed amendments to O.Reg 232/18 limit the
Proposed Provincial
as affordable for 25 years.
duration to 25 years. Duration maximizes positive impact
Requirement: Maximum 25
of the program on the affordable housing supply within
years
the limits of the proposed regulations. The
implementation program could support options for
affordability beyond 25 years where affordable units are
owned by a third sector provider (see #10).
8. Incentives
Affordable units are exempt from
The high cost of providing structured parking has a
development charges. Community
significant impact on the financial feasibility of a
benefits charges and parkland
development and limits the potential yield of affordable
dedication exemptions are
and market units in areas well served by transit.
forthcoming.
Reduction in overall residential parking rates, combined
Affordable units delivered through the
with the removal of parking minimums for affordable
IZ program should be exempt from
units would help to offset the cost of providing affordable
parking requirements to further
units and is appropriate given the proximity of the
incentivize the development of more
developments to rapid transit and alignment with other
kinds of housing including affordable
city objectives (e.g., greenhouse gas reduction and
units created through the IZ program.
active transportation targets and commitments).
Additional heights and densities for
Increases in permitted heights and densities in PMTSAs
developments in PMTSAs should be
concurrentwith the introduction of an IZ program can
considered where appropriate.
help offset the financial impact of the program.
9. Offsite Units
The required affordable units in a new
Enabling offsite units provides opportunities for
development alication may be
creativity, partnerships, and cost-sharing to create
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Policy Parameter
Recommendation
Rationale
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 PMTSA within
program to create high quality affordable units.
the same municipality.
Opportunities include:
IZ units, whether onsite or offsite, must
. developers partnering with third sector to
be delivered coincident with market
accommodate IZ units within a third sector builds
units.
. locating affordable units within buildings having lower
construction costs, on lower cost sites and with more
favorable financing.
Third sector ownership could help leverage more
affordable units, more deeply affordable units, longer
affordability periods and opportunities for on-site
supports, if needed, when compared to onsite units
alone.
10. Administration and
The Region of Waterloo has indicated
Centralized administration by government or a single
Implementation
a willingness to take a leading role in
mission-aligned, arm's length organization with sufficient
monitoring, and waitlist management.
operational funds is required to ensure consistent
Affordable units will be secured
monitoring and administration of the program. Enabling
through the development review
third sector ownership and operation of affordable rental
process by city staff, in accordance
units within condo developments will address
with IZ zoning by-laws (Attachments B
condominium developers' concerns about capacity to
and C) and draft Implementation
operate affordable units and will ensure affordability
Guidelines (Attachment D). The
beyond 25 years.
proposed program includes pathways
for a third sector to own affordable
units created either offsite or in a
condominium building.
11. Monitoring
Report to council on successes and
The financial impact model that supports the proposed
Provincial Requirement:
challenges of IZ in accordance with
policy direction is based on current market conditions
Report every two years
Provincial reporting requirements and
and proposed Provincial regulations. Updates to the
(biennially) and update
adjust policy requirements as needed.
policy may be warranted to enable securing more of
Assessment Report every 5
fewer affordable units, different affordability levels etc. in
years
response to market and regulatory changes.
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Rents and Income of Eligible Households
Maximum rents for affordable units are proposed to be calculated using a combined market
and income -based approach (Table 1). The combined approach helps to balance financial
feasibility of development, with the assurance that the units will be affordable to low- and
moderate -income households irrespective of significant fluctuations in the housing market
year over year.
Using the proposed calculation, the maximum rents for affordable units in both a
condominium building and a purpose-built rental building would be affordable to low-income
households that fall in the 15th through 28th percentiles of the regional household income
distribution (Tables 2 & 3). Although households below the 15th income percentile would
be eligible for IZ units, they would need to spend more than 30% of their income on rent.
This would be considered unaffordable according to the typical definition, but more
affordable than most market housing options.
Table 2. Maximum Rents for Affordable Units in a Condominium Buildina (2022)
Unit type
Rent
Household income for
which the rent is
affordable
Household income
percentile for which
the rent is affordable
Max Eligible
Household Income
(3.5x rent)
Bachelor
$1,075
$43,000
15th (low income)
$45,000
1 -bedroom
$1,275
$51,000
20th (low income)
$54,000
2 -bedroom
$1,469
$59,000
24th (low income)
$62,000
3 -bedroom +
$1,631
$65,000
28th (low income)
$69,000
Table 3. Maximum Rents for Affordable Unit in a Purpose Built Rental Building (2022)
Unit type
Rent
Household income for
which the rent is
affordable
Household income
percentile for which
the rent is affordable
Max Eligible
Household Income
(3.5x)
Bachelor
$1,425
$57,000
23rd (low income)
$60,000
1 -bedroom
$1,425
$57,000
23rd (low income)
$60,000
2 -bedroom
$1,469
$59,000
24th (low income)
$62,000
3 -bedroom +
$1,631
$65,000
28th low income
$69,000
The proposed method of calculating affordable rents is recommended because it:
• Aligns with the definition of affordability in the Regional and City Official Plans, the
Provincial Policy Statement (2020), and the newly revised Development Charges Act;
• Aligns with IZ best practice in other jurisdictions;
• Helps meet the needs of many households that earn too much to be eligible for
community housing, but cannot afford market rents, and therefore helps address a
gap in the housing continuum;
• Delivers on affordable housing objectives while having a manageable impact on
financial viability of development that could otherwise curtail new housing supply;
• Helps to support mixed -income complete communities and overall community health
and prosperity; and
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• Creates movement along the housing continuum, freeing up units that are more
deeply affordable for very low income (e.g. 10th percentile) households who cannot
afford units secured through the IZ program.
While various market metrics were considered for the purpose of determining the maximum
affordable rents, staff recommend using 100% Average Market Rent (AMR) rather than the
maximum of 80% AMR that is under consideration by the Province in its proposed
regulations. The proposed rents have significantly less financial impact on development pro
forma (with its resulting impacts on the pace of housing supply) than would an 80% AMR
program. Furthermore, an 80% AMR program would have significant overlap in income with
eligibility for community housing whereas the proposed rents serve an affordability gap in
the housing continuum. 100% AMR results in affordable rents that support low-income
households in the 15th -28th percentile of the regional household income distribution (Tables
2 and 3). This is because, despite its name, AMR is significantly lower than the typical rent
for a unit that is available in the market today. CMHC calculates AMR as the average of the
rents for both older, rent -controlled units and newer units. When rent -controlled units are
vacated and become available to new renters, a landlord may increase the rents to what the
market can bear and so the rent -controlled rents do not reflect what a renter may secure in
the market. In undersupplied rental markets, the rents facing new tenants are typically many
hundreds of dollars more per month than AMR.
Staff also recommend setting higher maximum rents for affordable units in purpose built
rental buildings than affordable units in condominiums. The higher rents for purpose built
rental buildings align with CMHC's MLI select program's affordability criteria and are
intended to help mitigate the potential financial impact on desirable purpose-built rental
projects that typically have lower financial returns that condominium development. While the
financial challenges for purpose built rental buildings have improved in recent months
relative to condominium developments, market fundamentals continue to favour
condominiums. Proposed rents in purpose-built rental would be affordable to the 23rd -28th
household income percentile (5% percent of households in the Region).
Set aside Rates
The proportion of GFA (gross leasable residential area) dedicated to affordable units should
start low in 2025 and transition slowly upward to a maximum of 5% to reflect local market
conditions.
• PMTSAs within Prime Market Areas should start at 2% and increase to 5% by 2029.
• PMTSAs within Established Market Areas should start at 1% and increase to 5% by
2031.
• PMTSAs within Emerging Market Areas should start at 0% and increase to 5% by 2031.
Proposed amendments to O.Reg 232/18 limit the set aside rate to 5%. A low initial set aside
rate and gradual transition to the maximum rate will help avoid market disruption and signal
to the market future policy intentions. Financial feasibility modeling indicates that stronger
(Prime) markets can better absorb the costs associated with an IZ policy compared with
weaker (Emerging) markets.
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Notwithstanding the general principle of applying higher set aside rates in stronger markets,
staff recognize the potential for significant land value uplift when employment lands are
converted to permit residential uses. Employment lands in emerging and established market
areas that are converted to residential uses are therefore proposed to have set aside rates
consistent with the Prime Market Areas. Set aside rates based on market strength combined
with specific measures for employment lands will capitalize on site specific opportunities that
enable higher set aside rates while helping to ensure development viability in PMTSAs that
is crucial to meeting Cities' housing pledges. This treatment of employment properties —
the 5% set-aside for all market areas by 2031, promotion of the Mill and Borden Station
Areas to the "Established" category, and quicker transition — are revised from the June
policy directions and are supported by NBLC's supplemental letter included as Attachment
Table 4. Set aside Rates
*Implementation timing to coincide with Growing Together East.
Duration of Affordability
Staff recommend an IZ program that requires the longest term of affordability permitted
under the proposed Provincial IZ regulations, to provide maximum benefit to households
needing affordable housing. The longest duration of affordability that can be required under
the proposed IZ regulations is 25 years.
The proposed IZ program provides an opportunity for the duration of affordability to be
extended beyond the maximum of 25 years. By enabling affordable units to be provided
offsite and providing flexibility for developers to work with third sector housing providers
(non -profits, co-operatives, and other mission -aligned providers), the program encourages
the transfer or sale of affordable units to the third sector. Third sector ownership of affordable
units is more likely to result in a voluntary extension of the duration of affordability, perhaps
even in perpetuity.
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Minimum Percentage of Gross Leasable
Residential Floor Area set aside for
Protected Major Transit
affordable units by date of building permit
Market Area
Station Area
issuance
2025-
2027-
2029-
2031+
2026
2028
2030
Prime
. Central Station
• Victoria Park/Kitchener
2%
3%
5%
5%
City Hall
• Queen/Fredrick
Established
. Grand River Hospital
• Kitchener Market
1%
2%
4%
5%
• Borden
• Mill
Emerging
. Block Line*
• Fairway*
0%
1%
3%
5%
• Sportsworld*
*Implementation timing to coincide with Growing Together East.
Duration of Affordability
Staff recommend an IZ program that requires the longest term of affordability permitted
under the proposed Provincial IZ regulations, to provide maximum benefit to households
needing affordable housing. The longest duration of affordability that can be required under
the proposed IZ regulations is 25 years.
The proposed IZ program provides an opportunity for the duration of affordability to be
extended beyond the maximum of 25 years. By enabling affordable units to be provided
offsite and providing flexibility for developers to work with third sector housing providers
(non -profits, co-operatives, and other mission -aligned providers), the program encourages
the transfer or sale of affordable units to the third sector. Third sector ownership of affordable
units is more likely to result in a voluntary extension of the duration of affordability, perhaps
even in perpetuity.
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Offsite Units
The Planning Act provides for affordable units required under an IZ program to either be
provided within the development giving rise to the IZ requirement or within a development
on an offsite location. Staff are recommending that offsite units be permitted provided they:
• are located within any Kitchener PMTSA where IZ applies;
• are occupied at the same time as market units; and
• are a similar size and bedroom composition as the market units.
The proposed IZ program enables innovative solutions to delivering affordable units and
rapid new supply of market housing. This could include developers building small purpose-
built rental buildings, partnering with non -profits to increase the number of units in their
builds, working with other developers to jointly meet IZ requirements in a single project, or
banking their IZ requirements for multiple projects in a single building.
In staffs assessment, enabling offsite units is crucial to providing needed flexibility to the
development community to deliver affordable units in a cost-effective manner that aligns
with their business model. It provides a pathway for condominium developers, who do not
typically own units in the long term, to deliver on affordability objectives while avoiding long
term obligations on their development sites thereby freeing up capital for their next
construction project. It further enables developers to incorporate affordable units within low -
and medium -rise built forms that are less expensive to build compared to high-rises.
Staff have heard concerns from some that enabling offsite units could encourage the
creation of lower quality or poorly managed affordable housing developments, rather than
mixed income buildings. While staff agree that enabling offsite units may result in the
creation of more developments that contain only affordable units, it is important to note that
there are many successful examples of rental developments geared toward lower income
residents and such developments continue to be created throughout the region without
generating significant problems for the tenants or the surrounding community. Any
development, whether it be for tenants with a mix of incomes or for lower income tenants
specifically, would be subject to the same design standards, amenity and greenspace
zoning regulations and property standards requirements. These will be reviewed through
the site plan approval process, informed by the draft implementation guidelines (Attachment
D) and secured through inclusionary zoning agreements. Although allowing for offsite units
might reduce the number of widely mixed -income apartment buildings, it does help deliver
mixed -income neighbourhoods and complete communities in PMTSAs.
Compatibility with other Housing Programs
Because IZ is not reliant on government funding, it does not compete with other housing
programs, such as emergency and transitional housing, deeply subsidized affordable
housing, and supportive housing. The focus of the proposed IZ program on levels of
affordability that are more expensive than deeply subsidized units, but still well below market
rents, provides additional housing options that aren't currently available in the market, such
as housing for those who are ready to leave rent geared to income housing, a household
with two minimum wage earners, and older adults on modest fixed incomes. Forthis reason,
IZ not only supports those households who require an affordable unit, but also contributes
Page 1011 of 1179
to movement within the housing system and a more diverse and responsive housing system
overall.
Forecasted number of IZ units
IZ is one of many affordable housing tools. In order to address the housing crisis, all orders
of government and the third sector must invest significantly in affordable housing as outlined
in Housing for All, the Region of Waterloo's 10 year Housing and Homelessness Plan,
Building Better Futures, and other strategic initiatives.
While there is significant uncertainty in the number of housing units that can be delivered by
the market in the short term, the City remains committed to its housing pledge and Housing
Accelerator Fund targets. Growing Together forecasts that approximately 2,000 units per
year in PMTSAs will contribute to our 10 -year target of 35,000 homes. Based on the set-
aside rates in Table 4 and the estimated share of buildings of 50 or more units, the number
of affordable units is forecasted to ramp up to 80 affordable units per year by 2031. This
represents a modest but meaningful number of new affordable units in addition to affordable
units delivered though Federal, Provincial, Regional, City and non -profits' programs and
initiatives.
Financial Viability and Transition
The Planning Act and Ontario Regulation 232/18 establish the process by which an IZ policy
can be adopted, and the contents of IZ policy and zoning by-law provisions. Kitchener has
completed all the necessary studies and assessments required under the legislation. The
recommended framework is supported by a financial impact model and peer review shared
through DSD -20-150, model updates described in report DSD -2023-258 and the memo
included in Attachment F to this report.
The proposed planning framework (i.e. Official Plan policies and zoning regulations) for the
PMTSA through Growing Together is more permissive than the current planning framework
around ION station stops especially with respect to the amount of growth enabled through
as -of -right zoning permissions. This is crucial to offsetting some of the negative financial
impacts of IZ on site development economics that could otherwise slow housing
construction. Implementation of IZ for the Block Line, Fairway and Sportsworld PMTSAs is
proposed to coincide with the updated planning framework currently scheduled to
commence in mid -2024.
The Partners heard from our consultants and the development community that transition
provisions are essential to ensuring that financial impacts of IZ can be incorporated into
early decision making and land acquisitions. The Planning Act exempts developments that
were the subject of site plan or subdivision application prior to the passing of an IZ by-law.
Staff have carried out or are recommending transition provisions beyond the statutory
requirements including:
• Since early 2020, communicating broadly with the development industry to expect
IZ requirements;
• Exempting projects that apply for building permits in 2024; and
• Gradually increasing set-aside rates to 5%, with the pace varying according to the
strength of each market area.
Page 1012 of 1179
In comparison to the proposed approach outlined in June 2023, the applicable set aside rate
will apply at the time of building permit issuance rather than the time of occupancy (less
onerous), IZ requirements begin in 2025 rather than the original proposal of, and the set
aside rates phase-in more quickly.
Staff do not recommend exempting developments that are currently the subject of Official
Plan or Zoning By-law amendment applications. In staff's opinion, the statutory and other
recommended transition provisions appropriately mitigate the financial impact of IZ.
Exempting units that are the subject of OPA and ZBA applications would mean forgoing
approximately 400-500 affordable units in Kitchener's PMTSAs.
Planning Analysis
The legal framework for IZ is established in sections 16, 34 and 35.2 of the Planning Act
and Ontario Regulation 232/18. The list of requirements, and how each of these are
addressed are detailed in Appendix 2 of the June 2023 Discussion Paper included as
Attachment G. Two key prerequisites are highlighted here.
1. IZ can only be applied within approved Protected Major Transit Station Areas
(PMTSAs) within upper tier or single tier Official Plans; or within community planning
permit areas that are mandated by the Province.
Regional Official Plan Amendment 6 established boundaries for Kitchener's major transit
station areas, minimum number of residents and jobs per hectare for each, and policies
requiring the City to establish authorized uses of lands and minimum density targets with
respect to buildings and lands. Accordingly, Kitchener's 10 station areas meet the criteria
for PMTSA in section 16(16) of the Planning Act and IZ is therefore enabled.
2. IZ policies must be informed by an assessment report that includes specified content
and analysis. It must be updated every 5 years.
Kitchener's assessment report requirements are met through the 2020 Housing Needs
Assessment, NBLC's 2020 Evaluation of Potential Impacts of an Affordable Housing
Inclusionary Zoning Policy, and the supplementary discussion paperincluded as Attachment
F to this report. The 5 -year review of the assessment report is planned and budgeted
through the City's Housing Accelerator Funding work program that is underway.
A fulsome planning analysis was included in report DSD -2023-258 and the June 2023
Discussion Paper (Attachment G). It provides planning analysis outlining how The Provincial
Policy Statement (2020); Growth Plan for the Greater Golden Horseshoe (2020); Regional
Official Plan (ROP) and Kitchener Official Plan all emphasize the importance of planning for
a full range and mix of housing, including affordable housing, to meet community needs.
While many planning tools encourage the provision of affordable housing, Inclusionary
Zoning is the only one that can require its provision and its implementation is strongly
supported in the ROP. The recommended approach to IZ contributes to mixed income
communities in PMTSAs and a complete and vibrant community. The recommended
approach to IZ implemented through the proposed Official Plan and Zoning By-law
amendments have regard for matters of Provincial interest; are consistent with the Provincial
Page 1013 of 1179
Policy Statement (2020); conform to A Place to Grow: Growth Plan for the Greater Golden
Horseshoe (2020), and the Regional Official Plan; further implement the objectives and
policies of the Kitchener Official Plan; and represent good planning.
Next Steps
Pending Council's decision on the recommended IZ framework:
• The Official Plan amendment will be forwarded to the Region for their approval;
• Staff will finalize the implementation guidelines included as Attachment D;
• Staff will develop a memorandum of understanding with the Region that outlines work
that the Region will undertake on the Cities' behalf regarding tenant selection and
monitoring of agreements;
• The Region will develop a waitlist and begin inviting potential tenants;
• City staff will identify IZ requirements to provide affordable units through the
development application approvals processes;
• Affordable units will be required for developments that have building permits issued
in 2025 and beyond;
• Affordable units will be leased to eligible tenants likely starting in 2026;
• The Partners will monitor the program and report back to councils biennially or more
frequently if needed.
In the near term, staff intend to host regular meetings with developers whose developments
are subject to IZ requirements, and third sector housing providers for training and education
purposes and to facilitate connections to enable offsite unit collaboration and/or transferring
ownership of units to the third sector.
STRATEGIC PLAN ALIGNMENT:
This report supports Building a Connected City Together: Focuses on neighbourhoods;
housing and ensuring secure, affordable homes; getting around easily, sustainably and
safely to the places and spaces that matter.
FINANCIAL IMPLICATIONS:
Capital Budget —As with affordable 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, and will be monitored and considered through future
budgeting and updates to relevant by-laws.
Operating Budget — The recommended approach to implementation would see new
tenancies and monitoring primarily undertaken by the Region. As the number of affordable
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.
COMMUNITY ENGAGEMENT:
As reported in June 2023, staff consulted with representatives from the development
industry, housing advocacy groups, non-profit housing providers, moderate income
Page 1014 of 1179
individuals likely to benefit from an IZ program and the public at large. There was general
support for establishing an IZ program. Community and affordable housing organizations
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.
The discussion paper was circulated to a broad range of stakeholders and people that had
previously been engaged in the project. Since June 2023, staff met with the Waterloo Region
Homebuilders Association, Kitchener Development Liaison Committee, Build Urban, Grand
River Accessibility Advisory Committee, several local high-rise developers, non -profits and
academics. Written and verbal comments since June 2023 along with staff responses are
included in Attachment E. Approximately 1,100 individuals have been engaged in the
project. Key themes from the engagement activities are highlighted in DSD -2023 -071 -and
DSD -2023-258.
The statutory public meeting was advertised in the Waterloo Record on January 5, 2024,
EngageWR and a email notice of the meeting was sent to all parties who had previously
expressed interest in the project.
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 -2022-281 Growth Related Funding Tools —Cumulative Impact Assessment
• DSD -2022-501 Bill 23 More Homes Built Faster Act — Kitchener Comments
• DSD -2023-071 Inclusionary Zoning for Affordable Housing: Status Update
• DSD -2023-258 Inclusionary Zoning — Policy and Implementation Directions
• Provincial Policy Statement, 2020
• A Place to Grow: Growth plan for the Greater Golden Horseshoe, 2020
• Regional Official Plan
• Planning Act
CO-AUTHORS: Michelle Lee, Executive Officer to the CAO, 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 and Research
Ryan Hagey, Financial Planning and Asset Management
APPROVED BY: Justin Readman, General Manager of Development Services
ATTACHMENTS:
Attachment A
— By-law to amened the Official Plan
Attachment B
— By-law to amend Zoning By-law 2019-51
Attachment C
— By-law to amend Zoning By-law 85-1
Attachment D
— Draft Inclusionary Zoning Implementation Guidelines
Attachment E
—Community Engagement Comments and Responses
Page 1015 of 1179
Attachment F — Inclusionary Zoning - Supplementary Discussion Paper, NBLC
2023
Attachment G — Discussion Paper, June 2023
Page 1016 of 1179
AMENDMENT NO. x TO THE OFFICIAL PLAN
OF THE CITY OF KITCHENER
CITY OF KITCHENER
Page 1017 of 1179
AMENDMENT NO. X TO THE OFFICIAL PLAN
OF THE CITY OF KITCHENER
CITY OF KITCHENER
INDEX
SECTION 1 TITLE AND COMPONENTS
SECTION 2 PURPOSE OF THE AMENDMENT
SECTION 3 BASIS OF THE AMENDMENT
SECTION 4 THE AMENDMENT
APPENDICES
APPENDIX 1 Notice of the Meeting of Planning and Strategic Initiatives
Committee of January 29, 2024
APPENDIX 2 Minutes of the Meeting of Planning and Strategic Initiatives
Committee — January 29, 2024
APPENDIX 3 Minutes of the Meeting of City Council — February 12, 2024
2
Page 1018 of 1179
AMENDMENT NO. x TO THE OFFICIAL PLAN OF THE CITY OF KITCHENER
SECTION 1 —TITLE AND COMPONENTS
This amendment shall be referred to as Amendment No. x to the Official Plan of the City of Kitchener.
This amendment is comprised of Sections 1 to 4 inclusive.
SECTION 2 — PURPOSE OF THE AMENDMENT
The purpose of this Amendment is to introduce Inclusionary Zoning policies that will permit the
City to require affordable housing units in new developments to be included as part of other
housing development within Protected Major Transit Station Areas ("PMTSAs").
The amendment:
• Introduces goals and objectives for the Inclusionary Zoning policy and a description of
measures and procedures used to attain these goals and objectives;
• Sets the minimum size of development to which Inclusionary Zoning policies apply as 50
units or more;
• Specifies that the policy initially applies to the Protected Major Transit Station Areas west
of the Conestoga Expressway;
• Establishes a requirement in each Protected Major Transit Station Area that up to 5% of
the gross leasable residential floor area be set aside as affordable housing, with the set
aside requirements phased in over multiple years;
• Specifies that affordable units are to be rented by low and moderate income renter
households
• Authorizes all housing types and sizes to be provided as affordable units, and requires
that they be similar in size and number of bedrooms to market units giving rise to the
Inclusionary Zoning requirement;
• Establishes a minimum period of affordability of 25 years;
• Outlines the measures and incentives to support these policies;
• Outlines that the maximum rents for affordable units will be determined according to
Average Market Rent and median renter income in the regional market area;
• Amends the definition of affordable housing as it applies to the Inclusionary Zoning policies
to align with these criteria;
• Enables the provision of off-site affordable units, provided they are located within an
PMTSA in the City, and are occupied in a timely fashion; and
• Sets out the approach to monitoring that ensures required affordable units remain
affordable for 25 years.
SECTION 3 — BASIS OF THE AMENDMENT
Section 16(4)-16(13) of the Planning Act provides that municipal official plans may contain policies
authorizing Inclusionary Zoning by requiring the inclusion of affordable housing units within
buildings containing other residential units. These sections along with Ontario Regulation 232/18
outline the required processes and prescribed content of Official Plan polices authorizing
Inclusionary Zoning. The requirements have been met in the preparation of this amendment.
The Regional Official Plan designates Protected Major Transit Station Areas and encourages
municipalities to implement Inclusionary Zoning.
Page 1019 of 1179
This Official Plan amendment has regard for matters of provincial interest, is consistent with and
conforms to the Provincial Policy Statement (2020), A Place to Grow: Growth Plan for the Greater
Golden Horseshoe (2019) as amended, and the Regional Official Plan (2009) as amended.
Page 1020 of 1179
SECTION 4—THE AMENDMENT
The City of Kitchener Official Plan is hereby amended as follows:
1. Section 4 is hereby amended by adding the following after Objective 4.1.6:
"4.1.7 To ensure that new affordable housing is provided alongside market housing within
Protected Major Transit Station Areas through Inclusionary Zoning."
2. Section 4.C.1 is amended by adding the following policies after policy 4.C.1.42 :
"Inclusionary Zoning
4.C.1.43 Inclusionary Zoning is a tool that allows the City to require affordable
housing to be provided in new developments within Protected Major Transit Station
Areas. Policies for Inclusionary Zoning are intended to support the development of mixed -
income communities and equitable access to higher order transit by increasing the supply
of affordable housing for low and moderate income households within these areas.
(a) Inclusionary Zoning will be implemented in conjunction with other planning tools
to increase the supply of affordable housing within Protected Major Transit Station
Areas that might not otherwise be built, contributing to diverse, mixed -income
communities that offer a range of housing options that are affordable for a range
of household incomes.
(b) Inclusionary Zoning policies will be informed by ongoing monitoring and
periodic assessment reports in accordance with Provincial requirements, or more
frequently as necessary, to create and increase the supply of affordable housing
without negatively impacting new market housing supply.
(c) The City will work collaboratively with the Region, private and non-profit
developers and housing providers, to leverage expertise to achieve affordable
housing objectives.
(d) Inclusionary zoning will be implemented through the Zoning By-law and guided
by Inclusionary Zoning Implementation Guidelines."
4.C.1.44 The City will enact a Zoning by-law for Inclusionary Zoning, pursuant to the
Planning Act and in accordance with the policies of this Plan, to require affordable
housing to be included in developments containing dwelling units located within a
Protected Major Transit Station Area as shown on Map 4.
4.C.1.45 Notwithstanding policy 4.C.1.44, Inclusionary Zoning will not apply to:
a) development containing fewer than 50 new dwelling units;
Page 1021 of 1179
b) the portions of a development containing residential care homes, retirement homes,
group homes, nursing homes or post -secondary student residences;
c) the development or redevelopment proposed by a non-profit housing provider or is
proposed by a partnership in which:
(i) a non-profit housing provider has an interest that is greater than 51 per cent,
and
(ii) a minimum of 51 per cent of the dwelling units are intended as affordable
housing, excluding any offsite dwelling units that would be located in the
development or redevelopment;
d) developments that are otherwise exempt under the Planning Act;
e) Lands located within the Block Line, Fairway or Sportsword Protected Major Transit
Station Areas until such time as a comprehensive city -initiated Official Plan Amendment
updating the planning framework for these areas has been completed.
4.C.1.46 Development subject to Inclusionary Zoning shall provide a minimum
percentage of new gross leasable residential floor area as affordable dwelling units in
accordance with Table 3.
Table 3: Inclusionary Zonina Set -Aside Requirements
6
Page 1022 of 1179
Minimum Percentage of Gross Leasable
Residential Floor Area to be provided as
Protected Major
affordable dwelling units by date of building
Market Area
Transit Station Area
permit issuance
2025-
2027-2028
2029-
2031+
2026
2030+
Prime
• Central
• Victoria Park and
Kitchener City Hall
2%
3%
5%
5%
• Queen and
Frederick
Established
• Grand River
Hospital
• Kitchener Market
1%
2%
4%
5%
• Borden
• Mill
Emerging
. Block Line
• Fairway
0%
1%
3%
5%
• Sportsworld
6
Page 1022 of 1179
4.C.1.47 Notwithstanding Policy 4.C.1.46, any lands within a Protected Major Transit
Station Area that were designated for employment or industrial purposes in accordance
with the Secondary Plan or Official Plan in effect on the day prior to the effective date of
Official Plan Number xx, must provide affordable dwelling units in accordance with the
Prime Market Area in Table 3.
4.C.1.48 Affordable dwelling units required under Policy 4.C.1.46 will be provided as
rental dwelling units.
4.C.1.49 The City, in consultation with the Region and the Cities of Waterloo and
Cambridge will establish maximum rents for the required affordable dwelling units on an
annual basis as described in definition of affordable housing/affordability in Schedule A.
4.C.1.50 Affordable dwelling units required under Policy 4.C.1.46 shall be:
(a) occupied by low or moderate income renter households as described in the definition
of affordable housing/affordability in Schedule A, with a maximum income at the time of
their initial tenancy of 3.5 times the dwelling unit's rent,-
(b)
ent,
(b) rented in accordance with policies of this plan for a period of at least 25 years from
the date of first residential occupancy of the affordable dwelling unit;
(c) similar to the market -rate portion of the development giving rise to the requirement for
affordable dwelling units in terms of dwelling unit mix and size, as appropriate, to achieve
a balanced mix of dwelling unit types and sizes and support the creation of affordable
units suitable for a range of household sizes; and
(d) first occupied prior to or coincident and proportional to the first occupancy of the
market dwelling units in the development giving rise to the affordable dwelling units.
4.C.1.51 The City, in consultation with the Region, will support developments in
meeting their Inclusionary Zoning requirements by exempting developments that contain
the required affordable dwelling units, on a prorated basis, from park dedication
requirements, development charges, and community benefit charges in accordance with
Provincial legislation.
4.C.1.52 Affordable dwelling units will be provided within the building giving rise to
the Inclusionary Zoning requirements, or offsite in a building located within a Protected
Major Transit Station Area as shown on Map 4, and on lands subject to the Inclusionary
Zoning provisions of the zoning by-law.
4.C.1.53 Further to Policy 4.C.1.50 d), the timing of first occupancy of offsite
affordable dwelling units will be prior to or coincident and proportional to the occupancy
of market units on the site giving rise to the requirement for the affordable dwelling units.
Page 1023 of 1179
4.C.1.54 The City, with support from the Region, will ensure ongoing affordable rents
of the dwelling units, and their occupancy by eligible households, by establishing and
maintaining a list of eligible tenants, outlining reporting requirements, and securing these
requirements through agreements as outlined in section 17.E.17.
4.C.1.55 The City shall prepare an assessment report a minimum of every 5 years,
in accordance with the Provincial requirements, for the purpose of determining whether
any Inclusionary Zoning policies in this Plan should be amended.
4.C.1.56 The City, together with the Region, shall monitor the impact of Inclusionary
Zoning on the affordable housing supply and will prepare and make publicly available a
report every two years in accordance with Provincial requirements. The report will contain
information including:
a) the number of affordable dwelling units,-
b)
nits,b) the types of affordable dwelling units;
c) the location of the affordable dwelling units;
d) the range of household incomes for which the affordable dwelling units were
provided;
e) the number of affordable dwelling units that were converted to units at market
value; and
f) the proceeds (if any) that were received by the municipality from the sale of
affordable dwelling units.
The City may initiate amendments to these policies is response to the findings of this
report in advance of the 5 -year assessment report update."
3. Section 17.E.17 is deleted in its entirety and replaced as follows:
"17.E.17 Inclusionary Zoning Agreements
An owner of a development subject to an Inclusionary Zoning By-law will enter into one
or more agreements with the City, and if applicable, an offsite affordable dwelling unit
owner, to be registered on title, securing:
a) the requirements of Section 4.C.1.43-56
b) requirements for the timely delivery of the affordable dwelling units including
any phasing if applicable;
c) the approach to determining maximum rent and permitted rent increases;
d) Adjustments to the maximum permitted rent in the event the purpose built rental
housing, is converted to condominium tenure,
e) requirements ensuring the occupants of affordable dwelling units have the
same building and amenity access as occupants of market units
f) requirements ensuring affordable dwelling units are provided to eligible
tenants;
g) requirements for ongoing administration, reporting and monitoring of the
affordable dwelling units over the affordability period;
h) conditions for offsite affordable dwelling unit delivery if applicable;
Page 1024 of 1179
i) provisions that apply in the event of default of the agreement; and
j) other standards or arrangements as appropriate."
4. Schedule A is amended by adding the following definitions into the existing text in
alphabetical order:
-Non-profit housing provider means,
(a) a corporation to which the Not -for -Profit Corporations Act, 2010 applies that is in
good standing under that Act and whose primary objective is to provide housing,
(b) a corporation without share capital to which the Canada Business Corporations Act
applies, that is in good standing under that Act and whose primary objective is to
provide housing,
(c) a non-profit housing co-operative that is in good standing under the Co-operative
Corporations Act, or
(d) an organization that is a registered charity within the meaning of the Income Tax Act
(Canada) or a non-profit organization exempt from tax under paragraph 149 (1) (1) of
that Act, and whose land is owned by the organization, all or part of which is to be used
as affordable housing";
and
"Purpose Built Rental Housing means a multiple dwelling where individual dwelling
units are not units in a plan of condominium, and which is intended for use as rented
residential premises."
5. Schedule A is amended by adding the following text after the final paragraph of the
definition of Affordable Housing/Affordability:
"Notwithstanding the preceding, for the purposes of policies relating to Inclusionary
Zoning in section 4, affordable housing means:
c) for dwelling units within buildings that are not within purpose-built rental
housing, in accordance with subsection b); and
d) for dwelling units within purpose-built rental housing, the greater of the value
calculated in accordance with subsection c); or 30% of median renter income for
the regional market area, as published from time to time by Canada Mortgage
and Housing Corporation."
6. Schedule B is amended by inserting the words "Inclusionary Zoning
Implementation Brief" between the words "Existing Conditions Plan" and
"Neighbourhood Design Report or Brief'
9
Page 1025 of 1179
APPENDIX 1 — Statutory Public Meeting Notice
Advertised in The Record — January 5, 2024
NOTICE OF PUBLIC MEETING
proposing Inclusionary Zoning requirements for
Aordabte housing within major transit station areas ki
Have Your Voice Heard!
Planning & strategic Initiatives Committee
Bate°. January24.2024
Location: Council Chambers,.
rt Kitchener City Hall
rte- 200 King Street West
t. or Virtual Zoom Meeting
Go to kitchenerca/meetings
7 and select
-� -- + Current agendas and reports
(posted 10 days before meeting)
Appear as a delegation
• Watch a meeting
Tim Donegani, Senior Ptanner
tim.donegani,,41kitchener.ca
519.741,2200 x7067
To learn more visit_
www.engagewr.ca/
inclusionary -zoning
The City of Kitchener Wil consider city -initiated Official Plan an Zoning 6y -law
amendments that would require some affordable housing units tote included as part of
new buildings within Protected Major Transit Station Areas. These requirements are
called Inclusionary Zoning and would establish a minimum number of units that would
be required to be set aside to be rented to low and moderate income households at
affordable rents for the next 25 yearn
10
Page 1026 of 1179
APPENDIX 2 Minutes of the Meeting of Planning and Strategic Initiatives
Committee — October 22, 2019
11
Page 1027 of 1179
APPENDIX 3 Minutes of the Meeting of City Council — October 28, 2019
12
Page 1028 of 1179
13
Page 1029 of 1179
BY-LAW NUMBER XXX
OF THE
CORPORATION OF THE CITY OF KITCHENER
(Being a by-law to amend By-law 2019-051 known as the
Zoning By-law 2019 for the City of Kitchener — Inclusionary
Zoning
WHEREAS it is deemed expedient to amend By-law 2019-051;
NOW THEREFORE the Council of the Corporation of the City of Kitchener
enacts as following amendments to by-law 2019-051:
1. Section 4 is hereby amended by deleting section 4.3 in its entirely and replacing it as
follows:
"4.3 INCLUSIONARY ZONING
a) For the purposes of this Section 4.3,
Affordable Unit - means a dwelling unit where the maximum rent is in accordance with
subsections 4.3 e) and is occupied by an eligible tenant in accordance with subsection
4.3 d) of this By-law.
Complete Application - means an application that contains sufficient particulars and
information to allow it to be processed and approved. An application that is incomplete
becomes a complete application on the date that the required particulars and information
are provided to the City.
Development —means the construction, erection or placing of one or more buildings or
structures on land or the making of an addition or alteration to a building or structure that
has the effect of substantially increasing the size or usability thereof.
Eligible Tenant(s) - means a tenant is eligible to occupy affordable units in accordance
with subsection 4.3 f)
Gross Leasable Residential Floor Area - means the aggregate horizontal area of
dwelling units in a building measured from the exterior faces of the exterior walls of all
storeys of a building. For greater clarity, Gross Leasable Residential Floor Area does not
include common or parking areas or storage lockers.
Page 1030 of 1179
Non-profit housing provider -means
i) a corporation to which the Not -for -Profit Corporations Act, 2010 applies that is in
good standing under that Act and whose primary objective is to provide housing;
ii) a corporation without share capital to which the Canada Business Corporations
Act applies, that is in good standing under that Act and whose primary objective is
to provide housing;
iii) a non-profit housing co-operative that is in good standing under the Co-operative
Corporations Act; or
iv) an organization that is a registered charity within the meaning of the Income Tax
Act (Canada) or a non-profit organization exempt from tax under paragraph
149(1)(1) of that Act, and whose land is owned by the organization, all or part of
which is to be used as affordable housing.
Purpose -Built Rental Housing - means all or part of a multiple dwelling or mixed use
building where dwelling units are not a unit within a registered plan of condominium per
section 2 of the Condominium Act, and which is intended for use as rented residential
premises."
Regional Market Area —means the real estate market within the geographical boundary
of the Region of Waterloo.
b) The following regulations shall apply to the following Protected Major Transit Station
Areas identified on Appendix F to this By-law:
• Grand River Hospital;
• Central Station;
• Victoria Park/Kitchener City Hall;
• Queen/Frederick;
• Kitchener Market;
• Borden; and
• Mill.
C) Section 4.3 of this By-law does not apply to the following developments:
i) Existing buildings except where any addition or change in use would result
in 50 or more new dwelling units;
ii) Development that would add fewer than 50 dwelling units to a lot,-
iii)
ot,iii) Development where a non-profit housing provider has an interest that is
greater than 51 per cent;
iv) Development that, on or before the effective date of the zoning by-law
amendment bringing this section 4.3 Inclusionary Zoning provisions into
this By-law, is the subject of a complete application for:
a. a plan of subdivision under section 51 of the Planning Act;
Page 1031 of 1179
b. a description or an amendment to a description under section 9 of
the Condominium Act;
c. Building permit; and/or
d. Site plan control under section 41 of the Planning Act;
V) Development that is exempt in accordance with the Planning Act and
associated regulations;
vi) Large Residential Care Facility,-
vii)
acility,vii) Lodging House,-
viii)
ouse,viii) Group Home
ix) Hospice; or
X) A student residence owned and/or operated by a post -secondary school.
d) A percentage of gross leasable residential floor area shall be provided as affordable
units in accordance with Table 4-1
Table 4-1: Inclusionary Zonina Set-aside Requirements
e) The maximum rent that can be charged for affordable units will be determined
annually by the City, in consultation with the Region and according to the following
definition:
i) within buildings that are not purpose-built rental housing, the lesser of average
market rent for the regional market area according to the number of bedrooms; or
30% of the 60th percentile household income for renter households for the regional
market area; and
Page 1032 of 1179
Minimum Percentage of Gross Leasable
Residential Floor Area to be provided for
Market Area
Protected Major Transit
affordable units by date of building permit
Station Area
issuance
2025-
2027-
2029-
2031+
2026
2028
2030
Prime
. Central Station
• Victoria Park/Kitchener
2%
3%
5%
5%
City Hall
• Queen/Frederick
Established
. Grand River Hospital
Kitchener Market
1%
2%
4%
5%
Borden
• Mill
Emerging
. Block Line
• Fairway
0%
1%
3%
5%
• S ortsworld
e) The maximum rent that can be charged for affordable units will be determined
annually by the City, in consultation with the Region and according to the following
definition:
i) within buildings that are not purpose-built rental housing, the lesser of average
market rent for the regional market area according to the number of bedrooms; or
30% of the 60th percentile household income for renter households for the regional
market area; and
Page 1032 of 1179
ii) within purpose-built rental housing, the greater of the figure calculated in
accordance with subsection 4.3 e) i) above or 30% of median renter household
income for regional market area, as published from time to time by Canada
Mortgage and Housing Corporation.
f) Tenants of affordable units shall be pre -approved by the City in consultation with the
Region and have a maximum household income of 3.5 times the unit's rent at the
time the tenant first occupies the unit.
g) Affordable units shall be similar to market units in terms of mix, type, size, and quality
as further detailed in the agreements described in section 4.3 i).
h) Affordable units shall not exceed the maximum rent set out in subsection 4.3 e) and
will be provided to eligible households in accordance with subsection 4.3 f) for a
minimum of 25 years after the date the unit is first occupied.
i) Inclusionary Zoning requirements in Section 4.3 and related matters outlined in the
Citys Official Plan and Planning Act shall be secured by one or more legal
agreements with the City, owner, and owner of offsite units if applicable, to the
satisfaction of the City Solicitor, and registered on title of the lands."
2. Section 19 is hereby amended by adding Site Specific Provision (4) as follows:
"Within the lands zoned SGA -2, SGA -3, or SGA -4 and shown as affected by this
provision on Zoning Grid Schedules 117, 118, 119, 143, 144, and 145 of Appendix
A, despite Table 4-1 of Section 4.3 of this By-law, the minimum amount of Gross
Leasable Residential Floor Area to be provided as Affordable units shall be in
accordance with the Prime Market Areas in Table 4-1. "
3. Zoning Grid Schedule Numbers 117, 118, 119, 143, 144, and 145 of Appendix A of By-
law Number 2019-051 are hereby amended by adding Site Specific Provision (4) as
shown on Attachment 1.
4. Appendix F is hereby added to By-law 2019-051 as shown on Attachment 2.
5. This By-law shall become effective when Official Plan Amendment No. xx (Inclusionary
Zoning), comes into effect pursuant to Section 24(2) of the Planning Act, R.S.O. 1990, c.
P. 13, as amended.
PASSED at the Council Chambers in the City of Kitchener this day of , 2024.
Mayor
Clerk
Page 1033 of 1179
Attachment 1
Map showing the locations on Appendix A to By-law 2019-051 where Site Specific
Provision (4) apply
Page 1034 of 1179
Attachment: ZBA23/027/K/TD Appendix A -Zoning Grid Schedule 117
[5000] Zoning By-law Index Number By -Laws Overlays Applicable to By -Law 2019-051 87 118 144
�
(88) Site Specific Provision Number Lands Subject to this Flooding Ecological Restoration
[1 ] Property Detail Schedule Number 1:3 Zoning By-law Amendment 0 Hazard Mq Areas 88 117 145 a
Date: November 24, 2023
Lands not Subject to this Slope Erosion Significant Wildlife Habitat
Zoning By-law Amendment Hazard 0 and Landforms
Attachment: ZBA23/027/K/TD Appendix A -Zoning Grid Schedule 118
[5000] Zoning By-law Index Number By -Laws Overlays Applicable to By -Law 2019-051 86 119 143
�
(88) Site Specific Provision Number Lands Subject to this Flooding Ecological Restoration
[1 ] Property Detail Schedule Number 1:3 Zoning By-law Amendment 0 Hazard Mq Areas 87 118 144
Date: November 24, 2023
Lands not Subject to this Slope Erosion Significant Wildlife Habitat 4 1 +7 2, ' N
Zoning By-law Amendment Hazard 0 and Landforms
Attachment: ZBA23/027/K/TD Appendix A -Zoning Grid Schedule 119
[5000] Zoning By-law Index Number By -Laws Overlays Applicable to By -Law 2019-051 85 120 142
�
(89) Site Specific Provision Number Lands Subject to this Flooding Ecological Restoration
[I ] Property Detail Schedule Number 1:3 Zoning By-law Amendment 0 Hazard Mq Areas 86 119 143 a
Date: November 24, 2023
Lands not Subject to this Slope Erosion Significant Wildlife Habitat 1 +e '244 ' N
Zoning By-law Amendment Hazard 0 and Landforms
Attachment: ZBA23/027/K/TD Appendix A - Zoning Grid Schedule 143
[5000] Zoning By-law Index Number
(88) Site Specrfic Provision Number
t1] Property Detail Schedule Number
Date: November 24, 2023
By -Laws
r—n Lands Subject to this
`J Zoning By-law Amendment
Lands not Subject to this
Zoning By-law Amendment
Overlays Applicable to By -Law 2019-051
Flooding Ecological Restoration
0 Hazard Areas
Slope Erosion Significant Wildlife Habitat
Hazard 0 and Landforms
120 142 175
119 143 174
IH 11.1a '173 1' N
Attachment: ZBA23/027/K/TD Appendix A - Zoning Grid Schedule 144
[5000] Zoning By-law Index Number By -Laws Overlays Applicable to By -Law 2019-051 119 143 174
�
(88) Site Specific Provision Number Lands Subject to this Flooding Ecological Restoration
[1 ] Property Detail Schedule Number 1:3 Zoning By-law Amendment 0 Hazard Mq Areas 118 144 173 a
Date: November 24, 2023
Lands not Subject to this Slope Erosion Significant Wildlife Habitat I P ! L1s772 N
Zoning By-law Amendment Hazard 0 and Landforms
Attachment: ZBA23/027/K/TD Appendix A - Zoning Grid Schedule 145
[5000] Zoning By-law Index Number By -Laws Overlays Applicable to By -Law 2019-051 118 144 173
(88) Site Specific Provision Number Lands Subject to this Flooding Ecological Restoration
Property Detail Schedule Number 1:3 Zoning By-law Amendment 0 Hazard Mq Areas
117 145 172
Date: November 24, 2023
Lands not Subject to this Slope Erosion Significant Wildlife Habitat I 1 11'1 ',71 N
Zoning By-law Amendment Hazard 0 and Landforms
Attachment 2
New Appendix F to By -Law 2019-051 that shows detailed PMTSA boundaries and labels
Page 1041 of 1179
Appendix F. Protected Major Transit Station Areas
YL Trac scut I?a 7W
Page 1042 of 1179
BY-LAW NUMBER xxx
OF THE
CORPORATION OF THE CITY OF KITCHENER
(Being a by-law to amend By-law 85-1 known as the Zoning
By-law for the City of Kitchener — Inclusionary Zoning
WHEREAS it is deemed expedient to amend By-law 85-1;
NOW THEREFORE the Council of the Corporation of the City of Kitchener
enacts as following amendments to By-law 85-1:
1. Section 5 is hereby amended by adding the following section after section 5.33 FOUR TO
TEN DWELLING UNITS ON A LOT:
"5.34 INCLUSIONARY ZONING
a) For the purposes of this Section 5.34
"Affordable Unit" means a dwelling unit where the maximum rent is in accordance with
subsection 5.34 e), and is occupied by an eligible tenant in accordance with subsection
5.34 f) of this By-law.
"Complete Application" means an application that contains sufficient particulars and
information to allow it to be processed and approved. An application that is incomplete
becomes a complete application on the date that the required particulars and information
are provided to the City.
"Development" means the construction, erection or placing of one or more buildings or
structures on land or the making of an addition or alteration to a building or structure that
has the effect of substantially increasing the size or usability thereof.
"Eligible Tenant(s)" - means a tenant that is eligible to occupy affordable units in
accordance with subsection 5.34 f)
"Gross Leasable Residential Floor Area" means the aggregate horizontal area of
dwelling units in a building measured from the exterior faces of the exterior walls of all
storeys of a building. For greater clarity, Gross Leasable Residential Floor Area does not
include common or parking areas or storage lockers.
"Non-profit housing provider" means
Page 1043 of 1179
i) a corporation to which the Not -for -Profit Corporations Act, 2010 applies that is in
good standing under that Act and whose primary objective is to provide housing;
ii) a corporation without share capital to which the Canada Business Corporations
Act applies, that is in good standing under that Act and whose primary objective is
to provide housing;
iii) a non-profit housing co-operative that is in good standing under the Co-operative
Corporations Act; or
iv) an organization that is a registered charity within the meaning of the Income Tax
Act (Canada) or a non-profit organization exempt from tax under paragraph
149(1)(1) of that Act, and whose land is owned by the organization, all or part of
which is to be used as affordable housing.
"Purpose -Built Rental Housing" means all or part of a multiple dwelling or mixed use
building where dwelling units are not a unit within a registered condominium per section 2
of the Condominium Act, and which is intended for use as a rented residential premises.
"Regional Market Area" means the real estate market within the geographical boundary
of the Region of Waterloo.
b) The following regulations shall apply to the following Protected Major Transit Station
Areas identified on Appendix F to this by-law:
• Grand River Hospital;
• Central Station;
• Victoria Park/ Kitchener City Hall;
• Queen/ Frederick;
• Kitchener Market;
• Borden; and
• Mill.
C) Section 5.34 of this By-law does not apply to the following developments:
i) Existing buildings except where any addition or change in use would result in 50
or more new dwelling units;
ii) Development that would add fewer than 50 dwelling units to a lot;
iii) Development where a non-profit housing provider has an interest that is greater
than 51 per cent;
iv) Development that, on or before the effective date of the zoning by-law
amendment bringing this section 5.34 Inclusionary Zoning provisions into this By-
law, is the subject of a complete application for:
a. a plan of subdivision under section 51 of the Planning Act;
Page 1044 of 1179
b. a description or an amendment to a description under section 9 of
the Condominium Act; or
c. Building permit; and/or
d. Site plan control under section 41 of the Planning Act;
V) Development that is exempt in accordance with the Planning Act and associated
regulations;
vi) Residential Care Facility;
vii) Lodging House;
viii) Group Home;
ix) Correctional Group Home;
x) Hospice; or
A) A student residence owned and/or operated by a post -secondary school.
d) A percentage of gross leasable residential floor area shall be provided as
affordable units in accordance with Table 5-1
Table 5-1: Inclusionary Zonina Set -Aside Reauirements
e) The maximum rent that can be charged for affordable units will be determined
annually by the City, in consultation with the Region and according to the following
definition:
i) within buildings that are not purpose-built rental housing, the lesser of average
market rent for the regional market area according to the number of bedrooms;
Page 1045 of 1179
Minimum Percentage of Gross Leasable
Residential Floor Area to be provided as
Protected Major Transit
affordable units by date of building permit
Market Area
Station Area
issuance
2025-
2027-
2029-2030
2031+
2026
2028
Prime
. Central Station
• Victoria Park/Kitchener
2%
3%
5%
5%
City Hall
• Queen/Frederick
Established
. Grand River Hospital
• Kitchener Market
1%
2%
4%
5%
• Borden
• Mill
Emerging
. Block Line
• Fairway
0%
1%
3%
5%
• Sportsworld
e) The maximum rent that can be charged for affordable units will be determined
annually by the City, in consultation with the Region and according to the following
definition:
i) within buildings that are not purpose-built rental housing, the lesser of average
market rent for the regional market area according to the number of bedrooms;
Page 1045 of 1179
or 30% of the 60th percentile household income for renter households for the
regional market area; and
ii) within purpose-built rental housing, the greater of the figure calculated in
accordance with subsection 5.34 e) i) above or 30% of median renter
household income for regional market area, as published from time to time by
Canada Mortgage and Housing Corporation.
f) Tenants of affordable units shall be pre -approved by the City in consultation with the
Region and have a maximum household income of 3.5 times the unit's rent at the
time the tenant first occupies the unit.
g) Affordable units shall be similar to market units in terms of mix, type, size, and quality
as further detailed in the agreements described in section 5.34 i).
h) Affordable units shall not exceed the maximum rent set out in subsection 5.34 e) and
will be provided to eligible households in accordance with subsection 5.34 f) for a
minimum of 25 years after the date the unit is first occupied.
i) Inclusionary Zoning requirements in Section 5.34 and related matters outlined in the
City's Official Plan and Planning Act shall be secured by one or more legal
agreements with the City, owner, and owner of offsite units if applicable, to the
satisfaction of the City Solicitor, and registered on title of the lands."
2. APPENDIX "D" - SPECIAL REGULATION PROVISIONS FOR SPECIFIC LANDS to By-
law 85-1 is hereby amended by adding Special Regulation Provision 808R as follows:
"Notwithstanding Table 5-1 in section 5.34 of this By-law, within the lands zoned
M-2 on Schedule 143 of Appendix A, the percentage of gross leasable residential
floor area to be provided as affordable units shall be in accordance with the Prime
Market Areas in Table 5-1 ."
3 Schedule Number 143 of Appendix A to By-law Number 85-1 is amended by adding
Special Regulation Provision (808R) in accordance with Attachment 1.
4. Appendix J is hereby added to By-law 85-1 in accordance with Attachment 2.
5. This By-law shall become effective only if Official Plan Amendment No. xx (Inclusionary
Zoning), comes into effect pursuant to Section 24(2) of the Planning Act, R.S.O. 1990, c.
P. 13, as amended.
Page 1046 of 1179
PASSED at the Council Chambers in the City of Kitchener this day of , 2024.
Mayor
Clerk
Page 1047 of 1179
Attachment 1 Changes to Appendix A to By-law Number 85-1 to add Special Regulation
Provision (808R) to specified lands
Page 1048 of 1179
Attachment: ZBA23/027/K/TD
Schedule Number 143
,m
0
O p
n
�m
�o
00
[5000] Zoning By- law Index Number By -Laws Overlays Applicable to By -Law 2019-051
(88) Site Specffic Provision Number Lands Subject to this Flooding Ecological Restoration
Zoning By-law Amendment K�0 Hazard Areas
[1] Property Detail Schedule Number
Pacle
Lands not Subject to this Vw —S4&pc
`J Zoning By-law AmendmentHazard I ♦ ♦ and Landforms
Attachment 2
New Appendix J that shows detailed PMTSA boundaries and labels
Page 1050 of 1179
Appendix J. Protected Wor Transit Station Areas
Protected MTSA
Light Rail Transit (LRT)
Station
Kitchener
Market
Lands within Protected Major Transit Station Areas are subject to Inclusionary Zoning requirements, as outlined in Section 5 —
General Regulations and any other section(s) of Zoning By-law 85-1.
NETPoC SCALE 1 78.01 C
N
Page 1051 of 1179
Inclusionary Zoning Implementation
Guidelines
for Cambridge, Kitchener and Waterloo
Revision History
version I Date I Description
1.0 February 2024 1 Draft presented to Kitchener and Waterloo Councils
1
Page 1052 of 1179
Contents
Section1— Introduction............................................................................................................................4
Section2 —Guiding Principles...................................................................................................................5
2.1 Inclusionary Zoning shall be used to ensure the continuous supply of affordable housing near
higher order transit station stops.........................................................................................................
5
2.2 The IZ program will complement, not compete with, existing affordable housing programs .......
5
2.4 The IZ program will be designed to maximize duration of affordability.........................................5
2.5 The IZ program be designed to operate without significant government subsidy .........................
5
Section3 — Set-asides...............................................................................................................................
6
3.1 Set-aside Rates................................................................................................................................6
Section 4 — Exemptions and Limitations...................................................................................................7
4.1 Developments Exempt from IZ Requirements................................................................................7
4.2 Rental Replacement Units...............................................................................................................7
4.3 No Cash in Lieu................................................................................................................................7
Section 5 — Financial Incentives................................................................................................................7
5.1 Financial Incentives and Capital Grants..........................................................................................7
5.2 Development Fees and other Charges............................................................................................8
Section6 — Offsite Units............................................................................................................................8
6.1 Offsite Units....................................................................................................................................8
6.2 Innovative and Flexible Approaches...............................................................................................8
Section 7 — Implementation and Administration......................................................................................8
7.1 Planning to meet IZ requirements..................................................................................................8
7.2 Agreements Registered on Title......................................................................................................9
7.3 Agreements for Units in a Condominium Building.........................................................................9
7.4 Agreements for Offsite Units..........................................................................................................9
7.5 Timing of Occupancy.....................................................................................................................10
7.6 Affordability Period.......................................................................................................................10
7.7 Household Eligibility......................................................................................................................10
7.8 Applications for Affordable Units..................................................................................................10
7.9 Selection of Tenants......................................................................................................................11
7.10 Maximum Permitted Rent..........................................................................................................11
7.11 Rent Changes..............................................................................................................................12
2
Page 1053 of 1179
7.12 Maximum Rents Upon Vacancy..................................................................................................12
7.13 Sale of Affordable Units in Condominiums.................................................................................12
Section8 - Building Design......................................................................................................................12
8.1 Location and Distribution within Buildings...................................................................................12
8.2 Access to Building and Amenities.................................................................................................13
8.3 Balconies, Patios, and Terraces.....................................................................................................13
8.4 Accessibility...................................................................................................................................13
8.5 Universal Design............................................................................................................................13
8.6 Parking Requirements...................................................................................................................14
Section 9 —Affordable Unit Design..........................................................................................................14
9.1 Unit Sizes.......................................................................................................................................14
9.2 Number of Bedrooms....................................................................................................................14
9.3 Unit Features.................................................................................................................................14
Section 10 — Reporting and Monitoring..................................................................................................14
10.1 Annual Reporting........................................................................................................................14
10.2 Responding to Market Conditions and Program Outcomes.......................................................14
AppendixA - Definitions.........................................................................................................................15
3
Page 1054 of 1179
Section 1— Introduction
Inclusionary Zoning (IZ) is a land -use planning tool, authorized through the Planning Act, that can be
used by municipalities to require affordable housing units in new residential and mixed-use
developments located in Protected Major Transit Station Areas (PMTSAs). The tool has been used
successfully in a number of different jurisdictions to create a modest but meaningful supply of
affordable housing.
IZ is only one tool in a larger toolbox to help create a healthy housing system that provides housing
across the full housing continuum. Used in combination with (rather than instead of) other tools and
programs, such as emergency shelters and temporary housing, Federally and Provincially funded
affordable housing, municipal grants and programs, and supportive local planning policies and
regulations, IZ has the potential to create a continuous supply of affordable housing to support
households with modest incomes who have been priced out of the housing market.
Once the cities of Kitchener, Waterloo, and Cambridge adopt a join inclusionary zoning policy and program, this
guide will assist will assist in its implementation. The purpose of this document is to outline the principles and
implementation guidelines for the IZ program that are not explicitly outlined in the Planning Act, Ontario
Regulation 232/18, or the Cities' respective IZ Official Plan policies and by-laws. The guidelines in this
document are to be read in conjunction with the IZ policies and regulations in each city's Official Plan
and Zoning By-law (Table 1).
Table 1. Inclusionary Zoning Policies and Zoning By-law Regulations*
Municipality
Relevant Official Plan Policies
Relevant Zoning By-law
regulations
Kitchener
Housing Section 4;
Zoning By-law 2019-051,
Implementation: Section
Section 4.20 and
17.E.17
Zoning By-law 85-1 Section
5.37
Waterloo
Major Transit Station Areas
Zoning By-law 2018-050,
Section 3.8;
Section 3
Supporting a Range of Housing
Section 10.1.2; and
Implementation 12.2
Cambridge
TBD
TBD
*Policy Numbers may change from time to time. Readers should refer to the updated Official Plan and Zoning By-
law of the subject municipality for the most up-to-date policy numbers and references.
The IZ Official Plan policies and Zoning By-law regulations shall take precedence over these guidelines in
the event of any conflict. These guidelines may be revised from time to time by staff to reflect council -
approved program changes, improve clarity and usability and to update the latest applicable maximum
rents that can be charged for affordable units required through the IZ program.
4
Page 1055 of 1179
Section 2 — Guiding Principles
The following guiding principles will inform decisions of all parties in the implementation and
administration of IZ.
2.1 Inclusionary Zoning shall be used to ensure the continuous supply of affordable housing near
higher order transit station stops.
Housing located within Protected Major Transit Station Areas is increasingly unaffordable for many
households. IZ will help support the creation of a continuous supply of affordable housing in places of
significant public investment in high quality transit and will ensure that people with lower incomes can
benefit from convenient transit options.
2.2 The IZ program will complement, not compete with, existing affordable housing programs.
A wide range of housing types are needed to ensure a healthy housing system. The IZ program will
support moderate income households seeking rental tenure housing near transit. By focusing on
creating units that are affordable to moderate income households, the program can operate without
additional municipal subsidy (also see Principle #5). The requirement for affordable units to be provided
as rental units recognizes the fact that rental units are typically easier for lower income households to
access and further, to ensure that a mix of tenure types are available near higher order transit stops.
2.3 The IZ program will provide policy predictability and limit market disruption.
IZ set-aside rates will come into effect starting in 2025 and will increase gradually over time in
accordance with the schedule set out in the relevant municipality's Inclusionary Zoning By-law (See
Section 3). The gradual phase in of set-aside rates is intended to minimize land market disruption, signal
to the market the policy expectations and allow time for developers to incorporate affordable unit
requirements into their financial models and reduce risks for negative impacts on the supply of new
housing units. By 2031, it is expected that all market areas will achieve the maximum set-aside rate of
5% that is permitted under proposed amendments to Ontario Regulation 232/18.
2.4 The IZ program will be designed to maximize duration of affordability.
Owners of affordable units created under the IZ program will be required to provide those units at
prescribed rents for a period of 25 years, which is the maximum term under the proposed amendments
to Ontario Regulation 232/18. The 25 -year period shall commence on the date of occupancy of an
affordable unit. The IZ program will provide flexibility and opportunity to support the eventual
ownership of affordable units by co-operatives and non-profit housing providers who may choose to
expand the period of affordability beyond 25 years.
2.5 The IZ program be designed to operate without significant government subsidy.
To complement existing housing programs and initiatives, and to avoid competing for limited
government funds, the IZ program has been designed as a financially sustainable program that doesn't
rely on municipal grants or financial incentives. Private developers can offset reduced revenues in the
short term by capitalizing on the increased value and opportunity created through municipally -initiated
increases in heights and/or densities (in some stations areas), the elimination of vehicle parking
requirements for affordable units and exemptions for affordable units from development charges and
5
Page 1056 of 1179
other charges (see Section 5). Over the longer term, real estate transactions and particularly land
acquisitions by builders, should reflect and account for the IZ requirements and revenue potential of
newly acquired lands. The program further limits the financial impact on development pro formas by
prescribing rents that are affordable for households with moderate incomes.
Section 3 — Set -asides
3.1 Set-aside Rates
Development within Protected Major Transit Station Areas will provide affordable units in accordance
with the set aside rate associated with the relevant Market Area (Table 1).
Table 1. Set Aside Rates for Protected Major Transit Station Areas
For developments with more than one phase, the required set-aside rate for a given phase will be
calculated at the time of the building permit issuance for that phase. The set-aside rate for a
development shall be calculated by multiplying the applicable set-aside rate in Table 1 by the Gross
Leasable Residential Floor Area of the development.
0
Page 1057 of 1179
Set-aside Rate by Date of Building Permit
Market Area
Protected Major Transit Station Area
issuance
2025-2026
2027-2028
2029-2030
2031+
• University of
• Allen
Waterloo
• Central Station
• Laurier/Waterloo
Prime
Park
e Victoria
2/
3%
5%
5%
Park/Kitchener
• Waterloo Public
City Hall
Square
•Queen/Fredrick
• Willis Way
• KitchenerMarket
• Conestoga
• Northfield
. Borden
Established
• Research &
' Mill
1%
2%
4%
5%
Technology Park
• Main
• Grand River
Hospital
• Downtown
Cambridge
• Block Line
• Pinebush
• Fairway
• Cambridge
Emerging
. Sportsworld
Centre Mall
o
0/
0
1/
0
3/
0
5/
• Preston
• Can-Amera
• Delta
For developments with more than one phase, the required set-aside rate for a given phase will be
calculated at the time of the building permit issuance for that phase. The set-aside rate for a
development shall be calculated by multiplying the applicable set-aside rate in Table 1 by the Gross
Leasable Residential Floor Area of the development.
0
Page 1057 of 1179
Section 4 — Exemptions and Limitations
4.1 Developments Exempt from IZ Requirements
IZ affordable housing requirements are only applicable to certain classes of development within
Protected Major Transit Station Areas. Classes of development that are exempt from the IZ
requirements are set out in the Zoning By-law for each subject city and include:
1. Existing buildings except where any addition, extension or change in use would result in 50 or
more new dwelling units;
2. Development that would add fewer than 50 housing units;
3. Development where a non-profit housing provider has a majority interest;
4. Residential Care Facilities;
5. Lodging Houses;
6. Group Homes;
7. Hospices; and
8. Student residences owned and operated by a post -secondary educational institution.
Developments which have submitted complete applications for either site plan approval or plan of
subdivision prior to the subject city's Inclusionary Zoning by-law being passed (xxx, 2024 for Kitchener
and xxx 2024 for Waterloo and xxx 2024 for Cambridge ), shall be exempt from IZ affordable housing
requirements in accordance with Section 8(1) of Ontario Regulation 232/18.
4.2 Rental Replacement Units
The Region of Waterloo Official Plan directs area municipalities to develop Official Plan policies and
implementing By-laws that regulate the replacement of rental units in buildings with six units or more.
Affordable units required to meet IZ requirements shall be net new affordable units and shall not include
any rental replacement units that may be required under a rental replacement by-law, if one exists. If
the proposed development requires rental replacement units, such rental replacement units shall not
count toward the IZ exemption threshold of 50 units or Gross Leasable Residential Floor Area that is
used in combination with the set-aside rate to determine a development's affordable unit requirements.
4.3 No Cash in Lieu
While proponents may enter into various contractual and financial arrangements with other partners to
meet their IZ requirements, they may not provide cash payments in lieu of providing affordable units to
the city in which the development is located.
Section 5 — Financial Incentives
5.1 Financial Incentives and Capital Grants
Affordable units that are provided in accordance with IZ requirements will not be eligible for Regional or
local municipal affordable housing financial incentives and/or capital grants. Developments that are
proposing to provide additional affordable units (i.e. greater than the required set-aside rate for the
applicable market area) and/or units with lower rents than that required by the IZ program may be
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eligible for financial incentives and/or capital grants on a case-by-case basis, at the discretion of the
municipality.
5.2 Development Fees and other Charges
IZ units are exempt from City and Regional Development Charges, Community Benefits Charges, and
Parkland Dedication requirements and/or Fees.
Section 6 — Offsite Units
6.1 Offsite Units
Affordable units can be provided onsite within the development giving rise to the IZ requirements
("onsite"), or in a separate, new building provided that the new building is located in the same city as
the original development and within an area subject to IZ requirements (PMTSA) ("offsite").
Offsite affordable housing units will be located in a newly constructed residential or mixed-use buildings.
Offsite affordable units may be located within a building comprised entirely of affordable units or in
combination with market -rate units, affordable units created through other programs, or non-
residential uses. Should a building containing offsite affordable units contain more than 50 market -rate
housing units, it shall also be subject to IZ requirements unless otherwise exempt (see Section 4).
6.2 Innovative and Flexible Approaches
Innovative approaches will be considered to facilitate the rapid construction of affordable units, with a
view to ensuring appropriate and efficient long term management of the affordable units and to
facilitate, where possible, the sale or conveyance of affordable units to not-for-profit and co-operative
housing organizations. Such approaches include but not limited to:
• Enabling affordable units required to meet the IZ requirements of a single development to be
located in one or more offsite buildings
• Enabling affordable units required to meet the IZ requirements for multiple developments to be
located of one or more offsite buildings
• Partnerships that facilitate the construction of new affordable units on lands owned or leased by
non-profit, co-operative or social purpose affordable housing provider (cannot double count
units already funded by senior government housing programs)
• Agreements with other developers to jointly satisfy IZ requirements, provided the newly
constructed affordable units total the sum affordable units required for each development
Section 7 — Implementation and Administration
7.1 Planning to meet IZ requirements
As part of a complete application for site plan approval or plan of subdivision, the applicant will submit
an Inclusionary Zoning implementation Brief outlining how the inclusionary zoning requirements are
intended to be met. This will include:
• The proposed tenure of the development
• The total Gross Leasable Residential floor area for all units and the affordable units (whether
onsite or offsite)
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• The suite mix (number of bedrooms) for all units and affordable units (whether onsite or offsite)
• Typical floor plans that identify the market and affordable units
• If offsite units are proposed, the address of the proposed offsite units along with the
owner's/proponent contact information
• Expected timing of occupancy of market and affordable units
7.2 Agreements Registered on Title
Matters to support the implementation and administration of IZ, including matters set out in these
implementation guidelines, shall be secured through an Agreement between the subject city, the owner
of the affordable units, and the owner of offsite units if applicable, to be registered on title of the lands,
to the satisfaction of the subject city's Solicitor. Agreements will secure ongoing compliance with the
applicable IZ policies and Zoning By-law. Agreements will cover matters outlined in these guidelines,
including, but not limited to:
• The maximum rents for the affordable unit(s);
• The timing of occupancy of affordable units;
• The time period for which the affordable unit(s) must remain affordable;
• The timing of construction and occupancy of the affordable units in relation to the market units
• Matters related to the eligibility and selection of tenants;
• Restrictions on offering affordable units as short-term rental accommodation;
• Matters related to offsite affordable unit(s);
• Requirements for annual monitoring and reporting; and
• Provisions in the case where an owner of the affordable unit(s) acts in violation of the
Agreement.
Agreements registered on title automatically bind subsequent owners.
The owner will typically be required to enter into an inclusionary zoning agreement as condition of site
plan approval. An agreement must be executed and registered on title prior to building permit issuance.
7.3 Agreements for Units in a Condominium Building
In addition to the requirements in 7.2, where affordable units are located within a condominium
building, affordability requirements may be included in the condominium description with reference to
the agreement registered on title, to ensure that any potential purchaser is aware of the affordability
requirement. In certain circumstances, affordability requirements may also need to be registered as a
restriction enabled by section 118 of the Land Titles Act.
7.4 Agreements for Offsite Units
If IZ affordable units are proposed offsite , an agreement between the City, the owner of the
development giving rise to the IZ requirement, and the owner of the offsite development shall be
entered into and register on title to the lands of both the proposed development and the offsite
development, to the satisfaction of the City Solicitor and subject city's most senior planning staff, in
order to secure any conditions that, in the opinion of the City Solicitor and Chief Planner, may be
necessary to implement the IZ requirements applying to the proposed development.
0
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7.5 Timing of Occupancy
The timing of occupancy of affordable units must be before or concurrent with and proportional to the
timing of occupancy of the market units within the development giving rise to the IZ requirements. In
developments with multiple phases and/or buildings, or where IZ requirements are to be satisfied
through creation of affordable units in an offsite building, the occupancy of the affordable units must be
concurrent and proportional to the occupancy of market units on the site giving rise to the IZ
requirements.
In the case where affordable units are to be provided offsite and the construction timing of the offsite
building does not align with construction timing of the development giving rise to the IZ requirements,
then the affordable units shall be provided in the development giving rise to the IZ requirements until
such a time that the affordable units are ready for occupancy at the offsite location. If the offsite project
does not proceed for whatever reason, affordable housing units shall be provided onsite for the
duration of the affordability period. The tenant of any temporary onsite affordable unit will have the
right of first refusal to occupy an offsite affordable unit containing the same number of bedrooms.
7.6 Affordability Period
Affordable units created to meet the Inclusionary Zoning requirement shall remain affordable for 25
years, to be measured from the date of occupancy. Proponents are encouraged, but not required to
maintain the units as affordable units beyond the 25 year requirement.
7.7 Household Eligibility
Eligible households shall, at the time of initial tenancy of an affordable unit, satisfy the following criteria:
1. At least one member of the household shall be at least 18 years of age;
2. At least one member of the household must currently reside in Waterloo Region;
3. Each member of the household shall be a Canadian citizen, Permanent Resident, Temporary
Resident (including International Students), or a refugee claimant or Convention refugee;
4. The household shall have a gross income at or below the 60th percentile of renter household
incomes in the Region of Waterloo; and
5. The gross annual income of a household shall not exceed 3.5 times the rent of an affordable unit;
6. Household sizes shall be such that affordable units are occupied by a minimum of one and a
maximum of two persons per bedroom. Individuals and couple households without children or
dependents are only eligible for one -bedroom or bachelor units;
7. No member of the household shall be related (including kindship, business or close personal
relationship) to any person with current or former interest in the land or development; and
8. No member of the household shall own, in whole or in part, any form of residential real estate in
Canada or abroad;
9. The household must occupy the affordable unit for the duration of their lease and may not sublet
the unit.
7.8 Applications for Affordable Units
The Region of Waterloo will be responsible for creating and maintaining an online application portal
("Community Housing Portal") and a waitlist of eligible tenants for affordable units created through
Inclusionary Zoning. Households interested in an affordable unitwill apply through the application
portal and will be required to submit documentation that confirms their eligibility, such as income
statements. Applications will be assessed by Region of Waterloo staff to confirm eligibility. Eligible
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households will be placed on awaiting list specifically for Inclusionary Zoning affordable units based on
the date their application was deemed complete. Households will be contacted when a unit becomes
available.
7.9 Selection of Tenants
When a new affordable unit is to be rented out, or an existing affordable unit becomes vacant, the
Region of Waterloo will post details of the unit(s) on the Community Housing Portal and applicants will
be invited to express interest in as many units as they would like. After the posting period has ended,
staff will, for each unit, determine prospective tenants based on how long the household has been on
the IZ waiting list and forward their names to the landlord.
The landlord of the affordable unit may vet the prospective tenants identified by the Region of
Waterloo. Any vetting must be carried out in accordance with the provisions of all relevant legislation
including the Residential Tenancies Act and must adhere to the Ontario Human Rights Code, Regulation
290/98, which lists the following review and selection practices as acceptable:
• Rental history, credit references, and/or credit checks may be requested. A lack of rental or
credit history shall not be viewed negatively.
• A landlord can ask for income information, but they must also ask for, and consider together,
any available information on rental history, credit references, and credit checks (such as through
Equifax Canada).
In the event the first eligible tenant's credit, rental history or income is not satisfactory to the landlord,
the process will be repeated for the second household on the waitlist, etc. until a final tenant is selected.
The landlord will send an offer to the selected tenant to rent the unit. Once the tenant receives an offer,
they will be provided with an opportunity to tour the unit and sign the lease.
7.10 Maximum Permitted Rent
Maximum permitted rents for affordable units will be adjusted on an annual basis and published in
annual updates to this guideline document. Calculations and sources of data used to determine the
maximum permitted rent for each building type are listed below.
Affordable Units in Condominiums
Maximum permitted rents for affordable units within condominium buildings are the lower of (a) and
(b):
(a) Average Market Rent (using the CMHC data for apartment rentals in the regional market area);
and
(b) Rent that does not exceed 30% of a household's gross annual income for a household at the 60th
percentile of renter household income range for the regional market area (inflation adjusted
using Census data)
Table 2 shows the maximum permitted affordable rents for 2021 and 2022 calculated in this way.
Affordable Units in Purpose Built Rental Buildings
Maximum permitted rents for affordable units within purpose built rental buildings are calculated as the
higher of (a) and (b):
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(a) The maximum rent in for affordable units in Condominiums above or
(b) Rent that is 30% of median renter income (as published by CMHC from time to time).
The table below shows the maximum permitted affordable rents for 2021 and 2022 calculated in
this way.
Table 2. Maximum Rents for Affordable Units within Different Building Types
Building Type
Year
Bachelor
1 Bedroom
2 Bedroom
3+ Bedroom
Condominium
2021
$950
$1,134
$1,356
$1,470
2022
$1,075
$1,245
$1,469
$1,631
Purpose Built Rental
2021
$1,425
$1,425
$1,425
$1,470
2022
$1,425
$1,425
$1,469
$1,631
Developments may choose to, but are not required to, provide affordable units at rents that are lower
than the maximum rents in Table 2.
7.11 Rent Changes
Rents can be increased annually by landlords in accordance with the maximum rent for the most recent
year outlined in Table 2 of this guideline.
7.12 Maximum Rents Upon Vacancy
If an affordable unit becomes vacant, both maximum rent and eligibility criteria apply to the new
tenancy. The maximum rent will be calculated in accordance with Table 2 of this guideline document
and not based on the rent paid by the previous tenant.
7.13 Sale of Affordable Units in Condominiums
In a case where condominium developers do not wish to own and operate affordable units over the long
term, they are encouraged to consider, as a first step, the sale of affordable units to non-profit and co-
operative housing providers. The area municipalities and the Region of Waterloo will provide support to
connect affordable housing providers seeking affordable units with private developers seeking to sell
affordable units. The Region of Waterloo, CMHC, credit unions and banks may all play a role in financing
these transactions. Inclusionary zoning by-law and policy does not regulate the sale price of affordable
rental units.
If the purchase of the affordable units by an affordable housing provider is unsuccessful, affordable
units can be sold to a private individual or corporation. The maximum rents, eligible tenants, and other
requirements of the IZ program will continue to apply regardless of unit ownership and will be secured
through agreements registered on title.
Section 8 - Building Design
8.1 Location and Distribution within Buildings
Where IZ requirements are to be achieved within a mixed income building, either in the development
giving rise to the IZ requirements or in an offsite building, the affordable units should be dispersed
throughout the building. Concentration of units may be considered where such an approach will benefit
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the affordable unit occupants (e.g. at the request of a future not-for-profit owner, or to improve
proximity to amenities or services). Location and distribution of affordable units in a development will
be confirmed through the site plan application and review process.
In some cases, IZ requirements may be achieved within a building containing only affordable units,
either on the site giving rise to the IZ requirements, or offsite.
8.2 Access to Building and Amenities
Affordable units shall share the same entrances, common areas, and amenities as market -rate units
located within the same building, and additional fees or charges over and above the fees and charges
applied to market units shall not be applied to the affordable units or the tenants of those units for
access to these amenities. Indoor and outdoor amenity space shall be made available to the residents of
affordable units on the same terms and conditions as residents of the market -rate units. Tenants of
affordable units may be charged fees for the private booking of amenities (i.e. party room, movie
theatre) so long as the fees charged do not exceed the amounts charged to residents of the market -rate
units.
8.3 Balconies, Patios, and Terraces
The proportion of affordable units within a development featuring a balcony, patio, or terrace shall be
equal to or greater than the proportion of market -rate units within the development featuring a
balcony, patio, or terrace.
8.4 Accessibility
The Ontario Building Code requires 15% of units within a multi -unit residential building to include
barrier -free accessibility features. Accessibility requirements shall be distributed proportionally
throughout market -rate and affordable units. Where the proportional distribution results in a fraction,
then the number of affordable units that have barrier -free accessibility features shall be the next higher
whole number (For example, where 8 affordable units are provided and a 15% proportion would equal
1.2, there shall be 2 affordable units designed to include barrier -free accessibility features). Developers
are encouraged to, where possible, provide a higher proportion of accessible units than required by the
Building Code, and/or to ensure that all affordable units are adaptable to enable later retrofit to include
accessibility features if needed.
8.5 Universal Design
Affordable units should incorporate as many principles of Universal Design as possible to create spaces
that are suitable for individuals and families of all ages, abilities, sizes, and stages of life. For guidelines
detailing the principles of Universal Design, refer to Table 4:
Table 4. Universal Design Policies
Municipality
Relevant Document(s)
Relevant Section(s)
City of Kitchener
Urban Design Manual
Part A
City of Waterloo
Urban Design Manual
Section 2.3.3
City of Cambridge
Official Plan
Section 5.9
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8.6 Parking Requirements
Parking spaces for affordable units required under the IZ program shall be provided in accordance with
the relevant Zoning By-law. Parking spaces may be provided for affordable units as long as the total
number of parking spaces for the overall development is below the maximum parking requirement
specified in the subject city's Zoning By-law, where applicable. Bicycle and visitor parking spaces shall be
provided at the rates specified in the applicable city's Zoning By-law and shall be made accessible to
residents of the affordable units on the same terms and conditions as residents of market -rate units.
Section 9 —Affordable Unit Desi.Qn
9.1 Unit Sizes
The average unit sizes of affordable units within the proposed development units shall be consistent
with or larger than the average unit sizes of market -rate units, by bedroom type. The minimum unit size
of an IZ affordable housing unit must be no less than 90% of the average unit size of the market -rate
units, by bedroom type (e.g. if the average size of a market -rate two-bedroom unit is 80 m2, the
minimum unit size of an two-bedroom affordable unit shall be 72 m2). Affordable units will be
comparable and functionally equivalent to market -rate units in terms of unit shape and configuration.
9.2 Number of Bedrooms
The mix of one bedroom, two bedroom, and three or more bedroom affordable units within the
proposed development shall be similar and proportional to the mix of bedrooms for the market -rate
units.
9.3 Unit Features
The finishes, fixtures, and features (including appliances) provided in the affordable units will be the
same or similar to the finishes, fixtures and features provided in the market -rate units. Where finishes,
fixtures or features are not identical, they will be functionally equivalent to the finishes, fixtures, and
features provided in market -rate units . A functionally equivalent finish, fixture or feature is one that is
new, of good quality, and generally the same in terms of performance and durability.
Section 10 — Reportin.Q and Monitorin
10.1 Annual Reporting
The Owner of one or more affordable units shall submit rent rolls to the Region of Waterloo on an
annual basis confirming that the rents of the affordable units do not exceed the maximum rents as set
out in the subject city's Inclusionary Zoning By-law. The Owner shall also be responsible for reporting
any change in tenancy and any changes in unit ownership in their annual report to the Region of
Waterloo. It is the responsibility of the vendor of any affordable unit to inform the subject city and the
Region of Waterloo of any sale, and the contact details of the new owner within 30 days of closing.
10.2 Responding to Market Conditions and Program Outcomes
The subject city shall be responsible for monitoring the relative success of IZ in delivering affordable
rental housing units without negatively impacting new housing supply. Where market conditions
improve or decline in specific Market Areas, the City shall contemplate increasing or decreasing the
14
Page 1065 of 1179
required set-aside rate rent criteria or other requirements of the IZ program accordingly. This may be
done at the time of the five-year municipal IZ assessment report or the biennial monitoring reports
pursuant to Section 35.2(9) of the Planning Act; the biennial report; or more frequently as appropriate.
Appendix A - Definitions
Affordable Unit— means an affordable housing unit that meets the rent and tenant requirements set out
in the subject municipality's Inclusionary Zoning official plan policies and zoning by-law regulations.
Building Permit— means a building permit granted in accordance with the building shell permit, not the
building permits for foundation or site works. For developments with more than one phase, the required
set-aside rate shall be in accordance with the timing of building shell permit issuance for each phase.
Gross Leasable Residential Floor Area - means the aggregate horizontal area of dwelling units in a
building measured from the exterior faces of the exterior walls of all storeys of a building. For greater
clarity, Gross Leasable Residential Floor Area does not include common or parking areas.
Occupancy— means the first time at which an eligible tenant inhabits an affordable unit
Ontario Regulation 232/18 - refers to O. Reg. 232/18: INCLUSIONARY ZONING made under the Planning
Act.
Planning Act - refers to the Planning Act, R.S.O. 1990, c. P.13
Protected Major Transit Station Area - refers to a geographic area around and including rapid transit
station stops that is delineated in an Official Plan.
Set-aside Rate — means the proportion of Gross Leasable Residential Floor Area that must be set aside
for affordable units
Subject city— means the city in which the development that is subject to the IZ requirements is located.
The subject city will be one of the following: City of Kitchener, the City of Waterloo or the City of
Cambridge.
15
Page 1066 of 1179
Appendix A — Protected Major Transit Station Areas
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Page 1067 of 1179
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Page 1070 of 1179
Comments and Response Since July 2023
Comment - Dan Driedger, Beyond Housing
I've just reviewed the Executive Summary and it lands where I had hoped it would. From my
perspective, the ability to have offsite partnerships and reallocate funds to an MTSA within
the same municipality is critical. Thank you for hearing this, and making it part of your
recommendations. I really don't have anything to add or critique.
Staff Response
The team understands that providing offsite units and supporting relationships between
developers and third -party housing providers is critical to the long-term success of IZ and has
incorporated this into the proposed approach.
Comment - Hal Jaeger
I continue to see the value of IZ in terms of the assistance it provides to those with incomes in
the 4th- to 7th deciles who are seeking rental accommodations. I further see that the value
provided far exceeds the discounts provided by the municipalities.
I nonetheless continue to perceive this form of IZ, which does not address the population at
greatest need, as a patch on a system that over -emphasizes land -use as a revenue -
generating tool as opposed to a means of housing and serving the general population.
At our municipal level, I ask that we direct more of our planning energies toward the creation
of full rental replacement requirements in the event of both renovation and demolition.
Staff Response
The team agrees with the statement that IZ is only one of many tools that municipalities can
use to combat the ongoing housing crisis. Kitchener staff are continuing to pursue the suite of
actions contained Housing for All, the Enabling Missing Middle and Affordable Housing Study
and others. City of Kitchener staff are preparing a Rental Replacement By-law for Council's
consideration in early 2024 and pursuing actions to support housing supply and affordability
under the federal Housing Accelerator Fund. Waterloo is working toward a number of actions
identified in their recently approved Affordable Housing Strategy, and Housing Accelerator
Fund that will support the creation and preservation of affordable rental housing. Waterloo
and Cambridge are also both in the process of updating their respective Official Plans and will
be looking at policies around Rental Replacement as part of this update and review.
The staff report outlines how IZ can directly assist those in the second and third income
deciles 15th-28thpercentile)
Comment —Waterloo City Council
Consider further restrictions to the locations for offsite units to ensure affordable units are
created in Uptown.
Staff Response
Enabling offsite units across the MTSAs provides flexibility for condo developers to extract
themselves from the long-term management of the affordable rental units. Staff consider this
flexibility to be crucial for the program implementation (see below for more details).
Limitations on where offsite units can be located will reduce the intended flexibility provided
by the offsite policy. Staff recommend that the policy as proposed be reviewed every two
ears and adjusted if deemed necessary.
Comment - Waterloo City Council
Should we require higher set aside rate for offsite units?
Staff Response
Page 1071 of 1179
The team recognizes that the proposed requirement for rental as the tenure for affordable
units does not fit well with condominium developer's business model. The proposed
permissions for offsite units are intended to address this challenge by providing developers,
and particularly condo builders, with practical solutions to "get off the site", while also creating
a more appealing opportunity for affordable housing providers to take over the ownership and
operation of the affordable rental units. Offsite units will be required to be contained within
new, well-designed, attractive buildings in accordance with each municipality's design
standards and site planning processes. In our opinion, higher set aside rates for offsite units
will discourage or penalize condo developers who choose to provide units offsite and will
hamper the needed flexibility and potential partnerships with affordable housing providers.
Comment - Waterloo City Council
A request to review/confirm the categorization of some of Waterloo's market areas (is Uptown
real) "established" or should it be "prime")
Staff Response
The team asked N. Barry Lyons Consultants (NBLC) to provide an updated review of the
market areas to reflect current conditions to determine whether certain market areas could
support a change in categorization. The market categorization of the Northfield, Willis
Way/Waterloo Public Square, Mill and Borden MTSAs are proposed to be amended in
response to NBLC's recommendations.
Comment — Larry Kotseff (Solowave)
We feel strongly that our property within the Conestoga MSTA should be classified as an
`Emerging Market Area' based on many factors including the fact that the area is
underutilized, being redeveloped, and transitioning with the intent to deliver a mixed-use
residential development. Our site certainly should not be considered as an `Established
Market Area' given the existing circumstances. Also, I draw your attention to the disclaimer
from NBLC regarding the conclusions and accuracy of their analysis.
We would appreciate your consideration of our concern and request a further dialogue with
you on this matter. In addition, please keep us apprised of the public process and meetings
that will be arranged to discuss the matter further in accordance with your Council's direction.
Staff Response
The team has asked N. Barry Lyons Consultants (NBLC) to review the market areas to reflect
current conditions to determine whether certain market areas could support a change in
categorization. On NBLC's recommendation, the categorization of the Conestoga station area
has been reconfirmed. They also recommend staff explore opportunities to require higher set-
aside rates on lands converted from employment to residential use. Notwithstanding these
recommendations, the Planning Act provides for certain exemptions from Inclusionary Zoning,
including developments that are part of a complete site plan application or plan of subdivision
application are exempt from IZ policy. The subject development may be exempt from IZ
requirements under these provisions.
Comment —Waterloo Region Home Builders Association
Developers don't want to own rental units or be in property management business. Are there
enough non -profits to purchase units? Developers don't want to be landlords.
Staff Response
Staff are recommending a range of options to help condo developers convey/sell affordable
rental units to third parties, including provisions that enable: (1) sale of affordable units to not -
for -profits, (2) developers to build or fund the construction of affordable units in offsite
buildings with third sector, and (3) coordination between developers and consolidation of
affordable units into a single offsite building. Although it is staff's preference that non -profits or
developers would own the affordable units in the long term, there may be circumstances what
Page 1072 of 1179
a for-profit third party could own the affordable units. Staff propose to host regular meetings
with developers whose developments are subject to IZ requirements, and third sector housing
providers for training and education purposes and to facilitate connections to enable offsite
unit collaboration and/or transferring ownership of units to the third sector.
Comment —Waterloo Region Home Builders Association
Administration by non -profits would be an unorganized approach to administrating affordable
housing. Kitchener should get back into housing business. Sustainable non-profit housing
sector is needed.
Staff Response
Staff recommend an approach that would enable third sector ownership and management of
units and Region of Waterloo administration and monitoring of the program across all three
cities. A number of third sector organizations have expressed interest in ownership and
management of the units, and the Region of Waterloo has indicated a willingness to
administer the program. Administration by the Region of Waterloo will provide a centralized
approach to administration, and it would leverage the existing capabilities and capacity of the
Region, who are familiar with administering community housing.
Comment - Waterloo Region Home Builders Association
Will Region or the Cities enforce development agreements? Concern about duplication of
efforts if Cities carry out separate admin responsibilities.
Staff Response
Staff are recommending that the Cities enter into a memorandum of understanding with the
Region of Waterloo to carry out the monitoring requirements outlined in the agreements. This
capitalizes on existing expertise and reduce duplication of admin responsibilities. Provincial
regulations require that the cities carry out any enforcement, if required.
Comment - Waterloo Region Home Builders Association
We heard that if not approached carefully, IZ could have the immediate impact of increasing
overall housing costs in new developments. By extension, it will also affect the cost of resale
housing, further eroding affordability within the regional housing market.
Staff Response
The team recognizes that in the short term, an IZ policy can have a negative impact on the
feasibility of development, particularly for those developers who purchased land with the
expectation of certain revenues that would be reduced under an IZ policy. Staff have
proposed a low initial set-aside rate (ranging from 0% to 2%) that would be reasonable to
expect could be absorbed and/or offset in the short term. These requirements would start in
2025 and increase over time. The proposed schedule of set aside rates will signal future
policy intentions so that developers can make informed decisions on land purchases.
Comment - Waterloo Region Home Builders Association
Does IZ align with the best planning principles?
Staff Response
In staffs opinion, the recommended IZ program represents good planning that balances the
need for affordable housing with the private market's ability to deliver housing. Ensuring that
some amount of affordable housing is included in new residential developments around public
transit can help the cities facilitate the creation of complete, equitable and diverse
communities, which is an important planning objective highlighted in all Provincial and
municipal planning documents.
Comment - Waterloo Region Home Builders Association
Will IZ increase the number of homes available?
Staff Response
Page 1073 of 1179
IZ is a tool to increase the supply of affordable housing, not the overall supply of housing. The
team has recommended a variety of measures to ensure that the proposed IZ program does
not inadvertently make the development of new market housing financially unfeasible (which
could reduce or slow overall housing supply), including: setting low initial set-aside rates,
adopting 100% AMR (rather than 80% AMR) as the required rents for the affordable units,
and providing the option to construct affordable units offsite to enable the provision of
affordable units within lower cost locations and/or lower cost built forms (e.g. wood frame
buildings).
Comment - Waterloo Region Home Builders Association
What impacts are there on the current economics of construction?
Staff Response
The proposed IZ program has been carefully designed to minimize negative impacts on
development feasibility under current economic conditions. NBLC was retained in 2020 to
develop a pro forma model against which different IZ policy parameters could be tested. The
model was peer reviewed by land economics firm urbanMetrics and updated in late 2022. The
model incorporates the wide range of soft and hard costs associated with development. Hard
cost assumptions are from the 2023 Altus Canadian Construction Cost Guide. Outputs from
the model were combined with public/stakeholder feedback, a review of best practices, and a
follow up review by NBLC in the fall of 2023 to produce the final recommended IZ program
parameters. The proposed program also recognizes mandatory exemptions to DCs, CBCs
and parkland charges that will help developers offset the cost of the affordable units.
Comment - Waterloo Region Home Builders Association
Societal cost to inclusionary zoning — costs should be borne by general public not new
homeowners and renters
Staff Response
Staff acknowledge that the private sector cannot be the only sector responsible for solutions
to addressing the affordable housing crisis. Investment in affordable housing is needed from
all orders of government, the not-for-profit and private sector. Staff also recognize that
additional costs to development can be passed on to the consumer. For this reason, staff are
proposing modest initial set aside rates and a gradual increase to provide developers with
time to adapt. With clear signals to the development industry about a forthcoming IZ policy
and specific set aside rates, the industry will be able to make land purchasing decisions that
reflect the true development value of a property. Land transactions in the market that reflect
existing zoning regulations and the development potential of a site will not create
unanticipated costs that need to be offset by higher costs for renters/owners of market units.
Comment - Waterloo Region Home Builders Association
Desire for consistent, comprehensive Regional policy and implementation strategy.
Consideration of entire region as the "regional housing market'. Desire for a coordinated
Regional housing strategy consistent plan, approach and implementation).
Staff Response
This is the approach recommended by the staff team.
Comment - Waterloo Region Home Builders Association
Workable local definition of affordability?
Staff Response
For rental units in condos, staff are proposing 100% AMR or 30% of the 60th income
percentile for renter households in the Region. This is consistent with the Provincial Policy
Statement, Regional Official Plan and City Official Plans' definitions of affordability that are
determined using local definitions. For rental units in purpose built rental buildings, staff are
proposing a definition that aligns with maximum rents under CMHC's MLI select program, and
Page 1074 of 1179
accompanying eligibility requirements. These definitions will be consistent across the 3
municipalities to ensure a consistent region -wide definition that balances affordability
objectives with financial viability for development.
Comment - Waterloo Region Home Builders Association
Gradual transition period?
Staff Response
A gradual transition is the approach recommended by the staff team.
Comment — Royce Bodaly (City of Waterloo councillor)
Surprised to see Allen Station in the Established market area vs. Prime market area and
extremely surprised that Willis Way was not in Prime. What drives these market
characterizations and can these be reconsidered (in particular the Willis Way PMTSA).
Staff Response
The categorization of Uptown PMTSAs has been updated per advice from NBLC in memo
dated September 28, 2023, and subsequent meeting with NBLC. The Uptown MTSAs are all
now identified within Prime market areas.
Comment — Royce Bodaly (City of Waterloo councillor)
Was consideration was given to requiring a higher set aside rate and/or deeper affordability
level for offsite units to encourage units to be built on site within new mixed income buildings.
Staff Response
The team received feedback from some members of the public and council who expressed a
preference for onsite affordable units within mixed income buildings rather than offsite
affordable units provided in mixed income or standalone buildings. A fulsome response to
these comments can be found under the heading "Offsite Units" in the staff report. In
summary, the team considers offsite units to be crucial to providing needed flexibility to the
development community to deliver affordable units in a cost-effective manner that aligns with
their business model. It provides a pathway for condominium developers, who do not typically
own units in the long term, to deliver on affordability objectives while avoiding long term
obligations on their development sites thereby freeing up capital for their next construction
project. It further enables developers to incorporate affordable units within low and medium
rise built forms that are less expensive to build compared to high-rises. Finally, creating viable
options for developers to create offsite units in lower rise built forms is anticipated to provide
more choice and diversity for tenants of affordable units, some of whom may prefer to live in
mid -rise and low-rise buildings. Staff note that any offsite units provided through the program
will need to be constructed within a PMTSA and therefore will be in close walking distance to
an ION stop. Offsite developments will be required to achieve the same city performance and
design standards as any other development. Under the proposed program, complete mixed
income communities can continue to be achieved at a neighbourhood scale around ION
stops.
Comment — Royce Bodaly (City of Waterloo councillor)
Agree with the mandatory approach, but am wondering if consideration was given to further
increasing height/density by right in exchange for either deeper affordability (below 80%
AMR) and/or increased units (beyond what IZ will prescribe).
Staff Response
Given current market conditions that are making residential development challenging under
all scenarios (with or without IZ), staff have recommended a policy approach that would see a
single set-aside rate along with a onetime increase in development permissions through a
concurrent Official Plan amendment and zoning by-law update (simultaneous but subject to
separate process and council approval). The additional height and/or density enabled through
the concurrent OPA and ZBA process is intended to help with the phase in and impact
Page 1075 of 1179
absorption of the initial IZ policy. ZBAs requesting additional height or density for
developments that provide more affordable units or deeper levels of affordability may be
considered by the respective city councils on a case-by-case basis.
Comment — Age Friendly Committee (through Scott Amos)
We (Age Friendly Waterloo Region) support the Major Transit Station Areas (MTSAs) as
excellent locations for the IZ tool as they have been planned for intensification and can
provide many mixed-use opportunities.
Staff Response
Provincial regulation dictates that IZ can only be implemented within PMTSAs. The team
recommends implementing IZ in all Waterloo Region PMTSAs.
Comment — Age Friendly Committee (through Scott Amos)
Even though the legislation allows IZ to be applied to 10 or more residential units, it is unlikely
that densities that low will be built in many MTSAs. We do question if 50 units is too high of a
standard as it opens the door for developers to start building 49 unit projects to avoid this
measure and then just increase the number of bedrooms per unit to maximize their return.
We need to maximize the number of affordable units as we are at a crisis now. This raises a
broader concern of should the measurement be units or bedrooms or a combination of both,
especially in a region with 2 Universities and 1 College.
Staff Response
The proposed policy seeks to balance maximizing the number of affordable units delivered
through IZ, without discouraging the creation of missing middle housing that has been
demonstrated (through studies such as Kitchener's "Enabling Missing Middle and Affordable
Housing Feasibility Study" and feedback from the development industry stakeholders) to be
economically challenging to build. For this reason, a 50 unit threshold was chosen to exempt
small scale intensification projects and smaller scale midrise developments. Staff will monitor
any potential threshold effects and will consider recommending adjustments to the set aside
rate threshold should the viability of missing middle housing improve.
Comment — Age Friendly Committee (through Scott Amos)
It seems that the definition of affordability (AMR/AMP) has been set by the Provincial
legislation and still seems to have little benefit to those in most dire circumstances.
Staff Response
The team anticipates that amendments to O. Reg 232/18 under Bill 23 (that limit the discount
for affordable rents or prices to 80% of Average Market Rent or Average Market Price) will be
proclaimed and therefore recommend a program that works within the proposed Provincial
framework. The team recognizes that affordable units created through the proposed IZ
program will not be affordable to households in the bottom 15% of the regional income
distribution and who are likely to face the greatest housing challenges. Since the proposed IZ
program does not rely on government funding, it is intended to complement rather than
replace existing and new programs that are specifically designed to provide housing for very
low-income households (e.g. RGI programs, supportive housing, community housing etc).
Moreover, a best practice review and financial modeling suggests that IZ is best suited for the
creation of more moderately affordable units rather than very deeply affordable units. Noting
that 80% Average Market Price for ownership units is not even affordable to moderate income
households, the team has proposed a program that focuses on rental as the tenure for
affordable unit.
Comment — Age Friendly Committee (through Scott Amos)
We support the concept that different markets could have different set-aside rates as it
recognizes that not all MTSAs are equal. It will allow emerging areas a chance to get off the
ground. However, we do not support the concept of a low initial set-aside rate that increases
Page 1076 of 1179
over time up to 2031. We suggest you start off with the maximum set-aside rate in 2024 as
the affordable units are needed now. Further, transitioning from 2% to 5% for Prime Markets,
1 % to 3% for Established Markets and 0% to 2% for Emerging Markets is such a small
percent shift over 7 years we feel it will have a minimal impact on the viability of a project, but
a significant impact on those who get an affordable unit.
Staff Response
The team understands the need for new affordable housing to be created as soon as
possible. Feedback from members of development industry and development pro forma
modelling suggest that adopting the maximum allowable set aside rate in 2024 at a time when
the economic conditions for development are already challenging could stall new residential
construction in the short term, which would in turn, slow the creation of much needed new
housing supply and worsen the current housing situation. Staff have instead proposed a
gradual increase in the set-aside rate to allow development to remain viable, which will deliver
needed housing units along with affordable IZ units. Notwithstanding the proposed gradual
increase in set aside rates, staff have recommended accelerating the set aside rates and
revising the market categorization of certain station areas in response to an updated analysis
from N. Barry Lyon Consultants (NBLC) in September 2023.
Comment — Age Friendly Committee (through Scott Amos)
We recognize that you are bound by Provincial legislation and high local market conditions.
Further we understand that the IZ tool is not meant to solve all the affordable housing
problems. However, this affordability level does little for those in the lower end of the
affordability market. Perhaps your concept of assisting moderate income households which in
turn may free up housing for lower income households will come true.
Staff Response
In 2022, IZ units would be affordable to the households in the 15th -28th percentiles of
regional household income distribution. Creating housing for this income range is expected to
help reduce competition for the more deeply affordable housing units and create movement in
the housing system by enabling movement of households who no longer require community
housing. The team agrees that IZ is only one of many needed tools to create affordable
housing.
Comment — Age Friendly Committee (through Scott Amos)
We do support the idea that the target group should be low to moderate income households.
We would like to better understand how a senior on a fixed income (Canada Pension Plan)
would fit into the $58,900 threshold.
Staff Response
Senior households, including those that rely exclusively on Federal and Provincial income
sources (CPP plus OAS and GIS), are more likely than other age cohorts to own their own
homes and therefore may choose to remain in their home or may be able to use their assets
to afford a unit created through the IZ program should they chose to do so. A renter senior
household with only CPP, OAS and GIS income and no other pension income or assets
would be below the 15th percentile of the region's income distribution and below the $43,000
threshold that would be required to afford a unit created through the IZ program. It is
anticipated that very low-income renter senior households would require subsidized housing
provided through government assisted housing programs, such as Region of Waterloo
community housing, or through non-profit housing eared to low income seniors.
Comment — Age Friendly Committee (through Scott Amos)
We support the 25 year duration with the potential to expand beyond 25 years.
Staff Response
Acknowledged
Page 1077 of 1179
Comment — Age Friendly Committee (through Scott Amos)
Incentives to provide affordable housing is something that we strongly support provided the
incentive truly results in affordable units. It should also be noted that giving an incentive does
not mean a Development Charge does not need to be paid, it is just not paid for by that
developer. We believe that either the municipality pays for it or other development charge
users pay.
Staff Response
Acknowledged
Comment — Age Friendly Committee (through Scott Amos)
We support the approach to offsite units and agree with your rationale.
Staff Response
Acknowledged
Comment — Age Friendly Committee (through Scott Amos)
We support the approach to administration/implementation and agree with your rationale,
provided the administration of this program does not become overly burdensome and costly.
The administration should be kept as simple and straightforward as possible so all users will
find it worthwhile.
Staff Response
Acknowledged
Comment — Age Friendly Committee (through Scott Amos)
We support a transparent monitoring and reporting program. Common sense adjustments
should be made to improve the program so that the ultimate users can benefit and the
development industry finds it reasonable.
Staff Response
Acknowledged
Comment — Age Friendly Committee (through Scott Amos)
There is a need to provide accessible housing for all age categories not just for seniors
however, as one ages, specialized or unique needs occur that can be both physical or
mental. Providing accessible units not only benefits the occupant but also any visitors which
can reduce social isolation. We would suggest that a requirement be added to provide a set
percentage of accessible units.
Staff Response
Staff recognize the need for affordable housing that is also accessible to support seniors and
others who may require accessible units. The draft implementation guidelines provide for
Building Code accessibility requirements to be distributed proportionally throughout market -
rate and affordable units and encourages developers to provide a higher proportion of
accessible units than is required by the Building Code and/or to ensure that all affordable
units are adaptable to enable later retrofit if needed.
Comment — Age Friendly Committee (through Scott Amos)
To ensure actual affordable units are built, mechanisms need to be put in place that requires
developers to fulfill their obligations and actually build the units. The mechanisms (e.g. Legal
agreements, By-laws, fines etc.) need to be strong and binding so the developer cannot walk
away from their obligation or simply pay a fine. On August 21, 2023 CBC highlighted this
issue in the City of Montreal where a program has been in place for 2 years and zero
affordable units have been built as the developers chose to pay the fine instead.
Staff Response
Affordability requirements will be included within agreements that must be registered on title.
These requirements will include annual reporting requirements and penalties in the event of
Page 1078 of 1179
default. IZ provisions under the Planning Act do not allow for payment in lieu of affordable
units.
Comment — Age Friendly Committee (through Scott Amos)
The Age Friendly Waterloo Multi -Agency Committee strongly supports the Inclusionary
Zoning Discussion Paper and its efforts to try and address this challenging issue. We feel the
goals and actions laid out in this paper are appropriate and suggest that the above noted
items be given further consideration given the special needs of an aging population.
Staff Response
Acknowledged
Comment - Anon
How much longer are you going to "plan" without creating any affordable housing? Habitat for
Humanity and Beyond Housing (former Menno Homes) and other community groups with a
lot less money and a lot less staff put you to shame.
Staff Response
All orders of government continue to work collaboratively, in partnership with non -profits, co-
ops and other housing providers, using all tools available to increase the supply of affordable
housing. Inclusionary Zoning is a tool municipalities can use to ensure that the private sector
is also contributing to the creation of new affordable units.
Comment — Reema Masri
My opinion is that IZ is yet another download of a social responsibility of the public sector to
the private sector. The public shouldn't shed its responsibilities onto private developers, not
only because it is irresponsible but it is a cost that will be passed on to the buyers and will
ultimately come from tax payers. The Canadian tax payer is too heavily taxed and financially
burdened already. Already the cost of building is high, whereas the municipalities continue to
add fees and charges and requirements, contributing even more to the increasing costs. Can
we be more creative? Can we imaging a solution where we create value without taking it from
someone else or passing it down — ultimately to the public?
Removing DC and PLD fees is a good start, but that is only a small portion of the total cost of
a unit. Are there other ways to compensate the developer and remove the burden from the
other buyers? Are there other incentives that the developer can benefit from in return to the
$400-500K per unit and lost profit? Perhaps remove the DC and PLD for 2-4 units per each
IZ unit? Will the municipality offer not collect property tax for these IZ units — so that everyone
has skin in this effort?
Staff Response
Staff acknowledge that the private sector cannot be the only solution to addressing the
affordable housing crisis. Investment in affordable housing is needed from all orders of
government as well as the not-for-profit and private sectors. IZ ensures some private sector
involvement in the solution to building affordable housing. With clear signals to the
development industry about a forthcoming set IZ policy requirements and specific set aside
rates, the industry will be able to make land purchasing decisions that reflect the true
development value of a property. Land transactions in the market that reflect existing zoning
regulations and the development potential of a site will not create unanticipated costs that
need to be offset by higher costs for renters/owners of market units.
The cost of IZ in the short term is proposed to be offset through exemptions from
development charges, CBCs and Parkland Dedicate fees, exemptions of the affordable units
from parking requirements (prorated), and concurrent planning changes that will provide for
increases in height and density.
Page 1079 of 1179
Comment — Reema Masri
Creative Solution: Perhaps the municipality can commit to process the planning and permit
applications within 6 months for a building with IZ units? In this case the savings come from
interest rates i.e. banks or investors who can still get their interest earnings from other
investments. So nobody loses!
Staff Response
The Cities are working hard to reduce development review timelines. Kitchener continues to
lead the way provincially in meeting all our legislated planning approval timelines. As a result
of this critical work, Kitchener has approved for construction units equating to more than 30
percent of our Housing Pledge target. Additionally, Kitchener has two dedicated Project
Managers to review and process affordable housing proposals. Waterloo has similarly
adopted a number of approaches to streamline development approvals and has recently
increased their staffing capacity to support faster review times.
Comment — Reema Masri
IZ if to go ahead should apply to projects over 120 units or over 20 storeys. 50 units is too
small to be feasible. There could be an increasing scale relative to size, so that this doesn't
result in buildings being capped at just below whatever threshold decided upon.
The percentage should relate to size of a building and not to time. Basic economy of scale!
5% is too high. should be 1 % increasing to 2% and above that should be optional where the
municipality provides more incentives.
Staff Response
The proposed policy seeks to balance maximizing IZ while not discouraging the creation of
missing middle housing that has been demonstrated (through studies such as Kitchener's
"Enabling Missing Middle and Affordable Housing Feasibility Study" and feedback from the
development industry stakeholders) to be economically challenging to build. For this reason,
a 50 -unit threshold was chosen to exempt small scale intensification projects and smaller
scale mid -rise developments. The team has anticipated that exempting buildings with 50 units
or less will provide an incentive to build 49 -unit projects. The team considered graduated set-
aside rates by project size. This would be hard to implement given the relatively narrow band
of set-aside rates (1-5%). Staff will monitor any potential threshold effects and will consider
recommending adjustments to the set aside rate threshold should the viability of missing
middle housing improve.
Comment — Reema Masri
Please, do not advocate for yet another body to manage IZ units, costing tax payers even
more of their dwindling incomes. All these management bodies eventually evolve into self-
serving bodies where they consume more than they save through management costs. If this
is a must, the ROW already has a department that manages all forms of low-income housing.
Staff Response
The proposed program would see the Region of Waterloo providing administrative support for
monitoring and compliance.
Comment — Reema Masri
A better Idea: If each Condo Board would own the IZ units within their building and rent them
out to tenants on the regional list (same as low income housing) at asset market rate, then
the condo board would benefit from this income towards the management of the building and
this would offer savings to the other owners/ tax payers who already would have paid more
for their non-IZ units when the developer passed the costs to them. Again there is more win
here than loss. The ownership of the IZ units and the rental rates can be part of the
condominium approval conditions.
Staff Response
Page 1080 of 1179
The proposed IZ program would not prevent a Condo Board from owning and renting the
affordable units. However, in staffs opinion, condominium boards may not be as well suited
as landlords for affordable units given competing motivations and interests. Staff have not
heard interest from the development community in Condominium Boards owning and
maintaining IZ units. Over the medium and long term, developers should incorporate their
knowledge of reduced revenues of affordable units into their pro forma analysis and make
land purchase decisions accordingly so that the costs of IZ are not passed on to the market
units.
Comment — Melissa Bowman
While I'm not convinced we should place a lot of faith into IZ as a major solution for our
housing challenges, I appreciate staffs efforts in this work to date. The main concerns I'd
have are things that are seemingly limited by the province, such as the terms of affordability
(I'd definitely want to see them longer, if and when that's possible). Given the sheer number of
housing -related policies Kitchener (and likely the other cities too) are doing right now, I'd love
to have a better understanding of how they all fit in and build upon each other. For example,
where does IZ fit in well (or not) with the Growing Together Plan as a whole, or the Missing
Middle report, or work being done about options for city -supported tenant protections.
I think there is some great information in this (and those other) report(s). I'd love to see the
city break them down into shareable chunk that housing advocates and others could easily
share to keep people up to date on the work being done locally.
Staff Response
Proposed changes to O. Reg 232/18 have not been enacted yet. However, the team has
chosen to follow the Bill 23 amendments to O. Reg 232/18 when creating our policy directions
with the assumption that these changes will ultimately be proclaimed.
The proposed IZ program operates without significant government subsidy and therefore is
intended to complement rather than compete with other government housing programs. The
program has been designed to coincide with updates to the planning framework in the Cities'
PMTSAs. Kitchener's Growing Together will update the zoning and land use designations in
Kitchener's PMTSAs to support transit -oriented development and the City's housing pledge.
Waterloo will be proposing increases to heights and removing limitations on densities in
growth areas including PMTSAs, as part of a concurrent update to City's Official Plan.
Cambridge is working on implementing zoning updates in its PMTSAs through the Hespeler
Road Secondary Plan and other ongoing rojects.
Comment — Build Urban (through Helen Jowett)
The proposed Inclusionary Zoning set-aside rates of 1-5% should only be implemented in
locations where Light Rail Transit (LRT) infrastructure exists. For MTSAs where the LRT is
still in the planning stages (e.g. Cambridge), the policy should signal but not implement the
intended set-aside rates. This will ensure that the policy aligns with the potential increases in
development value created by the LRT.
Staff Response
PMTSAs planned for future LRT are identified as Emerging market areas and as such have
an initial 0% set aside rate that is intended to reflect the fact that the full market benefits of
LRT have not been realized. In addition, staff are proposing that the policy come into effect in
2025 (rather than 2024 as presented in the discussion paper). With these provisions,
PMTSAs that do not currently have LRT in place will not see a set aside rate requirement until
2027. Although trains may still not be running by 2027 in some PMTSAs, a key aspect of the
policy is to signal future IZ requirements so that developers can make informed decisions
when purchasing land. The transition policies, and low and gradual increases to the set aside
Page 1081 of 1179
rates are intended to enable a reasonable transition while also signaling future policy
requirements and helping developers make informed land purchase decisions in these market
areas.
Comment — Build Urban (through Helen Jowett)
At 5% set-aside rate, IZ will cost developers an estimated $250,000-$305,000/affordable unit
in reduced revenue. Some, but not all, of this reduced revenue may be offset by reduced land
value for new land purchases. There is concern that remaining costs will be passed on to
market rate units unless municipalities offer incentives to offset costs. Encourage providing
incentives to prevent costs from being passed to end user. Support DC exemptions and any
other offsets
Staff Response
Staff acknowledge that there are costs to providing an affordable unit at lower than market
rent. In the longer term, the majority of these costs should be passed on to land sellers rather
than the consumer of the market rate units given that the revenue potential of the land will be
diminished under an IZ framework. A proposed gradual phase in of set aside rates is
anticipated to provide developers with time and clarity to make informed land purchase
decisions that reflect the true value of the land (not unlike other site constraints and zoning
restrictions that influence land values). Exemptions of affordable units from DCs, Parkland,
and CBCs is estimated to provide a cost offset of approximately $30,000/unit. Staff also
propose to eliminate minimum parking requirements for affordable units which will have a
positive financial impact on pro forma. Staff in Kitchener and Waterloo are proposing
increases in density permissions alongside IZ, through separate but concurrent OPAs, to help
offset some of the potential impact to land value in the short term. Finally, staff propose
frequent monitoring and adjustment to reflect emerging market conditions and successes and
failures of the program.
Comment — Build Urban (through Helen Jowett)
For properties purchased prior to the IZ policy, 100% of the reduced revenue will need to be
absorbed by the market rate units or by incentives. Transition policies will be very important.
Costs of IZ that can't be adequately offset (see above) may result in decisions to delay
building, which could slow the construction of new housing supply.
Staff Response
Staff have proposed the following transition policies to recognize the foregone investments
made in MTSAs and to limit disruption to the market: (1) Exempting developments for which a
complete site plan application or plan of subdivision has been submitted prior to the subject
city's Inclusionary Zoning by-law being passed, as per the Planning Act; (2) adjustment of the
proposed set aside rate phase in to start in 2025 rather than 2024; (3) very low initial set
aside rates for the initial phase of the policy (0-2%); and (4) in some cases, increased
development permissions will be introduced concurrently with IZ which will help offset
reduced revenue in the short term.
Comment — Build Urban (through Helen Jowett)
Recommend that set aside rate be established on a per unit basis rather than GFA or GLA for
ease of calculation and implementation.
Staff Response
Staff are of the opinion that the benefits of a GLRA (Gross Leasable Residential Area)
approach for applying set aside rates outweigh the benefits of a per unit approach. While a
per unit calculation may be slightly easier and more intuitive, challenges include: 1) lower
certainty and predictability in the number of affordable units to be secured since the number
of units in a development can vary significant based on unit size and mix; 2) possible
disincentive to the creation of larger (in terms of bedrooms) affordable units; 3) rounding
challenges, particularly for low set aside rates and smaller buildings that would require
Page 1082 of 1179
additional policy (e.g. 1% set aside rate for a 50 unit building is 0.5 affordable units); 4) less
flexibility, since a GLRA approach provides developers with more opportunity to determine
appropriate unit number, size and mix within the general limits of the prescribed regulations
and guidelines. Staff also heard from a number of other developers that they would prefer a
GLRA approach.
Comment — Build Urban (through Helen Jowett)
Question some of the prime, established and emerging markets. Emerging markets may be
areas of greatest opportunity.
Staff Response
NBLC provided staff with an updated evaluation of market areas. Staff have adopted the
recommendations, which included the reclassification of certain market areas and a policy to
recognize additional IZ potential should employment lands be converted to permit residential
uses. MTSAs with no trains have remained unchanged and are assigned to the emerging
market category with the lowest set aside rates.
Comment — Build Urban (through Helen Jowett)
Transition policy: IZ should applied only to developments that have not yet reached the
complete application stage. Significant pro forma development and financial planning goes
into development applications and this work would no longer be relevant if IZ policies was
applied midway through development application review process. Significant changes to the
pro forma late in the game could result in an unviable development.
Staff Response
The proposed transition policies seek to balance the cities' desires to create new affordable
units quickly with the potential negative impacts of an IZ policy on pro forma and development
viability in the short term. In recognition for the need for a fair transition time, the start date for
set aside rates to come into effect has been pushed back from 2024 to 2025. Gradual set
aside rates are recommended starting at 0-2% depending on the market area. Additionally, IZ
is proposed to not apply to any site plan or plan of subdivision applications that have been
deemed complete at the time of council adoption of an IZ policy and regulations. To support
the timely delivery of new affordable units and in alignment with the statutory requirements
and timing for municipal reviews of IZ policies, the timing for increases in set aside rates has
been shortened to be every 2 years with the achievement of the maximum set aside rate of
5% for all market areas by 2031.
Comment— Build Urban (through Helen Jowett)
There is a need to ensure that development in the built-up areas is not shouldering more than
its fair share of development costs as compared to development in greenfield areas.
City/regional policies should consider ensuring that priority areas for development (e.g.
MTSAs) are not overly burdened by fees/charges and policies, which can make them the
most expensive and complicated places to develop, and less viable than suburban areas.
Rebalancing of urban/suburban development costs needed.
Staff Response
Staff agree in principle in the alignment of fees and charges with policy intentions. For
example, Kitchener's DC bylaw has lower DC rates for central neighborhoods than in
suburban and greenfield areas. An exemption to DCs, CBCs and Parkland fees will be
provided for IZ affordable units. In addition, removal of minimum parking requirements and an
increase of heights/densities is proposed to help offset the cost of IZ.
Comment— Build Urban (through Helen Jowett)
Condo builders and rental requirement: Question the capacity of affordable housing providers
to obtain financing to purchase units. May not be feasible to rely on one or two affordable
housing partners to purchase all the IZ units.
Page 1083 of 1179
Staff Response
Many stakeholders agree that non-profit ownership of IZ units has many benefits but their
financial compacity to deliver the units is uncertain. CMHC, the Region, Banks and Credit
units may all assist in financing. The implementation guidelines encourage non-profits/co-ops
to purchase IZ units ownership, although private third -party ownership is also possible.
Comment — Build Urban (through Helen Jowett)
Encouraged to see potential for offsite units to be created anywhere in same municipality.
This may provide opportunities for developers to transfer units to more affordable sites or to
work together on one build, with units to be banked for future developments. Consider if IZ
units can be created through the purchase of existing rental buildings?
Staff Response
Staff have confirmed that the legislation only permits the establishment of offsite IZ units as
new construction.
Comment — Build Urban (through Helen Jowett)
Definition of affordable: IZ policy should use 30% of annual household income instead of
market-based definition. This is more meaningful to households and will be simpler to
administer. Recommend that one measure of affordable be used across both condo/rental
providers.
Staff Response
Response: Staff have incorporated an income measurement into the calculation of affordable.
The definition for affordable units in condos is now generally consistent with the PPS, ROP
and City Official Plans and the definition in the DC Act introduced through Bill 134. The
definition for affordable units in rental buildings remains unchanged, since it already
incorporated an income component.
Comment— Build Urban (through Helen Jowett)
Some felt that rules for rental should better align with rules/points for MLI Select and RCFI
funding. E.g., timeframe for affordable units could be 10 rather than 25 years. Others noted
that they don't use MLI Select or RCFI, and when they do they opt for sustainability measures
over affordability because it is cheaper on their bottom line.
Staff Response
Staff agree that there are some differences between MLI Select and the proposed IZ
program. Alignment in the definitions of affordable rents between the IZ program and the MLI
Select program is expected to help rental developers who secure MLI Select financing more
easily adhere to the requirements of the 2 programs, but it is recognized that not all rental
housing providers use the MLI Select program, or don't use the affordability criteria. Staff
continue to see value in setting less onerous, higher rents for purpose built rental
developments than for condominium developments to avoid discouraging the construction of
purpose built rental, which is housing type that has historically faced more financial barriers to
construction. Staff continue to recommend a 25 -year affordability period rather than the 10 -
year affordability period recommended in the MLI Select program due to the significant need
for longer term affordable housing in the community.
Comment — Build Urban (through Helen Jowett)
For additional consideration, Municipalities should consider offering tax increment financing
grants to developers and other providers regarding property taxes paid on affordable housing
units.
Staff Response
The Cities of Cambridge and Waterloo currently offer tax -increment financing for affordable
units through Community Improvement Plans. (Waterloo's CIP applies only to Uptown).
Page 1084 of 1179
Kitchener has committed to exploring financial incentives for affordable housing through its
Housing for All Strategy and Enabling Missing Middle and Affordable Housing Study.
Comment — Nelson Chukwuma (Conestoga Students Inc)
We are troubled by the proposed 100% minimum of Average Market Rent (AMR) or MLI
Select Rent for purpose-built rental units. This requirement, as opposed to the more
reasonable 80% minimum, risks excluding lower-income residents. It primarily benefits those
within the 60th percentile and above, effectively abandoning low-income individuals and
families. Though the province allows IZ minimum rents to be 80% of AMR, the Region's
framework suggests a minimum of 100% of AMR or MLI select rent ($1425), whichever is
greater. This does not create affordable housing for low-and-moderate income residents. In
this model, only bachelor, one-bedroom, and two-bedroom units will be affordable, and only
to the 60th percentile and up, representing those with the highest moderate income. As
outlined in the discussion paper, the Region states that IZ is most successful for moderate-
income residents, particularly those with larger families, and therefore abandons low-income
residents. It argues that an increase in affordable housing to moderate-income residents will
further free up deeply affordable units for low-income residents. However, "trickle-down"
methods do not work. Additionally, it is vital to note that these rents do not include utilities,
pushing these units out of the affordability band even for the 60th percentile, especially during
the winter/summer months. Therefore, in the proposed model, IZ will not create any
affordable units, but rather create minimal lower-priced but still unaffordable units.
Staff Response
The framework has been revised to align with the market and income-based definition for
affordable housing in the PPS and to provide rental housing that is affordable to low income
individuals between the 15th and 28th percentiles of the regional income range. Higher rents
are proposed for affordable units in purpose built rental to avoid discouraging the construction
of this tenure type which already faces financial challenges. Staff acknowledge that these
rents may not be affordable to many low-income households. IZ is just one tool in the
affordable housing toolkit. Investments from all order of government and the non-profit sector
are required to assist low income households.
Comment— Nelson Chukwuma (Conestoga Students Inc)
As pointed out in the discussion paper, rents are outpacing incomes, and with this trend
continuing, the minimal units that may need a definition of affordability will quickly become
unaffordable. Therefore, by starting at 100% of AMR or MLI select rent (whichever is greater)
the Region would have to revisit these criteria to ensure affordable housing is available in the
IZ framework. As such, CSI is recommending that the Region make the rent maximums 80%
of AMR for all affordable units, unless provincial legislation changes and allows for lower
rents, at which point the more affordable option should be pursued.
Staff Response
The calculation of maximum rents has been revised to align with the definition of affordable in
the PPS, City and Region Official Plan and Bill 134. The proposed market/income calculation
for maximum rents will ensure that rents continue to be affordable to low- and moderate-
income households even as housing markets and incomes change over time. The proposed
maximum rents of 100% AMR are intended to minimize the financial impact in the on
development viability which could stall or delay the creation of new housing supply.
Comment — Nelson Chukwuma (Conestoga Students Inc)
There is a disconnect between the IZ discussion paper's recommended market area
distinctions and the recommendations presented to Waterloo and Kitchener Councils. This
disconnect has led to multiple areas being "downgraded" to locations with lower IZ
requirements, such as Kitchener Market, Downtown Cambridge, and Main, from prime to
established. Ensuring consistency in these designations is crucial for fairness and
Page 1085 of 1179
effectiveness. While CSI believes that all areas should be subject to the 5% maximum sooner
rather than later, at minimum, areas that have the greatest potential for new residential
development (such as Conestoga, Waterloo Public Square/Willis Way and Allen) should be
designated as prime for IZ to have the widest and most effective impact possible in creating
additional affordable housing supply.
Staff Response
Staff have proposed revisions to "upgrade" certain market areas in response to a memo by
NBLC dated September 2023. All PMTSA are proposed to require 5% set asides by 2031.
Comment — Nelson Chukwuma (Conestoga Students Inc)
While we acknowledge the desire for phased IZ percentages in different areas, there is a lack
on emphasis on maximizing affordable units in the majority of market areas. We believe that
all areas should contribute to the goal of affordable housing more substantially. The Region
has identified a needs -based target of 30% of all new housing (a total of 31790 units) to be
affordable, however under the Region's estimated long-term yearly maximum of 99 units per
year, this would take just over 321 years. This does not include the almost 50,000 current
residents needing affordable housing, the 25 -year maximum of affordability, or that the vast
majority of MTSAs, under the current model, will not reach the 5% of affordable units. Given
that the majority of MTSAs will not reach the 5% threshold, the Region should remove the
references to 99 units per year in an effort to be transparent. Looking at the short term
estimate of new affordable housing units per year (36 units per year) which is based on a 3%
threshold (averaged across various timelines and MTSA categorizations) it would take the
Region over 883 years to reach the necessary 31790 new units needed. Though only one
tool, the proposed IZ framework fails to address the need for affordable housing in Waterloo
Region. Given the gap between Regional needs and the proposed plan, drastic steps need to
be taken to intensify in all areas to begin to close this gap.
Staff Response
Staff agree that serious efforts are required to address the affordable housing crisis. IZ is only
one tool among many needed to address the issue. Many other municipal tools and programs
are being implemented across the region to contribute to the goal of increasing affordable
housing supply, including new or expanded affordable housing grant programs, facilitating
missing middle housing and the creation of more second and third residential units, and
strategic use of surplus lands for affordable housing. Staff have attempted to balance the
need for more affordable housing units with the need to maintain the financial viability of
development and ensuring that new housing supply will continue to be constructed.
Comment— Nelson Chukwuma (Conestoga Students Inc)
In addition to the phased IZ percentages, the designation of areas along the
prime/established/emerging, each with lower percentages of units that need to be affordable,
creates a discrepancy among which cities will receive units. For example, Waterloo would
receive the least amount of affordable units (12 units/year in the short term and 27 units/year
with a 5% maximum in the long term). However, Waterloo has a higher population than
Cambridge, and the highest persons per unit out of the three cities included, indicating a
greater need for more housing. Though the Region has integrated transit that does allow for
travel, it is neither comprehensive nor convenient for all travelers, particularly those with
disabilities or who work/study in areas that are unserved by the current transit infrastructure.
As such, CSI is in favour of removing the market distinctions, instead focusing on ramping all
areas up on a faster timeline to begin to meaningfully address the crisis the Region is in.
Staff Response
Staff recommend different set asides for different market areas to reflect market strength and
ability to absorb the cost of IZ. The gradual increase to the 5% set aside rate is intended help
ensure that developments in the short term continue to be viable and to reflect current
Page 1086 of 1179
economic conditions that are already making residential construction financially challenging.
A 5% set side is proposed for all markets by 2031.
Comment — Nelson Chukwuma (Conestoga Students Inc)
The utilization of offsite units is a concern. The usage of offsite units, provides opportunities
for "using lower cost construction methods", and the potential development of specifically low-
income areas. This would counter the positive impact mixed-income neighbourhoods can
have for all residents. By allowing developers to provide cheaper offsite units, the municipality
is encouraging cost-cutting measures and the creation of lower quality and segregated
communities instead of maintaining inclusionary zoning's goal of creating inclusive areas of
people from diverse income backgrounds it risks segregating lower-income communities. If
this approach is pursued, it must prioritize deeply affordable units and ensure inclusivity.
Staff Response
In staffs opinion, offsite units are necessary to support the requirement that affordable units
be rental in tenure, which in turn is important to ensure that the program provides housing
that is affordable to low and moderate income households. Enabling offsite units is not
expected to result in the creation of low-quality buildings or low-income areas given that there
are many successful examples of buildings with moderately affordable units integrated within
neighborhoods. The reference in the Discussion Paper to "lower cost construction methods"
refers not to the quality of construction but rather the differential in cost between high rise
construction that requires expensive concrete and building systems vs. low and midrise
construction that can be constructed using less expensive materials such as wood and that
may have less expensive building systems (e.g. elevators, HVAC etc).
Comment — Nelson Chukwuma (Conestoga Students Inc)
We have observed an overrepresentation of developer and landlord perspectives throughout
the consultations and the discussion paper. While these stakeholders are important, their
priorities should not overshadow the pressing need for affordable housing. Landlords are a
part of the root problem of the financialization of the housing market. For example, calling
landlords "local housing providers", as the report does, ignores the fact that landlords play an
active role in the housing crisis by driving up rents and housing prices to make the most profit
manageable. Many landlords are encouraging this change in language to eschew the
negative connotations of being a landlord, hoping that legislation and politicians (many of who
are landlords) will ignore their contributions to the housing crisis. While there may need to
balance of developer interests, in areas where feedback was reported, developer's feedback
was noted 13 times (compared to 9 times for community members) and this feedback was, on
average, longer (an average of 5 lines for developers and 3.2 for community members). While
developers are an integral stakeholders in providing affordable housing, their primary
interests are in direct opposition to the goal of prioritizing the need for affordable housing.
Staff Response
Staff appreciate the quantitative analysis and feedback that CSI conducted on our analysis to
date. Staff have sought to thoughtfully consider the interests of the development industry, low
to moderate income households, and the community at large in the development of this
policy. We have endeavored to avoid inappropriately privileging the developers' interest in
these discussions. However, their feedback has tended to be more technical and warrant
more complex explanations and responses. A key principle throughout the development of
the IZ project is 'partnering with the development community.' The rationale for this principle is
that IZ needs to work for developers because IZ units are necessarily tied to private market
investment. IZ seeks to leverage the power of the housing market to deliver on affordable
housing outcomes. If IZ does not work for developers, there is significant risk of stifling new
housing supply which could further exacerbate the housing affordability crisis.
Comment — Nelson Chukwuma (Conestoga Students Inc)
Page 1087 of 1179
We also have several questions regarding the implementation of IZ units and their tenant
eligibility. Given that many Conestoga students are international students, and therefore
ineligible for current social housing programs, we would urge the Region to allow eligible
international students to enroll in waitlists for these units. CSI increasingly sees international
students become victims of scams, experiencing high rates of food insecurity, homelessness
and other concerns that drastically impact their ability to live, study and work in the Region.
International students are significant economic contributors to the regional economy and
integral to the continued success and growth of the Region. Although the IZ program is not
built to receive substantial or ongoing financial support from the municipality, it should not be
limited based on citizenship.
Staff Response
Staff are proposing a program that would make Canadian citizens, Permanent Residents,
Temporary Residents (including International Students), or a refugee claimant or Convention
refugee eligible for the affordable units.
Comment— Nelson Chukwuma (Conestoga Students Inc)
In noting developer concerns with providing affordable housing for low-income residents, they
cite marketing and operational concerns. Within this concern, developers imply that providing
affordable housing for lower-income populations comes with challenges that limit the
feasibility of their projects. These concerns further the oppression of marginalized
communities due to the belief that those who are low income are mentally ill, involved in crime
or sex work, and more unsavoury elements that make it harder to sell/rent properties out at
higher prices and successfully gentrify areas. These types of marketability concerns of non -
affordable uses are indirectly related to broader human rights concerns. Further to human
rights concerns, the inclusion of landlords being able to vet pre -approved eligible tenants is
disconcerting. While landlords cite wanting to avoid conflicts, it is essentially impossible to
avoid landlord -tenant conflict altogether and to foresee all future interactions based on
minimal meetings. To be able to vet a pre -approved tenant for future conflicts in this manner,
landlords would have to rely on stereotypes, which could result in violations of the Ontario
Human Rights Code.
Staff Response
Staff have attempted to faithfully report marketing and operational concerns raised by some
(not all) developers in our consultation. Staff share many of CSI's concerns regarding the
potential negative impact on equity considerations that could arise from centering these
developer concerns. These particular developer concerns have not materially influenced the
staff recommended policy or program. Staff continue to recommend that landlords have a say
in tenant selection from the list of eligible tenants (provided they are not discriminated against
on grounds protected by the Charter and Ontario Human Rights Code). Other landlords have
any opportunity to select tenant in their units (including not for profit and rent geared to
income housing). Staff do not recommend a departure for this approach.
Comment— Nelson Chukwuma (Conestoga Students Inc)
One aspect that CSI is pleased to see is the removal of parking lot requirements. This is one
instance where the model appears to be beneficial for both developers and residents, with the
goal of reducing the overall cost of providing housing. It also further aligns with sustainability
goals, and due to the nature of the MTSAs, helps to encourage residents to use public
transportation where possible. Moving away from car -heavy infrastructure, like parking lots, is
one of many ways to help address our ongoing climate crisis.
Staff Response
Comment acknowledged.
Comment — Nelson Chukwuma (Conestoga Students Inc)
Page 1088 of 1179
As originally stated, CSI remains in favour of IZ as one of many tools to address the housing
crisis. However, the Region of Waterloo's proposed IZ framework will not provide long-term
affordable housing and does not support the core purpose of IZ. CSI urges the Region and
cities involved to maximize the presence of IZ throughout the Region to centre on the needs
of residents, not developers of landlords, in creating IZ policies.
Staff Response
All orders of government continue to work collaboratively, in partnership with housing
providers, using all tools available to increase the supply of affordable housing. Since IZ relies
on private market housing construction, staff have worked to develop a program that
balances the financial impact of the program on developers with the housing needs of the
community. In striking this balance, staff are recommending a program that will fill an
identified gap in the housing supply (moderately affordable rental housing) and enable
movement within the housing system. Other programs, such as government subsidized
housing, which do not rely on the participation of the private sector, will continue alongside
the IZ program to create more deeply affordable housing that may not be feasible through the
IZ program.
Comment — Brian Doucet
Lots of good ideas within this document. My main comment is the varying set aside rates. 5%
is already pitifully low, and far lower than other cities' policies before Ford implemented these
very weak rules. Ramping up the rates make sense if the max can be 25% or so. But 5% is a
drop in the bucket and if you want to actually get some units built, 5% is such a low number
that anything less isn't likely to produce much at all.
Of course on land that the cities and region owns, you can (and should) be much more
ambitious than the rules the province has set out for land that is privately owned. While
distinct from the IZ policy, it's not entirely separate either, and we can talk more about this
when we meet.
Staff Response
Considering the current financial challenges of residential development, a 5% set aside rate
can be very impactful on development viability. It is important to allow the market to build IZ
requirements into their investment decisions and to avoid delaying new supply. Staff continue
to recommend a gradual transition in set aside rates but are now recommending a slight
increase in the pace of that transition compared to the discussion paper. Staff agree that
additional opportunities for affordable housing may exist for lands that are municipally owned.
Comment — Prica Global Enterprises (through Brandon Simon)
Set aside rates tailored to different MTSA Market Areas: The differentiation between prime,
established, and emerging market areas is an important distinction which recognizes that not
every MTSA within the Region is subject to the same market conditions. Providing different
and phased set-aside rate requirements for each of these market classifications will help to
mitigate any short-term impacts that IZ will have on the viability of new housing projects, and
allow the land market to graduallyadjust to this new cost.
Staff Response
Acknowledged and agreed.
Comment — Prica Global Enterprises (through Brandon Simon)
Ability for Off -Site supply: Permitting affordable units to be provided off-site will potentially
allow for synergies and efficiencies in the delivery of affordable units by allowing larger
quantities to be concentrated together, allowing for improved operations and administration
and potential partnerships with non-profit organizations. Given that some smaller
development projects may only need to provide a handful of affordable units, administration of
Page 1089 of 1179
these and other units will be much more efficient if there are larger concentrations that can
potentially satisfy the IZ requirements for multiple development projects at once.
Staff Response
Acknowledged and agreed.
Comment — Prica Global Enterprises (through Brandon Simon)
Level of affordability: The proposed maximum level of affordability of 100% AMR will deliver
units "that are affordable to most moderate income households" as noted in the Discussion
Paper. This also helps to further mitigate the impact that these new IZ requirements will have
on the delivery of new housing and recognizes that IZ is just one tool in the delivery of
different affordable housing options, with additional government support required to deliver
increased levels of affordability.
Staff Response
Acknowledged and agreed.
Comment — Prica Global Enterprises (through Brandon Simon)
Incentives to Support IZ: Within MTSAs, it is expected that most vehicular parking will be
provided as underground and/or structured parking. This is very expensive to construct and
represents another potential significant cost in the delivery of affordable units. Exempting
affordable units from parking requirements, as suggested by the Discussion Paper, is a
prudent and very effective incentive that can help offset the added cost of providing affordable
units. This will also further support the significant investment the Region has made in the ION
LRT system, and reinforces the Region's goal of creating 15 -minute neighbourhoods within
the various MTSAs, where public transit and active transportation is prioritized over private
vehicle usage.
Staff Response
Acknowledged and agreed.
Comment — Prica Global Enterprises (through Brandon Simon)
The Discussion Paper also suggests that increases to maximum permitted heights and
densities should be implemented concurrent with the IZ program. This will have the dual
positive impact of supporting the viability of new development projects subject to IZ, and
increasing the number of units that can be delivered in a given development project, which
will provide both additional housing opportunities overall and additional affordable units given
that IZ requirements as based on the overall size of the project.
Staff Response
All three cities, with some variation, intend to increase permitted heights and densities
alongside the introduction of IZ to mitigate some of the potential negative impacts of
development proformas arising from IZ.
Comment — Prica Global Enterprises (through Brandon Simon)
Additional Financial Incentives: In addition to the consideration of parking waivers for
affordable units and increases to maximum height/density limits to support the inclusion of
affordable units, as well as Provincial requirements for the waiving of Development Charges,
parkland dedication and Community Benefits Charge, it is suggested that additional financial
incentives be considered, such as reduced application fees. Streamlined planning approvals
would also be an effective tool in reducing cost and expediting the delivery of new affordable
housing.
Staff Response
The base IZ program is intended to be "sustainable" in that it does not require significant
subsidies for the ongoing and regular construction of new affordable units. The framework
doesn't restrict each City from adopting additional financial incentives, if determined
appropriate and in particular if they can enable more affordable units or affordable units with
Page 1090 of 1179
more affordable rents. The municipalities continue to work toward streamlining development
approvals to support the efficient delivery of new affordable housing.
Comment — Prica Global Enterprises (through Brandon Simon)
Transition for Active Applications: The discussion paper clearly acknowledges the importance
of the phased implementation of IZ requirements in order to allow the development market
time to adapt to this new cost. We believe it is also crucial that clear transition policies be
established for active planning applications that were submitted prior to IZ requirements
coming into effect. The development projects subject to these active applications would have
been planned and designed, and the development land acquired, without knowledge of the
future IZ requirements, and so should be exempt from IZ requirements. O. Reg 232.18
establishes a baseline transition policy for IZ, providing that any development project for
which any application for OPA/ZBA has been submitted, along with an application for either a
Draft Plan of Subdivision or Draft Plan of Condominium, is exempt from IZ requirements.
Notwithstanding this, recognizing that most development projects within MTSAs will not
require a Plan of Subdivision, and that Draft Plan of Condominium applications are typically
submitted much later in the application process, following Site Plan Approval and often
construction has commenced, we suggest that the City should implement a more practical
transition policy, which would exempt a development project that is subject to a previously
submitted application for ZBA, minor variance, or SPA. For reference, the City of Toronto has
proposed a transition policy whereby developments would be exempted from IZ requirements
if complete applications for ZBA and/or SPA were previously submitted. Notwithstanding this,
we note that the City of Waterloo has not typically accepted concurrent ZBA and SPA
applications, and with recent implementation of Bill 109 requirements related to application
processing times, it is our experience that most other municipalities in the Province are now
taking a similar approach. As such, it is not practical to require submission of both a ZBA and
site plan applications. Rather the transition policy should apply to previously submitted
applications for ZBA, SPA, or Minor variance, as noted above.
Staff Response
The team is proposing a program that aligns with the requirements of O. Reg 232/18 that
exempts development projects for which any application for OPA/ZBA has been submitted,
along with an application for either a Draft Plan of Subdivision or Draft Plan of Condominium.
Set aside rates are proposed to come into effect starting in 2025, which provide some
additional transition time for projects that have been planned and designed prior to IZ coming
into effect. Gradual increase in set aside rates also assist in transition.
Comment — YW Kitchener Waterloo (through Racheal Walser)
Understanding this inclusionary zoning proposal is not targeted at the deepest affordability
needs, the discussion paper recommends eligibility for renter households with an income of
less than $58,900. This creates a large population of eligible renters. Due to the severity of
the current housing crisis and the large percentage of the population that would be eligible for
these affordable units, every effort must be made to increase set-aside rates thereby
increasing the impact of inclusionary zoning.
Staff Response
The team has recommended an approach which seeks to reach the 5% maximum set-aside
as quickly as possible while minimizing potential disruption to the creation of new housing
supply. By balancing these objectives, the recommended approach strives to maximize the
number of affordable units that will be built.
Comment — YW Kitchener Waterloo (through Racheal Walser)
To support the creation of resilient communities, limit the exposure of women, gender diverse
people, and their children to further violence, and ensure ample supply of resources and
services to residents, it is vital that affordable units are spread throughout the region.
Page 1091 of 1179
Women and gender diverse people regularly experience violence in Waterloo Region and will
avoid accessing services and support critical to their wellbeing in an effort to avoid further
violence. Project Willow revealed that 65% of women and gender diverse people surveyed
stated that they avoided accessing the services and supports they need because they were
concerned that they would run into an abuser and/or experience more violence. In order to
provide women and gender diverse people with critical supports, like affordable housing,
these supports must minimize the chance that recipients would be forced to interact with an
abuser. To do this, it is critical affordable units are not over -concentrated in specific
geographical locations.
The discussion paper recommends that "offsite IZ units should be provided in an MTSA within
the same municipality as the donor development". This restriction may not be stringent
enough in its proximity criteria to avoid over -concentration of affordable units.
Policy must ensure that affordable units are spread throughout the region, including in areas
with higher median incomes. Ideally, affordable units should be in the same buildings as their
market price counterparts.
Staff Response
Staff appreciate these insights. One of the policy goals of Inclusionary Zoning is to require the
construction of affordable housing in PMTSAs, where the high rents of units in new
developments price many out of the market. The team understands that allowing the
provision of offsite units in any PMTSA within the same municipality may result in the
concentration of affordable IZ units within a few PMTSAs. The team is committed to
monitoring our approach to offsite units every two years and can consider regulatory changes
in the case where concentration of IZ affordable housing units is identified and deemed
undesirable. This review could include a review of the geographic distribution of all affordable
units, not just those created through the IZ program, to ensure the achievement of complete
communities and neighborhoods.
Comment — YW Kitchener Waterloo (through Racheal Walser)
As per table 4 of the Inclusionary Zoning Discussion paper, rates vary between 0% and 5%
across occupancy timeframes and station areas. Specifically, set-aside rates are proposed at
1 % for units with 2024-2026 occupancy in established station areas, and 1 % for units with
2027-2029 occupancy in emerging station areas. As these set-aside rates are proposed to
apply to buildings with 50 or more units, it is important to note the real-world outcomes of
these rates.
A set-aside rate of 1% for a building of 99 units creates a functional to set-aside rate of zero
units. When set-aside rates are set at lower, odd -numbered percentages it also has the
possibility of incentivizing developers to reduce building units by a single unit in order to avoid
setting aside affordable units.
For example, under the proposal outlined in the discussion paper a developer looking to build
a 100 unit building in a Prime Market Area with 2028-2030 occupancy would be required to
abide by a set-aside rate of 3%, for a total of 3 affordable units. By reducing the building size
by only one unit, a set-aside rate of 3% would create a total of 2 affordable units. In this
situation a 1 % reduction in building size would lead to a 33% reduction in affordable units.
Possible considerations to mitigate these impacts include increasing the set-aside rates and
including building size as a factor within the set-aside rate matrix, allowing for set-aside rates
that fluctuate according to the number of units in the building.
Staff Response
The proposed approach would calculate the set-aside rate as a percentage of the building's
gross leasable residential floor area. A typical 100 -unit building may have an average of 50
square meters per unit, which would result in 5000 square meters of leasable residential floor
area (i.e. residential space that can be rented or sold). Of said 5000 square meters, a 1 % set -
Page 1092 of 1179
aside would equate to 50 square meters of floor area that must be dedicated to affordable
units, which would likely result in 1 affordable unit. In larger developments where more floor
area is required for IZ, the unit mix, and size could vary. The team has recommended an
approach in the draft Implementation Guidelines which encourages the unit mix and size of IZ
units to be comparable to that of the overall development.
Comment — YW Kitchener Waterloo (through Racheal Walser)
It is vital to ensure that affordable multi -room builds are available to support the
disproportionate number of women, gender diverse people, and children seeking housing. For
women, gender -diverse people, and their children, a unit with an insufficient number of
bedrooms has dire consequences — such as a potential loss of custody.
The Inclusionary zoning discussion paper proposes maximum rents for affordable units in
both purpose-built rental buildings and condominium buildings. The maximum rent for
affordable units in purpose-built rental buildings is calculated as the greater of 100% AMR or
MLI Select definition of affordability. As a result, the maximum affordable rents for bachelor,
one -bedroom, and two-bedroom units in purpose-built rental buildings is identical ($1,425).
This limits incentives for developers to make affordable multi -room builds available.
To ensure access to affordable units for women, gender diverse people, and their children,
policy outlining inclusionary zoning must be unequivocal in establishing the size and type
(including the number of bedrooms) of affordable units must reflect the size and type of
market rate units.
Staff Response
The team acknowledges the risk that maximum rents based on the MLI select criteria are not
differentiated by number of bedrooms, and that this could provide a marginal disincentive for
large units IZ units in purpose built rentals. However, criteria that calculate the set aside
requirement based on a percentage of floor area, rather than a percentage of units provides a
countervailing incentive to provide larger units. The proposed approach attempts to balance a
myriad of factors, including the financial challenges with building purpose-built rental versus
condominium developments. By allowing for rents using the MLI Select definition of
affordability, rental developers can qualify for CMHC funding which will assist with their costs
while also providing affordable housing at rents below what the market could bear. The intent
of the implementation guidelines is to require developers to provide IZ units of a unit mix and
size which is comparable to the unit mix and size of the overall development, though it does
maintain some opportunity for flexibility. Staff are committed to monitoring the results of the
approach to IZ and could make adjustments the number of bedroom requirements over time.
Comment — YW Kitchener Waterloo (through Racheal Walser)
As non -profits often lack the additional streams of income that developers maintain, we
anticipate challenges in absorbing additional operational and administrative costs if affordable
units are transferred to non -profits. Affordable units to be transferred to non -profits must be
accompanied by funding frameworks to cover operational and administrative costs.
Staff Response
Staff received feedback from some affordable housing providers who believe they can take
on the affordable units and the associated operational and administrative costs, provided that
the affordable units are conveyed at a price low enough to be covered through available
financing tools and grants.
Comment — Church and Benton Limited (through Heather Price)
We are writing to request that the City give consideration to broadening the exemption of the
IZ By-law to exempt development/redevelopments engaged in a planning process with the
City (not just Site Plan Applications) and specifically to exempt the Site (39-51 Church/69-73
Benton) from the IZ By-law. We are pleased to provide within this submission additional
information and materials in support of this request. Enclosed hereto are transfer documents
Page 1093 of 1179
for each of the three properties comprising the Site; which confirm that Church and Benton
Limited is the current owner of all of these properties and that the lands were purchased in
late November and early December, 2021. Church and Benton Limited has assembled the
properties comprising the Site with the intent to redevelop it for high density mixed-use. At the
time the lands were required, there were no draft IZ policies, guidelines, or regulations in
place. [... ] Despite their investment and full intention of advancing planning approvals in a
timely manner, applications of this complexity require considerable effort to prepare. It is not
likely that the OPA and ZBA will be approved before the anticipated timing of IZ, let alone
being able to submit a Site Plan application. The inability to submit before the implementation
date of the Inclusionary Zoning is through no fault of our client, who has done all the
necessary work to prepare complete applications but is held up waiting for clearance of one
of their reports by a provincial Ministry. For the reasons illustrated by the circumstances of
this Site, we think it prudent that the City give consideration to expanding the exemption
provisions to include other planning application types besides Site Plan applications to ease
in the transition to IZ. We specifically request that the City provide a site-specific exemption of
the IZ for the site.
Staff Response
The team is proposing a program that aligns with the requirements of O. Reg 232/18 that
exempts development projects for which any application for OPA/ZBA has been submitted,
along with an application for either a Draft Plan of Subdivision or Draft Plan of Condominium.
Set aside rates are proposed to come into effect starting in 2025, which provide some
additional transition time for projects that have been planned and designed prior to IZ coming
into effect.
Comment —Tyler Ulmer (Momentum Developments)
I read through the paper again. I don't think I have any specific comments/questions. Playing
around with some of our upcoming project proformas, 2-3% at the affordable rates drops the
profitability below the banks typical minimum, but it also makes the equity returns small
enough that we wouldn't be able to raise investor money for projects. It's tough to predict if
sale prices can increase to cover this, or if build costs drop enough to balance it.
Staff Response
Acknowledged
Comment — Jamie Crich (Auburn Developments)
I mostly like and agree with your approach. There are a few things I think you can improve on:
I feel your set aside rate is too low and too slow. We have an issue now, and both the prov.
and feds have come to the table with the HST, so I feel you should be pushing this higher.
Prime should be 3/4/5, and EM should be 2/3/5, and Emerging 1/2/4 and all should be
shortened to 2029 ear on each). Parking rate should be 0.
Staff Response
Thanks for your feedback. Staff have made some adjustments to increase and accelerate the
proposed set aside rates and transition. In addition, some PMTSAs have been moved
upwards into Established and Prime market areas with higher set aside rates.
Zero parking is proposed for the affordable units. Kitchener has signaled zero parking for all
types of development in Major Transit Station Areas through the Growing Together project.
Comment — Dawn Parker and Brian Doucet
The IZ report asserts that land value uplift facilitates the opportunity to provide affordable
housing, but the dynamics work in the opposite way. Land Value uplift combined with high
construction costs for high rise housing make it extremely difficult to provide affordable
Page 1094 of 1179
housing. DP is seeking information on how the land value uplift that results from increases in
zoning permission was considered in the IZ analysis
Staff Response
Staff have reviewed academic research, consulted with land developers and real estate
industry professionals and talked to other municipalities who have enacted IZ to understand
the relationship between land value uplift and Inclusionary Zoning regulations. Results of this
research confirmed that significant public investments, like LRT, can increase land values in
nearby areas, while site constraints, city zoning regulations and other factors can decrease
land values. Property owners who purchased land parcels in MTSAs prior to the construction
of the LRT and who continue to own those parcels have benefitted from significant land value
uplift, and it is staff opinion that these properties can more easily absorb the reduced
revenues associated with IZ. Staff also recognize that many properties within the region's
MTSAs were bought and sold after the construction of the LRT at an uplifted market price,
and that IZ regulations could have a challenging impact in the short term on the development
pro forma for these properties (this impact is intended to be offset through modest and
gradual set aside rates). Finally, staff recognize that as land continues to be bought and sold
in the market into the future, IZ regulations that have been adopted by council should
influence land purchase decisions and depress land values to ensure that future transactions
reflect the true value of the land and potential revenues. It is important to distinguish the
premise 1) that land value uplift provides an opportunity for policy to capture land value and
dedicate it towards a community purpose (affordable units in this case) from an assertion 2)
that land value uplift in and of itself improves affordability. Premise (1) but not premise (2) is
asserted through this work.
Comment — Dawn Parker and Brian Doucet
Request that pro forma and financial models be released to allow more scrutiny
Staff Response
The pro forma model is a balance sheet of anticipated costs and revenues that could be
reasonably anticipated for certain scales of development. The underlying mechanics of the
balance sheet were created by the consultant and are the subject of a non -disclosure
agreement between the cities and the consultant and cannot be released. Staff are able to
share the outputs of the model and information about all of the variables considered but are
not able to share the model itself. It is important to note that while the model provided useful
information about development pro forma under various scenarios, it was only one of a
number of inputs into staffs decision making on potential IZ policy and regulations. Other
information, such as feedback and pro formas shared by local developers, information
gathered from affordable housing providers and members of the public in need of affordable
housing, and a review of program parameters from successful IZ programs also factored into
staffs decision making.
Comment — Dawn Parker and Brian Doucet
DP noted that the project team are concerned about slowing the housing market, but the
housing market is not a single entity. It is made up of multiple markets housing markets - that
differ by housing type, finance type, tenure. In particular land and housing developers are
diverse. We know that much of what is being built now is using CMHC rental financing.
Policy changes that make for-profit high rise housing construction less financially attractive
can provide opportunities for non -profits and or missing middle developers to become more
successful buying land to build housing. In this way land market disruption (subtly, not
radically) may be desirable for affordability outcomes.
Staff Response
Staff agree that the housing market is comprised of many subsectors and that constraints or
pressures in some subsectors can create opportunities in others. Providing opportunities for
Page 1095 of 1179
non-profit housing providers to create more housing is a worthy objective and is consistent
with the general goals and objectives of the Kitchener and Waterloo's housing strategies.
Given the current housing affordability and supply challenges, staff recommend minimizing
disruption of the housing market that could have the impact of slowing the pace of new
housing construction. The proposed IZ policy and regulations are designed to work in tandem
with other policy tools to create opportunities for a full range of housing providers and housing
types. For example, while IZ is under consideration, staff in Kitchener and Waterloo are also
working toward reducing restrictions on small scale intensification in low rise neighborhoods,
which will provide opportunities for missing middle developers. Many municipalities, including
the Region of Waterloo, have committed to exploring opportunities to use public lands
housing, which could support the construction of non -profits in building housing. Any
approach that intentionally reduces the viability of market housing in order to provide the non-
profit sector greater opportunity to bid for land would be a significant and ideologically
charged intervention that is beyond the scope of this project.
Comment — Dawn Parker and Brian Doucet
There should be no transition provision to the IZ regime. It should be implemented fully and
promptly for social and political reasons. Transition provides incentives to build now to avoid
(higher) IZ rates coming later
Staff Response
Staff have considered the full range of transition provisions and their potential impacts on the
housing market. Staff are of the opinion that a gradual transition is important to minimize
negative impacts of IZ on development pro formas. A developer who can no longer ensure a
development will be financially viable will slow or stall their work and will redirect their
energies to more viable projects. This could have the effect of redirecting developers' efforts
to projects outside of the cities' MTSAs and possibly outside of the region. Ultimately, such an
approach could reduce the local yield of both market and affordable housing in the short term.
To avoid this, staff are recommending a program that will ensure market units continue to be
constructed in the short term while adding a modest number of affordable units, with a view to
maximizing the number of affordable units within the limits of the proposed provincial
regulations over the long term.
Comment — Dawn Parker and Brian Doucet
Cities should require at the minimum 5% set aside outlined by the province. It is a moral
imperative and will strengthen the municipal positions when advocating to the province for
more flexibility in IZ.
Staff Response
Staff recommend that by 2031 all MTSAs will have a set aside rate of 5%. Waterloo and
Kitchener councils both advocated to the Province to provide more flexibility in the application
of IZ.
Comment — Dawn Parker and Brian Doucet
Analysis that the housing market is currently challenged isn't born out in reality. There is still
housing being built, mostly with CMHC funding. IZ should reward innovative developers
delivering affordability outcomes
Staff Response
There is a good amount of information to suggest that condominium development is currently
challenged as a result of a range of factors, including high interest rates. Rental housing
continues to be built, but not at a pace that meets demand. Staff agree that innovation should
be rewarded and have proposed a rental only program that enables significant flexibility to
permit innovative partnerships between developers and the non-profit sector to enable condo
developers to extract themselves from the long-term management and to enable non -profits
Page 1096 of 1179
to deliver affordable housing for a longer term of affordability. The required rents in purpose
built rentals align with CMHC's MLI select program criteria.
Comment — Dawn Parker and Brian Doucet
Other ideas to advance affordable housing: Leverage municipally owned lands.
Staff Response
Determining how municipally owned lands can be leveraged to support affordable housing is
an action in both Waterloo's Affordable Housing Strategy and Kitchener's Housing For All plan
and work is underway in both cities to implement this action. In the past few years City of
Cambridge has declared two properties as surplus to permit the construction of affordable
housing and Region of Waterloo identified 3 regionally owned parcels as surplus to permit
their use for affordable housing.
Comment — Dawn Parker and Brian Doucet
There should have been further consideration of academic sources. Work should be peer
reviewed by people with PhDs. Consultants do not have the training that those with PhDs do,
and their analysis should hold less weight.
Staff Response
Academic sources were consulted as part of staffs research into Inclusionary Zoning as a
tool to achieve affordable housing. Academic research provided helpful information regarding
the theoretical basis of IZ, and lessons learned from communities across North America that
have implemented IZ. Consultant research provided additional context regarding local
development economics and housing market opportunities and constraints.
Comment — Dawn Parker and Brian Doucet
Major Transit Station Area boundaries should be determined using an analytic and
reproducible methodology and their extent should be maximized if and only if municipality can
and do limit zoning in the expanded areas (between 500-800 meters walking distance) to low-
rise. The extension of these boundaries could provide more opportunity for missing middle
land use planning permissions (that may be protected from appeal) and additional
opportunities for inclusionary zoning units
Staff Response
MTSA boundaries were identified by the Region of Waterloo through a municipal
comprehensive review and public process. These boundaries have now been approved by
the Province and are in effect.
Comment — Dawn Parker and Brian Doucet
Residents should be informed of all aspects of the current and planned zoning for their
properties, including what it means for appealability to be within a major transit station area
and a protected major transit station area. Current communication from the Region and
Cities around MTSAs and PMTSAs is incomplete and misleading. When developers and
speculators know what is allowed, and residents do not, it gives developers and speculators a
market advantage in terms of buying up properties for "land assembly". It also keeps
residents from having the opportunity to speak up about proposed zoning changes, which
contradicts mandates for resident consultation.
Staff Response
Land use planning information for all properties in Kitchener, Waterloo and Cambridge is
available online, along with information about projects that are proposing changes to existing
policy and zoning. The Cities continue to work toward improving their communication around
land use planning matters to ensure that people affected by decisions have an opportunity to
review changes and provide feedback. For IZ specifically, a substantial amount of online and
in person engagement has been carried out over the past three years, including in person
and online meetings for: the general public, individuals and groups in need of affordable
Page 1097 of 1179
housing, affordable housing providers, and developers, homebuilders and other real estate
industry professionals.
Comment — Bell Canada
No concerns
Comment — Gina Georgiou
I am not very well versed on it, but it sounds like a wonderful idea to get the investors, who
stand to gain the most from each development, to "give back" to the community. There are
many people cannot afford or stand to continue maintaining any levels of increases to their
rent. With renovictions being the new "in" thing, we must stop people profiteering off these
unfortunate circumstances from Kitchener residents.
My question is, the last time I checked (maybe a year or so ago) there were 20,000 approved
developments (not sure how many of those were of units more than 50+ dwellings), if
inclusionary zoning is agreed upon, the ones that have not broken ground yet, would they be
required to follow the percentages set?
In the article I read it stated that "starting 2025, require residential developments to include a
minimum of 0-2% of their gross leasable residential floor area as affordable units". Does this
apply to a)buildings scheduled to be rentals b)buildings that are approved, but have not yet
broken ground?
As a side note: If developers are given the option, I don't agree with developers choosing to
divert from inclusionary zoning to bonusing, as the money given through bonusing is no
where close to making any significant difference to the city. If inclusionary zoning does not go
through, can the "bonusing" expectations go up by the City which will enable the City funds to
use currently owned lands to build affordable housing
Staff Response
Thanks for your interest in the project. In repose to your questions:
IZ is proposed to apply to both purpose built rental and condominium projects. The maximum
rent is proposed to be higher in purpose built rents than in condos to reflect the fact the
economics of rentals is typically more challenging, and this is a type of housing we'd like to
encourage more of.
We are proposing that buildings that have building permits issued in 2025 or beyond be
subject to the IZ requirements. Provincial legislation exempts developments that have already
applied for site plan approval from IZ requirements. Also, there is no ability to use bonusing
or cash -in -lieu of providing units.
Page 1098 of 1179
nb1c
Trusted advisors since 1976.
Memorandum
City of Waterloo
To: City of Kitchener
City of Cambridge
Region of Waterloo
From: N. Barry Lyon Consultants Limited
Date: September 28, 2023
RIE: Inclusionary Zoning — Supplementary Discussion Paper
1.0 Introduction
N. Barry Lyon Consultants Limited (`NBLC') has been retained collectively by the Cities of Waterloo,
Kitchener, Cambridge and the Region of Waterloo (`the Partners') to provide a supplementary
memorandum for discussion as it continues to consider and advance opportunities for the application of
Inclusionary Zoning (IZ) policies throughout their municipalities. This discussion paper is intended to
be complementary to NBLC's previous work on this project. It provides additional discussion regarding
the potential classification of market strength across varying Protected Major Transit Station Areas
(PMTSAs), and the application/ phasing of affordable housing set aside rates.
2.0 Market Area Categorization
While IZ policies can only be implemented at the area municipal level, the Partners have recognized the
importance of adopting a consistent approach that can be applied region -wide. It is notable that the
approach that has been presented to date would see a gradual increasing affordable housing set aside
rates over time in order to avoid a shock to the market and encourage new housing supply overall. This
approach is in line with NBLC's recommendations and is appropriate from a land economics perspective.
Stakeholders throughout the market will benefit from the clarity and consistency that this brings as the
policy is applied. As part of this framework, three market area categories — "Prime", "Established", and
"Emerging" — were considered, with each PMTSA being assigned one of these market area
classifications. In the testing of IZ policy outcomes, each of the market strength classifications was
Inclusionary Zoning — Supplementary Discussion pg. 1
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1099 of 1179
assigned a set of market parameters that best reflected prevailing market conditions in Waterloo Region.
Subject to market strength (among other built form considerations), testing demonstrated that the
applicable set aside rates for an initial IZ policy should vary across these market categories in order to
maintain development viability in initial years after the policy is implemented. The Partners have
recommended initial set aside rates ranging from 0%, 1% or 2% through to 2027, with increases
thereafter.
Factors considered in this initial categorization of PMTSA market strength included:
■ The pace and volume of new high density apartment sales activity;
■ Achievable sales pricing thresholds;
■ The scale and volume of new high density residential development application activity; and,
■ The pricing and volume of residential land acquisition activity.
The relative performance of new residential development activity related to the factors above was used
to categorize PMTSAs into each of the three market area categories. As part of this supplementary
review, the Partners have requested that recent market activity be considered to confirm and/or highlight
any potential changes that could be considered in this classification. In this regard, we note the following:
■ The new condominium apartment markets throughout Waterloo, Kitchener and Cambridge have
continued their lackluster performance throughout 2023. Over the last eight months sales have slowed
to about 415 units year-to-date down from more than 1,370 sales throughout the first three quarters
of 2022. This, of course, is due to persistently high interest rates which has undermined sales activity
from both end users and investors alike.
■ While low rise product types have seen a decline in achievable pricing, pricing in condominium
apartment formats appears to have remained relatively flat throughout the latter part of 2022 and into
2023. Notwithstanding this, some developers have held back supply and appear to be pausing sales
activity until market strength returns.
■ Despite the reduced sales activity, demand for housing in Ontario continues to build. Purchasers have
been sidelined due to increased mortgage rates, and record immigration levels are adding to pent up
demand. We expect that as lending rates and pricing stabilize, that buyers will return. TOD locations
have proven, even in the current market, to be strong market draws. For example, at the Pickering
GO Station, Centrecourt sold 95% of its 500 -unit project over three days in September 2023.
■ Rental market conditions continue to tighten, with vacancy rates in the Greater Golden Horseshoe
returning to pre -pandemic lows, indicating significant unmet demand. Buyers, who are unable or
unwilling to purchase homes, have only added to the demand for rental housing. The recent Federal
announcement to waive the GST potion on the HST for new purpose-built rental housing should
stimulate market interest in investing in rental housing going forward (moreover, there are recent
signals that the Provincial government will follow suit).
■ Persistently high interest rates, however, are likely to keep overall demand muted in the ownership
market. In particular, the high costs of ownership have discouraged investors as market rents are
Inclusionary Zoning — Supplementary Discussion pg. 2
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1100 of 1179
insufficient to support the investment costs and produce a reasonable return. This may have
implications on development densities. High density projects that accommodate buildings with more
than 300 units rely on a strong investor market to acquire a large portion of these units early in the
pre -sale period. Without these investors, a project of this scale would encounter a prolonged sales
program which can have significant impact on the financial viability of a development.
Overall, given the pace of change and volatility affecting the residential market, municipal policies that
can potentially affect development viability, and the supply of new homes, should remain nimble and be
updated at regular intervals. In this spirit, we have reviewed the previous classification of PMTSA areas
for IZ testing purposes across the Waterloo, Kitchener and Cambridge market areas to consider whether
any changes to PMTSA categorization appear to be warranted. An updated classification of submarket
areas for testing purposes is shown in Table 1, where the following adjustments have been
recommended:
■ The Northfield PMTSA could be considered an `established' submarket following relatively strong
sales activity demonstrated in the area throughout recent development activity.
■ The Uptown Waterloo PMTSAs (Waterloo Public Square, Willis Way and Allen stations) could be
considered `prime' submarkets. While there appears to have been some recent challenges affecting
the the sales programs of some projects, there continues to be notable development interest as
demonstrated through persistent development proposal activity and the area is very well positioned
for growth and change from a market perspective.
■ The Borden and Mill PMTSAs in Kitchener could be considered as established submarkets where a
notable amount of recent land transaction and development application activity suggests that these
submarkets are no longer being overlooked nor viewed as a pioneering development area.
Table 1
MTSA Market Areas
PMTSA
Municipality
Market Area
Conestoga
Waterloo
Established
Northfield
Waterloo
Established
Research & Technology Park
Waterloo
Established
University of Waterloo
Waterloo
Prime
Laurier
Waterloo
Prime
Waterloo Public Square / Willis Way
Waterloo
Prime
Allen
Waterloo
Prime
Grand River
Kitchener
Established
Central
Kitchener
Prime
Victoria Park / Kitchener City Hall
Kitchener
Prime
Queen / Frederick
Kitchener
Prime
Kitchener Market
Kitchener
Established
Borden
Kitchener
Established
Mill
Kitchener
Established
Blockline
Kitchener
Emerging
Fairway
Kitchener
Emerging
Sportsworld
Kitchener
Emerging
Inclusionary Zoning — Supplementary Discussion
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586
pg. 3
Pagel 101 of 1179
Table 1 Continued...
Preston
Cambridge
Emerging
Pinebush
Cambridge
Emerging
Cambridge Centre Mall
Cambridge
Emerging
Can-Amera
Cambridge
Emerging
Delta
Cambridge
Emerging
Main
Cambridge
Established
Downtown Cambridge
Cambridge
Established
3.0 Opportunities for Achieving Maximum Set Aside Rates
In November 2022, Provincial Bill 23 introduced proposed policy changes that, if implemented through
regulation, provide additional clarity and structure regarding the design of IZ policies. Among other
potential changes, the bill signalled the Province's intention to limit the total number of units that can be
required to be affordable at 5% of units in a development and the introduction of a maximum period of
affordability, at 25 -years. This clarity is helpful for the private sector because it provides an
understanding of the `upper limit' for potential Inclusionary Zoning policies.
Developers typically acquire land on a speculative basis, based on their expectation of maximum
approvable (and market supportable) built form. Given this forward-looking perspective, it remains
important that IZ policy is designed and implemented in a phased approach that will allow for
development to proceed in the near term whenever possible — this is particularly important in weaker
`emerging' market locations. At the same time, a policy framework that gives long term clarity to the
market is beneficial because it allows the private sector to build potentially costly policies (like IZ) into
land acquisition and project underwriting.
Within this context and amidst a challenging housing crisis, the Partners have been asked to consider
instances where it may be possible to achieve the maximum set aside rate, or to accelerate the timeline
for achieving the maximum 5% threshold. While the stie-specific nuance of every redevelopment project
creates unique financial outcomes, we offer the following strategies that the Partners could pursue to
establish higher initial set aside rates, and/ or to seek the maximum set aside rate at the conclusion of the
policy's phase-in period.
3.1 Acknowledge unique policy contexts
Consider higher set aside rates in PMTSA areas where significant changes to planning
entitlements have occurred, or, are anticipated.
In recommending an approach that acknowledges variation in market strength, our review of
characteristics focused on market side dynamics. However, municipal and regional governments can
have notable influence over land value and development viability through land use planning
mechanisms. Moreover, the instance of significant policy change can add meaningful land value at the
stroke of a pen. A prime example of this is when lands are shifted from Employment to Mixed -Use
Official Plan policies.
Inclusionary Zoning — Supplementary Discussion pg. 4
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1102 of 1179
Through discussions with the Partners, we understand that some of the employment lands in PMTSA
areas throughout the region have been removed from the Region's Significant Employment Lands policy
area through a recent Regional Official Plan Amendment and could potentially transition to include
mixed use development permissions. What results is an enhanced opportunity for the exchange of
community benefits (in this instance, affordable housing), that might not otherwise be sustainable if
lands transacted at residential land values.
To contextualize the potential value uplift that these policy decisions can unlock, NBLC compiled land
transaction data for high density residential sites and commercial land throughout Kitchener and
Waterloo over the past 24 months. This desktop research indicates that the average land value for
transacted vacant commercial lands has been in the order of $1.4 million per acre, whereas the value of
high density residential land transactions has had an average in the order of $5 million per acre.'
A major shift in the land use policy context means that the range of development opportunities on
affected sites becomes much broader, and more valuable. At present, this is particularly meaningful
within the context of a challenging post -pandemic environment office market where increased remote
working patterns threaten to reduce office space requirements permanently.
It is recommended that staff review these potential policy changes in detail to consider whether
meaningful changes to lands within PMTSAs warrant a different application of IZ policy parameters.
There may be geographic areas where policy changes unlock opportunities to apply the maximum 5%
set aside rate in the near term.
3.2 Plan for positive market evolution
Previous proforma testing indicates that a uniform IZ set aside rate is unlikely to be achievable at present
across all of the PMTSAs in Waterloo, Kitchener and Cambridge. Moreover, there has been a significant
amount of volatility affecting the viability of new residential projects in the market of late. However,
fundamental economic factors suggest that the long-term outlook for residential demand remains positive
overall. While the pace of market evolution is uncertain, it is appropriate in our view to plan for market
strength to return over time.
With this perspective and still reserving flexibility to adjust policy parameters in the future (two-year
intervals have been proposed in draft policy direction), the cities of Waterloo, Kitchener, and
Cambridge should signal an intent to seek the full 5% set aside rate at the conclusion of a phase-
in timeline across all PWSAs.
Should economic challenges persist over the long term, policies could be modified to maintain a `low
and slow' approach to phase-in while maintaining viable development outcomes wherever possible.
Potential policy adjustments following biennial review could include an extension to the length of the
phase-in period, or adjustments to the set aside rates themselves, if warranted.
1 Land values are a weighted average based on land transaction data compiled from Altus Data Solutions and Costar
Group for sites between 0.5 and 10.0 acres in size.
Inclusionary Zoning — Supplementary Discussion pg. 5
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1103 of 1179
The Partners have taken positive and appropriate steps in clearly signaling their intentions for an
emerging policy in order to ensure that future speculative land market activity can begin to adjust to new
cost considerations. We maintain that IZ should be viewed as a forward-looking policy that will be en-
force and adjusted over the long term. The policy has the potential to create thousands of affordable units
over time. However, this requires a measured approach and recognition that the policy tool must be well
aligned with market and economic reality.
Markets can — and do — evolve quickly. So, rather than to signal that weaker market locations, where
speculative land purchasing has yet to ramp up, are not desirable locations to implement IZ policies to
the full extent available, it remains appropriate to plan for viable TOD and an exchange of community
benefits in the future. The challenge for the Partners is in designing a policy and program framework for
IZ that will not adversely delay the market's maturation process in these emerging locations. While
absolute precision is impossible, sensitive early implementation (as has been proposed by the Partners)
will in fact condition the development community around future expectations, making IZ predictable as
part of future development.
The Partners should continue monitoring market conditions after the introduction of IZ because
there is likely to be a lag — perhaps over several years — between the timing of policy introduction
and when impacts (positive or negative) are realized throughout the region. The Partners should
continue to pursue a policy framework that can react quickly to changes in market conditions and
cost factors as required; this could include upswings in market strength as economic conditions
stabilize.
3.3 Incentivise desired outcomes in the interim
A strategy that the Partners could employ in order to accelerate or increase initial affordable
housing set aside rates could be to offer financial incentives to new development projects in the
near term. If these incentives were calibrated to fully offset the impact that the delivery of affordable
units creates, the Partners could seek higher set aside rates than would otherwise be sustainable without
additional incentives.
We note and acknowledge that recent provincial policy revisions do include certain fee and charge
exemptions for affordable units and that the Partners' policy framework includes a removal of parking
requirements for affordable units. However, while these reductions are beneficial from the private
sector's perspective, the value of these incentives does not fully offset the impact of delivering affordable
units.
Incentive programming could include:
■ Additional density above the current approved zoning to offset the costs of an affordable housing
component (i.e., a voluntary approach);
■ The provision of financial incentives to the project to offset some of the costs of the affordable
housing contribution; or,
Inclusionary Zoning — Supplementary Discussion pg. 6
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1104 of 1179
■ A combination of the previous two approaches above.
In market locations where residential demand is weaker, density will have less value. In fact, there are
instances where added density would detract from the viability of a project by adding costs, time and
risk. Therefore, a policy that exchanges density for housing will be less viable outside high demand
PMTSAs where financial incentives will be more effective as an interim solution. However, as the
market evolves and demand improves, the need for these incentive tools diminishes because
development density becomes more powerful as an incentive.
The calibration and monitoring of incentive programming would need to be managed carefully to ensure
that the value of the combined incentives is meaningful as an offsetting measure. In our view, financial
incentives would be best delivered over a limited timeframe and reviewed regularly in order to ensure
that this programming could be reduced or withdrawn as submarkets mature.
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 memorandum 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 — Supplementary Discussion pg. 7
Waterloo, Kitchener, Cambridge, September 2023
NBLC Docket #22-3586 Page 1105 of 1179
Inclusionary Zoning Policy and Program
Directions for Cambridge, Kitchener and
Waterloo
Discussion Paper
June 2023
Page 1106 of 1179
ExecutiveSummary.......................................................................................................................................4
Introduction..................................................................................................................................................
9
IZ as a tool to create Affordable Housing.................................................................................................9
Benefits and Limitations of IZ.................................................................................................................10
LegislativeFramework................................................................................................................................
12
MTSAPlanning Framework.....................................................................................................................14
IZPolicy Parameters....................................................................................................................................
23
Evaluation of Financial Impacts of IZ......................................................................................................23
Set -Aside Rate........................................................................................................................................26
Level of Affordability (Maximum Rent or Price).....................................................................................
28
Durationof Affordability.........................................................................................................................
34
Tenureof IZ Units....................................................................................................................................35
Unit Size and Number of Bedrooms.......................................................................................................37
LocationWithin Projects.........................................................................................................................38
DesignCriteria.........................................................................................................................................39
Timing of Construction and Occupancy..................................................................................................40
Exemptions.............................................................................................................................................41
OffsiteUnits............................................................................................................................................43
Accessibility.............................................................................................................................................
45
Incentivesand Offsets................................................................................................................................46
Mandatory or Voluntary (Incentive zoning)...........................................................................................46
ParkingRequirements.............................................................................................................................48
Implementation and Administration.......................................................................................................... 51
Incorporating IZ Requirements into Development Approvals Processes...............................................51
AdministeringIZ Units.............................................................................................................................52
Appendix 1— Jurisdictional Scan of Inclusionary Zoning (IZ) Frameworks .................................................. 56
Appendix 2 — How Planning Act Requirements are Addressed.................................................................. 70
2
Page 1107 of 1179
Page 1108 of 1179
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.
0
Page 1109 of 1179
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
top 20th 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.
Eligible households: Households eligible for the affordable units should be low or moderate
income households, having a gross annual income at or below the 60th 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
' . 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.
Page 1110 of 1179
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
11
Page 1111 of 1179
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-aside Rates
Market Area and MTSA
Set-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
• Allen
1%
2%
3%
• 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
*Set-aside rate applies to total GFA of proposed development
Page 1112 of 1179
Recommended Maximum Rents for IZ units
Unit Type
2022 Maximum Rent for Affordable
Rental Unit
Unit Type
Purpose-built
Rental Building*
Condominium
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
Page 1113 of 1179
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
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
Page 1114 of 1179
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
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 not replace 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
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 IZ program, by municipality
* 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
Page 1116 of 1179
Estimated IZ units in
Estimated IZ units in
Municipality
Total units in MTSAs*
medium term **
long term
(units/year)
(units/year)
(units/year)***
Kitchener
698
27
35
Cambridge
741
25
37
Waterloo
532
12
27
Total
1 1,971
60
99
* 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
Page 1116 of 1179
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
12
Page 1117 of 1179
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
*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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Current PPS,
proposed Provincial
Unit type
ROP, OP
regulations maximum 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*
1 $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.
13
Page 1118 of 1179
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 densities within 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
Page 1119 of 1179
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
Page 1120 of 1179
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Page 1120 of 1179
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15
Page 1120 of 1179
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
Page 1121 of 1179
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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
Page 1121 of 1179
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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
Page 1121 of 1179
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 Kitchener MTSAs as per the Region of Waterloo Official Plan
17
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Page 1122 of 1179
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Page 1123 of 1179
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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
Page 1124 of 1179
Figure 3. City of Cambridge IVITSAs as per the Region of Waterloo Official Plan
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Page 1125 of 1179
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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 MTSAs to enable IZ
Milestone
Cambridge
Waterloo
Kitchener
MTSA boundaries
Anticipated Q4 2023
Anticipated Q4 2023
Anticipated Q4 2023
delineated in City OPs
1a
North
Ma ]
for MTSAs 1-7. Timing
Sq
Cambridge Centre Mall
:7
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
Downtown Cambridge Station - 9d�,,,,,
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 MTSAs to enable IZ
Milestone
Cambridge
Waterloo
Kitchener
MTSA boundaries
Anticipated Q4 2023
Anticipated Q4 2023
Anticipated 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,
updates anticipated
for MTSAs 1-7. Timing
uses
Cambridge Centre Mall
Q4.
on MTSAs 8-10 TBD.
and Can-Amera.
Timing on remaining
MTSAs TBD.
21
Page 1126 of 1179
Milestone
Cambridge
Waterloo
Kitchener
City OP minimum
Anticipated Q4 2023
Completed. Some
Anticipated Q4 2023
densities applying to
for Pinebush,
updates anticipated
for MTSAs 1-7. Timing
buildings and land
Cambridge Centre Mall
Q4.
on MTSAs 8-10 TBD.
and Can-Amera.
Timing on remaining
MTSAs TBD.
IZ policies and zoning
Coordinated with
Coordinated with OP
Coordinated 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 IZ policy 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
Page 1127 of 1179
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
land economists N. Barry Lyon Consultants Limited (NBLC) to carry out an IZ Financial Impact Study"'
(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
Page 1128 of 1179
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
Page 1129 of 1179
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
Page 1130 of 1179
Figure 4. Example of Development and Existing Use Land Value Across Different IZ Policy Options
=Development Value Existing Use Value
Set -Aside Rate
What does this concept mean?
A set-aside rate refers to the proportion of a market rate building that is required 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.
What does the financial model tell us?
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
Page 1131 of 1179
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
leasable residential areas (GLA) of a development rather than percentage of units2. 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.
3. Where the set-aside calculation would result in the requirement for less than 57 m2 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"
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Table 4. Recommended Set-aside Rates
Station Area
2024-2026 occupancy
2027-2029 occupancy
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
Square
1%
2%
3%
• Willis Way
• Allen
• Grand River Hospital
Emerging
• Borden
• Mill
• Fairway
• Sportsworld
0%
1%
2%
• 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
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• 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
AMR is about $500- $700 per month lower than what a renter would expect to pay for a vacant unitll.
i'l 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-
m a rket/renta I -market -rep ort -d ata -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
(Figure 5). Moderate income renter households (calculated as the 40th -60th 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
40th -60th percentile of incomes across all households) who earned $71,100— 104,800 in 2021.
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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)
$3,000 1 1
$2,500
$2,000
$1,500
$1,000
$500
Low Income Moderate Income High Income
2 bedroom
1 bedroom
bachelor
Figure 6. Affordability of 80% Average Market Resale Price to Low, Medium and High Income Households
(bars represent prices at 300/6 of a household's gross annual income)
$800,000
$700,000
$600,000
Min IZ unit price (80% AMP)
$500,000
Min IZ unit price
$400,000 — _ — _ _ — _ (80% AMP for Condo)
$300,000
0
$200,000 ti
rn � t • • t
ih
$100,000 "•
Low Income Moderate Income High Income
30
Page 1135 of 1179
What are best practices/options we have seen in other communities?
In accordance with the PPS 2020, the Cities of Toronto and Mississauga adopted an income 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
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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.
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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)
$3,000
$2,500
$2,000
$1,500
$1,000
$500
Low Income Moderate Income High Income
3 Bedroom
2 Bedroom
1 Bedroom
Table 5. Comparison of incomes and affordable rents based on Ministry of Municipal Affairs and Housing
(MMAH) and Canadian Mortgage and Housing Corporation (CMHC) definitions and program criteria
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)
40th percentile
$40,400
$1,010
N/A
N/A
50th percentile'
$49,200
$1,230
$57,000
$1,425
(median)
60th percentile
$58,900
$1,490
N/A
N/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 to different 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)
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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.
Table 6. Recommended Maximum Rents for IZ units
Unit Type
2022 Maximum Rent for Affordable
Rental Unit
Unit Type
Purpose-built
Rental Building*
Condominium
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?
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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.
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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
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
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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 Requirements by Municipality
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City
Minimum IZ Unit Size Requirements (square metres)
Studio
1 BR
2 BR
3+ BR
Toronto, ON
87
100
Boulder, CO
28
44
Los Angeles, CA
No less than 90% of average floor area of market units with same # bedrooms
San Francisco, CA
33
51
74
93
Chicago, IL
39
56
81
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 the location of affordable units within buildings. The locations of
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.
What does the financial model tell us?
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.
What are best practices/options we have seen in other communities?
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 5.37 (density bonusing) agreement,
development agreement, 5.51 agreement, 5.45 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.
What we heard
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
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.
What does the financial model tell us?
The financial model did not provide pro forma analyses for accessible units over and above the 15%
required by the Building Code.
What we heard
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
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
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 nor Mississauga offer financial incentives through their IZ programs. Prior to Bill 23,
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
affordable units (11%), tax relief abatement (6%), and direct public subsidy (4%)'x."
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 Change
Value (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,
public support and trust'. In extreme cases, inadequate monitoring and enforcement has led some
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
Toronto's Draft Inclusionary Zoning Implementation Guidelines", City and County of San Franciso's
Inclusionary Affordable Housing Program Monitoring and Procedures Manual"and the City of
Chicago's Affordable Requirements Ordinance Rulesx"
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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
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
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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 / Disadvantages
Region of Waterloo
Non-profit
Advantages
Efficient - 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
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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
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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.
• Eligible households should be those who are within the moderate income range (below the 60th
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.
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• 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.
W..
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Appendix 1—Jurisdictional Scan of Inclusionary Zoning (Q Frameworks
Page 1162 of 1179
City of Toronto
City of Vancouver
Approach
Require IZ as a percentage of large-scale developments and incentives in the form of bonusing for affordable
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 targets as rental
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
Background
PMTSAs a subset of the MTSAs.
include affordable housing and amenities
In 2017 the City of Vancouver also implemented Inclusionary housing requirements for large
developments that are required. Intended to deliver deeper affordability for moderate and lower-
income households
Mandatory or
Mandatory
Mandatory for all large developments
Voluntary
Voluntary for all developments within the specified areas
Median Total Income (2020) (CAD $)
Median Total Income (2020) (CAD $)
Income
All families: $96,700
All families: $98,640
Figures
Couple families: $104,960
Couple families: $104,350
Lone -parent families: $59,120
Lone -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
Developments
Meet at pre -app phase to discuss the appropriate mix of incomes, household types and tenures
Impacts
Required as a condition of development approval —applicant will enter into a Housing Agreement
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:
Condo with fewer than 100 units or 8000mzGFA
- Where an unencumbered dirt site is and cannot be provided, the transfer of ownership in the form
Non -profits, student residences, and residential care homes
of an Air Space Parcel may be required — upon evidence that the applicant cannot provide such land
Exemptions
Bonusing:
Found in Table 3: Exemptions from Density Bonus Contributions
Retention of pre -1940s houses — subject to meet the Zoning & Development By-law definition
Secured market rental housing—subject to meet the Zoning & Development By-law definition
For-profit affordable rental housing—subject to meet the Development Cost Levies (DLC) By-law
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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 —subject to an agreed upon
rental increase limit and meeting the Zoning & Development By-law definition
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% residential GFA 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-property-
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 housing
Large Developments:
By 2030- increase requirements t 8-22%
30% of total residential floor area (20% social housing target and 10% moderate income housing
Set-aside Rate
target
Unencumbered dirt sites are the priority mechanism to enable 20% social housing
Bonusing:
- based on the net additional floor area above base density in Table 2
Unit Mix section 6 ofthe 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 and Technical Standards such as the
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
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59
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City of Toronto
I 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 Projects apply
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 — set out by
Depth of
(1) one times the average City of Toronto rent; or
the Vancouver Charter
Affordability
(2) 30% ofthe before -tax monthly income of renter households in the City
Will test tenants every 5 years after initial occupancy
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.
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60
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City of Toronto
City of Vancouver
Ownership or
Rental
- Rental units can be privately owned but units will be secured as rental housing with below-market
rents through a Housing Agreement with the City of Vancouver
Affordability
Period
99 years
60 years or the life ofthe building, whichever is greater for all social housing through legal agreements such as
section 565.2 of the Vancouver Charter
Sources
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-
https://bylaws.vancouver.ca/bulletin/bulletin-density-bonus-zoning-public-benefit.pdf
https://bylaws.va ncouve r.ca/zoning/policy-be low-ma rket-renta I-ho usi ng-for-rezoni ngs. pdf
172128.pdf
City of Toronto IZ
https://www.toronto.ca/wp-content/uploads/2021/10/8672-CityPianning-
https://vancouverplan.ca/wp-content/uploads/Vancouver-Plan-2022-09-23-1.pdf
https://vancouver.ca/people-programs/creating-new-market-rental-housing.aspx
https://guidelines.vancouver.ca/guidelines-technical-housing-design.pdf
https://vancouver.ca/home-property-development/density-bonus-zoning.aspx#::text=bulletin%20(2%20MB)-
Draft-Inclusionarv-Zoning-Implementation-GuidelinesOct2021.pdf
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-
172507.pdf
https://www.toronto.ca/legdocs/bylaws/2021/lawO941.i3df
https://www.toronto.ca/legdocs/bylaws/2021/1aw0940.pdf
Dens ity%20Relaxations%20for%2OAmenities%20(in%2Dkind),referred%20to%20as%20inclusionary%20zoning.
https://vancouver.ca/home-property-development/annual-inflation-index.asi3x (inflation rate chart)
60
Page 1165 of 1179
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City of Ottawa
Montgomery County, MD
Mandatory to require a set-aside rate that uses AN 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'sfirst, IZ laws. 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
Target to have 20% of all new res units be affordable (70% of which are within
affordable to households earning 65 percent of area median income (AMI) for
the definition of core affordability and 30% within market affordability) terms
garden -style apartments and 70 percent for high-rise apartments.
IZ not to target households with the definition of "core affordability"
The program's implementation involves both the public and private sectors, with the
local government performing regulatory and administrative functions, and the
Affordability Targets: Low to moderate -those people in the lowest 60% income
building industry producing the housing.
Background
distribution for regional market
Between 12.5 and 15 percent of the total number of units in every subdivision or
Ownership calculation will include households with incomes in the lowest 60%
high-rise building of 20 or more units must be moderately priced, according to the
of the income distribution
MPDU regulation.
Rental 60% for renters of the income distribution
Effective October 31, 2018, developments with less than 20 but more than 10 units
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
Mandatory
Mandatory
Voluntary
Median Total Income (Ottawa -Gatineau) (2020) (CAD $)
The most recent 5 -year estimate for Montgomery County's median household
Income
All families: $107,290
income is $100,352 (source: 2012-2016 American Community Survey 5 -Year
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 Map 26 PMTSAs
12.5-15% is based on building typology for the four categories — law applies to properties
zoned one-half acre or smaller that are served by sewer or water lines. Subdivisions not
*Considering including an Official Plan policy pursuant to paragraph 10 of subsection 3(1)
serviced are exempt
Developments
of Ontario Regulation 232/18 that would allow off-site units only where those units are to
Income -Restricted Affordable Housing: A moderately priced dwelling unit (MPDU) is
Impacts
be assumed by a non-profit housing provider.
built under a government regulation or a binding agreement requires the unit to be
affordable to households at or below the income eligibility for the MPDU program.
IZ will apply to new developments and additions to existing buildings for 50 units or more
Under this program, income requirements are usually 65 percent of area median
residential units or 3,500 square metres of residential GFA even if there is less than 50
income (AMI) for garden apartments, and 70 percent (AMI) for high-rise
units
apartments.
Income -Restricted Workforce Housing: Chapter 25B of the Montgomery County
Offsite units
Code defines housing that is affordable to households earning up to 120 percent of
Page 1166 of 1179
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City of Ottawa
Montgomery County, MD
must be in the same PMTSA as parent development
AMI or less as workforce housing. Income -restricted workforce housing is bound by
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 -by -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 readyfor occupancy before or contemporaneous the parent
area median income. Workforce housing rents must be 20 percent lower than
development
market 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 -rate
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. The
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 rent
guideline).
N/A
If you provide 25 percent MPDUs, you are exempt from paying transportation and
Exemptions
school impact taxes under §52-49 and §52-89.
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
Incentives 8,
increment equivalent grants offered through a Community Improvement Plan
category of public benefit points for optional method projects in the C/R and
Bonusing
employment zones.
Possible reduced taxes for those who own/rent an affordable unit to mitigate imparts
- If you provide 25 percent MPDUs, you are exempt from paying transportation and
from assessed value that exceeds affordable prices
school impact taxes under §52-49 and §52-89.
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-aside Rate
unfeasible.
median income will have a legal requirement to provide 15 percent MPDUs.
- Athird-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 -Chevy Chase.
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City of Ottawa
Montgomery County, MD
Unclear on most aspects of unit design
To 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 units
exceed 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-family attached units.
Some interior space, such as basements, third bedrooms, and lofts, may be left
unfinished, and extra bathrooms may be roughed -in, and left unfinished, as long as
minimum specifications are met per the applicable regulations.
Unit Design
Further design guidelinesfor 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 -rate units
Ensure liveability requirements are met (i.e. bedroom to bathroom ratios)
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.
IZ Targets: Moderate income households are within the 401h to 60th distributions
Maximum Income Limits for MPDU Rentals:
601h = 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-rise
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.
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City of Ottawa
Montgomery County, MD
Affordability
Period
99 -year affordability period for ownership units
- Non-profit may purchase the units from for-profit developers and move
In 2004, the Montgomery County Council amended the MPDU control period governing for-
sale MPDUs from 10 years to 30 years and for rental MPDUs from 20 years to 99 years
ownership units to rental if possible
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
Sources
https://pub-ottawa.escribemeetings.com/filestream.ashx?Documentld=73819
https://montgomerypianning.ore/planning/housing/
https://www.montgomerycountymd.gov/DHCA/housing/singlefamily/mpdu/produced.html
https://pub-ottawa.escribemeetings.com/filestream.ashx?Documentld=73817
https://pub-ottawa.escribemeetings.com/filestream.ashx?documentid=90399
https://www.montgomerycountvmd.gov/DHCA/MPDU/mpdu-r)rogram.htmi
https://pub-ottawa.escribemeetings.com/filestream.ashx?Documentld=73822
https://www.montgomerycountymd.gov/DHCA/MPDU/mpdu-Developers.html
https://ottawa.ca/en/planning-development-and-construction/official-plan-and-master-
memorandum
AMI figures
https://www.housingfinance.com/policy-legislation/montgomerv-county-and-12-000-units-
plans/new-official-plan/volume-1#section-7fe49ebf-c933-4670-9794-cl7cllfal235
https://documents.ottawa.ca/sites/documents/files/section4 op en.pdf
created-bvmontgomerv-county-program o
httr)s://www.montgomerycountvmd.gov/DHCA/MPDU/index.htmi
https://www. housingfi na nce.co m/policy-legis latio n/montgomery-county-md-12-000-u n its-
created-bvmontgomery-county-program o
Page 1169 of 1179
New York City, NY
I Boston, MA
Approach
Mandatory for all developments that meet criteria for size and number of units.
combination of mandatory and voluntary IZ policies. Mandatory until zoning changes are
Based on an AMI calculation. Bonusing is a method of action.
needed to facilitate development otherwise voluntary.
n
New NYC MIH Program Implemented in 2016 for Mandatory, but originally started as
Known as an Inclusionary Development Policy — first created in 2000 and was updated in 2015
Voluntary in 1987. https://www.toronto.ca/wp-content/uploads/2019/11/98le-
CityPlanning-Mandatory-Inclusionary-Housing-in-NYC.pdf
- Since 2022 Mayor Wu has been working with a consultant to lower the threshold
requirements for IDP from 10 to 7 for rental projects and increase the set-aside rate
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-site
Background
requirements. The zones determine the amount of on-site IDP required under IDP. An increase
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 forthe equivalent of 18% of the total number of units is multiplied by the
Zone Factor of $380,000 per unit; Zone B 15%, $300,000, and Zone C, 15%, $200,000.
httr)s://www. bosto n pla ns.o rg/getattach ment/9lc30f77-6836-43f9-85b9-f0ad 73df9f7c
Page 1169 of 1179
65
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New York City, NY
Boston, 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 of sales per square foot
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 often or more units either:
would apply one or both of these two requirements to each Mandatory Inclusionary
Housing area:
- Financed by the City
25% of residential floor area must be for affordable housing units for
- On property owned by the City or the BRA, or
residents with incomes averaging 60% AMI ($46,620 per year for a family
- That requires zoning relief.
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
family of three
Developments that do not need zoning relief (built "as of right') will still have to
*In addition to one or both of the options above, the City Council and the
support income -restricted housing.
City Planning Commission could decide to apply one or both of the
The trigger for participation will be lowered from 10 units to 7 units.
following options:
Under the new policy, ratherthan require a set number of inclusionary units,
requirements will be calculated in square footage, to allow for more flexibility and the
Developments
Deep Affordability Option
production of family -sized units.
Impacts
- 20% of the total residential floor area must be for housing units for
residents with incomes averaging 40% AMI ($31,080 peryearfor a family
Asset Limits
of three) No direct subsidies could be used forthese units except where
Properties set-aside for incomes of less than 80% AMI: $75,000
needed to support more affordable housing
Properties set-aside for incomes more than 80% AMI: $100,000
Applicants for rental units where all household members are over the age of 65 years: $250,000
Workforce Option
30% of the total residential floor area must be for housing units for
Income guidelines vary by development, but most BPDA opportunities are available to renters
residents with incomes averaging 115% AMI ($89,355 per year for a family
with incomes up to 70% and homebuyers with incomes up to 100% of area median income
of three)
(AMI).
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
Page 1170 of 1179
66
Page 1171 of 1179
New York City, NY
Boston, 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 forthese affordable housing units
- This could not applyto 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 studied)
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
Set-aside Rate
area through the land use process.
- 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 Construction that address the
All IDP Units are comparable in design and quality to the market -rate units
following needs:
Not be stacked or concentrated on the same floors
Accessible design +construction
Be consistent in bedroom count with the entire proposed project
Unit Design
Equitable & healthy buildings
Have comparable square footage as units in the rest of the Proposed project
Requirements
Sustainability
Flood resistant
Active design
Aging in place
Commercial and retail spaces
Page 1171 of 1179
67
Page 1172 of 1179
New York City, NY
I Boston, MA
Require IZ within PMTSAs via an assigned set-aside rate
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
- one -bedroom units will be priced at or below the maximum purchase price forthe 4th income decile or rented at or below the maximum rent for
Background
may be granted for moderate and/or middle income units (125%- 175% AMI).
Option for
Both rental and ownership
Both rental and ownership
affordability
-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
Ownership or
Mandatory or
Mandatory minimums and funding/incentives
Rental
Affordability Period
Permanent
30 years, with a subsequent extension of 20 more years at discretion of BRA, for an effective
total of 50 years.
https://wwwl.nvc.gov/assets/planning/download/pdf/plans-
studies/mih/mih report.pdf
https://www.bostonplans.org/proiects/standards/inclusionarydevelopment-policy
IHP
https://www.ipnc.org/development-guidelines/inclusionarv-
https://www.nvc.gov/site/planning/zoning/districts-tools/inclusionary-housing.page
zoning/#:—:text=To%20ensure%20that%20there%20are,Area%20Median%201ncome%20(AMI).
https://zr.planning.nvc.gov/article-ii/chapter-3#23-012
https://zr.planning.nyc.gov/appendix-f-inclusionary-housing-designated-areas-and-
http://www.bostonplans.org/housing/income-asset-and-price-limits
Sources
https://www. bosto npla ns.o rg/news-calendar/news-updates/2022/12/15/mavo r-wu-a nnou nces-
mandatory -inclusionary -housing -areas
strategy -for -inclusive -growth -b
https://www.nvc.gov/assets/hpd/downloads/pdfs/services/hpd-design-guidelines-
for -new -construction. pdf
https://www.bostonplans.org/getattachment/da67d384-8323-4821-9dc8-3fblaba6f852
https://www.bostonplans.org/getattachment/9lc30f77-6836-43f9-85b9-f0ad73df9f7c
Page 1172 of 1179
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 prices and rents on an
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 forthe 4th income decile or rented at or below the maximum rent for
Background
the 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 maximum rent for
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 housing units.
Mandatory or
Mandatory minimums and funding/incentives
Voluntary
Page 1172 of 1179
68
Page 1173 of 1179
City of Mississauga
Median Total Income (Toronto) (2020) (CAD $)
All families: $96,700
Income Figures
Couple families: $104,960
Lone -parent families: $59,120
Developments Impacts
Requires affordable housing units in new developments in the Major Transit Station Areas (MTSAs). More specifically new/redevelopments
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 prices and rents.
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;
Exemptions
development or redevelopment meeting the exemption criteria under the Planning Act or related Ontario Regulations; and
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 policies are
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. An IZ By-law may
Incentives & Bonusing
identify 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-aside rates
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 it
costs no more than 30% of gross annual household income. The IZ policy is targeted to housing for moderate income households.
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 Mortgage and
Depth of Affordability
Housing Corporation (CMHC).
Proposed Change to Provincial Regulation O.Reg. 232/18 : Currently, there are no price/rent requirements in the Provincial Regulation.
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 for
ownership units
Page 1173 of 1179
69
Page 1174 of 1179
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
Affordability Period
stay affordable for 25 years (plus a 5 -year phase out).
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 is 25 years.
https://you rsay. m iss issa uga.ca/i ncl usio na ry-zoni ng-po lice -for -affordable -ho using
Sources
Next steps doc
https://www.mississauga.ca/city of-mississauga-news/news/more-affordable-housing-for-mississauga-inclusionary zoning -moves -forward/
Page 1174 of 1179
70
Appendix 2 — Planning Act Requirements and How Addressed
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 Requirements
How 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 objectives and
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 planning
Assuming the regime will be in effect. IZ must be
authority IZ 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
Page 1175 of 1179
71
Planning Act Requirements
How Addressed
(c -d) may require that the affordable housing
See discussion on Unit Size and Number of
units meet additional requirements and
Bedrooms section of this report
standards specified in the by-law
Needs Assessment Report (2020), City of
(e -f) may provide for measures and incentives to
See discussion of Incentives and Offsets section
support those policies
of this report
g) shall require that when the affordable housing
See Unit Ownership and Occupation section of
units are sold or leased, they be priced or leased
this report
at the rent determined under the by-law
through the Regional Official Plan, A Cambridge
(h) shall include the prescribed provisions and
Various
provisions about the prescribed matters; and
housing studies.
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 title
See 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
Page 1176 of 1179
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
that may be needed to meet anticipated demand
ensure are these requirements are addressed
for affordable housing.
through the Regional Official Plan, A Cambridge
Official Plan Official Plan review, and ongoing
5 An analysis of the current average market price
and the current average market rent for each
housing studies.
housing type, taking into account location in the
proposed to be tailor based on the market of
municipality.
each individual MTSA
6 An analysis of potential impacts on the housing
market and on the financial viability of
affordable housing units would be provided.
development or redevelopment in the
4. The range of housing types and sizes of units
municipality from IZ by-laws, taking into account:
that would be authorized as affordable housing
i. value of land,
units.
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
I 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.
Page 1177 of 1179
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
Page 1178 of 1179
74
Citations
' Cui, B., Boisjoly, G., Miranda -Moreno, L., & EI-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.
i' 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
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 urban Metrics. (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/docu ments/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 O.pdf
V' Randle, J., and Thurston, Z. (2022). Housing Statistics in Canada. Housing Experiences in Canada: Persons with
disabilities. Statistics Canada. Release date: June 10, 2022. URL: https://wwwl50.statcan.gc.ca/nl/pub/46-28-
0001/2021001/article/00011-eng. htm
V'' CMHC. (2016). Cost of Accessibility Features in Newly -Constructed Modest Homes. URL: https://assets.cmhc-
schl.gc.ca/sf/prosect/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:Hihiusa.org/wp-content/uploads/Seperating-Fact-from-Fiction.pdf
'X Wang, R. and Balachandrian, S. (2021). Inclusionary Housing in the United States. URL:
httos://groundedsolutions.org/sites/default/files/2021-01/Inclusionary Housing US v1 0.0f
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
X' Jacobus, R. (n.d.). Delivering on the Promise of Inclusionary Housing: Best Practices in Administration and
Monitoring. Policyl-ink. URL:
https://www.policylin k.org/sites/default/files/DE LIVER INGPROMISE INCLUSIONARYZONING FINAL.PDF
X" R] 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
Manual. URL: https://Sfplanning.org/sites/default/files/documents/legis/inclusionary-affordable-
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
Page 1179 of 1179