At its meeting on November 9 and 10, 2021, the City of Toronto (the “City”) Council adopted amended versions of the proposed Official Plan Amendment (“OPA”) and the proposed Zoning By-law Amendment (“ZBLA”) to implement inclusionary zoning (“IZ”) within the City’s future protected major transit station areas (“PMTSAs”).
Background
As you may recall from our last blog, IZ is a tool for municipalities to require new development or redevelopment to provide a certain percentage of residential units as affordable housing.
The City first introduced draft IZ instruments in September 2020, which included a draft Official Plan Amendment and a draft Zoning By-law Amendment (collectively, the “Draft IZ Instruments”). After undergoing two phases of public consultation, on October 21, 2021, City staff released a staff report (the “October Staff Report”) recommending the adoption of revised versions of the OPA and ZBLA (collectively, the “Revised IZ Instruments”).
Council has now adopted the recommendations of the October Staff Report, with some amendments outlined in three supplemental staff reports: PH28.1a, PH28.1b and PH28.1c. The amendments to the Revised IZ Instruments were in response to the Planning and Housing Committee’s (“PHC”) recommendations, as well as new comments provided by the Ministry of Municipal Affairs and Housing. The amendments are intended to provide clarity around the transition provisions, the status of Map 37 as a statutory Official Plan map, the implementation of IZ in PMTSAs, the procedure for ensuring the units remain affordable and net proceeds for the sale.
We have reviewed the Draft Instruments, the Revised Instruments and the final IZ instruments, and have outlined the notable changes below.
PMTSAs
Pursuant to the Planning Act, where an Official Plan is not prescribed for the purposes of IZ, IZ policies may only apply within areas delineated as PMTSAs that are approved by the Minister of Municipal Affairs and Housing (the “Minister”), or areas where a Development Permit System has been ordered by the Minister. In the City, IZ will only apply in areas approved as PMTSAs.
To provide clarity on IZ’s application within the City, the OPA now expressly states that IZ may only be enacted within an IZ Market Area as shown on Map 37 and within an approved PMTSA. The City intends to create a comprehensive Zoning Overlay Map which will identify delineated PMTSAs as they are approved by the Minister. Presumably, the PMTSAs will be overlayed on Map 37.
Notably, City Council adopted the recommendation to request that the Minister amend the Planning Act to allow IZ policies to apply across the City, and not limited to PMTSAs. Given that this change is not reflected in the OPA or ZBLA, this recommendation does not carry much weight. However, we will continue to monitor its status.
Currently, the Minister has not approved any PMTSAs, despite City Council submitting two potential areas for approval (Finch West and Sentinel Transit Station areas). Sixteen other draft PMTSAs for the Downtown area have been delineated and endorsed by the PHC for consultation. These draft PMTSAs are expected to go to City Council for consideration in early 2022. The City intends to bring the remaining PMTSAs to Council prior to July 1, 2022, the Growth Plan conformity date, all of which will then have to go to the Minister for approval.
Transitional Provisions
The ZBLA has pushed back the transition date to exempt development from IZ from applications filed on or prior to January 1, 2022, to applications filed on or prior to the later of September 18, 2022 or the Minister issuing notice of approval of a PMTSA pursuant to the Planning Act.
This means that the IZ ZBLA will not prevent the erection or use of a building or structure for which complete zoning by-law amendment and site plan approval (“SPA”) applications, SPA applications, minor variance (“MV”) applications and building permit applications filed on or before September 18, 2022. Further, the IZ ZBLA will not prevent the erection or use of buildings or structures where the applications are filed after September 18, 2022 if the Minister has not approved the area as a PMTSA.
IZ also will also not prevent the erection or use of a building or structure for which:
- A zoning by-law amendment that came into force prior to the passing of a Community Benefits Charge By-law, and an agreement was executed pursuant to the former section 37 of the Planning Act, on or prior to the later of September 18, 2022 or notice of approval of a PMTSA. This exception will apply to in force zoning by-law amendments where no SPA application is submitted prior to the deadlines, however, a section 37 agreement is registered;
- A MV application filed after September 18, 2022 or after notice of approval of a PMTSA is issued, if a building permit for same was filed prior to that date; and
- A building permit application filed after September 18, 2022 or after notice of approval of a PMTSA is issued, if a zoning by-law amendment, SPA or MV application for same was filed prior to that date.
Complete applications are applications that satisfy the City’s Official Plan, Provincial Regulation or Municipal Code requirements, depending on the type of application.
Affordable Housing Definitions
The proposed “Affordable Rental Housing Unit” and “Affordable Ownership Housing” definitions have been revised once again. The draft IZ Zoning By-law released in September 2020 (the “Draft By-law”) outlined definitions based on household incomes. The ZBLA still bases the definitions on income, however, it now refers to types of households (i.e. studio, one-bedroom, two-bedroom, three-bedroom), rather than amount of people within the household. City staff believe these revised definitions will help low and moderate single-income earners. For example, a studio apartment may be occupied by one person whereas a three-bedroom unit may be occupied by one person and two dependents. In both cases, the household only has one income earner, but the single-person household income can be at or below the 50th percentile, whereas the three-person household income can be at or below the 60th percentile, given that they have more mouths to feed.
Inclusionary Zoning Overlay, Phasing and Monitoring
The Draft By-law contained two Inclusionary Zoning Overlay Areas (IZ1 and IZ2), which required minimum percentages of the total gross floor area (“GFA”) for residential uses to be provided as affordable rental housing units. IZ1 reflected strong market areas and encompassed the downtown core, whereas IZ2 reflected moderate market areas in areas adjacent to downtown (see old Map 37, pg. 5)
The ZBLA has reduced the minimum percentages required and created an additional Overlay Area (IZ3). IZ3 encompasses the inner suburbs of the City including areas within portions of South Etobicoke, North York West, North Yonge Corridor, Scarborough Central and Scarborough City Centre. All three IZ areas are identified in the OPA on Map 37.
In all three IZ areas, there is now no minimum percentage required for purpose-built rental housing buildings. Previously, a minimum of 5% was proposed for IZ1 areas and 3% for IZ2 areas. However, to better align with the HousingTO Action Plan and Official Plan policies supporting purpose-built rental housing, the City eliminated this requirement until January 1, 2026, when the requirements for a purpose-built rental housing building will be 5% in IZ1, 3% in IZ2 and 0% in IZ3. This is outlined in Schedule A to the ZBLA.
For ownership housing buildings, defined as a building or part of a building containing dwelling units which are individually owned as part of a freehold ownership or a registered condominium, the GFA for residential uses required is as follows:
| IZ1 | IZ2 | IZ3 | |
| Condominium development securing affordable rental housing units
(GFA requirement) |
7% | 6% | 5% |
| Condominium development securing affordable ownership housing units
(GFA requirement) |
10% | 8% | 7% |
These rates also apply to purpose-built rental housing buildings that are converted to ownership buildings.
The two distinct rates for rental housing and ownership housing were not found in the Draft By-law and reflect an updated Financial Analysis. The City states that this analysis demonstrated that providing affordable ownership units has less impact to land values than providing affordable rental units.
The ZBLA also phases the above minimum requirements starting on January 1, 2025 and ending January 1, 2030. Affordable rental housing units will increase annually by 1.5% for IZ1, 1% for IZ2 and 0.5% for IZ3. The requirements for affordable ownership housing units will increase at a rate of 1.4 times the requirements for affordable rental housing units.
Last, City Council adopted the PHC’s recommendation to direct City staff to review the IZ policy one year after its implementation to assess the market impacts of IZ, including the need for incentives; changes to the phase-in or set-aside rates; and alterations to the minimum development size threshold. This PHC recommendation arose from Mayor John Tory’s motion at the PHC meeting and was strongly advocated for by certain stakeholders and Councillors to ensure the viability of the City’s IZ tools.
Rental Replacement Units
The ZBLA now defines rental replacement units and excludes any rental replacement units required under the Official Plan from contributing to the total residential GFA, for the purposes of providing affordable rental housing units or dwelling units. This exclusion effectively separates the requirements of rental replacement units from IZ’s affordable housing requirements as two distinct processes, ensuring that the rental replacement units are not double counted.
Affordability and Net Proceeds from Sale
The Affordability period for affordable rental housing units and affordable ownership housing units is still a minimum of 99 years from the date on the first residential occupancy of each affordable housing unit.
Exemptions
The exemptions for development have been revised. The Draft By-law proposed to exempt development with fewer than 140 dwellings and 10,000 square metres of GFA for residential uses, unless it was within the Downtown or Central Waterfront Secondary Plan area, where only development with fewer than 100 dwelling units and 8,000 square metres of GFA for residential uses would be exempted. The ZBLA now only exempts development with fewer than 100 dwelling units and 8,000 square metres of GFA for residential uses regardless of the geographic location.
However, retirement homes and nursing homes were added to the exemptions, which exemptions already included student residences, non-profit housing providers (with some extra requirements) and residential care homes.
Draft Implementation Guidelines
To facilitate the implementation of the IZ OPA and ZBLA, City Council also endorsed the Draft Implementation Guidelines (the “Guidelines”) to undergo consultation and directed staff to report back with final recommended Implementation Guidelines in the first half of 2022, including identifying the terms and conditions for a third party administrator of affordable ownership units and an additional analysis that looks at a human rights approach to improving the affordability of set-aside numbers.
Currently, the Guidelines address specific details such as unit design, mix and size; accessibility; access to building amenities and parking; household eligibility; and marketing of affordable units. While the OPA and ZBLA will take precedence over the Guidelines, the Guidelines provide additional insight into the City’s objectives.
Final Words
IZ has been closely monitored by many stakeholders within the City over the past 2 years. As such, it has been a controversial subject as demonstrated by the large number of submissions and deputations made at the Council Meeting.
The Team at Davies Howe LLP has been following the process closely and would be happy to discuss any of the foregoing with you and how it may impact you.
