August 15, 2022
Affordable housing and inclusionary zoning have become a necessity now more than ever. From increased homelessness and shelter use to difficulty securing affordable rent and the immense struggles first-time homebuyers are facing trying to get into the market, Torontonians face a plethora of issues regarding housing.
According to the Toronto Street Needs Assessment (A survey conducted in 2018), a shocking 94 percent of those experiencing homelessness in Toronto want to obtain permanent housing. However, these individuals face barriers due to limited personal resources or insufficient savings.
As outlined in our 2022 Environmental, Social and Governance Report and demonstrated throughout our social equity initiatives, MOD stands with housing proponents such as the United Nations High Commission for Human Rights that adequate housing is not a luxury, but a fundamental human right.
Canada’s Affordable Housing & Inclusionary Zoning Policy: Our View
Unfortunately, despite living in a country as wealthy as Canada, almost one-third of Canadians still do not have adequate, affordable housing. The reasons for this are complex, and there are no easy answers.
One of the solutions the municipal government has put forward to level the proverbial playing field and create affordable housing is the Inclusionary Zoning (IZ) policy. Inclusionary zoning is a planning policy tool being implemented to create mixed-income developments in areas of the City where the market has not provided for a mix of housing prices and rents on its own.
While this appears to be a viable option at the outset, it has proven to be the opposite. This is because IZ is politically-driven and puts the onus of subsidies onto the purchase price for new home buyers, as opposed to raising taxes on all residents. Over 30 percent of the cost of a new home in Toronto is going towards various levels of government in the form of development charges, parks levies, Section 37 benefits, and numerous other fees. Reducing these charges alone would reduce the cost of new housing. In other jurisdictions (such as several US cities), inclusionary zoning only works if the municipality provides incentives, such as increased height or reduced taxes. Unfortunately, current policies approved by the City of Toronto do neither.
If affordable housing is a societal objective, then the costs incurred to make such housing affordable must be shared by society, not just new home buyers.
In the 1970s and 1980s, the federal and provincial governments had massive programs to build affordable housing in the form of nonprofits and cooperative housing. Thousands of units were built under these programs (such as the St. Lawrence neighbourhood) and all three levels of government worked together, buying out private owners to accumulate land, and developing a cooperative model and open space plans. Furthermore, these programs were built on bringing citizens of different socioeconomic circumstances together so that they were not only living in the same communities, but coexisting in the same buildings. Eventually, the programs were cancelled in the 1990s and only recently have some of them been revived by the current governments.
When MOD and our partner, Woodcliffe Landmark Properties, included affordable housing for Artscape at Waterworks, the only way we could do so was through the City selling us the land with no component for the affordable units, no development charges or parks levies on these units, combined with reduced municipal fees. In addition to these measures, the City still had to provide further subsidies to bring the costs of these units down to the “affordable” range.
One of the critical factors in making housing more affordable is to increase the supply of new housing. To that end, MOD has focused on sustainable, urban, transit-oriented locations that have substantially added to Toronto’s housing stock. A number of our developments include rental replacement, which has the benefit of replacing old, outdated buildings with new complexes that include new rental units at their previous affordable rents. The economics of these cases do not rely on government subsidies and result in new affordable rental units with features absent in older buildings, such as handicap accessibility, air-conditioning, and indoor and outdoor amenities.
MOD supports social equity and the right of everyone to have adequate affordability. Notwithstanding the current planning and political framework, we will continue to do our best to achieve this objective through our developments.