Proposed Amendment to O. Reg 232/18: Inclusionary Zoning

Everyone in Ontario should be able to find a home that is right for them. But too many people are struggling with the rising cost of living and with finding housing that meets their family’s needs. 

Ontario’s housing supply crisis is a problem which has been decades in the making. It will take both short-term strategies and long-term commitment from all levels of government, the private sector, and not-for-profits to drive change. Each entity will have to do their part to be part of the solution to this crisis. 

Ontario needs more housing, and we need it now. That’s why the Ontario government is taking bold and transformative action to get 1.5 million homes built over the next 10 years.

To support Ontario’s More Homes Built Faster: Ontario’s Housing Supply Action Plan: 2022-2023, the government introduced the More Homes Built Faster Act, 2022, which, if passed, would ensure that cities, towns, and rural communities grow with a mix of ownership and rental housing types that meet the needs of all Ontarians. These visionary changes will place Ontario at the forefront of housing policy in North America.

These changes are providing a solid foundation to address Ontario’s housing supply crisis over the long term and will be supplemented by continued action in the future.

Inclusionary Zoning Background:

Inclusionary zoning is a land use planning tool, authorized under the Planning Act, that municipalities may use to require affordable housing units to be included in residential developments of 10 or more units in identified Protected Major Transit Station Areas (PMTSAs) or in Community Planning Permit System (CPPS) areas ordered by the Minister. The Minister also has the authority to prescribe municipalities to adopt official plan policies authorizing the use of inclusionary zoning. Inclusionary zoning can be a useful tool to facilitate the supply of affordable housing in areas that generally have characteristics such as growth pressures, high housing demand and availability of higher order transit.

The Planning Act and O. Reg. 232/18 set out the legislative and regulatory requirements for municipal implementation of inclusionary zoning, including the authority for municipalities to adopt inclusionary zoning official plan policies and make inclusionary zoning by-laws. Beyond the prescribed minimum requirements, municipalities have flexibility and discretion to tailor their inclusionary zoning policies to their local context. Currently under the regulation, municipalities have the discretion to establish an affordability period, to determine the percentage of total units to be set aside as affordable, and to develop an approach to determining affordable prices/rents for inclusionary zoning units.

Proposal:

The proposed amendments to O. Reg 232/18 would establish an upper limit on the number of units that would be required to be set aside as affordable, set at 5% of the total number of units (or 5% of the total gross floor area of the total residential units, not including common areas). It would also establish a maximum period of twenty-five (25) years over which the affordable housing units would be required to remain affordable. Amendments would also prescribe the approach to determining the lowest price/rent that can be required for inclusionary zoning units, set at 80% of the average resale purchase price of ownerships units or 80% of the average market rent (AMR) for rental units. These proposed amendments would only apply on lands within PMTSAs. 

The proposed changes would provide more development cost certainty and establish a more consistent approach to inclusionary zoning requirements across the province. It would also support government priorities to provide housing that is affordable and within reach of more Ontarians.

Analysis of Regulatory Impact:

• The anticipated regulatory impacts of the proposal are neutral to positive. The proposed changes are intended to provide greater certainty and clarity on regulatory requirements for development while maintaining municipal flexibility on other elements of the inclusionary zoning framework. The changes will reduce regulatory and financial burdens for the development sector by making processes more predictable across municipalities. While there are no new administrative costs associated with this proposal, municipalities who have already developed inclusionary zoning frameworks may experience some administrative burden resulting from the need to update their inclusionary zoning frameworks.