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Inclusionary zoning and affordable housing

greenleaf

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I couldn't find a thread on this, so I'll start one.

NYC is using 80/20 building projects (that is, 20% of a building contains affordable, market rate and basically rent geared to income housing) to increase their supply of affordable housing. The city often offers more density or tax abatements. I'd love to see Toronto do this.

This article addresses some of the positives and pitfalls in designing them that have come with this process (in particular the luxury buildings, where yes, even some of them have these units): http://www.nytimes.com/2014/08/31/realestate/affordable-housing-in-new-yorks-luxury-buildings.html
 
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I've done some stuff on this in the past. There are lots of places that have variations of IZ (London, England, for example).

I don't think Toronto can do it on its own as the provincial legislation does not allow it. They did a revamp of the Planning Act a few years ago and looked into this and the building industry successfully campaigned against it; I guess it's pretty easy to imagine the reasons why.

The irony is that the province's own policies (ie the Provincial Policy Statement 2014) set specific affordable housing targets municipalities have to achieve (30%, IIRC) but there is no teeth to the numbers because there is no legislation (like IZ!) requiring affordable units and obviously the development industry's job isn't to provide them out of the goodness of their hearts.

So, no system is perfect but there's a gap between what the province says it wants to see and what municipalities are able to do to make it a reality. IZ, or some variation of it certainly seems to me like it will become a necessity if the government has any genuine interest in ensuring some sort of base of affordable units continue to exist in the GTA.
 
I'm not the biggest fan of IZ. I feel like its popularity is part of the 'something for nothing' mindset of local governments who are constantly on the lookout for free lunches. IZ is of course in no way free, but because it doesn't show up on any government budget it can look that way for politicians looking to score votes.

IZ is just an indirect tax on new construction, which in turn is almost surely passed on to consumers of new construction. This is bad on two counts. One, it will inevitably make housing more expensive for units not counted as affordable housing, which would perversely make housing less affordable. Two, it's not clear why new home buyers are the ones who should carry the cost of subsidizing affordable housing. That should be the general tax base's responsibility. Imagine some rich old people living in their homes in Rosedale wouldn't pay a dime to support affordable housing, yet the first time home buyer shelling out for a market rate condo will. Doesn't make any sense.

It can also misallocate resources more generally. The implicit subside to provide a unit in a luxury building for affordable housing can easily be far larger than typical assisted housing programs.

The only two solutions to housing affordability are either to lower the cost of housing (through new supply) or to provide more direct and indirect subsidies to groups in need of assistance. Maybe IZ can play a small role in some cases, but it's really not a solution to the underlying affordability issues. IZ requirements will always be too relaxed, in which case hardly any units will get produced, or to stringent, in which case the cost of non-IZ units will only be viable for the super rich and increasing the implicit subsidy per unit of affordable housing. The latter scenario seems to be at play in NYC where new construction seems horribly skewed towards the premium.

Never any such thing as a free lunch.
 
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My understanding is the current Provincial policy requires every municipality to provide a certain amount of affordable housing (30%?). Each municipality has to figure out how to provide that. Some may already have large amounts of cheap housing and already meet the target, but if not they will either require a certain number of units in every new development to be affordable, or to collect levies (development charges) from developers and then build or buy their own units/buildings. Toronto runs it's program through its Affordable Housing Office and Toronto Community Housing. I'm not clear on exactly how they generally operate, it seems to vary depending on the size of the development and it's location, however Section 3.2.1 of the City of Toronto Official Plan gives them the authority and outlines all their options.

I do know one of the biggest problems most municipalities have is defining what is "affordable". What's affordable in Toronto is not the same as what's affordable in Mississauga, Barrie, Chatham-Kent, or Timmins. And not only are there geographic difference but as housing prices and the availability of jobs change in each community so does the Affordable Housing threshold, so it's an ongoing battle to prove you are meeting the Province's requirements.

Another problem is tenure. If there is a market for rental units in your municipality then rent caps can be established, but if there is no rental market and the municipality does not take direct ownership of the units then the question becomes how to control each unit's market value so it remains affordable. If the developer just sells units for a discounted price in order for them to qualify as "affordable" then the new owner can turn around and sell it for a massive profit and it is no longer "affordable". For big cities like Toronto, that's not a problem (Toronto Community Housing owns the units), but for many smaller municipalities owning units and being a landlord is much too onerous a task. In other words there is no one-size-fits-all solution.
 
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They could require a better mix of housing options. No developments of exclusively single family homes without also accomodation for apartments or other more modest forms of housing. Right now they seem to be zoned out to maintain the character of neighbourhoods, to keep people outside the middle class family units away. I think Rosedale is made a much more interesting place by the inclusion of low-rise apartment buildings on some of its streets.

Maybe we could also stop celebrating the rise in housing prices. We don't cheer when the price of cars or electricity or bananas goes up. Politicians, especially municipal politicians, almost seem to consider it their duty to boost the price of housing. But in Toronto, where the city is dependent on the LTT and Section 23 funds and politicians often suggest new ways to try ride the market for new revenue (this NYC approach seems a form of that), any chance of making overall affordability a priority above investment return seems remote.
 
What do we consider as affordable housing. I've seen it referred to as 30% or less of a family's income spent on housing. I would argue this is outside of the means of most Torontonians.

Toronto median family income in 2013 per StatsCan was $72K. This is gross, before income taxes. Assuming the 30% target is on gross income, this means about $1,800 or less must be spent each month on housing. This average rent or mortgage payment on a family-sized house or condo/apartment in Toronto exceeds $1,800. So, is all of Toronto's housing unaffordable?

On forcing building to include RGI units, would these have to be purchased by the city? Are we asking the city to increase its unprofitable real estate holdings in this time of reduced gov't revenues? Is it a city's role to ensure that those who can't afford to live here, can?
 
We don't cheer when the price of cars or electricity or bananas goes up
Because they are not an investment, a house or condo is an investment as well as a place to live unlike a rental.
 
Interesting re: provincial policy.

Anyway, there seems to be a lot of excuses from posters here though. What we're doing isn't quite working enough, and this seemed like it might be effective in some cases. I don't think it should be required, but can you imagine if some development proposal came in at 70s and instead of the city trying to chop it down 10s they said sure you can keep 70s but 10s has to be market rate affordable housing? It's just another tool in the kit.
 
Interesting re: provincial policy.

Anyway, there seems to be a lot of excuses from posters here though. What we're doing isn't quite working enough, and this seemed like it might be effective in some cases. I don't think it should be required, but can you imagine if some development proposal came in at 70s and instead of the city trying to chop it down 10s they said sure you can keep 70s but 10s has to be market rate affordable housing? It's just another tool in the kit.

I don't have confirmation but in many cases I think that's what's already happening. Toronto Community Housing ends up owning a handful of units in many condo's, which they then rent out to people in need. It's hard to find information on it because they keep quiet about it for three reasons: so the people paying full price for the adjacent units don't complain; so the cost of the other units doesn't drop because of the stigma; and so the people requiring rent assistance aren't singled out within the building by neighbours. I think in some cases TCH may also sell the units and invest the money in a more appropriate location.
 
so the people paying full price for the adjacent units don't complain; so the cost of the other units doesn't drop because of the stigma;
That's an interesting point. Would an owner have legal recourse to sue for financial loss against the city for knowlingly impacting the value of other peoples' investments?

I suppose that can't work in the courts, otherwise you'd have people suing their neighbours over their cooking smells.

http://realestate.msn.com/7-neighborhood-threats-to-your-homes-value
 
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That's an interesting point. Would an owner have legal recourse to sue for financial loss against the city for knowlingly impacting the value of other peoples' investments?
You're asking if owners could sue poor people for being poor, or sue developers for letting poor people into the neighbourhood?

That's messed up. You're making money into virtue, by force of law. Why some form of inclusion is necessary.

The new Regent Park seems to be working out okay. Where the city had something to offer to entice developers to create mixed housing.
 
I don't have confirmation but in many cases I think that's what's already happening. Toronto Community Housing ends up owning a handful of units in many condo's, which they then rent out to people in need. It's hard to find information on it because they keep quiet about it for three reasons: so the people paying full price for the adjacent units don't complain; so the cost of the other units doesn't drop because of the stigma; and so the people requiring rent assistance aren't singled out within the building by neighbours. I think in some cases TCH may also sell the units and invest the money in a more appropriate location.

The city has been using Section 37 to get affordable units in some new projects. I'm sure there's a way to do some research and find out how many times they've done it - definitely a few. There's a chart on P. 6 of this document that shows how often it's been used but it's a bit hard to read (too many blues!):
http://munkschool.utoronto.ca/imfg/uploads/221/imfg_perspectives___moore_(feb_2013).pdf

Note that both "affordable" (probably RGI) units and "public" (i.e. TCH) units are included. To use S. 37, you need to have it in your municipal Official Plan AND make it clear that affordable housing is something it can be used for. I doubt any municipality other than Toronto has used it much for this purpose, at least to date.
(This article says Richmond Hill is doing it to, which is pretty admirable for a suburb where there's probably very little that's affordable.)

And Admiral Beeze is right that the definition of "affordable" may well not actually reflect affordability but that is the formula they use, handed down from CHMC.
 
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