Exploring Inclusionary Zoning as an Affordable Housing Tool

The lack of sufficient affordable housing is an issue in Hamilton, across the Province, and more broadly across Canada. The City of Hamilton is exploring the feasibility of adopting a tool known as Inclusionary Zoning to help increase the supply of affordable housing locally.

Inclusionary Zoning requires new market rate residential development or redevelopment within a Protected Major Transit Station Area (PMTSA) to include a certain percentage of new affordable housing units. Inclusionary Zoning is one tool that may help increase the supply of more affordable housing units in the City over the long term.

How Does Inclusionary Zoning Work in Ontario?

Ontario Regulation 232/18 under the Planning Act was enacted in April 2018 by the Province of Ontario. The regulation allows municipalities to secure affordable housing in new residential developments with more than 10 units that are located within a PMTSA).

Inclusionary Zoning policies must be carefully designed to ensure that residential development continues to be viable and does not significantly disrupt the supply of market rate housing. Inclusionary Zoning policies can include a range of measures to reduce the financial impact of providing affordable units on the private development industry. These measures may include phasing in Inclusionary Zoning requirements, establishing more permissive planning regulations (e.g. increased height, increased density, reduced parking requirements etc.), or providing financial incentives, among others.

Before a municipality can adopt an Inclusionary Zoning policy framework, the Province requires municipalities to conduct a detailed assessment of the potential impacts Inclusionary Zoning may have on the overall housing market within the City.

The Inclusionary Zoning Project Components

Based on Provincial legislation there are several studies that must be undertaken before a municipality may enact an Inclusionary Zoning policy framework:

1. Determining Protected Major Transit Station Areas (PMTSAs)

• Provincial legislation limits the use of Inclusionary Zoning to PMTSAs
• A Major Transit Station Area (MTSA) is defined in the Province’s A Place to Grow: Growth Plan for the Greater Golden Horseshoe as the area within an approximate 500 to 800 metre radius (a 10 minute-walk) of an existing or planned higher order transit station or stop; or the area including and around a major bus depot in an urban core.
• Within Hamilton, the area around planned Light Rail Transit stops and the existing and planned GO Stations are considered MTSAs (see map).
• Some or all of the City’s draft MTSAs may be identified as PMTSAs.
• An Official Plan Amendment is required to implement PMTSAs and must be approved by the Province.
• Status: Draft Report in Progress.

2. Housing Assessment Report

• An analysis of existing and projected demographic trends, existing and projected housing unit supply by type and size, household incomes as related to affordability thresholds, average market prices and rents, and overall demand for affordable housing, in accordance with the requirements of the Planning Act (O. Reg 232/18).
• The report will contain a detailed analysis of current and projected housing needs in the City of Hamilton across the broader housing continuum.
• The City has retained SHS Consulting to complete this component of the Municipal Assessment Report.
• Status: Draft Report Complete and Available for Public Review and Comment.

3. Market Feasibility Study

• An analysis of potential impacts on the housing market and financial viability of development and redevelopment from the enactment of an Inclusionary Zoning program, in accordance with the requirements of the Planning Act (O. Reg 232/18).
• The final study will also include sensitivity testing and analysis assessing the impact of various Inclusionary Zoning regulation options which may be considered to offset the cost of providing affordable units.
• The City has retained urbanMetrics to complete this component of the Municipal Assessment Report.
• Status: Undergoing updates and revisions following the completion of the peer review.

4. Peer Review

• An independent review of the Market Feasibly Study by a qualified professional must be completed in accordance with the requirements of the Planning Act (O. Reg 232/18).
• The City has retained N.Barry Lyon Consultants Ltd. to complete a written peer review.
• Status: Complete. Findings of the peer review are being incorporated in the Feasibility Study.