This correspondence has been…

This correspondence has been prepared in response to the posting of the draft Inclusionary Zoning (IZ) regulation on Ontario’s Environmental Registry website on December 18, 2017. The following preliminary comments are provided by Mississauga staff for your consideration as input on the proposed regulation. The City will provide additional formal comments following endorsement by City Council in the coming weeks.

General Comments

Mississauga representatives provided early input and participated in various stakeholder discussions on IZ. City Council was encouraged by this new planning tool which would enable municipalities to increase the supply of affordable housing through the development approval process. Mississauga’s housing strategy, “Making Room for the Middle,” which was approved on October 25, 2017, identified IZ as an opportunity to increase the supply of new housing affordable to middle income earners. The Strategy was developed with the guidance of an expert Housing Advisory Panel formed in 2016, comprised of members of the Building Industry and Land Development Association (BILD), Ontario Home Builders Association (OHBA), Canada Mortgage and Housing Corporation (CMHC), Ministry of Municipal Affairs and Housing (MMAH), Mississauga Board of Trade (MBOT), financial sector, non-profit housing sector and Region of Peel.

While Mississauga welcomes IZ, the proposed regulation will not achieve meaningful results in the city. Many of the provisions are overly prescribed, costly and cumbersome to administer. The following discusses some of the specific issues:

•Limited to Ownership Housing

The proposed IZ regulation enables municipalities to enact policies and by-laws that would require the provision of affordable housing through development approvals. The requirement would only apply to ownership housing (e.g. condominiums including and above 20 units). Staff views restricting IZ to only ownership housing as a missed opportunity. The City’s Housing Strategy identifies the need for market purpose-built rental units (current vacancy rate is 0.9) to support our local economy and workforce. Consideration should be given to determining how this tool can be used to secure purpose-built rental housing as part of ownership developments. IZ has the potential to provide a steady stream of affordable rental and ownership housing as growth takes place.

•Required Municipal Incentives

The proposed regulation requires municipalities to provide a financial contribution that reimburses developers 40% of the shortfall in price between an affordable versus a market unit. No such measures or incentives are required for lands where a Community Permit Planning System (CPPS) is in effect. As Mississauga does not currently have a CPPS in place, a financial off-set would be required in each case.

Staff worked closely with financial experts and the Housing Advisory Panel to investigate the types of incentives that could be introduced to deliver affordable units for middle income households. Relying on decades of experience in the US, it became apparent that creating affordable units through IZ requires monetary off-sets which are cost-prohibitive for a local municipality. In addition the prescribed off-set is cumbersome to administer. There is no guarantee that the standard municipal measures and incentives (waivers or exemptions of planning fees, development charges, cash-in-lieu of parkland payments and parking reductions) would be sufficient to achieve the 40% off-set requirement. For example, our research found that, depending on the level of affordability, construction material, land value, and unit type, additional Regional incentives may be required.

The required financial contribution is particularly burdensome for lower-tier municipalities which do not have direct access to affordable housing funding. Existing City revenues (e.g. development charges and taxes) are already committed to support growth and services. The proposed regulation should include provision for new enduring revenue sources to support IZ. This would greatly simplify the process.

•Section 37

The proposed regulation states that a financial contribution could not be satisfied through an increase in height or density for the proposed development. Currently Mississauga’s Official Plan enables Section 37 but requires that the development application first and foremost represents good planning. The value of the community amenity contribution is based on a capture of the land lift value and the rezoning. There should be consideration given to using Section 37 to address the required contribution for the IZ units where no other Section 37 benefits are required, in other words no ‘double dipping’. The Section 37 agreement is also a valuable legal mechanism for the municipality to ensure that the IZ requirement is registered on title.

•Community Planning Permit System

The implementation of a CPPS is the most cost-effective implementation method for IZ. While the City and Province have begun some dialogue around creating a CPPS in Mississauga, this will take some time and would considerably delay the implementation of IZ. Consideration should be given to achieving similar objectives through other zoning mechanisms e.g. pre-zoning, conditional zoning.

•Resources to implement

Under the proposed regulation, municipalities will have to redirect limited staff resources to implement and administer IZ. Given that lower-tier municipalities are generally not involved in the administration of housing programs, additional resources with different expertise, will be required. Provincial support or simplification of requirements (such as legal agreement provisions), would enable greater uptake of the tool.

•Cash-in-lieu/ Offsite IZ Provisions

In earlier comments (August 15, 2016), Mississauga suggested that IZ regulations include the potential to provide cash-in-lieu of on-site IZ units. The City continues to recommend that the regulations for IZ consider cash-in-lieu contributions where it is not practical to fulfill an IZ requirement on-site. This might apply to projects where land values are such that they are aimed at the higher-end of the housing market and would be accompanied by maintenance fees and other operating costs that would be challenging to carry.

Circumstances where units could be provided off-site are likely to be limited, thus potentially resulting in a loss of the support for housing affordability units which could be gained from IZ. A cash-in-lieu of on- or off-site option would ensure that there are no missed opportunities to secure affordable units.

There are challenges with implementing IZ as currently proposed. Mississauga looks forward to providing complete formal comments and continuing to work with the Province to find suitable solutions to address the above issues. Thank you for the opportunity to provide comments on the proposed IZ regulations

[Original Comment ID: 212340]