Comments on Schedule 1…

   Comments on Schedule 1 and Schedule 4 of Bill 204 (The Promoting Affordable Housing Act, 2016) County of Oxford, August 16, 2016

  The County of Oxford has reviewed Schedule 1 and Schedule 4 of Bill 204 (The Promoting Affordable Housing Act) and does not generally have concern with the stated intent of the proposed amendments which is to provide municipalities with the enabling legislation to develop inclusionary zoning policies and by-laws.  That being said, there are still a number of questions that the County feel need to be addressed before it can be determined whether the additional tool being proposed would be an appropriate and/or effective option for the provision of additional affordable housing.  The County also has a number of questions/concerns with respect to the proposed amendments pertaining to secondary dwelling units.

 The following comments comprise the County’s submission with respect to the Provincial consultation on the proposed revisions to the Development Charges Act and the Planning Act being introduced through Bill 204 in the May 18th, 2016 Environmental Bill of Rights (EBR) registry number 012-7616. Also, the associated Planning Act Regulations are being consulted on simultaneously as EBR registry number 012-7617.  It should be noted that these comments have been prepared by County staff for discussion purposes and have not been reviewed or endorsed by County Council.   As such, the comments are intended to be general in nature and address a number of the technical questions that were posed to municipalities as part of the Inclusionary Zoning Consultation Discussion Guide (May 2016). The County would welcome the opportunity to discuss the comments provided in greater detail and/or to work directly with the Province to identify potential solutions for addressing the various concerns raised.

  SECOND UNITS

 It is understood that the proposed change to the Development Charges (DC) Act under Schedule 1 of Bill 204 serve to clarify that a “second dwelling unit” being created in a new residential building should be treated similarly to “the creation of up to two additional dwelling units, as prescribed, subject to the prescribed restrictions, in prescribed classes of existing residential buildings,” as currently stated in clause 2 (3) (b) of the DCA.  This existing clause is clarified by O. Reg. 82/98, which notes the class of residential development (single detached, semis and row housing, or other) and the restrictions associated with each type, noting that the gross floor area of the new unit(s) must be equal to or lesser than to gross floor area of the existing dwelling unit.  It is the assumption that similar restrictions will be placed on the proposed clause 2 (3) (c) through an amendment to O. Reg 82/98.

 However, it is unclear what class of residential buildings are proposed to be exempt from development charges by this clause and under what circumstances. For instance:

 •Is the intent to exempt second units in all types of new buildings (singles, semis and rowhousing) from development charges?

 •Is the intent to exempt second units in new purpose-built two unit dwellings (e.g. duplexes), purpose built coach house dwelling units and/or dwellings and accessory structure (e.g. garages) that are “built-to-convert” to contain a second dwelling unit, from development charges? •Will there be gross floor area, number of bedrooms or other restrictions for a second unit to qualify for the DC exemption?

 •Would the proposed changes to the DC Act allow municipalities to distinguish between secondary units in new buildings and purpose built two unit dwellings (e.g. duplexes) for DC purposes? For instance, some municipal policies and by-laws stipulate that the primary unit is required to be owner-occupied for a secondary dwelling unit to be permitted and place other restrictions on secondary dwelling units to distinguish them from a purpose built duplex (e.g. licensing, additional parking, max number of bedrooms). Could compliance with such restrictions be determined at the time the development charge is determined?

 •The term “second dwelling unit” does not appear in the Planning Act.  Is this meant to address Planning Act clause 16 (3), which speaks to municipalities authorizing the use of a “second residential unit”?  Perhaps more consistent terminology could be used when discussing this term throughout provincial legislation.

 It is import to note that many of the municipal costs for DC eligible growth related services are directly related to household growth.  Therefore, if every dwelling (new or existing) can potentially be converted into two dwelling units (households) without DCs applying to the second unit, and there is substantial uptake on this provision, municipalities could be left with substantial DC funding shortfalls in relation to demands on services from residential household growth.  These shortfalls would need to be made up through general revenue (which runs contrary to the philosophy of growth pays for growth) or other means, such as increasing DCs for new single unit dwellings to recognize the fact they could become two units.  If the intent of such exemptions is to promote residential intensification and affordable housing, municipalities should have the discretion to determine where and under what circumstances they allow exemptions from DCs for second units, rather than having such exemptions dictated through the DC Act.  Municipalities are in the best position to determine the potential impacts of such exemptions on municipal revenues, as well as where such incentives would be best directed to support both increased affordable housing and local planning/intensification objectives.  Not to provide municipalities with this discretion seems to run contrary to other Provincial initiatives to increase local authority and powers with respect to determining how best to promote intensification and provide additional affordable housing.

 In terms of the rationale for providing DC exemptions for the creation of second units, whether it be in new or existing dwellings, County staff pose the following questions/comments for consideration:

 •If the rational is to promote intensification, then providing a DC exemption for the creation of a second dwelling unit in a dwelling existing as of a certain set point in time (e.g. before DCs came into effect or some other reasonable date) in an existing built up area with established infrastructure and public services may, in some cases, be a reasonable financial incentive for municipalities to provide to promote intensification (provided municipalities are given discretion as to where and when it is provided).  However, it is questioned how exempting DCs for second units in newer, low density housing forms such as singles, semi’s and townhouses is promoting intensification, as higher density development (e.g. apartments) make more intensive/efficient use of land and are also more likely to be affordable and place less demand per unit on municipal services, but yet are required to pay DCs on all the dwelling units in the development, as opposed to having an exemption for every second dwelling unit.

 •If the rationale is to promote more affordable housing, again this raises the question as to how second units in a new/newer lower density housing forms are more affordable than units in higher density housing forms (e.g. apts) that aren’t afforded such DC exemptions.  Perhaps a lower bachelor or 1 bedroom apartment unit type DC charge may be more appropriate for modest second units than a full duplex unit charge, but that should be left to municipalities to determine through their DC study process.

 •There is no guarantee that second units will be affordable and, in fact, may even serve to drive an increase in the price of single unit dwellings due to the added income potential from a second unit.  We understand that allowing for secondary units as a means of improving the affordability of single unit dwellings may have been part of the rationale used to support the province’s current policies on secondary units.  However, we are not aware of any compelling evidence or research completed province-wide to justify allowing for secondary dwelling units on that basis, or to warrant a statutory development charge exemption for such units.  As such, it is felt that there should be further research and analysis completed by the Province to understand the actual (versus perceived) costs and benefits for current and future homeowners and financial impacts on municipalities (not just large urban centres) from purpose-built second units, particularly if development charge exemptions are being considered for such units.

 Without being able to review the proposed associated updates to O. Reg. 82/98, or predict the effects of future impacts on municipal DC revenues, it is difficult for municipalities to assess and comment on the implications of this proposed change.

  INCLUSIONARY ZONING

 County of Oxford planning and housing staff have reviewed Schedule 4 of Bill 204, as well as the associated “Inclusionary Zoning: Consultation Discussion Guide” released by Municipal Affairs and Housing in March 2016.  The County appreciates the intent to provide municipalities with an additional tool to try to increase the availability of affordable housing, provided that the changes to the Planning Act, and the associated Regulations that will soon follow, remain sufficiently flexible to address each municipality’s specific needs and objectives, as well as being consistent with the existing processes currently in place to oversee and implement affordable housing units.

  Regarding the questions posed in the discussion guide, the County provides the following comments:

 Q1: Program Targets: Should there be provincial direction to further specify the target groups for inclusionary zoning, or should this be left to each municipality to determine?

 Generally, County staff are of the opinion that the existing definition of “affordable” is sufficient for the purposes of implementing new affordable units through the inclusionary zoning framework.  This will ensure a consistent, transparent approach when establishing policies, communicating with developers, and the processing and marketing of the units.  Furthermore, the specific needs of municipalities may change over time and are typically identified through associated reports and studies that act to further target groups with the highest need (e.g. Shelter Plans, Housing and Homelessness Plans).  Therefore, it is advised that, on a provincial level, the direction to require “affordable” housing, under the current definition remains and it is left to the discretion of municipalities to determine, if necessary, more specific sub-groups of affordability.

 Further, although there are often very good reasons for targeting certain affordable housing projects to particular groups (e.g. seniors), any proposed restrictions of affordable housing to allow only certain age groups or individuals may need to be carefully considered with respect to compliance with the Human Rights Code.  That being said, the need to target affordable housing to certain groups should be at the discretion of each municipality.  However, any clarification that the Province could provide through the legislation to assist municipalities in addressing Human Rights Codes concerns with respect to targeting affordable housing to specific groups may be beneficial.

  Q2: Price and Rent: Should there be provincial direction on how price and rent would be determined in an inclusionary zoning by-law when inclusionary zoning units are sold or leased?

 Similarly to Q1, the prices for leasing or purchasing affordable housing units are already determined by calculations using the current definition of “affordable” through the Canadian Mortgage and Housing Corporation.  Determining the price and rent for affordable units has been working well using the processes currently in place.  These should not be altered, as this would introduce additional confusion into the current process for developing affordable housing units. It should be left up to the municipality to determine lower limits for selling prices for these types of new units. It is also noted that Service Managers could be enabled to establish upper limits, or maximum selling prices, based on the local needs of the municipality.  Again, it would not be advised that this be regulated at the provincial level.

  Q3: Unit Set-Asides: Should minimum and/or maximum unit set asides be specified province-wide or should this be left to each municipality to determine?

 The minimum or maximum units to be set-aside through inclusionary zoning should be clearly defined through municipal policies.   Dictating minimum and maximum set-asides Provincially (e.g. similar to parkland dedication %) may have some benefit to municipalities if there was concern with respect to the potential for on-going challenges to set-aside requirements through local appeals.  However, if intent is that there be no right of appeal (e.g. the set aside # can’t be challenged), it would seem unnecessary to limit local flexibility by provincially dictating minimum and/or maximum set asides.  If the Province is concerned some municipalities might be unreasonable in their set aside requests, perhaps maximum set aside guidance or a Provincial review requirement for inclusionary zoning set-aside policies/provisions could be considered, to maintain some level of oversight. However, dictating a minimum set aside percentage would not seem to be necessary, particularly given that it is up to municipal discretion as to whether they even implement inclusionary zoning. If minimums were dictated by the Province and municipalities determined it to be appropriate (e.g. targets reached in certain areas) to lower the number and/or percentage of “set asides” below those minimums, would the municipality be forced to discontinue use of the inclusionary zoning tool? If a municipality chooses to implement the inclusionary zoning tool, their general approach  to establishing set asides would likely be to determine their specific affordable housing unit needs, and the communities, growth areas and types of housing units/development that would need to be targeted to address those needs.  The information could then be used to establish specific percentages, or “set asides,” attached to those communities, areas and/or housing/development types.  The method for the determining the number of affordable units required would need to be made clear through the official plan and zoning by-law to ensure transparency throughout the development process.

 It is noted the proposed Planning Act amendments revoke the right to appeal specific decisions, by-laws, and conditions for inclusionary zoning.  It is understood why removing private rights to an appeal may be considered appropriate in certain circumstances. However, we would suggest that municipal rights of appeal with respect to inclusionary zoning provisions be maintained.   The reason being that, in two tier municipal structures, affordable housing is typically administered by the upper-tier, while zoning by-laws are typically enacted and administered by the lower-tiers. In such cases, the upper and lower tier municipalities may have different perspectives on implementation and maintaining the appeal mechanism to resolve any disputes may be warranted, particularly in instances where a municipal decision is deemed not to comply with the associated Official Plan policies.

  Q4: Affordability Periods: Should there be provincial direction for a minimum or maximum affordability period that would apply to inclusionary zoning programs province-wide, or should this be left to each municipality to determine?

 As stated previously, to remain consistent with existing processes for the development of affordable housing units, there should also be a minimum of 20 years for such agreements to be in place.  However, it is advised that municipalities should be enabled to require the affordability period to be in perpetuity, or for the life span of the building, as this would better serve the identified need in many cases.

  Q5: Threshold Size: Should there be provincial direction for a minimum and/or maximum threshold size that would apply to inclusionary zoning programs province-wide, or should this be left to each municipality to determine?

 This should be left to the discretion of the municipality.  As stated above, it should be clearly established through policies and bylaws what the expectations are for various areas and type of development.  However, a number of questions would need to be addressed when considering threshold sizes for an inclusionary zoning system, such as:

 •Would the threshold size be based on the total proposed gross floor area of the development, number of units or some other factor? Could thresholds entice developers to manipulate their development sizes, number of units, dwelling types or densities to ‘work around’ the requirements? Would developers have incentive to divide their development into phases to circumvent the requirements or lower the total number of affordable units?  Would the price of the other market units in the development simply be increased to off-set the development of the affordable units, which would then make those units less affordable?  The system would need to ensure such ‘perverse incentives’ would not be created as they could serve to work against other municipal land use planning objectives.

 •Would the calculation for number of ‘set asides’ be based on a percentage of a subdivision plan or a secondary planning area or more site specific?  When there are multiple developers working within one subdivision or secondary plan area, how would it be determined who is required to create the affordable units, without creating potential inequities?

 It would seem that there may be other potential unintended consequences if inclusionary zoning policies and by-laws were implemented in some municipalities/regional market areas, but not others that should be considered prior to implementing such policies, such as:

 •Could it cause residential growth to be pushed to nearby communities that do not have inclusionary zoning? For example, would a developer looking to avoid the requirement to provide affordable units decide to go elsewhere, or would those looking to purchase a new home look to neighbouring communities without such programs due to increases in market prices for new housing in their community being driven by developers looking to off-set the cost of providing the required affordable housing units?

 •If there is no requirement to be a resident/taxpayer of the municipality to be eligible for an affordable housing unit in that municipality, could it inadvertently increase demand for affordable housing in jurisdictions that are ensuring an adequate supply of good quality affordable housing using such local programs as inclusionary zoning?  For instance, could municipalities who implement inclusionary zoning end up providing the affordable housing supply for adjacent municipalities who do not implement such programs (e.g. shorter waiting lists and more/better unit choice resulting in increased demand from adjacent jurisdictions).  If the cost of providing such affordable units is off-set entirely by provincially funding, this may not be as much of a concern.  However, if the costs of providing such units are primarily borne by the municipality, developers and/or ratepayers, as it appears would be the case with inclusionary zoning, then this issue likely warrants further consideration.

 Additionally, there may need to be local official plan policies to address conversions to a residential use from another use (industrial or commercial).  How would redevelopments differ from greenfield development?  Would there be any incentives to maintain the existing structure (i.e. adaptive reuse)?

 It is the generally the opinion of the County that municipalities should maintain the flexibility to establish size thresholds locally.  However, the province should ensure that any legislation and associated regulations have carefully considered the questions and concerns noted above.  The Province may also wish to consider providing guidance materials to establish the basis framework and/or expectations for the inclusionary zoning tool to assist municipalities who choose to implement the tool in addressing some of the questions and considerations outlined in the consultation guide and related municipal responses.

  Q6: Measures and Incentives: Should measures and incentives be required on a province-wide basis through regulations, or should this be left up to municipalities?

 For inclusionary zoning tool to be an effective and appropriate tool, it will be important for the Province to ensure municipalities have the Provincial funding sources and tools and discretion necessary to alleviate or off-set the local costs (e.g. to developers, municipality and homebuyers) of requiring the provision of affordable housing through inclusionary zoning.  However, implementing a requirement for municipalities to incent affordable housing created through inclusionary zoning seems to be an unnecessary measure.

 Municipalities currently have the authority and discretion to provide a range of incentives for affordable housing similar to the examples mentioned in the consultation guide.  For instance, municipalities have the ability to incent affordable housing through such means as Community Improvement Plans (e.g. property tax deferrals, grants, waiving application fees, etc.), zoning by-laws (e.g. reduced parking requirements) and development charges by-laws (e.g. DC reductions/exemptions), in addition to providing more direct funding for affordable housing units (e.g. use of housing reserve funds).   Like many municipalities, Oxford County has already implemented a number of these incentives to support affordable housing.  Leaving the discretion for implementation of such incentives to municipalities allows for local planning and affordable housing objectives, as well as financial impacts, to be taken into consideration.  However, municipalities may need to review their existing municipal affordable housing incentive programs to determine whether applying them to affordable housing created through inclusionary zoning would also be consistent with local objectives and financial impact considerations.

 Furthermore,  given the concerns expressed in response to Q5 with respect to the potential impacts on municipalities, local developers and/or housing prices if inclusionary zoning is not uniformly implemented across the Province, the Province may need to consider providing additional funding/incentive programs (e.g. directed to municipalities) to ensure municipalities can alleviate or off-set any local fiscal impacts from requiring the provision of affordable housing through inclusionary zoning.  One specific measure the Province should consider is to enable Community Improvement Plan funding, or a similar program, to allow for incentives to be provided for affordable housing development in greenfield areas.  This recommendation should not only extend to those units created by inclusionary zoning, but for all affordable housing units.

  Q7: Requirements and Standards: Should there be provincial direction to specify minimum requirements and standards for inclusionary zoning units or should these be left up to each municipality to determine?

 No.  If the municipality has identified those with the greatest need to have specific standards, or that a group is the target market for inclusionary zoning units, then the municipality may have a role in determining any requirements or standards for new units.  However, it is noted that the Ontario Building Code contains requirements for minimum sizes of rooms and units, and there would be little need to alter the existing requirements on a provincial level.

  Q8: Agreements: Should there be provincial direction on inclusionary zoning agreements?

 No.  The agreements Oxford currently has in place for affordable housing units would suffice for new units created through the inclusionary zoning framework.  There may be an opportunity for the province to develop optional standardized templates for use by local municipalities that may require additional guidance.

  Q9-11: Administration Monitoring and Reporting:  Should there be provincial direction on requirements for ongoing administration of units and ensuring affordability over the control period?  Should there be provincial direction on mandatory requirements for municipal monitoring procedures?  Should there be provincial direction on municipal reporting of inclusionary zoning units?

 Current practice requires an income test of tenants or buyers occupying an affordable housing unit to be conducted at time of move-in.  The municipality has no control over the tenant’s or buyer’s annual income increasing and no annual review or recertification for eligibility is necessary.  The existing mandatory requirements for monitoring the affordable housing units (i.e. annual reports) should remain the same.  Altering the existing process to create a special reporting and monitoring procedure for these types of affordable housing units may be a disincentive for municipalities to enable use of the inclusionary zoning framework.

  Q12-13: Section 37 Height and Density Bonusing: In what circumstances would it be appropriate to require inclusionary zoning units as well as community benefits in exchange for additional height and density?

 It is unclear as to the rationale for including a prohibition to s.37 of the Planning Act at times an inclusionary zoning by-law is passed.  Section 37 has been used successfully by the County to provide additional height and/or density in exchange for affordable housing in the past.  Is the concern that requiring other community benefits (e.g. energy efficiency measures, enhanced site/building design) in exchange for additional height and/or density through s. 37, in addition to the affordable housing requirements under inclusionary zoning may be too onerous?  If so, it is noted that municipalities need to consider both the merits and impacts on the financial feasibility of development when applying the s. 37 tool now.  So, these same factors should also be part of the municipal considerations when choosing to apply the s. 37 tool in combination with inclusionary zoning.  As such, it is unclear why the Province would eliminate the option of using s. 37 on sites where inclusionary zoning is applied.  Particularly given that s. 37 may be one of the more effective tools that municipalities could use to provide incentives/off-set costs (e.g. through increased height and/or density) for the community benefit of the affordable housing being required through inclusionary zoning.  If use of the s. 37 tool is not permitted on sites subject to inclusionary zoning, it would seem to unnecessarily eliminate that incentive option for municipalities.

  Additionally, the County questions the rationale and need for prohibition on cash-in-lieu for the provision of affordable units in the inclusionary zoning framework.  The County is of the opinion that there may be many situations where it would be acceptable or preferable (e.g. for smaller developments, or for development in areas of a settlement where affordable housing is not required, or would not be the most logical location for the type of affordable housing required) for municipalities to redirect funds to locations where there is a greater need for affordable units and/or where the municipality has surplus lands that have been earmarking for affordable housing development.  A municipality could issue a Request for Proposal for a new construction, or complete the project themselves and sell it to a non-profit housing provider to own and operate.  Ensuring all development projects, neighbourhoods, settlements in general, have a range and mix of housing – to create integrated, inclusive communities - is currently the responsibility of municipalities. Ensuring that affordable housing options are integrated into every development may not always be the most appropriate or desired outcome when all aspects or good planning (e.g. walkability/access to parks, recreation and goods and services, efficient use of infrastructure and public services, vital and viable downtowns and mainstreets etc.) are considered and given that needs and targets may change over time.

  Q14-15: Transitional Matters: Do you think that planning applications commenced prior to enactment of the proposed legislative process should be grandfathered? Do you think that planning applications commenced prior to municipal adoption of inclusionary zoning official plan policies and/or zoning by-laws should be exempted?

 Although it is agreed that transitional matters and related impacts need to be carefully considered, the County does not currently have any specific comments in this regard.

  CONCLUSION

 Overall, it is the opinion of the County that any new regulations associated with the implementation of inclusionary zoning should ensure that new affordable housing units are developed in a manner that is as consistent as possible with the existing frameworks and processes in place for provision of affordable housing by municipalities.  This will ensure that municipalities can easily assess their potential capacity to utilize these enabling policies, and ensures clarity and consistency when communicating to staff, the public and potential developers.

 Again, we support the notion that these policies remain voluntary for municipalities to implement when and if they feel it is appropriate and are given a flexible framework to enable their own policies and by-laws.  Much of the information presented in this consultation document, except where specifically noted, would perhaps be more appropriate for a guidance document on ‘enabling inclusionary zoning’ that is prepared by the province, as opposed to being prescribed by regulation under the Planning Act.

 Thank you for providing the opportunity to review and comment on the changes proposed by Bill 204. County staff would welcome the opportunity to discuss the comments provided in greater detail, as required, and look forward to reviewing future Readings of this Bill.

[Original Comment ID: 194559]