The city of Toronto officially approved its previously proposed inclusionary zoning framework in November of 2021.

What does this mean for new residential developments? How will the framework impact existing and proposed high-rise developments?

What Is Inclusionary Zoning?

Inclusionary zoning is a new framework that dictates requirements for affordable housing based on the total gross floor area (GFA) of a new development. It does not require any changes to existing properties. The percentage of affordable housing required is based on the market area where a new development is located, the tenure of the development, as well as the tenure of the affordable housing units. Requirements for affordable housing minimums are determined by the amount of new GFA in development in a specific market area. All requirements for new developments will phase in between 2022 and 2030.

Inclusionary Zoning in Toronto

Three market areas have been selected for inclusionary zoning, all of which are located in downtown Toronto. These markets are each made up of multiple sectors’ nearby Protected Major Transit Station Areas (PMTSAs).

Source: Aird Berlis https://www.airdberlis.com/insights/publications/publication/city-of-toronto-introduces-inclusionary-zoning-framework?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration

Inclusionary zoning only applies in areas located nearby PPMTSAs, which are subsets of Major Transit Station Areas (MTSAs).

MTSAs are areas within 500-800 metres of a transit station. PMTSAs have added requirements such as minimum population density. PMTSAs are adopted by the Council and given final approval by the Minister.

MTSA & PMTSA Zones in Toronto

As of November, 2021, there are 23 proposed PMTSAs and 2 adopted, not yet approved PMTSAs in Toronto. It’s likely the proposed areas will be officially adopted by July 2022, with Ministerial approval following.

Ownership vs Rentals

The new inclusionary zoning applies to both rental and ownership developments. Both are affected at different rates.

Affordable housing requirements for each zone apply as follows for large condominiums:

Source: Aird Berlis https://www.airdberlis.com/insights/publications/publication/city-of-toronto-introduces-inclusionary-zoning-framework?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration

Purpose built rental developments will not have any affordable housing requirements until January 1st, 2026.

Exceptions to Inclusionary Zoning

Where inclusionary zoning is implemented, there are no rights to appeal that zoning except by the Minister of Municipal Affairs and Housing.

However, some developments are not subject to inclusionary zoning regulations.

Exceptions include the following.

New Development Exceptions

New developments will only be excluded if they have filed either:

1. A complete application for a building permit; or
2. A complete application for a minor variance

Either of these must have been filed before the later of September 18th, 2022 or an official notice of approval by the Minister.

Other exclusions apply if filings have been made for zoning by-law amendments and site plan applications within the same time frame.

If a new development has less than 100 dwelling units and less than 8000 square metres of GFA, it will be exempt from inclusionary zoning.

Other considerations of inclusionary housing do apply:

Renovated Development Changes

Additions to existing buildings or buildings with changes in use are exempt if there are fewer than 100 new dwelling units or there is less than 8000 square metres of new residential GFA.

Non-Profit Housing

There are exemptions for non-profit housing that is exclusively owned by the non-profit.

Another exemption applies if the development is held at a minimum 51% ownership interest by the non-profit when at least 51% of the existing dwelling units are planned as affordable housing.

Student Housing

Residential housing for students is exempt from inclusionary zoning.

Retirement housing

Exemptions are provided for retirement housing, residential care homes, and nursing homes.

Stay Informed of Investment Opportunities

Understanding the ins and outs of inclusionary housing regulations can be difficult. Couple that with working with local government and its officials and the task can be insurmountable without the proper help. If you considering investing in an inclusionary zone, be sure to contact an expert that can help you make wise choices.