Density bonusing when used in inclusionary zoning (IZ) is a practice through which municipalities offer developers additional residential density (or development rights) in return for providing affordable housing.
In IZ programs the bonuses are generally are offered under non-negotiable rules fixed in advance. They are made available to all or most developments, although the permitted increase typically is adjusted according to the base density.
In many programs, particularly in early suburban communities, density bonusing is offered under a simple formulation: the permitted as-of-right base density is increased by one market unit for every affordable unit provided. In these cases, the extra density is compensation for the affordable housing.
In other programs, the increased density is only for developments providing additional affordable housing on top of the affordable units required by the base zoning. In these cases, the density bonus is an inducement for developers to provide additional affordable housing.
Most programs also typically include provisions to protect the local residents from excessive development. The municipalities place a limit (generally, somewhere between 10% and 25%) on the additional density that can be is granted as-of-right and/or make the density increase subject to local public review and approval.
Incidence
Density bonusing is widely used in IZ. A number of surveys indicate that it is used in large majority of programs, but these surveys are not adequate in revealing some key differences (Porter 2004, CCRH 2003, Schuetz 2009 and IHI 2010).
These surveys do not distinguish between mandatory and voluntary programs. All voluntary programs are most likely to offer density bonusing because they rely on providing fulsome compensation as a way of attracting the developers’ participation. As a consequence, if the mandatory programs could be separated out, they would show a much lower incidence of density bonusing.
The surveys also do not distinguish between rezoning and density bonusing (see next section). Most, if not all, IZ programs in major cities rely on conventional upzoning rather than density bonusing to secure affordable housing. This is because most developments in these cities need a re-zoning, which would predominate over density bonusing in the increased density permitted and affordable housing produced.
Experience in Toronto
In the 80’s, Toronto had successful but short-lived density bonusing program for office developments. It took cash in return for allowing higher densities, and then used that cash for building affordable housing. Although the program raised millions, it was closed down after pushback from the public, which considered this as selling development rights, and also allowing for office towers that were too tall.
Since then, the City has taken the position that allocating density must be based in the first place on “good planning”. This principle is applied when administering s37, which thereby relies on upzoning and not density bonusing.
Density Bonusing vs Upzoning
Density increases can be used in IZ to provide affordable housing through two processes: density bonusing and upzoning. The two are too often conflated, but are fundamentally different. They reflect different approaches toward how the density increase is determined, whether compensation is needed, and how the cost burden associated with the affordable housing is absorbed.
In conventional upzoning, the permitted density limits are determined development-by-development on the basis of planning grounds. The need for affordable housing is not a factor in that determination. In this case, sound planning prevails over affordable housing needs.
In this process, the affordable housing is seen as an obligation that all developers have. The cost burden of that housing is absorbed by the increase in land values resulting from the permitted density increase.
In the case of density bonusing, affordable housing goes ahead of planning. The need for affordable housing influences what density is permitted.
The increased density under density bonusing is seen as compensation to the developers for the cost burden associated with the affordable housing. Providing increased density in this way means the cost burden is not passed back to the land.
Summary of Issues
The use of density bonusing in IZ can be questioned for at least three significant reasons:
1. It potentially distorts the planning process. More specifically, it could automatically allow development exceeding what would be warranted by good planning grounds. In turn, this could serve to spark a public backlash against particular developments, and possibly even against IZ more generally.
2. It supports the argument that developers need compensation. In other words, developers must be paid for providing affordable housing rather than having an obligation to provide it. But developers do not need compensation because they are able to pass the costs of the affordable housing back to the landowners.
3. It has a limited role in a dynamic market like that in the City of Toronto. Most developments here will required rezoning that will provide higher density increases than that allowed under density bonusing. So, rezoning will override density bonusing in these circumstances.
References
Innovative Housing Institute: “Inclusionary Housing Survey – Measures of Effectiveness”; Nov 2010.
Douglas R. Porter: “Inclusionary Zoning for Affordable Housing”; Urban Land Institute, 2004.
Inclusionary Housing in California: 30 Years of Innovation; Non-Profit Housing Association of Northern California & California Coalition for Rural Housing; July 2003.
Jenny Schuetz et al: “31 Flavours of Inclusionary Zoning”; Journal of the American Planning Association; Autumn 2009.
Richard Drdla
28 March 2019
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