The Ontario government in December of 2016 passed legislation authorizing the use of IZ in the province. The implementation of this legislation is dependent upon the the province also releasing the associated regulations. The release of those regulations has been pending for some time.
The delays are related to the behind-the-scenes lobbying by the development industry. The developers have been pushing for a regulation that would require all municipalities to compensate the developers for the affordable units. More specifically, the required compensation would be arbitrarily set across-the-board at 50% of the price or rent difference between the market units and corresponding affordable units.
This regulation would be particularly counterproductive. It would subvert the very purpose of the legislation by ensuring that it generated no or very little affordable housing. Municipalities do not have the cash or other financial resources to provide mandatory compensation like this. Faced with this obligation, they will chose either not implement IZ programs, or implement programs providing affordable housing in a very limited or shallow way.
Opposition to this regulation has rightfully developed, as news has leaked out about the efforts of the developers. Both the City of Toronto and the Association of Municipalities of Ontario have objected to this possible provision. Similar objections were registered in a letter prepared in late March by Social Planning Toronto and signed by over 30 community and non-profit organizations across Ontario (see letter). During Question Period on 3 April, MPP Cheri DiNovo quizzed the Minister about the status of this provision, while calling it a “poison pill” (see transcript).
While undermining the legislation, this provision is also remarkable for being so unnecessary. The proof of this can be seen is the large number of the US programs that have successively operated without any or limited compensation. And it is generally recognized that no compensation is typically needed particularly in fast-growing communities like Toronto and those in the surrounding GTA.
It is also important to note that there is no precedent for this sort of mandated across-the-board compensation in the US programs. The municipalities there have been free to fashion their own regulations – sometimes with and sometimes without compensation – that respond to their particular and disparate local conditions and needs. They seemed to have acted responsibility because these programs have generated considerable affordable housing while not apparently impairing the ability of developers to build. Municipalities in Ontario should be given the same flexibility and opportunity.