Toronto council votes to require developers to build affordable units in some new condo towers

After a battle between the city and province that's lasted for decades, Toronto will soon require developers to build affordable units in new condo buildings in an attempt to add thousands of homes below market value in the coming years.

Councillors voted 23 to 2 to use a new power called inclusionary zoning, which allows the city to compel developers to make five to 10 per cent of units affordable in new towers within 500 metres of major transit stations starting in September 2022. That percentage will increase to eight to 22 per cent by 2030, depending on the neighbourhood.

"Today is a big day," Coun. Mike Layton, who represents Ward 11, University-Rosedale, said at the council meeting Tuesday.

"We are passing a once-in-a-generation policy that we've waited decades to implement. Now we have to make sure we do it properly and actually make a difference in people's lives." 

Ownership and rent prices will be geared to households earning between $32,486 to $91,611 a year and won't exceed 30 per cent of their income, a staff report says.

The city says it's developing a website for people to apply for an affordable unit, staff are considering a lottery system. Toronto will work with community housing groups to manage renting and selling the units, although details are still being worked out.

Units will remain affordable for 99 years, with resale prices pegged to inflation, according to city staff.

Province can appeal council's decision

Mayor John Tory said he was proud of the plan, a first for an Ontario city, despite opposition from developers claiming it will be too costly and housing advocates calling for more affordable units.

"The private development industry has been very successful during the pandemic," Tory said at a news conference ahead of Tuesday's council meeting. 

"But the long-term health of the city itself and its economy requires our development industry play an increasing role in the supply of affordable housing."

If Toronto had put into place similar measures a decade ago, as many as 25,000 affordable units would've been built, city staff told council.

David Wilkes, president and CEO of the Building Industry and Land Development Association, told CBC Toronto that developers support inclusionary zoning, but think the costs should be shared. They'd asked for the city to waive fees and taxes for the affordable units, which account for about 25 per cent of the cost to build them. 

Otherwise, the cost will be reflected in higher prices of the market value units and passed on to those homeowners, or investors and developers will leave the city, Wilkes said.

Many councillors shrugged off that idea, noting a recent influx of applications. 

"I've got out-of-control development, especially near transit lines," said Deputy Mayor Denzil Minnan-Wong, who represents Ward 16, Don Valley East.

"It's just insane." 

"The flood of development is frightening," Eglinton-Lawrence Coun. Mike Colle said. "And nothing's being done to slow it down." 

They and other councillors noted that some neighbourhoods in their wards are excluded from inclusionary zoning, often near existing or proposed transit stations and where developers interest was high, such as Little Jamaica, North York Centre and East Harbour.

The city's chief planner, Gregg Lintern, said that's because the city's market analysis determined there wasn't enough housing demand to justify inclusionary zoning in those neighbourhoods. Staff will review these areas in one year.

The majority of councillors supported what staff recommended and Mayor John Tory endorsed — a gradual phase-in of affordable units to parallel market price increases and soften the blow to developers.

Other councillors, including Layton, pushed for the city to be more ambitious and mandate more affordable units from the start. That, however, might prompt Premier Doug Ford's government to challenge the bylaw at the Ontario Land Tribunal.

"The risk is Ford might appeal if we ask too much from his developer friends. But that's a risk I'm willing to take," Layton said. "Developers are going to say anything to get the city away from their profits. It's time for us to stop enabling them."

Tory said if the city were to pursue more aggressive inclusionary zoning, it could be tied up in "bureaucratic string" for years.

"I want this to happen now," Tory told council.