Item - 2023.PH7.7

The Planning and Housing Committee recommends that:

1. City Council request the Government of Ontario to create a provincial grant or other incentive program that provides incentives to promote affordability directly to homeowners, renters or developers, instead of exemptions to development charges, community benefit charges and parkland dedication fees, which provides a different level of incentive in municipalities across the province depending on the level of fees imposed.

2. City Council express to the Government of Ontario its support in principle of the direction in Bill 134 to adopt an income-based approach for the definition of affordable housing which is consistent with the Provincial Policy Statement, provided that the Government: 

a. rely on publicly accessible, reliable and objective data for determining the income-based affordable rent and affordable purchase price to develop the “Affordable Residential Units bulletin”, such as the Canada Mortgage and Housing Corporation’s Rental Market Survey and Census information published by Statistics Canada;

b. ensure provincial income-based affordable rents and purchase prices take into consideration the Canada Mortgage and Housing Corporation’s National Occupancy Standard and different household incomes and sizes for different bedroom types;

c. not publish the “Affordable Residential Units bulletin” until meaningful consultation with the City and stakeholders has taken place on data sources and the detailed methodology for determining average market rent, income-based affordable rent, income-based affordable purchase price and average purchase price;

d. following further consultation with the City and stakeholders, the Province publish the “Affordable Residential Units bulletin” on an annual basis on a set date;

e. enact legislation to ensure legal mechanisms exist to secure units created under this definition are registered on title, including securing the affordability term, depth of affordability, and tenure;

f. ensure there is a process put in place to guarantee fair and equitable access to the affordable rental and ownership units and require the use of any existing municipal process;

g. update Bill 23 amendments to further amend the Development Charges Act, 1997 to specify that affordable rental and ownership units that receive exemptions from municipal fees and charges must remain affordable for a minimum 50-year period, instead of 25 years as currently outlined;

h. update Bill 23 amendments to further amend the Development Charges Act, 1997 and Planning Act, 1990 to provide that where an owner does not provide affordable units for the required duration or otherwise breaches its obligations, to authorize the City to add the amounts plus interest to the tax roll and to give such amounts priority lien status;

i. update Bill 23 amendments to further amend the Development Charges Act,1997 to eliminate municipal development charge exemptions for “attainable residential units”, and alternatively create a direct provincial grant or other Provincial incentive program for developers, renters or homeowners; and

j. ensure that the proposed Provincial Planning Statement and any future provincial legislation, regulation and policy, includes an income-based definition of “affordable” consistent with the proposed definition under Bill 134.

3. City Council request the Government of Ontario to make the City whole respecting Bill 23 impacts, for all of the impacts that came into effect starting on November 28, 2022, that reimbursement include both operating impacts as well as the value of the fee reductions and exemptions provided through Bills 23 and 134, and that reimbursement commence in 2024, and continue annually thereafter.

4. City Council direct Executive Director, Housing Secretariat, in consultation with Chief Financial Officer and Treasurer, to report to the Planning and Housing Committee, with any recommended changes to the Open Door Affordable Rental Housing and Home Ownership Assistance programs following Bill 134 coming into effect, by the first quater of  2024.

On September 28, 2023 the Ontario government introduced Bill 134, the Affordable Homes and Good Jobs Act, 2023 and posted proposed amendments on the Ontario Regulatory Registry for a 30-day consultation, with comments due by October 28, 2023. As part of Bill 134, amendments to the Development Charges Act, 1997 are proposed to update the definition of 'affordable residential unit' for the purposes of exemptions from municipal development charges. Bill 134 was debated in Second Reading on October 3 and 4, 2023 and has been referred to the Standing Committee on Heritage, Infrastructure and Cultural Policy. City staff are currently undertaking a review of the proposed amendments. A complete report with staff comments on the proposed amendments will be available at the Planning and Housing Committee meeting on October 26, 2023.

On September 28, 2023 the Ontario government introduced Bill 134, the Affordable Homes and Good Jobs Act, 2023 (Bill 134) and posted proposed amendments on the Ontario Regulatory Registry for a 30-day consultation, with comments due by October 28, 2023. As part of Bill 134, amendments to the Development Charges Act, 1997 (DCA) are proposed to update the definition of 'affordable residential unit' that were introduced through Bill 23 on November 28, 2022 but are not yet in effect. The proposed definitions would impact which units qualify for the statutory exemption from municipal development charges under the DCA, and the community benefits charge and parkland dedication requirements under the Planning Act.

This report outlines staff comments on the proposed definition of 'affordable residential unit' under the DCA. The proposed changes incorporate an income-based approach to the definition of affordable rental and ownership housing and modifies the market-based approach in the current definition. The proposed definition aligns with the current definition of 'affordable' in the Provincial Policy Statement, 2020. Overall, staff are supportive of incorporating an income-based approach, as it aligns with the City’s own efforts to improve housing affordability for residents, recognizing that market rents and ownership costs continue to increase at a much higher rate than incomes. To this effect, the City itself has in-force Official Plan affordable definitions which reflect the City’s commitment to taking a rights-based approach to housing, as outlined in the HousingTO 2020-2030 Action Plan. Further, the proposed amendments respond to the City’s previous requests to the Government of Ontario as they relate to Bill 23, which include the request to add an income indicator into the definition.

Despite these positive aspects, Bill 134 will have negative impacts to municipalities if enacted without offsetting financial compensation, and there is limited information on the methodology for determining income-based affordable rents and prices to fully assess the impacts, with many of the details to be determined based on “the Minister of Municipal Affairs and Housing’s opinion”. To help mitigate these potential impacts, staff are recommending that the Government of Ontario include a number of key principles in its approach for determining income-based affordable rents. These include: using transparent, reliable and publicly accessible data to determine the rents or prices that households can afford; providing incentives to encourage the development of affordable units and ensure they remain affordable long term; ensuring the City’s financial interests are protected and that there are no additional financial burdens placed on the City as a result of the province’s new definition; and ensuring that incentives given to developers are passed on to renters and homebuyers.

Second reading of Bill 134 took place on October 3 and 4th, 2023 and has been referred to the Standing Committee on Heritage, Infrastructure and Cultural Policy. The recommendations contained in this report address concerns and comments raised by City staff, including City Planning, the Housing Secretariat, and Finance and Treasury. Following Planning and Housing Committee’ consideration of this report, staff will submit the recommendations from Committee to the Ontario’s Regulatory Registry, as comments are due by October 28, 2023, and will submit any additional comments received at City Council’s meeting on November 8, 2023 as supplementary information to the recommendations contained in this report.