Item - 2026.PH27.6

The Executive Director, Development Review recommends that:

1. City Council amend City of Toronto Zoning By-law 569-2013 for the lands municipally known as 405 Sherbourne Street substantially in accordance with the draft Zoning By-law Amendment, which includes a Holding Provision, included as Attachment 5 to this Report.

2. City Council authorize the City Solicitor to make such stylistic and technical changes to the draft Zoning By-law Amendment as may be required.

3. City Council authorize the Executive Director, Development Review to enter into an Agreement pursuant to subsection 35.2(2) of the Planning Act and the City’s Inclusionary Zoning Bylaw on terms satisfactory to the Chief Planner and Executive Director, City Planning and in a form acceptable to the City Solicitor.

This report recommends approval of a City-initiated Zoning By-law Amendment to permit a 35-storey (120 metres, excluding mechanical penthouse) mixed-use building at 405 Sherbourne Street. This City-owned property has a Site-Specific Zoning By-law (By-law 450-2022) which permits a 26-storey (77-metre) mixed-use building with 267 rental dwelling units and 168 square metres of community space.

This new proposal includes 301 residential units (including up to 90 affordable housing units) and 229 square metres of community space on the ground floor. It provides a higher percentage of two and three-bedroom units over the previously approved zoning and an enhanced public realm that includes a landscaped mid-block pedestrian connection between Sherbourne Street and Bleecker Street. This Toronto Builds site will remain in City ownership and will be leased to a non-profit housing provider for a term of 40-99 years.

A separate report from Heritage Planning regarding the alterations to a Heritage Property Designated under Part V of the Ontario Heritage Act will be considered by City Council in conjunction with this report.

On May 21 and 22, 2025, City Council adopted Item PH21.4 “Toronto Builds – A Policy Framework to Build More Affordable Rental Homes on Public Land” to include a new policy framework to harmonize the development of the development of a range of rental homes and mixed-income communities on public land. The City-owned site at 405 Sherbourne Street was identified as a Toronto Builds site in that report.

To support the delivery of affordable housing on City-owned land, Council approved a range of financial incentives. The City’s financial incentives include exemptions from development charges, building permit fees, planning application fees and parkland dedication fees, as well as property taxes for municipal and school purposes for the duration of affordability starting from occupancy for all affordable homes.

In addition to the incentives for affordable homes, the full development is eligible for waivers of parkland dedication fees and community benefits contribution charges as approved by City Council on July 23 and 24, 2025 in EX25.1. That report included a recommendation to exempt Toronto Builds projects from these fees.

These incentives are not a direct capital payment as they represent the forgiveness of City levies and charges and are thus foregone revenue to the City.

Estimates of financial incentives to be provided to 405 Sherbourne Street via Toronto Builds and the Rental Housing Supply Program are shown in Table 1. The site will have a total of 301 units, of which 20-30% will be affordable for a period of 40-99 years.

Table 1. Estimated financial incentives provided to 405 Sherbourne Street site

*Calculated using 2025 development charge rates for affordable units only

**In the case of City-led planning application and building permit applications, application fee waivers are not applied and full application fees are paid.

***Includes estimated 2025 planning fees, building permit fees, parkland dedication fees, community benefits charges, and development charges.

^Calculated using 2025 property tax rates for affordable units.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the information as presented in the Financial Impact Section.