Michael Lewis
Special to Ontario Construction News
Ontario is planning to pause until July 1, 2027, a provincial regulation that has allowed municipalities to require up to five per cent of units in major housing projects near transit hubs be rented or sold below-market rates.
The Ford government says the move would encourage constructors to build new housing at a time when starts have slowed and the province is behind on its goal to deliver 1.5 million new homes within a decade.
The province’s Regulatory Registration in proposing the change said it has heard from stakeholders concerned that implementing inclusionary zoning, particularly in Toronto, could have a negative impact on housing supply and result in the cancellation or pause of projects.
“Beginning in 2022-23, market conditions in Ontario have undergone a series of shifts that have negatively impacted housing starts and costs, including significant increases in the costs of financing (i.e., interest rates) and construction,” the proposal says.
“The residential development market continues to be strained and many municipalities considering IZ are finding that is not viable under present economic conditions.”
Ontario in May capped the percentage of below market homes municipalities can require and said inclusionary bylaws can be applied for no more than 25 years.
Building project applicants in Toronto, Kitchener and Mississauga are currently subject to the inclusionary zoning requirement while other cities have taken steps toward implementation.
The proposed amendment would mean applicants in those cities would no longer be subject to the municipal inclusionary requirement. The statement says Kitchener has already paused implementation until July 2026.
Mayors and opposition parties say the pause will eliminate an opportunity to build much needed affordable homes.
Toronto Mayor Olivia Chow has advocated for a higher requirement of 20 to 30 per cent, saying the existing mandate is insufficient.
“People need homes they can afford,” Mayor Chow said at a press conference.
Mississauga Mayor Carolyn Parrish in a statement said the city is “deeply concerned” by the province’s proposal.
“We understand this zoning puts an extra burden on builders to finance their projects,” she wrote. “But it is impossible for municipalities like Mississauga to subsidize those IZ units, no matter how desperately they are needed.”
Green Party Leader Mike Schreiner, also in a statement, noted that the government’s proposal comes as the Association of Municipalities of Ontario in a report last week said about 85,000 people in the province experienced homelessness last year, an eight per cent rise from 2024.
“Instead of giving municipalities more tools to make communities more affordable, the Ford government is taking them away,” Schreiner wrote.
The PC government’s proposal is open for public comment until January 19.
The proposal follows an announcement last summer from the Canada Mortgage and Housing Corporation that said a funding stream for affordable housing projects is “on hold” pending federal government direction.
