Affordable Housing Regulations Could be Costly to Mississauga

Published March 14, 2018 at 4:32 am

housing

For many years, Mississauga residents have struggled to afford housing at a time when real estate prices are vastly outpacing wage increases. 

To Mississauga’s credit, it has attempted to help residents by pursuing its own affordable housing plan.

But the city says the province might make city-led affordable plans significantly more difficult to implement. 

The Province of Ontario recently proposed new inclusionary zoning regulations that could have a considerable financial impact on Mississauga. Inclusionary zoning, also known as IZ, would make amendments to the Planning Act and allow municipalities to require affordable housing units as a part of new residential developments. Staff at the city believe the program is set up to fail. 

For those who are unaware, IZ was introduced in 2016 as a way to increase affordable housing for middle-income earners. Mississauga’s housing strategy, “Making Room for the Middle,” identified IZ as an opportunity to mitigate the high prices of houses, especially during a real estate boom.

The city provided early input into the program and participated in various stakeholder discussions on the issue.

There are several proposed regulations that would determine whether IZ could be applied:

  • That the new development must have 20 or more units
  • That the units be for developments with ownership tenure (excluding rentals and non-profit)
  • That units remain affordable for a 20-30 year period
  • That no cash-in-lieu of on-site units is offered

If the following provisions are satisfied, IZ regulations would require developers to designate between five per cent and 10 per cent of their units as affordable.

A home is considered affordable when its inhabitants spend 30 per cent or less of their earnings on housing costs

A key area of concern for councillors is that the regulations exclude non-profit organizations from taking part in the program. Staff at city hall also view restricting IZ to only ownership housing as a missed opportunity.

“[The ownership only requirement] doesn’t seem to match with the growth plan and the province’s claim that they want to increase affordable rental housing. I have a real concern that the province to date has only made this for ownership, and I really question the rational behind that,” says Councillor Pat Saito.

Councillor Nando Iannicca felt similarly about the mandate of IZ.

“How incredibly stupid is that?” he said. “These are people that can’t afford a down payment on a condo. So what if I knock the price down 10 per cent. It’s just absurd on its face.”

The regulations of IZ require municipalities to subsidize developers for 40 per cent of the shortfall in price between an affordable unit price verse market value. For example, if a unit costs $400,000 and the developer sells the unit at an affordable cost of $300,000, the City would be required to pay 40 per cent of the $100,000 difference in price. 

“As subsidized by whom? That’s what this comes down to. Who’s going to write the cheques worth hundreds of millions of dollars, this is a non-starter,” says Iannicca.

There was concern from Councillor Ron Starr that the province has provided direction on solving the affordable housing issue, but is not providing the finical support to follow through with the program.

It would cost the city approximately $100 million to subsidize the developments of affordable new units (approximately 20,000 of them) in upcoming years. However, there was no clear answer as to who would be paying for that subsidy.

“We have nothing in our financial planning or our budget to be able to incentivize at that level,” says Janice Baker, city manager. “I think the province has probably set this up to fail.”

Ontario’s housing minister, Peter Milczyn, said in a statement that discussions will continue with municipalities and other stakeholders to gather more insight into how to create more affordable housing. The framework that was proposed was a start, but councillors feel it’s just the beginning of a larger process.

“There’s a lot of work to be done here, it’s a complex issue,” says Starr.

insauga's Editorial Standards and Policies advertising