A new policy headed to council next week would require affordable housing in new developments, but just how affordable they’ll be is up for debate.
Inclusionary zoning would lower the price of a percentage of homes in a new building. There are varying approaches to the idea in use across North America, with both voluntary and mandatory programs and different percentages set aside at different rates.
Council requested the authority to use inclusionary zoning in December 2016 with a report suggesting HRM could create up to 250 new affordable units annually. After years of delay, the government passed amendments to the municipal charter in October 2021 to allow HRM to use inclusionary zoning.
In a report headed to council on Tuesday, planner Jamy-Ellen Proud recommended finally starting the process to adopt inclusionary zoning. Proud’s report is based on the recommendations of a consultant hired to conduct research on the subject.
“Inclusionary zoning programs have proven to be an effective tool to produce more affordable housing by leveraging private housing development,” Proud wrote.
“Existing programs in Canada and throughout the United States demonstrate that well-designed inclusionary zoning programs can have a significant, positive impact on housing affordability, without triggering increases to the price of market housing.”
Inclusionary zoning would apply everywhere in HRM
HRM should adopt a mandatory inclusionary zoning policy across the municipality, Proud recommended.
“Jurisdictional and best practice research consistently show that mandatory programs are more successful at creating new affordable units than voluntary programs,” Proud wrote.
“Mandatory programs are also more successful at distributing new affordable units throughout the program area instead of concentrating new units in areas that already provide more affordable housing.”
The municipality would first implement the policy in areas with highest growth, like the future growth nodes identified in the Centre Plan. Those include areas like the West End Mall site and Dartmouth Cove.
Planners would focus mostly on multi-unit buildings, whether rental or condominium, but the policy could also apply to commercial and industrial development through cash-in-lieu.
The policy would give preference to including affordable homes in the buildings, but set up options for cash-in-lieu or offsite housing that “fairly and proportionately reflect the cost of replacing the missing on-site housing.”
Still missing from the plan are two important aspects: the “set aside rate” and the “affordability standard.”
The set aside rate is what percentage of units in a building will be affordable. Common set aside rates in Canadian jurisdictions range from 5% to 20%, with higher rates creating more affordable homes. Edmonton uses a 5% rate and created just 26 new affordable units between 2015 and 2018. The rate in Richmond, BC is either 10% or 15% depending on the area and that city has created 900 new affordable units since 2007.
The 2016 report to council suggested a 10% rate could create 180 to 250 affordable units annually based on annual housing starts between 1,800 and 2,500 units.
The affordability standard can be determined based on market rent or median incomes in the surrounding area.
“The majority of Canadian jurisdictions with inclusionary zoning programs tie affordability to a percentage of market rent, typically between 80-90% of average market rent,” Proud wrote.
“Remaining jurisdictions tie affordability… to a defined range of low- to moderate-income.”
The consultant suggested the municipality could choose to base the affordability on either household or individual income.
Also still to be ironed out is the time period of affordability, like 15 years, 99 years, or in perpetuity, and how the municipality will manage ownership and administration of the housing.
Proud recommended, in line with the consultant, that HRM hire another consultant to conduct a market fiscal impact analysis.
“Such a study is required to understand the potential impact of an inclusionary zoning program on the housing market in HRM, and could address the optimal affordability standard, set aside rate, delineation for market rate zones, minimum development size, and the appropriate amount of cash that could be paid in lieu of on-site units,” Proud wrote.
HRM would also conduct public consultation on the idea, including online and in-person engagement.