Five Planning Tools to Improve Housing Affordability

Many municipalities are experimenting with new or enhanced planning tools to develop affordable housing.

Written by Abra Adamo

February 1, 2016

Here are five planning policies with the potential to enable more affordable non-profit and private market rental housing:

1. Expediting the Approval Process

Fast-tracked or expedited approvals prioritize applications for affordable housing development, allowing them to essentially “jump the queue” at City Hall. The goal is to reduce the schedule, costs and associated risks that accompany delays in the approvals process.

The cities of KamloopsSaskatoon, and Regina have expedited approval processes in place that prioritize affordable housing applications over others in the approvals pipeline. The City of Toronto’s new Open Door Initiative proposes a “gold star” fast-track approvals process for affordable ownership, affordable rental and mid-range rental applications.

A fast-track approvals process for affordable housing projects could be a very effective planning instrument (and non-financial lever) to advance the construction of new affordable housing in line with the Ottawa’s Official Plan and new 10 Year Housing and Homelessness Plan.

2. Waiving Development Fees

Waiving development charges and other planning and building fees is an incentive that the City of Ottawa and many municipalities offer to lower the costs of affordable housing development. Although development charges and other fees are important tools for municipalities to offset the costs of new growth-related infrastructure and services, they impose a significant financial burden on developers. A growing number of cities, including Kamloops and Toronto, are beginning to expand and apply these incentives to facilitate the development of purpose-built, below market and market rental housing by private sector builders in order to increase supply.

Currently, the waiver of development and planning fees is applied only to projects funded under the City of Ottawa’s Action Ottawa program. Expanding this incentive to the private rental market will reduce the costs of rental production, making it a more attractive investment opportunity to private sector developers.  Applying these incentives to the market rental sector, the City of Vancouver created nearly 4000 units of secured market rental housing in just three years, according to its 2014 Housing and Homelessness Strategy Report Card.

3. Density Bonusing

Density bonusing is a common planning and regulatory measure used to stimulate the creation of rental housing in Canada. Under Section 37 (s37) of the Planning Act, Ontario municipalities are permitted to pass by-laws increasing height and density in return for the provision of “facilities, services or matters”, or what are commonly referred to as “community benefits”. Although community benefits can include a range of community amenities, the Planning Act does not limit the capacity of municipalities to prioritize affordable housing over other community benefits.

Under Toronto’s Large Sites Policy, on sites greater than five hectares, where an increase in height and/or density is sought, “the first priority - community benefit” is the provision of 20 percent of the additional residential units as affordable housing.

The City of Ottawa has the power to establish a city-wide policy to dedicate a fixed percentage of all s37 benefits to affordable housing. Alternatively, similar commitments could be made at a ward level. In Ottawa’s Somerset ward, a portion of all s37 benefits are now dedicated to an affordable housing fund, which can be used as equity to build affordable housing in the ward.  If all Ottawa city councillors were to make comparable commitments in their respective wards, s37 agreements would become a more robust, non-financial lever to advance affordable housing development in Ottawa neighbourhoods.

4. Alternative Development Standards

Many cities are adopting alternative development standards, to reduce development costs and increase affordability. Reduced parking standards, for example, can enable builders to make maximize the number of units that can be built on a given site, both increasingly the number of people housed and helping to generate more rental revenue for housing projects. This is a particularly viable policy innovation for downtown and inner suburban neighbourhoods well-served by public transit.

The City of New York’s 10-Year Plan, for example, plans to eliminate parking requirements for new affordable housing in subway-accessible areas, allow existing affordable developments near the subway to redevelop existing parking facilities, and reduce parking requirements for affordable housing in neighbourhoods further from subway stations.

In 2015, Ottawa launched a Zoning By-law Review of Minimum Parking Requirements. A report and recommendation on how to amend the Zoning By-law will be presented to the City of Ottawa’ Planning Committee early this year.

5. Surplus Municipal Land Development

Surplus municipal land presents a major opportunity to produce new affordable housing. In 2007, for example, the City of Vancouver dedicated 14 City-owned sites to create 1,500 units of supportive housing in partnership with BC Housing, which is providing funding to cover construction costs as well as operational subsidies. As of 2015, thirteen of the 14 sites were complete.

“Housing first” surplus lands policies have been adopted by a number of municipalities and provinces. Ottawa’s Housing First Policy requires that the City identify and make available suitable City-owned sites to the community for the provision of affordable housing. If surplus land is deemed unsuitable and subsequently sold by the City, 25 percent of the net proceeds of the sale is dedicated the City’s Housing Reserve Fund, to create affordable housing. The limitation of this policy is that it is currently limited to residentially zoned surplus land. Expansion of this policy to include City lands zoned for industrial, institutional or other uses, could free up additional sites for new affordable housing (where appropriate) and/or help to replenish the City’s Housing Reserve Fund.

On their own, these planning tools are not enough to create affordable housing targeted at very low-income households. However, in many cases, they can be used in different combinations to reduce development costs and improve affordability, delivering units priced closer to the market rate – perhaps 70 to 80 percent of market rent, or sale prices.

This research is the product of an on-going university-community partnership between Carleton University and Cahdco in collaboration with a United Way-funded project led by Ottawa’s Alliance to End Homelessness.

Abra Adamo

Senior Researcher, Carleton University

February 1, 2016