Inclusionary Zoning – City of Ottawa

Written by Cahdco

August 11, 2022

In June 2022, a special joint Planning Committee and Community and Protective Services Committee was held to discuss two City led initiatives with significant implications on the affordable housing sector. The first was a review of tools to prohibit or prevent renovictions, and the second was an Inclusionary Zoning status update and further direction. The latter will be the focus of this post.

Provincial Adoption
In 2018, Inclusionary Zoning (IZ) regulation was adopted by the Province of Ontario to allow municipalities to require the inclusion of affordable housing in new residential development. In May 2019, when the Planning Act was amended, the implementation of IZ was restricted to areas with a Community Planning Permit system (CPP) or areas designated Protected Major Transit Station Areas (PMTSAs).

Implementation Requirements
To implement IZ, the Planning Act requires that the City of Ottawa:

  • Complete an assessment report outlining the Ottawa housing market and feasibility of various inclusionary zoning options, and that the report be reviewed by a third party;
  • Include Official Plan policies authorizing the use of inclusionary zoning and the setting of certain parameters;
  • Designate lands eligible for inclusionary zoning in the Official Plan;
  • Implement Zoning By-law regulations for inclusionary zoning; and
  • Complete regular reporting (at least every two years) and regular updates of the assessment report (at least every five years).

Work Completed to Date
In March 2020, City staff began to look into designating specific lands as PMTSAs as a part of the new Official Plan process. City needs and financial impact assessments were also initiated. To date, the City has included the necessary policies and designations in the new Official Plan to allow for the implementation of IZ. When the Plan is approved by the Minister, 26 PMTSAs will be officially designated. Regarding the preliminary assessments, a report is currently in the process of being reviewed by a third party. Once the review is complete and the report finalized, it will be available to the public on the City of Ottawa website.

In the interim, the following City staff recommendations for the implementation of IZ were presented and discussed at the Joint Committee meeting held on June 16, 2022:

  • Development size threshold: IZ to apply to new developments, including proposed additions and phased developments, containing 50 residential units or more, and developments with a minimum residential gross floor area of 3,500 m2.
  • Target households: The principal objective of IZ is to add units to the housing market that are affordable to moderate income households. The City of Ottawa targets households in the 40th to 60th income distributions.
    • Ownership households earning between $61,646 and $117,109
    • Renter households earning between $32,433 and $64,456

Low income households will be ineligible for an IZ unit unless additional funding sources are identified.

    • Ownership households earning $61,646 and less
    • Renter households earning $32,433 and less
  • Affordability period: A 99-year affordability period for ownership units and a 25-year affordability period for purpose-built rentals, if and when they become subject to IZ.
  • Set-aside rates (percentage of units or gross floor area required to be affordable per development): Initial set-aside rates of 10% for condominiums and 0% for purpose-built rentals. Set-aside rates may be revised as individual reviews of each PMTSA is conducted before the end of 2024.
  • Provision of off-site affordable units: Not expected to be contemplated in the IZ By-law, therefore, Zoning Amendments would be required. City staff are willing to contemplate off-site affordable units in the Official Plan, under certain conditions.
  • Net proceeds from sale of affordable ownership units: An administrative framework would delineate the rules around collection to ensure that 0% of net proceeds are collected during the affordability period (99 years) and up to 50% are collected from the first sale after the period expires.
  • Transition period: At least one (1) year.

Committee Direction and Next Steps
The Joint Committee carried recommendations as amended by eight motions and one Direction to Staff. The following is a summary of key next steps:

  • Staff to move forward with further study of each PMTSA, Official Plan and Zoning By-law amendments, and an implementation strategy to introduce Inclusionary Zoning in 2023.
  • The Mayor and Co-Chairs of Planning Committee and Community and Protective Services Committee to write a joint letter to the Minister of Housing and Municipal Affairs to request that Inclusionary Zoning be expanded beyond PMTSAs.
  • Staff to consider:
    1. a set-aside rate of 10% and 20% for ownership housing, and up to 10% for purpose-built rentals in all PMTSAs;
    2. unit mix requirements in the Official Plan policies or zoning regulations to ensure that a sufficient number of multi-bedroom units are set aside as affordable;
    3. how to include fully accessible units, according to the City of Ottawa’s own accessibility design standards;
    4. opportunities to deepen affordability for rental and condominium units in order to maximize access down to 40th percentile income households;
    5. feasibility and impact of extending the affordability period for purpose-built, rental units;
    6. additional offsets that could be implemented as part of the Inclusionary Zoning policy and regulations;
    7. an Official Plan policy that would allow off-site units only where those units are to be assumed by a non-profit housing provider;
    8. any tools available to the City to limit the use of “renovictions” for long-term rental units in particular; and
    9. requirements for the transition period and condense this to the shortest time as is reasonable.

For more information on IZ, please visit the City of Ottawa Escribe Website.



August 11, 2022