Can Peel walk the tightrope of mandated affordable housing?
Buying a home in Peel is an unrealistic dream for all but a few.
Only the region’s wealthiest residents, or those who bought decades ago, are able to trade property in Brampton or Mississauga. For everyone else, the possibility of home ownership is no more real than a game of Monopoly.
Even during the COVID-19 pandemic, housing markets in Mississauga and Brampton have remained heated. At current market values, median and average wages in Peel Region are far from enough to own, or even rent, a home comfortably.
Data compiled for the Region of Peel show renting a house of any size is unaffordable for all low and moderate income households. At an income of $76,600 a household could afford to rent a bachelor apartment, a unit where living room and bedroom are generally combined.
A family would need a household income of $121,964 to rent a three bedroom apartment comfortably. According to the Region, only high income households can afford to rent at a rate that does not force difficult spending decisions for their remaining income.
The reality of homeownership is even worse. Households earning less than $131,000 annually can’t afford to get a foot on the property ladder, while only those earning in excess of $203,945 have the pick of the market and can afford traditional, suburban detached houses.
At a total income of $131,374, a household would be able to afford a condo unit. The average 2019 condo price in Peel was $466,729, detached homes are rapidly approaching $1 million. Even with a sizable total income of $158,712, a household in Peel could only afford a townhouse or row house.
The majority of residents in Peel don’t boast these household incomes.
According to the 2016 Census, the median household income across Peel in 2015 was $86,233. The Region’s figures suggest anyone earning the median annual total income in Peel would be unable to rent or own a house affordably.
Generally, families should spend less than 30 percent of their income on housing for it to be affordable.
One person households, the most likely candidates for a condo or bachelor unit, are drastically priced out of the market. In Peel, the average 2015 one-person household income was $51,872 and the median sat at just $41,872. To comfortably buy a condo, residents would need to earn almost three times the average salary in Peel.
Larger households of two or more people are also priced out. In 2015, Peel households of two and up earned an average of $114,394 per year (or median of $96,263). They would need at least $203,944 per year to own a semi-detached home.
There is a word to summarize this sea of numbers and dollar signs: crisis.
Councillors and staff are in the process of surveying their limited arsenal to battle brutal affordability issues in Peel. A series of strategies are being deployed, including incentives for homeowners to safely renovate and rent out secondary units, as staff work to defeat rising house prices on all fronts.
To date, their record has been poor. “Current ownership and rental housing prices are out of reach for 80 percent of Peel households,” a June 2020 report to regional councillors stated.
The Region’s Home For All plan set a target of 7,500 new affordable units annually and 75,000 by 2028. Each year, it said the Region should have 2,000 new affordable units and 5,500 at market rates. After endorsing the plan, its progress has been near-impossible to track and staff have not maintained a public record of their progress.
In 2019, Peel was offering $2.7 million in incentives to developers to build affordable housing in the region, less than one percent of what Toronto had introduced in its $280 million incentive package for developers. Peel has steadily introduced new incentives since then, but has a mountain to climb.
Failing in their mandate to provide subsidized housing, council has the option of a new approach. A recent and potentially vital new weapon at its disposal is inclusionary zoning.
The term refers to policies that force developers to include a certain percentage or square footage of affordable units in new projects. The option is relatively unique for being mandatory — most attempts to force developers to create affordable housing are more carrot than stick.
Rather than listing all of their homes at whatever price the market can bear, inclusionary zoning could force a developer to, for example, offer 10 percent of its homes at rates deemed affordable for low or medium income households. Such policies guarantee a certain number of affordable units at a set price, but can have detrimental impacts on the market as a whole if they are mishandled.
Developers run for profit, so the extra costs of providing units below market value are generally added to other home prices, forcing up the cost of housing not protected under inclusionary zoning rules. The rules can also act as a disincentive to build and reduce the total number of new homes coming online in a city.
Getting the policy right is a delicate balancing act. Not forcing developers to provide some homes at realistically affordable rates means many will never be able to afford adequate housing; requisitioning too many units can drive up overall prices or lower supply.
Changes made by the Progressive Conservatives in 2019 limited the scope of inclusionary zoning. Part of Bill 108 (More Homes, More Choice Act) restricted cities from issuing blanket inclusionary zoning policies within their borders; they can now only be applied around major transit stations.
The Region of Peel is nearing the end of a review of its current and proposed higher order transit routes, revealing where cities will be able to compel developers to build affordable units. They include the route of the Hurontario LRT, Mississauga Transitway, Queen Street BRT and GO train stations.
The Region of Peel is currently at the early stages of considering and drafting the inclusionary zoning rules it will apply to these areas. Staff are contemplating what percentage of units should be affordable and how policies should be applied across the Region. At this stage, there are more questions than answers as Peel prepares to take its first tentative step onto the tightrope of inclusionary zoning.
A presentation heard by councillors Thursday showed some areas of the region, particularly along the Hurontario LRT, could absorb the cost of inclusionary zoning. More far-flung transit hubs in the suburban corners of Peel might struggle. In order to maximize affordable units without chasing developers away, Peel is considering a sliding scale of unit demands based on the popularity of a particular area.
Since developers essentially view the policy as another cost to contend with, early adoption and a slow phase-in could help to keep the building industry on side.
The areas surrounding major transit corridors are being eyed for potential inclusionary zoning policies. (Map from the Region of Peel)
In a lengthy submission to the Region of Peel’s Planning and Growth Management Committee, BILD, a major development lobby group, raised concerns. Fighting to keep costs down for its development members, the organization suggested any inclusionary zoning policies should come with generous incentives to offset the costs.
“The Region’s proposed direction with inclusionary zoning to address the need for long-term affordability is consistent with best practices in other cities but is not fully accompanied by the offsets, incentives, or subsidies offered elsewhere to make it a viable, sustainable proposition for the private sector,” BILD wrote.
An analysis of inclusionary zoning across North America included in BILD’s submission noted that application fees, development charges, parkland contributions and Section 37 payments can account for between 20 and 25 percent of a unit cost. The example was included to show how inclusionary zoning could send prices soaring if it is mishandled.
Apprehensive as the development industry is about being forced to offer affordable units, its track record in Peel for doing so voluntarily is poor. The redevelopment plans for Mississauga’s Square One mall, for example, do not include a single unit of affordable housing. Mississauga’s downtown already allows unlimited building heights. Short of forcing developers to cough up, the City has few options to negotiate affordable units.
Regional staff are aware of the development industry’s desire to see incentives offered to them and have included some examples in their early work. Staff also plan to adopt the sliding scale of demands and incentives based on where in the region developers plan to build.
Introducing the process successfully will be difficult, but it could be a key tool in Peel. For years, the Region’s housing strategies have failed residents and council is running short of options.
Draft policies will be presented to the Region’s Planning and Growth Management Committee on June 17.
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