What is Inclusionary Zoning and How Will It Affect Your Development?

By Slonee Malhotra

Please note that an update to this article has been posted here. 

Inclusionary zoning (IZ) is a regulatory tool intended to increase the availability of affordable housing by requiring developers to either contribute a set amount toward affordable housing or sell off a percentage of the units at a lower price point.[1] The tool will be implemented in Toronto on September 18, 2022, and in Kitchener, Waterloo, and Cambridge sometime during 2023[2]. The policy will be tailored to the region's specific housing needs.[3]

IZ is introduced to combat the current housing market crisis and create mixed-income developments where the market has not done so on its own. The tool has three objectives. First, to increase the supply of affordable housing for low to moderate-income households (between $32,000-$92,000/year, depending on household size). Second, to encourage market housing development by supporting a diverse range of housing supply. Third, to create inclusive and equitable communities. [4]

Which Developments will be Impacted?

IZ will apply to residential developments that are:

1. Located within an identified IZ Market Area;
2. Located near public transit or where a Development Permit System exists; and
3. Contain more than 100 dwelling units and have 8000m² of residential gross floor area.[5]

IZ will only apply to developments located within proximity, approximately 800m, from major public transit stations. In Toronto, these areas are known as Protected Major Transit Station Areas, a complete list of which should be before the minister before July 2022.[6] In Kitchener and Waterloo, the Ontario government requires IZ within 800m of ION stations.[7]

IZ can apply where the city implements a Development Permit System (DPS).[8] As of yet, no DPS areas have been identified within Toronto or Waterloo Region.