HomeMy WebLinkAboutPLN 36-23Report to Council
Report Number: PLN 36-23
Date: October 23, 2023
From: Kyle Bentley
Director, City Development & CBO
Subject: Environmental Registry of Ontario Posting 019-7669
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
-File: L-1100-063
Recommendation:
1.That Council endorse the comments contained in Report PLN 36-23, and as set out in
Appendix I to Report PLN 36-23, as the City of Pickering Detailed Comments on the
proposed changes to the definition of an “Affordable Residential Unit” in the Development
Charges Act; and
2.That staff be authorized to submit the comments in Report PLN 36-23 and Council’s
resolution thereon, to the Environmental Registry of Ontario posting (ERO 019-7669) as
the City of Pickering’s comments on the proposed changes to the definition of an
“Affordable Residential Unit” in the Development Charges Act.
Executive Summary: The Province of Ontario is seeking comments on proposed
changes to the definition of an “affordable residential unit”, as defined in the Development
Charges Act, 1997, through the Environmental Registry of Ontario, by October 28, 2023.
The proposed definition includes a significant modification from the current definition that only
considers market rates, to a definition that includes household incomes.
City staff from City Development, in conjunction with Finance, have reviewed the proposed
definition, and prepared comments for Council’s consideration and endorsement. Subject to
Council’s endorsement, these comments will be forwarded to Council under separate cover,
for inclusion as part of the City’s response to the Registry Posting.
Upon receiving Council approval, staff will submit a copy of Report PLN 36-23, and City of
Pickering’s Council resolution thereon, to the Environmental Registry of Ontario posting
019-7669, by the October 28, 2023 comment deadline.
Financial Implications: The recommendations of this report do not present direct or
immediate costs to the City of Pickering.
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 2
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
Discussion
1. Purpose
On September 28, 2023, the Province of Ontario released Bill 134: Affordable Homes
and Good Jobs Act, 2023. Included in Bill 134 are proposed changes to the definition of
an “affordable residential unit”, as defined in the Development Charges Act. Comments
on these proposed changes are requested through a posting on the Environmental
Registry of Ontario (ERO).
The purpose of this report is to provide formal comments from the City to the Province
on the proposed definition of an “affordable residential unit”, as defined in the
Development Charges Act.
2. Background
2.1 Current Definition of Affordable Residential Unit
Bill 23, More Homes Built Faster Act, 2022, received royal assent on November 28, 2022.
As part of Bill 23, the Development Charges Act was amended. One of the amendments
to the Act was the addition of the definitions of “affordable residential unit” and
“attainable residential unit”. Units that meet the definitions of “affordable” or “attainable”
would be exempt from paying municipal development charges once the definitions and
exemptions are proclaimed by the Lieutenant Governor, at a date to be identified later.
The City provided comments to the Province, through Bill 23, identifying significant
concerns with exempting all affordable units from development charges. The previous
comments identified that complete exemption from development charges and parkland
dedications will impact the ability of the City to fund infrastructure and its ability to
provide parks, which contribute to community livability and positive human and
environmental health. In addition, units being exempt from development charges and
parkland dedication would be subject to agreements between the municipality and
developers, based on information provided by the Minister. The content of the
agreements is unknown at this time and there is no information on if, or how, the
Province may consult with municipalities on this matter. These concerns remain, despite
the proposed new definition of “affordable”.
The current definition of “affordable residential unit” is based solely on market prices
and market rents. Under the current Act, a unit is defined as affordable if:
• “prices and rents are no greater than 80% of the average purchase price or market
rent, as defined by the Ministry.”
The current definition does not consider the ability of an individual to pay based on
income.
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 3
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
3. Proposed Definition of Definition of Affordable Residential Unit
On September 28, 2023, the Province of Ontario released the proposed updated
definition of “affordable residential unit”. The Province has indicated that the proposed
definition would be based on the existing definition of “affordable” in the Provincial
Policy Statement (PPS), 2020, which considers local income, in addition to, market
prices.
The PPS currently defines “affordable” as follows:
• “housing, for which the purchase price, results in annual accommodation costs,
which do not exceed 30 percent of gross annual household income, for low- and
moderate-income households; or
• housing, for which the purchase price, is at least 10 percent below the average
purchase price, of a resale unit, in the regional market area;”
Under the proposed updated definitions in the Development Charges Act, (see Table
Comparing Current and Proposed Definitions Under the Development Charges Act,
Attachment #1), an affordable residential unit would be defined as follows:
For non-rental units, the price is no greater than the lesser of:
• “a price, for which the cost of accommodation, is less than 30% of the 60th percentile
of income for households in the municipality, or
• 90%, of the average purchase price, identified for the residential unit, set out in the
Affordable Residential Units bulletin.”
For rental units, the rent is no greater than:
• “30%, of the 60th percentile, of income for rental households in the municipality, or
the average market rent, set out in the Affordable Residential Units bulletin.”
There is a key difference between the existing PPS definition and the proposed
definition to be included in the Development Charges Act. The difference is the PPS
indicates “accommodation costs which do not exceed 30 percent of gross annual
household income for low- and moderate-income households”, whereas the proposed
definition in the Development Charges Act indicates “accommodation costs is less than
30% of the 60th percentile of income for households in the municipality”. The 60th
percentile is typically considered the top income decile of moderate-income households,
using Statistics Canada Census data. The current wording is interpreted by staff to
mean that the price point for being affordable would be set by using the income of the
60th percentile.
Setting the benchmark at the top of moderate-income households would indicate that all
households in income gaps below the 60th percentile will need to spend more than 30%
of their income for housing that is defined and deemed affordable and exempt
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 4
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
from municipal development charges. This would appear to have the largest impact on
low-income households, who typically need affordable housing the most. Based on the
latest Statistics Canada Census, the 60th percentile of rental households earned
$85,000 annually in Pickering. There are many households that annually earn
thousands of dollars less than the 60th percentile. Those households would be required
to spend more than 30% of their income on “affordable units”. The exemption of
development charges is being used to encourage more affordable housing. Setting the
top income decile of the moderate-income households as the benchmark is leaving the
majority of the low- and moderate-income households unserved by this proposed
incentive mechanism.
Taking household income into consideration, and not solely using market rates as a
determination of affordability, is a positive step. However, the definition of “affordable” in
the PPS is more inclusive and using it would impact the affordability crisis in Ontario in a
more meaningful way.
It must be noted that there is still a significant amount of information that the Province
has not released, discussed in Section 3.1 below. When the additional information
becomes available, it may further impact the comments provided by staff.
3.1 Concerns Regarding the Proposed Definition of Affordable Residential Unit
Despite the Province releasing the new definition for public comment, not all the
information required to determine how the definition will impact affordability has been
provided. The current and proposed definition will rely on an “Affordable Residential
Units for the purposes of the Development Charges Act” bulletin, which has not yet
been released. The bulletin, published by the Ministry, would identify average market
rents and purchase prices, define incomes for a local municipality, and define housing
and units by type. There is currently no information about the data that will be used to
determine market rates or local incomes: its source(s); frequency of updates; or
geographic area of coverage. Given this lack of information, it is difficult to provide
further meaningful comments on the proposed definitions that are the subject of this
consultation.
The lack of detail does not allow staff the ability to apply the proposed definition against
data in the Pickering Housing Profile, which was updated in 2023 with the annual
housing monitoring report. Staff has made assumptions, based on the most recent
housing profile, using Statistics Canada Census and Toronto Real Estate Board data,
and the language of the proposed definition, to illustrate how the definition may not
result in affordability.
Specifically, looking at the primary rental market provides greater insight into how this
could impact affordability in Pickering. Table 1, from the updated Pickering Housing
Profile in the 2022 Annual Housing Monitoring report, displays a cross reference of
2020 renter income deciles and maximum affordable rent. The maximum affordable rent
is determined by using 30% of the indicated income.
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 5
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
Table 1: Average Market Rents in the Primary Market Compared to Affordable Rents
Based on Renter Income Deciles (Pickering, 2020)
2020 Income
Deciles
Renter
Income
Maximum
Affordable
Rent
Average Primary Market Rent 2020
All
Types Bachelor 1
Bedroom
2
Bedroom
3
Bedroom
Low
Income
Decile
1 $24,600 $615 N N N N N
Decile
2 $34,400 $860 N N N N N
Decile
3 $48,000 $1,200 N $1,138 N N N
Moderate
Income
Decile
4 $60,800 $1,520 $1,452 Y $1,356 N N
Decile
5 $74,000 $1,850 Y Y Y $1,547 $1,721
Decile
6 $85,000 $2,125 Y Y Y Y Y
High
Income
Decile
7 $104,000 $2,600 Y Y Y Y Y
Decile
8 $123,000 $3,075 Y Y Y Y Y
Decile
9 $159,000 $3,975 Y Y Y Y Y
Minimum Wage $29,640 $741 N N N N N
Source: RISWG custom order of Statistics Canada Census, 2022.
Source: TREB, Market Watch, December 2022.
Y: Yes, can afford Average Market Rent, N: No cannot afford Average Market Rent
The table shows that currently, households in the primary rental market within the 6th
decile, can afford rental units at average rental prices, while spending 30% of income or
less. It is the households lower than the 5th decile, specifically low-income households,
that are experiencing more pressing affordability issues. The change in the definition for
rental units eliminates market rate, resulting in the price for affordable units being set
using $2,125 per month. The $2,215 is an increase compared to the current market
rates for all units within Pickering. This change would allow rental rates to increase
while still meeting the definition of affordable and being exempt from development
charges. This illustrates that using the 60th percentile of income households as the
benchmark for affordability will result in low-income households spending more than
current rates to pay rent for housing that has been deemed “affordable”.
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 6
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
4. Conclusion
The Province has proposed a new definition of “affordable residential unit”, which
considers household income as a factor for affordability. This represents a positive step
from the current definition, which only considers market rates.
Despite the new definition being proposed, the data and material that will be used to
implement the new definition have not been made available. Staff are concerned with
the wording that suggests using the 60th percentile of household incomes as the
benchmark for affordability. This benchmark will not fully address affordability issues
within communities, specifically for low-income households, and could result in higher
rental rates.
There is also a concern that units (that may not provide true affordability for all
residents) will be exempt from paying municipal development charges and not require
the dedication of parkland, which will impact the municipality and the community. If the
exemption of development charges is being used to encourage affordable housing, it
should benefit all residents in low- and moderate-income families, who need affordable
housing.
At this time, there is no additional information regarding “attainable” residential units.
Staff have prepared comments and recommendations for Council’s consideration
which, if endorsed, will be submitted as the City’s formal comments to the ERO by
October 28, 2023.
Attachment:
1. Table Comparing Existing and Proposed Definitions under the Development Charges Act
Appendix:
Appendix I City of Pickering Detailed Comments on Environmental Registry of Ontario
Posting 019-7669
PLN 36-23 October 23, 2023
Subject: Environmental Registry of Ontario Posting 019-7669: Page 7
Changes to the definition of an “Affordable Residential Unit”
in the Development Charges Act
Prepared By:
Original Signed By
Brandon Weiler, MCIP, RPP
Principal Planner, Policy
Original Signed By
Déan Jacobs, MCIP, RPP
Manager, Policy & Geomatics
BW:ld
Approved/Endorsed By:
Original Signed By
Catherine Rose, MCIP, RPP
Chief Planner
Original Signed By
Kyle Bentley, P. Eng.
Director, City Development & CBO
Recommended for the consideration
of Pickering City Council
Original Signed By
Marisa Carpino, M.A.
Chief Administrative Officer
Attachment #1 to Report PLN 36-23
Table1 Comparing Existing and Proposed Definitions Under the
Development Charges Act
Existing Development Charges Act Proposed Bill 134 Changes
Affordable residential
unit rented (s.s. 4.1(2),
para. 1)
The rent is no greater than
80 per cent of the average
market rent, as determined in
accordance with subsection (5).
The rent is no greater than the
lesser of,
i.the income-based affordable
rent for the residential unit set
out in the Affordable Residential
Units bulletin, as identified by
the Minister of Municipal Affairs
and Housing in accordance with
subsection (5), and
ii.the average market rent
identified for the residential unit
set out in the Affordable
Residential Units bulletin.
Average Market
Rent/Rent based on
Income (s.s. 4.1(5)) for
the purposes of s.s.
4.1(2), para. 1
the average market rent for
the year in which the
residential unit is occupied
by a tenant, as identified in the
bulletin entitled the “Affordable
Residential Units for the
Purposes of the Development
Charges Act, 1997 Bulletin
the Minister of Municipal Affairs and
Housing shall,
(a)determine the income of a
household that, in the Minister’s
opinion, is at the 60th
percentile of gross annual
incomes for renter
households in the applicable
local municipality; and
(b)identify the rent that, in the
Minister’s opinion, is equal to
30 per cent of the income of
the household referred to in
clause (a).
Affordable residential
unit ownership (s.s.
4.1(3), para. 1)
The price of the residential unit
is no greater than 80 per cent
of the average purchase
price, as determined in
accordance with subsection (6).
The price of the residential unit is
no greater than the lesser of,
i.the income-based affordable
purchase price for the
residential unit set out in the
Affordable Residential Units
bulletin, as identified by the
Minister of Municipal Affairs and
Housing in accordance with
subsection (6), and
ii.90 per cent of the average
purchase price identified for the
residential unit set out in the
Affordable Residential Units
bulletin.
Existing Development Charges Act Proposed Bill 134 Changes
Average Market
Rent/Purchase Price
based on Income (s.s.
4.1(6)) for the
purposes of s.s. 4.1(3),
para. 1
the average purchase price
for the year in which the
residential unit is sold, as
identified in the bulletin entitled
the “Affordable Residential
Units for the Purposes of the
Development Charges Act,
1997 Bulletin”, as it is amended
from time to time, that is
published by the Minister of
Municipal Affairs and Housing
on a website of the
Government of Ontario
the Minister of Municipal Affairs and
Housing shall,
(a) determine the income of a
household that, in the Minister’s
opinion, is at the 60th
percentile of gross annual
incomes for households in the
applicable local municipality;
and
(b) identify the purchase price that,
in the Minister’s opinion, would
result in annual
accommodation costs equal
to 30 per cent of the income of
the household referred to in
clause (a)
1 From Watson & Associates Economists Ltd.
Appendix I to
Report PLN 36-23
City of Pickering Detailed Comments on the
Proposed Changes to the Definition of an “Affordable Residential Unit” in the
Development Charges Act
ERO Posting 019-7669
(Closing October 28, 2023)
Changes to the definition of an “Affordable Residential Unit” in the Development
Charges Act, 1997 for the purpose of municipal development-related charge discounts
and exemptions
ERO Posting City of Pickering Comments
Including household incomes in the
definition of affordable.
Including household income, and not solely using
market rates, as a determination of the definition of
affordability, is a positive step and encouraged.
Affordable Residential Unit Rented Eliminating market rate from the definition of rental
units, to solely define affordable units based on the
income of the 60th percentile of households, could
increase rental prices.
Subject to the data to be used to in the Minister’s
Bulletin, that will define incomes, market rates, units,
etc., it is very possible that current rental prices will
increase, be deemed affordable, and be exempt from
development charges.
This would appear to decrease affordability and add to
the affordability crisis currently facing residents in
Ontario.
Affordable Residential Units bulletin,
as identified by the Minister of
Municipal Affairs and Housing
The data, and data sources to be used, are critical to
understanding the proposed definition of “affordable”,
and how it will impact affordability in local
communities.
Please provide details, and establish a formal
consultation process, on the following elements to be
used in creating the Affordable Residential Units
bulletin:
• Data to be used to determine market prices,
and local incomes;
• Data sources;
• Frequency of updates to the data and Bulletin;
• Geographic area(s) to be used to define “the
local municipality” e.g., municipal boundaries;
CMHC districts, TREB districts; Census tracts,
etc.?
Determine the income of a household
that, in the Minister’s opinion, is at
the 60th percentile of gross annual
incomes for households in the
applicable local municipality
The definition in the Provincial Policy Statement, 2020,
is more inclusive, as it refers to affordability to both
low- and moderate-income households. It recognizes
a broader range of affordability needs as part of the
affordability crisis in Ontario.
ERO Posting 019-7669
(Closing October 28, 2023)
Changes to the definition of an “Affordable Residential Unit” in the Development
Charges Act, 1997 for the purpose of municipal development-related charge discounts
and exemptions
ERO Posting City of Pickering Comments
The 60th percentile is considered the top end of the
moderate-income range. Using the 60th percentile of
income households as the benchmark for affordability
will not fully address affordability. Low-income
households, who require affordable housing
assistance the most, may still not be able to afford
units defined as affordable.
The exemption of development charges is being used
as a significant incentive to develop more affordable
housing. As the incentive has significant impacts to
municipalities and residents, the definition should
benefit all residents in low and moderate income
households.
Additional Comments
How will units be defined in the bulletin?
The City of Pickering’s Development Charge By-law
establishes charges for various categories of
residential development (single and semi-detached;
other multiples; apartments: 2 bedrooms +;
apartments – bachelor and 1 bedroom).
Will the Bulletin be providing information in
corresponding unit types, or will some other metric be
used, such as number of rooms; square metres, etc.?
This is key to understanding how these units will be
defined. How the units are defined may impact
developers decisions to create larger units, including
two and three bedroom units. These larger family units
are needed and currently difficult to get developers to
include in projects.