​A somewhat arcane housing regulation is not usually the kind of thing that raises people’s passions to the point that city councillors accuse the province of betrayal and housing advocates accuse the government of undoing its own legislation, but that’s where the Liberal government is currently.

The Liberals passed legislation in 2016 that would allow municipalities to use inclusionary zoning to address the dire affordable-housing shortage many cities face. Effectively, the province gave municipalities the power to require that developers provide units of affordable housing in their condo projects.

But the law is subject to more detailed regulations, which the government finally released for public comment in December (the period for public input closed February 1). And it’s those regulations that have housing advocates so upset.

There are numerous objections to the government’s proposal, but the biggest by far focuses on the requirement that cities subsidize the new affordable units the inclusionary zoning rules would create. The province isn’t allowing cities to simply demand that new units be built and paid for by developers (and thus new homebuyers). Municipalities would be required to offer financial incentives to offset some of the costs of new affordable units. City of Toronto staff estimate the cost to the taxpayer would be somewhere between $110,000 to $158,000 per unit.

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“If this were a natural disaster, the government would rush in with money and tools to rebuild,” said Alejandra Ruiz Vargas of ACORN. “If the stock market crashed, the government will rush to bail out the companies who went bankrupt. Why not with housing?”

Vargas, Toronto city councillor Mike Layton, and Sean Meagher of Social Planning Toronto released an open letter to the government asking it basically to abandon its current inclusionary-zoning proposal.

Some critics have gone further: last month, Layton’s colleague Gord Perks called the province’s proposal “a monstrous failure in public policy.”

The province, for its part, says that municipalities have a number of ways to avoid having to put hard cash on the table: they could reduce development charges or other fees they currently levy when developers build new homes, or reduce the minimum number of parking spaces required (a single underground parking space can cost between $50,000 and $80,000 in Toronto).

More ambitiously, municipalities could avoid the whole issue of charges and subsidies by adopting the community-planning permit system, an alternative to the traditional combination of official plans and zoning bylaws used to regulate building.

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In conventional Ontario towns, a developer buys a piece of land and applies for an amendment to existing zoning bylaws and, potentially, a change to the official plan. The city then considers the request (or doesn’t) and either grants it or not. Any decision, or lack of a decision after 210 days, can be appealed to the Ontario Municipal Board. OMB appeals can be lengthy and costly.

Under the CPPS, that process is flipped: if it works well, the municipality gets to do all of its planning in advance across a larger area, instead of reacting on a site-by-site basis. The city can direct growth in ways that the current zoning-based system doesn’t, or doesn’t do well. The system’s advocates — including the current government — say the CPPS can give both councils and builders more predictability and streamlined approvals than the current system. A CPPS can be appealed to the OMB once, before it’s put in place, but once it’s in effect, only small matters are supposed to go to the OMB, not whole developments.

The Liberals originally introduced the concept as the Development Permit System in 2006, but it’s had limited appeal among Ontario cities to date. The township of Lake of Bays was the first to implement it, and Brampton adopted a DPS for its historic downtown.

But when Toronto added language to its official plan to allow it, it was appealed to the OMB by both developers and residents’ associations. The concerns are predictable: developers worry that DPS policies will restrict the amount or profitability of their building; homeowners worry they’ll lose meaningful input into the shaping of their neighbourhoods. The language approved by council in 2014 is still there, waiting for a decision by the OMB, as of February 2018.

CPPS isn’t a panacea, but it is a solution the government hopes municipalities will take seriously: broad, conscientious expansions of allowable building instead of a never-ending series of one-off deals. Housing minister Peter Milczyn said as much in a Toronto Star op-ed this week:

“My experience as a city councillor for 17 years was that too often in our cities, development is treated like a game of ‘let’s make a deal’ between developers and councillors,” Milczyn wrote. “Cities, instead, should be pre-zoning rather than making a series of one-off deals. Pre-zoning is better for all communities.”

One of the government’s key concerns is making sure that inclusionary zoning doesn’t drive up housing costs in already-expensive markets like Toronto; local politicians are already looking to make new home construction bear large and growing costs. Even before adopting any new affordable-housing mandates, the city’s executive committee has started the ball rolling on a process that could see development charges double; the ambitious Raildeck Park plan could see parkland dedication fees increase substantially; and some trustees on the Toronto District School Board are currently lobbying hard to be allowed to charge developers fees to pay for its large capital backlog. (Other school boards, including the Toronto Catholic board, have this power — but unlike other boards, the TDSB has more school spaces than it has students to fill them.)

Meanwhile, Toronto’s homeowners enjoy one of the lowest tax burdens in the region.

Layton, for his part, acknowledged that Toronto City Council will need to do more to subsidize affordable housing, even as he said the provincial government was favouring “developers’ bottom lines over the health of city budgets.”

“What I’m saying is there’s value created through the rezoning process for developers, and some of that value should come back in the form of affordable units to the city,” Layton said. “There’s much deeper subsidy that’s needed … that’s something all level of governments need to contribute to.”

The government says it has heard the outcry from groups in Toronto and elsewhere demanding changes to its inclusionary-zoning rule. Milczyn’s office issued a statement on Thursday saying it was open to changes to both the municipal-subsidy rules and the percentage of new units cities could demand.

“We have received a lot of good feedback during the consultation period,” Milczyn said. “We have met, and will continue to meet, with municipalities, housing advocates, and other stakeholders to hear their ideas on how we can create more affordable housing.”