Council is considering how it calculates density bonusing and where to use the money that comes from it after approving the zoning bylaw amendment for the Sage 10 building on Hemlock Street in the Northdale neighbourhood and receiving $750,000 from the developer.

The new building proposed by IN8 Development Inc. for 257-263 Hemlock Street would replace four existing single detached residences for one building that would provide a new concept in the local housing market — micro units — with studio units at 320 square feet in size, single bedroom units at about 460 square feet and two bedroom units maxing out at 600 square feet. The developer Darryl Firsten sees it as a new entry point into the expensive local condo and housing market with new units starting at about $199,000.

To achieve that the developer would have higher density on the existing site and can do that through density bonusing. As part of the zoning bylaw amendment they proposed a density bonus of $750,000 for an additional 75 units for a total of 137 units in the six storey site that would add 147 bedrooms to the area.

“We’re not asking for any side-yard setbacks or rear yard setbacks or anything, the size of the building remains the same as any other building including our Sage 6 building which is adjacent to it,” said Firsten. “We’d like to build what you’d like to call micro units, but I wouldn’t. We’d like to build very efficient living spaces.

“I’m not saying everybody would like to live in a space this small but we’re trying to create a series of different products in each of our buildings, and this is the next one we haven’t tapped into yet.”

Of that $750,000 in density bonusing received by the city, $500,000 was slated for an affordable housing grant program the City of Waterloo is looking to set up to help promote more of those types of units in the city.

That sparked a discussion from council if they were getting enough from the density bonusing paid out by developers, with IN8 driving most of those recent increases to the program. Some wondered if $10,000 per unit was enough considering the project's longevity in the community.

“I think this would be a nice place to live for the next 50 years, and that’s where I get stuck,” said Coun. Mark Whaley. “Because the offer looks good, a one-time offer of $750,000, and we’ve got lots of uses for that money today.

“But that building is likely to stand for 50 years, and when you take the long view the other doesn’t look so good. It works out to $15 bucks a month for each of the bedrooms over the next $50 years.”

That prompted council to ask staff to re-examine if those density bonuses were enough and that if they shouldn’t be asking developers more for those developments.