Groundbreaking provincial legislation being introduced Wednesday will give Toronto and other Ontario municipalities long-awaited tools to force builders to include affordable housing as part of new residential developments, the Star has learned.

But municipalities will also be required to contribute to the cause by offering development charge rebates, density bonuses and property tax waivers, according to sources familiar with the legislation.

If passed and used by Ontario municipalities, it would be a first in Canada.

Manitoba passed so-called “inclusionary zoning” in December 2013. But to date, no city in that province has exercised the new power which allows municipalities to require residential developers to build a certain percentage of their units for low- or moderate-income households.

Vancouver and Montreal have planning policies that promote affordable housing in private developments, but they don’t require developers to actually build the units.

Ontario’s proposed Promoting Affordable Housing Act would prohibit developers from offering cities cash instead of affordable units or building the housing on another site, sources say.

Developers would also be barred from launching Ontario Municipal Board appeals of inclusionary zoning official plan policies and zoning bylaws.

The legislation, being introduced by Housing Minister Ted McMeekin, is expected to be passed late this year or early in 2017.

Toronto, which has been urging Queen’s Park to introduce inclusionary zoning for more than a decade, is eager to act.

“This legislation is extremely important for Toronto,” said Councillor Ana Bailao, chair of the city’s affordable housing committee.

“The amount of development this city is seeing and the amount of need is tremendous,” she said in an interview. “We need to make sure this legislation works ... and we are going to be working with our partners to get it right. The last thing we want is to have something that won’t produce the outcomes we want.”

Toronto Chief Planner Jennifer Keesmaat, who has said the new powers would be “transformational,” estimates the city could have created 12,000 new affordable homes in the past five years under inclusionary zoning. And that is if just 10 per cent of new units were mandated to be affordable in developments of more than 300 units.

Instead, fewer than 3,700 affordable rental and ownership units have been built in that time through existing programs.

Developers have warned the city and Queen’s Park that affordable housing isn’t free.

“There are costs associated with creating these units,” said Joe Vaccaro, chief executive officer of the Ontario Homebuilders Association. “Inclusionary zoning is a tool that needs to be supported by the appropriate financial and planning incentives.”

Inclusionary zoning will only produce results if the province creates a legislative framework built on partnerships between municipalities and developers, he said Tuesday.

Inclusionary zoning, which was introduced in the early 1970s in the United States, has been used to create affordable housing in more than 400 communities including Chicago, San Francisco, Denver, New York and Washington. The measure has created more than 150,000 affordable units in the past 10 years.

Details on whether Ontario’s legislation needs to set provincial parameters for the size of developments subject to the new rules, the percentage of affordable units required and how affordability would be determined and maintained over time will be set out in regulations, sources said.

Those regulations, including provincial rules governing municipal incentives and the earliest municipalities could impose the new measure, will be part of provincial consultations over the coming months, sources said.

The legislation, part of the province’s recently updated long-term affordable housing strategy, also includes requirements for municipalities to regularly count their homeless populations. It will prohibit municipalities from evicting tenants from rent-geared-to-income units, if they become employed and no longer require rent assistance. And the legislation will enable municipalities to reduce parking requirements and planning fees for affordable housing projects.

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If passed, the new law would override two private member’s bills on inclusionary zoning before the legislature — one was introduced by NDP MPP Cheri DiNovo (Parkdale-High Park) and the other by Liberal MPP Peter Milczyn (Etobicoke-Lakeshore,) a former Toronto city councillor. DiNovo has introduced five bills on the issue since 2009.

Housing by the numbers:

169,000: Number of Ontario households waiting for rent-geared-to-income housing in Ontario;

85,000: Number of Toronto households on active waiting list for rent-geared-to-income housing;

$1,895: Average rent for two-bedroom condo in Toronto;

$1,264: Average rent for two-bedroom apartment in Toronto;

$1 million: Average cost of a single detached house in Toronto;

$76,510: Median Ontario household income in 2013;

30%: Percentage of gross household income paid for accommodation to be deemed “affordable;”

10%: Percentage below average market rent or purchase price considered “affordable;”

12,000: Number of affordable units that could have been built in Toronto over the past five years if the city had inclusionary zoning;