Exploring Inclusionary Zoning to Support Affordable Housing

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Housing in Region of Waterloo - photo Adam Clarke


Safe and affordable housing is an issue of increasing concern both within Waterloo Region and more broadly across Canada. In recognition of the importance of affordable housing to our communities, the Cities of Kitchener, Waterloo and Cambridge have partnered, with support from the Region of Waterloo, to explore the feasibility of adopting a new tool to increase the supply of affordable housing. The tool, called inclusionary zoning, would allow the Cities to require private developers to include a certain percentage of affordable units within new, multi-unit housing developments built within Major Transit Station Areas (around ION stations; See map at right)

Before adopting an inclusionary zoning program, municipalities must conduct an assessment of the potential impacts of inclusionary zoning on the housing market. The three Cities and the Region of Waterloo have begun this work with the help and expertise of N. Barry Lyons Consultants (NBLC). Background information and preliminary results from the study are presented here for community review and feedback.

How Does Inclusionary Zoning Work?

Inclusionary zoning works by leveraging increases in land value achieved through development approvals, investment in ION and increasing demand for centrally-located housing to provide affordable housing. In this way inclusionary zoning programs typically don’t need to rely on government subsidies.

Because inclusionary zoning programs result in lower revenues for developers through lower rents or sales prices than would otherwise be the case, programs have to be carefully designed to ensure that residential development continues to be financially viable for private market housing providers. Where the economics of site development cannot support inclusionary zoning on its own, inclusionary zoning programs can include a range of measures to reduce the financial impact on the development industry. These measures could include the phasing in of the program, increased planning permissions, or financial incentives to help offset the cost of providing affordable units. Other considerations in designing an inclusionary zoning program that can influence development feasibility include the “set aside” rate (proportion of units required to be affordable), the duration of affordability, depth of affordability, and the tenure of affordable units (rental vs. ownership).

Other Considerations and Limitations of Inclusionary Zoning

Inclusionary zoning can complement other affordable housing initiatives, such as Region of Waterloo community housing and not-for-profit affordable housing, by providing an ongoing, sustainable supply of affordable housing that is not reliant on federal and provincial government grants. Despite its potential to leverage private investment for affordable housing, inclusionary zoning is subject to a number of regulatory and financial constraints that limit its ability to address the full range of affordable housing needs. These limitations include:

  • Location: Provincial regulations limit inclusionary zoning to Major Transit Station Areas

  • Scale of development: Provincial regulations limit inclusionary zoning to residential developments of 10 units or more

  • Depth of affordability: Research suggests that inclusionary zoning works well for creating affordable housing for households in the 30th and 60th percentile of income distribution. These households tend to earn too much to be eligible for community (government subsidized) housing, but not enough to afford market rents/prices.


Safe and affordable housing is an issue of increasing concern both within Waterloo Region and more broadly across Canada. In recognition of the importance of affordable housing to our communities, the Cities of Kitchener, Waterloo and Cambridge have partnered, with support from the Region of Waterloo, to explore the feasibility of adopting a new tool to increase the supply of affordable housing. The tool, called inclusionary zoning, would allow the Cities to require private developers to include a certain percentage of affordable units within new, multi-unit housing developments built within Major Transit Station Areas (around ION stations; See map at right)

Before adopting an inclusionary zoning program, municipalities must conduct an assessment of the potential impacts of inclusionary zoning on the housing market. The three Cities and the Region of Waterloo have begun this work with the help and expertise of N. Barry Lyons Consultants (NBLC). Background information and preliminary results from the study are presented here for community review and feedback.

How Does Inclusionary Zoning Work?

Inclusionary zoning works by leveraging increases in land value achieved through development approvals, investment in ION and increasing demand for centrally-located housing to provide affordable housing. In this way inclusionary zoning programs typically don’t need to rely on government subsidies.

Because inclusionary zoning programs result in lower revenues for developers through lower rents or sales prices than would otherwise be the case, programs have to be carefully designed to ensure that residential development continues to be financially viable for private market housing providers. Where the economics of site development cannot support inclusionary zoning on its own, inclusionary zoning programs can include a range of measures to reduce the financial impact on the development industry. These measures could include the phasing in of the program, increased planning permissions, or financial incentives to help offset the cost of providing affordable units. Other considerations in designing an inclusionary zoning program that can influence development feasibility include the “set aside” rate (proportion of units required to be affordable), the duration of affordability, depth of affordability, and the tenure of affordable units (rental vs. ownership).

Other Considerations and Limitations of Inclusionary Zoning

Inclusionary zoning can complement other affordable housing initiatives, such as Region of Waterloo community housing and not-for-profit affordable housing, by providing an ongoing, sustainable supply of affordable housing that is not reliant on federal and provincial government grants. Despite its potential to leverage private investment for affordable housing, inclusionary zoning is subject to a number of regulatory and financial constraints that limit its ability to address the full range of affordable housing needs. These limitations include:

  • Location: Provincial regulations limit inclusionary zoning to Major Transit Station Areas

  • Scale of development: Provincial regulations limit inclusionary zoning to residential developments of 10 units or more

  • Depth of affordability: Research suggests that inclusionary zoning works well for creating affordable housing for households in the 30th and 60th percentile of income distribution. These households tend to earn too much to be eligible for community (government subsidized) housing, but not enough to afford market rents/prices.

Share your issues and concerns with us

What issues or concerns do you have about what you've learned so far? What issues should we consider as we move into the policy development phase of this project?

Please share your comments here.

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We have to do WAAAY more to help those that can no longer afford to live in the downtown cores; especially families. Families are the heart and soul of a downtown. To do this, we need to have more purpose built 2 and 3 bedroom and designated "affordable" units in the downtown (everywhere really, but especially in the downtown). Research out if the University of Waterloo supports this huge demand and the region (as well as the municipalities) should actively look at ways to encourage/force developers to include these units in any new build. Current rules of affordable housing go nowhere near far enough to support cheaper, affordable housing. Every new build should have a minimum percentage of units geared towards our most marginalized.

Bill Bulmer about 1 month ago

The sort of exclusionary zoning we see in Canada and the US, where all you can build on a large part of the city is single-family homes, is an international aberration. The alternative isn't to require developers to include "affordable" housing (which often isn't affordable at all to those on low wages) in high-rise developments, but to have mixed-use neighbourhoods with amenities, public transport, and a range of homes all within the same area. And I don't mean a "range of homes" as Kitchener City Council seems to view it, which appears to be building towering high-rises next to 1.5-storey detached homes, but residential neighbourhoods with a variety of low-rise homes, like walk-up apartments, row houses, four-plexes, in addition to any existing detached homes in the neighbourhoods. This is how cities in many parts of Europe manage to have much more density than somewhere like Kitchener without compromising their historic town centres with high-rises.

In a city like Edinburgh, for instance, nearly two-thirds of all homes are apartments (or flats, as they're known there). It's not uncommon to have entire neighbourhoods of 3-storey walk-ups and townhouses, the majority of which are owner-occupied with low or no condo fees. And, despite being the most expensive city in Scotland with a large number of flats in the city centre bought up by AirBnB investors, it is still possible to buy a 2-bedroom flat for under $250,000 with condo fees of less than $150/month.

Compare this to Kitchener, where 55% of homes are single-family homes and 70% of residential land is zoned for detached houses, while the remaining land primarily houses high-rise condominiums whose units are overwhelmingly owned by investors, which has driven up prices for these so much that the average cost of an apartment-style condo in Kitchener is approaching $500,000. Rents are high (1-bedroom apartments in the buildings proposed across the street from Eastwood are expected to cost $1500/month) and there are limited options for home-buyers other than the expensive detached houses.

As an aside, the low-rise model is also environmentally-friendly. By having mixed-zoning in all areas, it's possible to have amenities within a 5-minute walk of a large number of homes. In the neighbourhood I lived in in Edinburgh, for instance, I was no more than two blocks from: a park, the dentist, my doctor, the local library, a fish and chip shop, two grocery stores, a number of small businesses, an elementary school, and - and this is what I miss the most - a bus stop where I never waited more than 5 minutes for a bus into the city centre. Many people in my neighbourhood did not own cars, yet still had access to amenities and plenty of greenspace. Moreover, high-rises carry an enormous carbon cost due to all the steel and concrete used in their construction. It is impossible to create steel without burning coal or coke, but low-rise buildings do not require the use of steel the way high-rises do.

NicolaH about 1 month ago

What is being described here is not "inclusionary zoning". Exclusionary zoning is where things like minimum lot sizes, maximum heights, minimum setbacks, and so on prevents a heterogenous mix of housing types from getting built and instead stratifies neighbourhoods into economic zones. "Inclusionary zoning" means getting ride of residential zones that only permit single-family homes in them—currently about 70% of Kitchener's residential area—and allowing triplexes, fourplexes, townhouses, three-storey walk-ups, low-rise apartments, and other low-rise buildings in *all* residential areas.

The current zoning laws are why we get only get luxury high-rise condos or single-family homes in sprawling suburbs that fewer and fewer people can afford. The new RES-1 through RES-7 zones proposed by Kitchener will not alleviate this issue as all they did was mildly collapse some of the zone for mid- and high-rise development and did nothing for the low-rise zones. Very, very little residential land in Kitchener allows the building of triplexes, fourplexes, townhouses, three-storey walk-ups, small apartments, and other low-rise housing types.

Kitchener needs to truly enact inclusionary zoning, and requiring developers to include affordable units just won't do it.

Cory 3 months ago

forcing a mix of this within all new developments is a poor idea. you would be much better of imposing a levy based upon some form of a reasonable calculation to raise new funds to be applied toward the new construction of designated affordable housing developments. if you try to mix it within the same property you will most likely stall the uptake of the high density developments as non affordable housing buyers will not want to locate in a model of this nature.

Denski 4 months ago

I agree that there is no affordable housing here. My children will not be able to afford their own home. I've lived here all my life and my children will not be able to afford their own home. On top of that, there are not many well paying full-time jobs. I see there were many part time jobs created, but I imagine those are all minimum wage.
It also concerns me that all these investors are swooping up houses and renting them, instead of allowing people who live and work in this community, who want to own, now have to compete with these investors that have more money.
I do not want kitchener to become a concrete jungle like Toronto. I do not want to look out my windows, of my expensive bungalow, to 2 25 story buildings infront of Rockway (like Vive developers want to do) Leave those types of developments to newer areas that have taller structures.
This whole thing irked me and fellow lifetime residents who can no longer enjoy our quiet city.

Citizen1234 4 months ago

I think it is important to constructively find a way forward to support affordable good housing, especially now when we have inflationary housing regionally at a time of covid-depressed economics. However, the offset option of "increased planning permissions" could negatively affect reception of the program in older treed neighbourhoods with historic homes if existing residents receive reduced consideration of their concerns.
Another option not proposed would be a unit design change to socially assist with amalgamation of "households" from most desirable of single unit/person to multi-unit/multi-generational akin to newer design strategies of pods within a unit, employed in some Canadian University residences. So, residents have both private and communal living space. Familial multi-generational living has social benefit of assisting with elder care while coalescence of multiple single person units provides community.

Judy-Anne Chapman 5 months ago

I like that the City and Region are looking at affordable housing from many angles, but it still feels like IZ is a small stop gap that may backfire.
1) Even with incentives, I fear developers will still price their market units even higher out of reach. IZ is aimed to help those within 30-60th percentile of household income, but being in the ~70th percentile (as of 2015 census), we are already priced out of home ownership altogether and are fortunate we do not have to move apartments as we would also be priced out of our desired communities.
2) I am concerned that using Gross Floor Area for the set-aside rate will not help to keep our communities diverse by encouraging developers to create more 1 bedroom units. So few buildings have 3 or 4 bedroom units. Families do want to live in these denser areas but have no choice but to move elsewhere. It would be great id there could be some sort of mix of requirements - Gross Floor Area and Unit Types.
3) Currently about 65% of residential zoning in Kitchener is for single family homes. THAT IS YOUR KEY PROBLEM. I agree that we need density but it does not have to be only downtown or only adjacent the LRT. Other areas of the city need to densify too. We need more low-rise and mid-rise buildings everywhere, and more mixed-use buildings. (I loved my building in Montreal that had a bakery, pizza place, flower shop, convenience store and more at its base). I actually think this would be even more amenable to developers as it may offset any losses from affordable units as business rentals usually charge more. Have Mixed-Use apartments allowed throughout the city would also encourage community engagement - it's a lot easier to get to know neighbours if you pop into the same convenience store in your building, rather than driving/taking bus to the nearest grocery store.

Jelsie 6 months ago

Requiring developers to provide permanent lower cost housing is only going to drive up the sale or rental prices of the other units because the developers are not going to sacrifice their profits. So instead of only the 60th percentile and lower earners having problems finding affordable housing, now it's the 65th percentile or maybe even the 70th who have problems finding affordable housing.

Better to redesign our zoning bylaws to encourage building "missing middle" housing, and to get rid of single-family-home-only zones that take up 70% of out city's residential lands.

Cory 6 months ago

The new proposed RES-x residential zones to replace the R-x don't go far enough. All they really do is collapse 9 zone types into 7 and add duplexes, which is ludicrously inadequate to increasing the housing supply, especially since most lot size, setback, height limit and coverage rules are retained. Zones need to be designed to encourage the "missing middle".

In *all* residential zones triplexes, fourplexes and low-rise apartments should be allowed; along with allowing low-density commercial like cafés, restaurants, and small stores to encourage walkability.

All traffic arteries should be zoned multi-use midrise to encourage commercial on the bottom and residential up top.

Cory 6 months ago

I am aging and walking is a big concern for the aged and disabled persons. How are you going to address these issues for the affordable housing and for the transportation hub? I also need to be with people that are in the senior age group for housing I would think that it should be subdivided as well. How are you doing the planning for these issues for the community? I am on a waiting list for housing and need it ASAP. I can not continue to do stairs and pay high rent that leaves me with $200 a month for food and expenses? How are you getting thru the housing lists for people like myself age 55 plus who are physically impaired etc?

jacquelinepope18 8 months ago

Most of the condos in the core are owned by investors who rent them for a profit. This is the problem. There are all kinds of affordable condos however the developers and agents sell them to investor keeping first time buyers out.

cpursel 9 months ago

This will cost everyone. Don't do it

ward 11 months ago

Less density and modern integrated architecture will make this more acceptable.

duct tape about 1 year ago

As shared in the description, Inclusionary Zoning can be performed with minimal to no impact to the budget for other initiatives, so we should make sure that other initiatives are not reduced if Inclusionary Zoning is implemented.

And as others have shared, we should take care that this doesn't end up creating "segregated" spaces between affordable housing developments and developments offered at market prices.

Peter about 1 year ago

With the anticipated transformation of St Mark's into low cost housing carried out by INDWELL, we have a good example of what, where and how it should be done. Indwell have been working at transforming cities around Ontario to develop affordable, holistic housing for people for several decades. Their track record navigating Covid-19 is stunning. Through years of experience they know how to make these initiatives work for everyone. Let's invite them onto our planning committees as we figure out a way forward in the Tri-cities.

DaveK about 1 year ago

I would love to see any such zoning fleshed out with community-oriented policy, eg, not creating an inferior or segregated component of a development designated "low income" but rather looking at integration to combat gentrification and walled-off portions of communities. I hope any such by-laws/policies would dovetail with current ones protecting greenspace, heritage, POPs, and walkable/livable communities - in that, affordability should be designed into existing planning and policy, not become a "tradeoff" that just moves disadvantage to another element (encroachment on existing homes, sacrifice of parks or the City allowing other profit-favouring variances "in return" for inclusion).

JohannaB over 1 year ago
Page last updated: 13 January 2021, 09:39