How did we get here?

In October 2022, the Province issued Bill 23, requiring Kitchener to:

* Target the creation of 35,000 new housing units by 2031 and

* Re-zone all lands within a Protected Major Transit Station Area (PMTSA or lands within 500-800m of an ION light rail stop) by April 2024.

At the same time, the Province also reduced or capped Development Charges (DCs) and Parkland Dedication Fees that municipal and regional governments levy to support the infrastructure that underlies new development, including new public parkland.

Bill 23 also provided for further policy changes to Inclusionary Zoning (IZ), the only policy framework that allows municipalities to require a percentage of affordable housing units within new private developments. First enacted in 2016, in 2019, the Province limited IZ to PMTSAs. In 2022, via amendments to Regulation 232/18, the Province proposed to limit a) the set-aside rate (percentage of units to be included in the IZ program) to no more than 5%, b) the depth of affordability to no less than 80% of market rates and c) the duration of affordability to no more than 25 years.

In light of the Provincial direction, on January 29, 2024, after substantial consultations, Kitchener Staff proposed ‘Growing Together’ (GT), a planning amendment which would permit more buildable floor space in seven of Kitchener’s PMTSAs in pursuit of 18,000 new residential units by 2031. Planning Staff simultaneously proposed an IZ program designed in collaboration with Cambridge, Waterloo, and the Region of Waterloo. You can see all the supporting documents and watch the full meeting here. You can watch our 7-minute video summary here.

GT proposes to remove Floor Space Ratio maximums (the amount of buildable floor space relative to land area), eliminate minimum parking requirements and provide for greater planning certainty to both permit greater density and reduce the cost of producing new residential units. It is understood that these measures increase land values.

IZ proposes to require new developments for which permit applications are submitted in 2025 to make up to 2% of units financially accessible to renters with 2022 annual household incomes of $43,000-$65,000. (The Planning Act exempts developments that were the subject of a site plan or subdivision application prior to the passing of an IZ bylaw.) IZ proposes to raise the requirement incrementally to 5% of units by 2031.

In responding to the GT proposal, property owners and developers requested that individual properties be granted permission to intensify further. They argued against the ‘restrictive regulations’, including built-form regulations and minimum amenity space requirements. They asked that the proposal take the form of guidelines, so that each project could manage the needs in their own way. One developer succinctly expressed the position of many -- that the market has changed, and more zoning permissions are required to return their project to financial viability.

“Since the lands were first acquired by ___, there had been a dramatic shift in the market. While the original intent was to develop the lands as a mid-rise condo building, the project is no longer financially viable for that purpose. ___ is now looking to shift the project towards purpose built rental, but financial viability is still challenging with a rental product for the limited number of units that can be developed under the current height and density permissions.” – from a written submission to the Planning Department.

In discussing IZ, developers argued that the policy was unfair, unaffordable, and being implemented too quickly. Representatives of ‘Build Urban’, an association of developers which produces 80-90% of the core area infill projects, asserted that IZ could reduce a property’s gross rental income by 1%. They warned that, if Council implemented IZ, their pro forma business plans would no longer satisfy lenders and investors. They called for Council to amend the proposals so as to not impede needed housing.

Members of Kitchener City Council then deliberated. They asked:

* Won’t this limit growth?

* Can we find additional lending?

* Can developers produce smaller units (300 SF)?

* Are our “lofty ideals” coming at the expense of roofs over heads?

Members of Council stated during their summation:

* “This [policy direction] is just giving me a little cause for pause”

* “My fear is that every storey that we don’t add near the downtown, will go into suburbia, in terms of infill, or even worse, outside the countryside line”

* “We need to be really, really careful that we’re not going to reduce the number of homes that get built as a result of this [policy direction], and that we don’t increase the market rates of homes”

“From what I’ve heard from the development community, I wouldn’t be comfortable passing this [IZ policy]”

Council deferred taking a decision until the March 18, 2024 Council meeting to permit further discussion and investigation.

The concerns raised by Council are very comprehensible. The same concerns have been consistently raised in communities that have adopted IZ programs since the early 1970s. Because the concerns around IZ have been so strong, the outcomes of IZ have been well-documented. The reports agree that IZ programs have had very little or no impact on either production or price of housing. Ultimately, the costs are passed back to the owners of land. To permit markets to adjust, where upzoning is not introduced simultaneously, it is standard practice to include a phase-in of IZ programs. When substantial upzoning is introduced at the same time as IZ programs, as is being proposed via GT, there is no need for a phase-in period.

See the FAQ Section for additional details.