Act
Changes to the Definition of an "Affordable Residential Unit" in the Development Charges Act, 1997 for the Purpose of Municipal Development-Related Charge Discounts and Exemptions
Regulation Number(s):
N/A
Instrument Type:
Act
Bill or Act:
134
Summary of Decision:
The Ontario Legislature has amended the definition of an "affordable residential unit" in the Development Charges Act, 1997, for the purpose of discounts and exemptions from municipal development-related charges (MDRCs). These are development charges, community benefits charges, and parkland dedication levies.
Once in effect, an affordable residential unit would be defined as:
For rental housing, a unit where the rent is no greater than the lesser of,
I. the income-based affordable rent for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
II. the average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable rent applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
a. determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for renter households in the applicable local municipality; and
b. identify the rent that, in the Minister's opinion, is equal to 30 per cent of the income of the household referred to in clause (a).
For ownership housing, a unit where the price is no greater than the lesser of,
i. the income-based affordable purchase price for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. 90 per cent of the average purchase price identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable purchase price applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
a. determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for households in the applicable local municipality; and
b. identify the purchase price that, in the Minister's opinion, would result in annual accommodation costs equal to 30 per cent of the income of the household referred to in clause (a).
Once in effect, an affordable residential unit would be defined as:
For rental housing, a unit where the rent is no greater than the lesser of,
I. the income-based affordable rent for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
II. the average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable rent applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
a. determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for renter households in the applicable local municipality; and
b. identify the rent that, in the Minister's opinion, is equal to 30 per cent of the income of the household referred to in clause (a).
For ownership housing, a unit where the price is no greater than the lesser of,
i. the income-based affordable purchase price for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. 90 per cent of the average purchase price identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable purchase price applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
a. determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for households in the applicable local municipality; and
b. identify the purchase price that, in the Minister's opinion, would result in annual accommodation costs equal to 30 per cent of the income of the household referred to in clause (a).
Analysis of Regulatory Impact:
The change to the definition of an affordable residential unit in the Development Charges Act, 1997 changes which units might qualify for discounts and exemptions from MDRCs. As local income would be a factor for determining which residential units would be deemed affordable, the changes could result in lower purchase prices compared to the current definition in the DCA. The change would also incent the development of housing that would be considered affordable to moderate income households.
The change may impact MDRC revenues collected by municipalities. However, aligning the definition with the PPS may mitigate these revenue impacts as the MDRC exemptions, once in force, may be better aligned with local incentives that some municipalities may have had in place to build affordable housing units.
The changes may result in additional administrative costs for municipalities, related to learning about the proposed definitional changes to the legislation.
Administrative Costs:
The amendment would not result in upfront or ongoing operating costs. The only costs for municipalities would be administrative and related to learning about the changes to the legislation.
The change may impact MDRC revenues collected by municipalities. However, aligning the definition with the PPS may mitigate these revenue impacts as the MDRC exemptions, once in force, may be better aligned with local incentives that some municipalities may have had in place to build affordable housing units.
The changes may result in additional administrative costs for municipalities, related to learning about the proposed definitional changes to the legislation.
Administrative Costs:
The amendment would not result in upfront or ongoing operating costs. The only costs for municipalities would be administrative and related to learning about the changes to the legislation.
Further Information:
Development Charges Act, 1997, S.O. 1997, c. 27 (ontario.ca)
Bill 23, More Homes Built Faster Act, 2022 - Legislative Assembly of Ontario (ola.org)
Planning Act, R.S.O. 1990, c. P.13 (ontario.ca)
Review of proposed policies adapted from A Place to Grow and Provincial Policy Statement
Changes to the Definition of an “Affordable Residential Unit” in the Development Charges Act, 1997
Changes to the Definition of an "Affordable Residential Unit" in the Development Charges Act, 1997 f
Bill 134, Affordable Homes and Good Jobs Act, 2023 - Legislative Assembly of Ontario (ola.org)
Development Charges Act, 1997, S.O. c. 27
Bill 23, More Homes Built Faster Act, 2022
Review of proposed policies adapted from A Place to Grow and Provincial Policy Statement
Proposal Number:
23-MMAH017
Posting Date:
September 28, 2023
Summary of Proposal:
The Ministry of Municipal Affairs and Housing (MMAH) is proposing to amend the Development Charges Act, 1997 to change the definition of an affordable residential unit for the purpose of discounting and exempting these units from municipal development-related charges (MDRCs). MDRCs are development charges, community benefits charges, and parkland dedication requirements.
The proposed new definition would be based on the existing definition of affordable housing in the Provincial Policy Statement (PPS), 2020, which considers local income in addition to market prices. The proposed new definition would consider the housing costs that are affordable for households that, in the Minister of Municipal Affairs and Housing's opinion, are in the 60th percentile of gross annual income in the applicable local municipality.
Under the proposed change, an affordable residential unit would be defined as:
For rental housing, where the rent is no greater than the lesser of,
i. the income-based affordable rent for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. the average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable rent applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
(a) determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for renter households in the applicable local municipality; and
(b) identify the rent that, in the Minister's opinion, is equal to 30 per cent of the income of the household referred to in clause (a).
For ownership housing, where the price of the residential unit is no greater than the lesser of,
i. the income-based affordable purchase price for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. 90 per cent of the average purchase price identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable purchase price applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
(a) determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for households in the applicable local municipality; and
(b) identify the purchase price that, in the Minister's opinion, would result in annual accommodation costs equal to 30 per cent of the income of the household referred to in clause (a).
The proposed new definition would be based on the existing definition of affordable housing in the Provincial Policy Statement (PPS), 2020, which considers local income in addition to market prices. The proposed new definition would consider the housing costs that are affordable for households that, in the Minister of Municipal Affairs and Housing's opinion, are in the 60th percentile of gross annual income in the applicable local municipality.
Under the proposed change, an affordable residential unit would be defined as:
For rental housing, where the rent is no greater than the lesser of,
i. the income-based affordable rent for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. the average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable rent applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
(a) determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for renter households in the applicable local municipality; and
(b) identify the rent that, in the Minister's opinion, is equal to 30 per cent of the income of the household referred to in clause (a).
For ownership housing, where the price of the residential unit is no greater than the lesser of,
i. the income-based affordable purchase price for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
ii. 90 per cent of the average purchase price identified for the residential unit set out in the Affordable Residential Units bulletin.
In identifying the income-based affordable purchase price applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,
(a) determine the income of a household that, in the Minister's opinion, is at the 60th percentile of gross annual incomes for households in the applicable local municipality; and
(b) identify the purchase price that, in the Minister's opinion, would result in annual accommodation costs equal to 30 per cent of the income of the household referred to in clause (a).
Contact Address:
MFPB@ontario.ca
Royal Assent Date:
December 4, 2023
Decision:
Approved