Potential Effects of “Inclusionary Zoning” in Our Community

1. Potential Effects of “Inclusionary Zoning” in Our Community Presentation to the Municipal Council of [Name] by CHBA – [Name] June, 2008

2. Topics Today: • Say who we are, and how we approach “inclusionary zoning”. • Outline our understanding of what the City of [Name] is proposing. • Discuss key evidence about this policy from the United States and Canada according to a recent study commissioned from Altus Clayton economic research. • Present positive alternatives to “inclusionary zoning”. Effects of "Inclusionary Zoning"

3. Who We Are: • Represent new home builders, residential developers, and home renovators in this community. • Nature of our business means we have to be concerned about housing affordability and choice… our interests coincide with those of current and future generations of new home buyers and renters. • Contribute to community economy. Effects of "Inclusionary Zoning"

4. How We Approach This Topic: • Understand pressures on municipal council to address issues of housing affordability and choice. • Two Fundamental Principles of our Association: • The right of all Canadians to decent, safe and appropriate housing • The right of all Canadians to a reasonable opportunity to own their own homes • Housing affordability challenges result from many factors, some beyond control of either the municipality or industry, e.g., global economic trends; changing Canadian demography. • Want to work together on evidence-based, effective solutions. • Have serious doubts about effectiveness of “inclusionary zoning” because of experience elsewhere with it. Effects of "Inclusionary Zoning"

5. Our Understanding of “Inclusionary Zoning” Policies: • Require land, units, and/or cash in lieu to be provided as part of an agreement to approve a new development. • Developer may be asked to supply these at a pre-determined price, below the market amount. • Developer may be compensated through density bonuses and/or other concessions by municipal planning authorities. [Specific details of municipal policy proposal here] Effects of "Inclusionary Zoning"

6. Evidence of Effectiveness from the United States – Altus Clayton Findings: • Negative impacts on affordability are likely, especially for first-time home buyers. • Do not produce high volume of “affordable” housing … typically only 3-7 percent of net new housing over lengthy period. • Often compensation must be provided to developers and this is costly. • Typically costs of providing “affordable” housing units passed on to new home buyers, reducing affordability for them. Inequitable, amounting to “housing tax”. • Requirements for “affordable” units may result in development not proceeding. Result may be reduced production overall. • Ultimate impact is generally higher housing prices and reduced entry into market for new home buyers. Effects of "Inclusionary Zoning"

7. Going to the Root of the Problem - Altus Clayton Findings: • Restrictions on land uses embedded in zoning system, coupled with taxes, fees, levies and charges, drive up housing prices. • Literature reveals “inclusionary zoning” only “works” in strong housing markets, and then only in a very marginal way. • “Inclusionary zoning” is not an effective housing policy but a deflection that avoids the real issues. Effects of "Inclusionary Zoning"

8. Evidence of Effectiveness from Canada – Altus Clayton Findings: • Only in British Columbia have there been long-standing efforts to apply inclusionary zoning policies. • To date, these have produced limited, disappointing results. • In most provinces, legislation discourages “regulatory takings”, which is what inclusionary zoning requirements are. Effects of "Inclusionary Zoning"

9. The Bottom Line: • Superficially attractive policy because it appears to be “free money”, and nobody seems to get hurt by it. • In reality, a deflection from tackling deeper issues; potential exists for market-wide reduction of affordability. • We need to do better than this! It is unfair to new home buyers, especially first-time buyers, and misleads those in need whom it is trying to assist. Effects of "Inclusionary Zoning"

10. An integrated approach to increase housing affordability and choice: • Reduce government-imposed costs on and remove regulatory barriers to new housing. • Encourage private sector investment in rental housing production by removing the tax disincentives to such investment. • Provide income support through portable housing allowances to those who cannot afford decent housing. • Build housing combined with support services for households with special needs. • Create opportunities for accessory units as integral elements of new housing developments. Effects of "Inclusionary Zoning"

11. Conclusions: • This is a policy shown by extensive experience to have disappointing results. • It can act as a distraction from the more fundamental pressures on housing affordability and choice. • It is preferable to address those underlying drivers than to attempt this new fad. • The CHBA is ready to work with you on an integrated policy to expand housing affordability and choice. Effects of "Inclusionary Zoning"