By. Ariel MacDonald M.A., Research Assistant, Affordable Housing Solutions Lab
Municipalities are often “stuck between a rock and a hard place”: they are closest to the problem of housing affordability but often lack the financial resources and authority to tackle it. What levers do municipalities have at their disposal?
The levers available to municipal governments are primarily planning and land-use regulations and policies (Zhang, 2020, BC Housing Research Centre, 2017; Ellery, 2019; Tsenkova & Witwer, 2011). In many instances the aim of these levers is to incentivize or compel private developers to build affordable housing (Tsenkova & Witwer, 2011; SHS Consulting, 2020). Below is a description of ten such municipal policy levers.
- Inclusionary Zoning
Inclusionary zoning requires developers to include a certain amount of affordable housing units in residential developments over a certain size (BC Housing Research Centre, 2017; Ellery, 2019; Tsenkova & Witwer, 2011; Pierre, 2007; Courville, 2015). This can be either through a financial/funding contribution or through purpose built housing stock (BC Housing Research Centre, 2017). Inclusionary zoning is frequently mentioned as a policy lever; this is in part because it can be implemented as a zoning regulation change that ensures integrated affordable housing throughout a community (BC Housing Research Centre, 2017).
- Increased Density Allowances
Municipalities can use increased density allowances or a ‘density bonus’ to increase the supply of affordable housing (BC Housing Research Centre, 2017; Ellery, 2019; Tsenkova & Witwer, 2011; Pierre, 2007; Courville, 2015). Increased density allowances or a ‘density bonus’ is a policy whereby if a developer includes a certain amount of affordable housing in their development they are permitted to build more dwelling units for the allotted area or are allowed an increased height allowance (BC Housing Research Centre, 2017; Ellery, 2019; Tsenkova & Witwer, 2011; Pierre, 2007; Courville, 2015). Increased density allowances are usually a part of inclusionary zoning.
- Regulatory Incentives
Municipalities can provide regulatory incentives for developers to include affordable housing in their residential developments (BC Housing Research Centre, 2017; Tsenkova & Witwer, 2011). Municipal development and planning approval processes can be “a significant barrier to building housing, including affordable housing, as it adds to the timelines and costs” (SHS Consulting, 2020, 24). Municipalities can reduce the development cost of projects that include affordable housing; this can include waiving application fees, permit fees, planning application fees and development charges and reducing or waiving minimum parking and parkland dedication requirements (Kimmell & Corliss, 2018; BC Housing Research Centre, 2017; Tsvenoka & Witwer, 2011). Furthermore, municipalities can expedite approvals, which in turn can save time and “lower financing costs and risks” (BC Housing Research Centre, 2017, 11). Expedited approvals can be applied to levers discussed above such as density bonusing; municipalities can allow for greater densities and remove time-intensive re-zoning requirements for affordable housing developments. Finally, streamlining the development process can remove barriers to implementing innovative solutions, like converting hotels that are vacant due to COVID-19 into affordable housing, “prefabricated homes, Passive Housing design, tiny homes, container housing, co-housing and secondary suites” (SHS Consulting, 2020, 24). Regulatory incentives can be employed in a variety of ways by municipalities to increase the supply of affordable housing. Although this lever can appear to be relatively straightforward it is often more complicated to implement.
Municipalities can rezone properties for increased density and a greater variety of housing types in order to intensify the use of the existing built up areas and increase the housing supply (BC Housing Research centre, 2017).This can include “[s]econdary suites (attached or detached), zoning for rental buildings, smaller lots, lot subdivisions, stratification or residential atop commercial” (BC Housing Research Centre, 2017, 9). Intensification can complement or work parallel to density bonuses and some of the innovative solutions described in the section above. Intensification creates more housing supply and can increase the diversity of housing options within the existing built up area and as a result increasing housing affordability. Intensification can add to the overall housing supply, thereby theoretically increasing the overall affordability of housing.
- Covenant Tools
Placing restrictive covenants on land targeted for affordable housing can ensure the provision of affordable housing over time (Kimmell & Corliss, 2018; BC Housing Research Centre, 2017). Placing covenants on land can “restrict who can live on a property and how much property can be sold or rented for” (BC Housing Research Centre, 2017, 15). The long term nature of covenants means they can target geographic areas where affordable housing could be beneficial to low income individuals, for example close downtowns and in proximity to amenities such as transit centres (Kimmell & Corliss). Covenants are slower and more difficult to implement than the solutions described above as they require legal expertise and are relatively rigid (BC Housing Research Centre, 2017). Covenants are not typically used on their own; they require re-zoning and therefore are almost exclusively employed in conjunction with inclusionary zoning and density bonus when an area is being rezoned.
- Community Land Trusts
Community land trusts (CLT) are “private non-profit corporations created to acquire and hold land for the benefit of a community and provide secure affordable access to land and housing for community residents” (Ellery, 2019, 3). When applied to housing, CLTs can reduce the cost of home ownership because the price of a home purchased from a CLT does not include the value of the land (BC Housing Research Centre, 2017; Ellery, 2019). Part of the purchase contract is an agreement to sell the home back to the CLT.
- Land Banking
Land banking is a mechanism for accumulating parcels of land for redevelopment in the public interest. Many Community Land Trusts (CTL) leverage lands acquired or already owned by a municipality, often as part of a land bank (BC Housing Research Centre, 2017). Housing can then be developed on the land by the municipality or other partners (often not for profits). This format means land ownership is directly tied in perpetuity to an owner that has a desire and/or mandate to create and maintain affordable housing.
- Housing Funds
Municipalities can assist in the creation of purpose built affordable housing through a variety of financing and procurement options. Most financing options for affordable housing include funding agreements with provincial and federal governments. Municipalities can also create dedicated funds for the creation of affordable housing (Ellery, 2019; BC Housing Research Centre, 2017). These housing funds “are distinct funds established to receive dedicated public revenues, which can only be spent on housing” and money is gathered via “gaming funds, land sales, development levies and more” (Ellery, 2019, 13). Housing funds can accrue from in lieu contributions; for example, from inclusionary zoning (discussed above). The procurement of affordable housing with Housing Funds can take many forms. Housing Funds can be used to directly finance the development of affordable housing by a municipality or partner organization such as a not-for-profit or a for-profit entity such as in the case of a public-private partnership.
- Rent Subsidy Programs
A rent subsidy is cash assistance paid to households that demonstrate need. Rent subsidy programs can take different forms. Voucher systems provide a set amount to households who can choose where and what to rent. Other programs are modeled after rent-geared to income models and involve paying a subsidy to private market landlords for an amount equal to the difference between market value rent and 30% of the household’s monthly income.
- Public Housing
Many municipalities are owners and managers of affordable housing. Some of this municipally owned “public housing” is managed by “arms-length” housing management bodies. One of the advantages of public housing models is that municipalities can leverage public lands for new projects. In addition, municipalities may have access to cheaper credit thereby lowering the finance costs for construction.
BC Housing Research. (2017). A Scan of Leading Practices in Affordable Housing. https://www.bchousing.org/research-centre/library/housing-affordability/scan-leading-practices-affordable-housing
Courville, R. (2015). The Growing Need for Social and Affordable Housing: A Municipal Perspective. Master’s Thesis, York University.
Kimmel, J., & Corliss, C. (2018). Levers of Housing Affordability: Strategies and Tools for Planners. The Western Planner. https://www.westernplanner.org/2019articles/2018/9/4/levers-of-housing-affordability-strategies-and-tools-for-planners
Pierre, N. (2007). A Safer Haven: Innovations for Improving Social Housing in Canada. Canadian Policy Research Networks. http://www.nipawinoasis.com/documents/49103_EN.pdf
SHS Consulting. (2020). Final Report of the Alberta Affordable Housing Review Panel. https://open.alberta.ca/publications/final-report-of-alberta-affordable-housing-review-panel
Tsenkova, S., & Witwer, M. (2011). Bridging the gap: Policy instruments to encourage private sector provision of affordable rental housing in Alberta. Canadian Journal of Urban Research, 20(1), 52-80.
Ellery, R. (2019). Promising & Innovative Practices in Affordable Housing. Immigration, Refugees and Citizenship Canada. http://www.guelphwellingtonlip.ca/wp-content/uploads/2019/04/GWLIP-Promising-and-Innovative-Practices-in-Affordable-Housing-2019-Final-Report.pdf
Zhang, B. (2020). Social policies, financial markets and the multi-scalar governance of affordable housing in Toronto. Urban Studies, 57(13), 2628-2645.