Premier Doug Ford
Hon. Rob Flack, Minister of Municipal Affairs and Housing
RE: Proposed amendment to Ontario Regulation 232/18 – Inclusionary Zoning to pause implementation in three municipalities until July 1, 2027
The Federation of Urban Neighbourhoods (Ontario) strongly objects to the Ontario Government proposal to “pause” a policy that would have forced developers to include “affordable” units in major housing projects near a subset of transit stations (Protected Major Transit Areas – PMTSAs) in Toronto, Kitchener and Mississauga.
The affordable housing policy, known as “inclusionary zoning,” was first passed by Toronto City Council in 2021 but did not come into force in Toronto until the Province announced a revised policy with reduced affordability requirements in August, 2025.
New residential development within the MTSAs would have to set aside five per cent of the gross floor area for below-market units priced so that housing costs don’t exceed 30 per cent of a household’s gross income, around many (but not all) transit stations, including subway and LRT stops, and requires developers to set aside below-market units. Those developer- subsidized units would eventually be handed over to the City to manage as affordable rentals, tied to people’s income.
Under current City of Toronto rules, inclusionary zoning requirements would have only applied to the construction of ownership-based housing, such as condos. It did not apply to purpose- built rental housing, though those rules were set to change in January 2026. However, instead of announcing the expansion to rental units the Ontario government has announced that the policy will not apply until July 2027 (i.e. for 18 months).
The move comes as the City’s housing construction industry continues to face strong headwinds. The condo market has collapsed, and housing starts are at the lowest levels in years. Nevertheless, housing affordability is still the critical issue, and we may never know if this measure, which was designed for developers to play a part in improving affordability, would work as intended.
The Provincial amendment argues that requiring developers to include this affordable housing would create further financial problems for the building industry and could cause construction to slow even more. However, the Inclusive zoning was widely seen as a “sweetener” or incentive to municipalities to ameliorate opposition to the Major Transit Station Areas (MTSAs) mandatory densification regime overreaching on municipalities and communities.
The amendment would further delay or halt the operationalization and delivery of associated affordable units through Inclusive Zoning in PMTSAs in Toronto, Kitchener and Mississauga.
The change amounts to eliminating any broad-based obligation by developers for making available affordable units, outside of individual “deals” with municipalities and the federal government negotiated in connection with local applications.
In addition, this proposed change to the PMTSA policy raises several other matters that question the advisability and appropriateness of the P/MTSA program of which PMTSA is (or was) an integral part.
- The Protected Major Transit Service Area (PMTSA) program applies to certain of the MTSAs without any explanation by the Province as to the rationale for the MTSAs designated as PMTSAs. As such the credibility of the program is suspect.
- The “growth mantra” that is behind the MTSA intensification program needs to be examined in light of (a) the economic downturn, the immigration decline and increased out migration from Ontario, which together led to a net decline in the population of Ontario in 2025 and (b) the large inventories of both built but unoccupied units, and approved but unbuilt units.
Finally, we object to the “spur of the moment” decision-making that this proposed change denotes. As per above the Province needs to examine its assumptions carefully and make deliberative decisions, not short-term ones based on developer objections.
Respectfully submitted,
Geoff Kettel
President
c.c. Members of Provincial Parliament