Ottawa Construction News staff writer
In a move designed to protect the financial viability of new housing projects, Ottawa’s Planning and Housing Committee has approved a framework that implements “inclusionary zoning” while setting the initial requirement for affordable units at zero per cent.
The decision allows the city to check a box required for federal funding under the Housing Accelerator Fund (HAF) without immediately imposing new costs on developers that city staff warn could stall construction during an ongoing housing crisis.
Under the new framework, developers of large residential projects near major transit stations will eventually be required to set aside a portion of units as affordable. However, a mid-2025 housing market assessment for Ottawa concluded that current conditions make such mandates economically unfeasible.
“While the intent of the policy is to ensure that affordable units are being constructed near transit, the costs associated with inclusionary zoning are borne by increasing costs on market units,” a city release stated following the meeting. “In the context of high housing costs, inclusionary zoning could have the unintended consequence of rendering some transit-oriented developments unviable.”
By establishing the framework with a zero-per-cent “set-aside rate,” the city creates the legal infrastructure to mandate affordable units in the future without triggering an immediate slowdown in the current market.
The move was welcomed by industry advocates who have long argued that inclusionary zoning functions as a “tax on development” that ultimately raises prices for the other 90 to 95 per cent of units in a building.
The Greater Ottawa Home Builders’ Association (GOHBA) has consistently urged the city to avoid policies that compromise project feasibility. Executive Director Jason Burggraaf has previously noted that “transformative changes” are needed to hit housing targets, emphasizing that “Ottawa has the opportunity to be an example of progressive leadership” by focusing on supply rather than adding regulatory hurdles.
The committee also moved to streamline the development process by making the Urban Design Review Panel (UDRP) reporting more flexible. The committee approved removing the requirement for an associated UDRP report as part of a “completed” development application. Instead, recommendations will be posted online during the formal review process, a change aimed at preventing design discussions from delaying the start of the application clock.
Key technical details of the approved inclusionary zoning framework include:
- Affordability definition: Aligns with provincial standards—the lesser of average market rent or shelter costs for middle-income households for rentals, and 90 per cent of average market purchase price for ownership.
- Duration: Units must remain affordable for at least 25 years.
- Next Steps: The city plans to conduct a fresh housing market assessment and updated needs analysis by the second quarter of 2028 before considering an increase to the set-aside rate. Detailed implementation guidelines are expected by mid-2027.
