Halifax will not move ahead with a tool that would require affordable housing units in certain new buildings — for now.

On Tuesday, municipal staff brought a report on inclusionary zoning to regional council, nearly three years after a former council voted for the idea in 2023.

The report includes a consultant’s study that examined the local market impacts of requiring a certain percentage of affordable units in new buildings. The group also consulted with private developers and non-profit housing groups.

Kasia Tota, manager of community planning for the Halifax Regional Municipality (HRM), said staff recommended against bringing in the tool now, because the study raised multiple issues.

The study found that inclusionary zoning might be viable in lower-density projects, especially in cheaper wood-framed developments. But, it would not currently work for highrise rental buildings, which have the slimmest profit margins.

“The higher-density projects would really be stretched by additional inclusionary zoning requirements, due to the higher cost of construction,” Tota said during the meeting.

The study also raised concerns the new tool could impact the rental housing market by slowing construction, and driving up market rents to accommodate for revenue lost through the affordable units, the staff report said.

Staff said creating the framework would also mean hiring more city staff to manage the units, by making sure they remain affordable and selecting appropriate tenants.

“We’ve been waiting so long for this and I was looking forward to it,” said Coun. Shawn Cleary.

“The kick in the gut was the economics just don’t work. The staff resources just aren’t there. The province isn’t supportive of what we’re trying to do … so we have to stand up a whole new agency if we wanna go ahead and do this.”

In November 2023, the provincial government brought in Bill 329 which gave the housing minister sweeping powers over development decisions in Halifax. It froze new development fees or charges, which would include new inclusionary zoning tools. The freeze is currently set to end this November.

Staff said non-profits do prefer to own their own buildings and affordable units as it allows them to build up equity, rather than manage units in private developments.

Although council agreed to stop exploring a wide-spread inclusionary zoning program, it did pass a motion to consider this kind of zoning in future changes to regional or community planning documents.

Cleary asked whether this could still lead to staff negotiating a percentage of affordable units in major development sites with a mix of housing, including future growth nodes like the West End Mall in Halifax.

“Yes, absolutely,” Tota said. “This is why we’re not completely shutting down the door on this.”

Tota also said the tool could be revisited if economic conditions change in the coming years.

Staff also said that Halifax is already making a difference in affordable housing through its current density bonus program, which they said is a form of inclusionary zoning.

Most large-scale developments over 2,000 square metres in the urban core, and certain projects in suburban areas, are required to pay into the bonus zoning reserve. The amounts vary based on location and project size, but 60 to 100 per cent of the fee goes into a reserve fund for affordable housing projects.

About $30M sent to Halifax non-profits in recent years

Aaron Murnaghan, manager of the Halifax Accelerator Fund program, said since 2021 about $30 million from the fund has been distributed to local non-profits.

He said the funding has created more than 770 units of new affordable housing units, and about 1,500 total units when including retrofitting and acquiring former market-rent units.

Murnaghan said non-profits have told staff that while a Halifax grant might end up making up about 10 per cent of the funding they use for a housing project, “it’s really the most important 10 per cent,” because it allows them to finish a job, or qualify for money from other levels of government.

“It’s invaluable to the success of their projects,” Murnaghan said.

He also said the city’s upcoming affordable housing strategy will recommend ways to better support the non-profit housing sector, and possible new tools.

A draft report of the strategy will come to council in the coming weeks, Murnaghan said, including what other municipalities across Canada are doing on the issue.

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