The tangible benefits of building retrofits are clear: improved energy performance, utility cost savings, better thermal comfort, and cleaner indoor air quality. Policies that help retrofits to scale will bring these essential benefits to more people. However, with the investments needed to implement building upgrades comes the risk of costs being passed down through Above Guideline Rent Increases (AGIs) and other cost increases, further exacerbating the housing affordability crisis.
To be successful, Toronto’s Building Emissions Performance Standards (BEPS) policy must include considerations to support building owners with compliance, while protecting affordability for residents. The City of Toronto has been focused on this from the start of the bylaw design and can leverage several existing City policies and programs to support this work. Fortunately, Toronto can also rely on the experience of the many jurisdictions across North America who have already implemented BEPS with various affordability protections. After examining dozens of policies from leaders across North America, we’ve made the following recommendations that build on existing affordability policies within Toronto’s BEPS:
Offer Alternative Compliance Pathways for affordable housing
Nearly all jurisdictions with BEPS policies in place utilize Alternative Compliance Pathways (ACPs), which provide flexibility for buildings to reach their targets. ACPs for affordable housing allow for case-by-case flexibility for buildings to manage timeline or financial constraints. ACPs are already being incorporated into Toronto’s BEPS bylaw design.
For additional support, we recommend offering specific ACPs for affordable housing, which is in line with best practices from other jurisdictions. Since Toronto’s affordable housing stock is diverse, Toronto should also adopt an inclusive definition that includes both formally designated affordable housing options as well as market-based affordability. Potential provisions within ACPs for affordable housing that Toronto could employ in its BEPS bylaw include:
- Lower rates: Offer better financing rates for affordable housing providers
- Streamlined application processes: Reduce administrative burden and make access more equitable
- Good Faith Effort: Consider applications to qualifying retrofit financing programs as evidence of good faith effort
- Extensions: Allow for extended compliance deadlines for buildings with financial difficulties
- Proportional relaxation: Provide pre-set relaxation of performance targets, proportional to the percentage of units that meet specific affordability criteria, for rental buildings
Toronto has programs that already employ affordability protections
To maximize these programs, it’s crucial that they be made more appealing to housing providers through measures such as lower interest rates and grants. Otherwise, providers may opt for private financing which does not inherently protect affordability. Toronto already has access to many existing financial tools and frameworks to support BEPS, such as the Energy Retrofit Loan program, the Hi-RIS initiative, and funding through the Canada Greener Affordable Housing Program and the Sustainable Affordable Housing Program.
Reinvest revenue for retrofit financial and technical support
BEPS will generate revenue from alternative compliance payments and penalties. We recommend using this revenue to help fund retrofits of affordable multi-family buildings. By defining financial assistance for these groups in the bylaw design, more buildings will be able to undertake deeper retrofits to achieve higher emissions reductions. Some of the other finance and technical support other jurisdictions implemented include:
- Priority: Consider affordable housing projects first when prioritizing funding allocation
- Incentives: Offer flexible and attractive municipal funding programs that are contingent on AGI waivers
- Assistance: Provide technical coaching and feasibility studies, and make assistance programs available as early as possible
- Support: Allocate revenue towards a rent assistance fund for low-income renters
Consistent engagement with affordability representatives
From the start of the bylaw development process, Toronto has prioritized engagement with affordability stakeholders through its Equity Advisory Committee. Vulnerable residents often benefit the most from building upgrades. It’s crucial that Toronto continues to engage equity-seeking groups on an ongoing basis to advise on BEPS implementation and financial assistance programs.
As the bylaw makes its way through final design and consultation phases this fall, these additional affordability protections will enable maximum benefits while reducing financial impacts on residents.
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