Ontario is looking to pass legislation that would allow municipalities in the province to implement something known as inclusionary zoning. If passed and should municipalities decide to use this tool (Toronto almost certainly would), developers would then be required and/or incentivized to include some percentage of affordable housing in their new market rate developments. 

Politically, inclusionary zoning tends to be popular. It’s believed to be a way for governments to create new affordable housing using relatively small public subsidies. Not surprisingly though, the development industry generally hates IZ. It’s another cost that needs to be added to the development pro forma – though some municipalities rightly offset these additional costs with additional density, breaks on levies, and so on.

What I always think about when this topic comes up is the broader economic impact of the land use policy. Because I’m suspect that it’s as simple as: mandate affordable housing; get more affordable housing for free. Generally there are always trade-offs.

So here’s some reading material for you all this morning.

In a classic paper (1981) by Yale Professor Robert C. Ellickson – called The Irony of Inclusionary Zoning – he argues that these practices can actually increase general house prices:

As a counterargument Owen Pickford over at The Urbanist argues that IZ simply reduces land prices as a result of the new tax. Land, after all, is the residual claimant. Therefore, he believes it’s an effective affordable housing policy. (I’m not so sure I believe that land prices would decrease in practice.)

There’s also debate about the effectiveness of inclusionary zoning to actually deliver affordable housing at a meaningful scale. City Observatory wrote a post that looked at the total number of units produced (through IZ) across a number of American cities and the results were spotty. It should, however, be noted that not all inclusionary zoning policies are mandatory.

Finally, the Furman Center for Real Estate & Urban Policy at New York University published a housing policy brief back in 2008 that looked at this exact topic. While they admit that the data is scarce, they come to the conclusion that IZ had no meaningful impact on the prices and production of single-family housing in San Francisco, but that IZ seems to have slightly decreased production and slightly increased pricing in the suburbs of Boston.

What this last point suggests is that inclusionary zoning policies are not all created equal. So like all difficult questions, the answer to this one is likely: it depends. If anyone can point me to better data on inclusionary zoning, I would love to see it.

The Martin Prosperity Institute here in Toronto recently published a new report that looks at worldwide venture capital investment by city. The report is called Rise of the Global Startup City.

The data is from 2012, because that’s what was available from Thomson Reuters, so keep in mind that there might be some variation in the rankings if we were to look at more recent data. Some of the cities sit fairly close.

Nonetheless, here are a few of the broader takeaways (from the report page):

“The United States accounts for nearly 70 percent (68.6 percent) of total global venture capital, followed by Asia (14.4 percent) and Europe (13.5 percent).”

“Just two broad regions — the San Francisco Bay Area and the Boston-New York-Washington Corridor — account for more than 40 percent of global venture investment.”

“Global venture investment is highly uneven and spiky — it is concentrated in a small number of large cities and metros around the world.”

Here are the top 20 cities by total venture capital investment (in USD millions):

And here are the top 20 cities according to venture capital investment per capita:

Given the variation in these two lists, you realize that some cities are largely benefitting from sheer size. London, for example, drops off the list when you look at venture capital investment per capita. 

In fact, in this second list, 19 of the 20 cities are in the United States. The only non-American city that remains is Toronto.

Yesterday the Washington Post published a great chart showing the housing types of the 40 largest cities, by population, in the US. The list is ordered from lowest to highest according to the percentage of single-family houses in the city (green bar).

Here’s the chart:

Not surprisingly, many of the cities at the top of this list (meaning they have the lowest percentage of single-family houses) are in the older east coast cities. 

It’s also interesting to see just how much the rowhouse dominates the urban landscape in Philadelphia and Baltimore. In Philadelphia, almost 60% of the housing stock is an attached rowhouse.

Housing is the backdrop for such a big portion of our lives. And when you live in a particular kind of home, it impacts your life whether or not you realize it. The dense rowhouses of Philadelphia and the single-family houses of Oklahoma City are the result of two very different kinds of urban landscapes.

In Toronto, that backdrop is in the midst of a dramatic change. More and more of us are now living in high-rise condos. That hasn’t always been the case, of course. It’s a recent shift. But it looks like it’ll be a big part of our future.