Why Canada’s Housing Crisis Needs an Index
What Performance-Based Zoning Policy Would Look Like
Highlights
Alex Beheshti is leaving MMI, but not without first finishing what he started. An earlier article this year argued for a National Zoning Atlas. This piece explains the Atlas’s most important use case, a zoning index.
Zoning reform keeps breaking down at implementation because zoning outcomes are not measured, leaving senior governments unable to see whether municipalities are actually changing what blocks housing.
Zoning operates through development envelopes, where a single conflicting rule can stop otherwise viable housing, regardless of demand or financing.
Since development envelopes cannot currently be assessed at scale, zoning restrictiveness remains opaque, so responsibility for reform failures flows upward.
A zoning index is the tool that makes development envelopes measurable at scale, converting complex zoning systems into a single, comparable metric.
By making zoning performance observable, the index enables performance-based zoning policy, allowing incentives to be tied to results rather than promises.
Performance-based zoning policy preserves local control, letting municipalities choose how they reform while making the results visible and accountable.
Canada now faces a clear choice between continuing prescriptive zoning reform that obscures responsibility and adopting measures that align incentives with outcomes.
This Is Not Goodbye, Rather See You Later
One of the most critical mission goals at MMI is ensuring that every problem has a solution. This is what attracted me to MMI in the first place.
Previous pieces have explored the issues with zoning measurement and accountability. This is the final piece that presents my solution to these problems. It represents both a culmination of that series and my time at MMI.
But before getting to that, I would like to take a moment to say it’s been a genuine pleasure working with everyone at MMI and connecting with you, the audience, both online and in person. This is a unique organization, unafraid to lead on ideas and policies, which is why I believe the work that gets done here resonates so much with all of you.
There’s nothing else like MMI in Canada. That fact is reflected by the passionate people who work here. They have dedicated their lives to covering topics and concepts no one else is even thinking about. This is all made possible by both Mike’s leadership and your support.
My time working at MMI is coming to an end. But that doesn’t mean the end of my friendships with the team, my continued collaboration with the organization, or my personal connections with you, the audience.
So, this is not goodbye, rather see you later.
Why Zoning Reform Keeps Breaking at Implementation
Ottawa has repeatedly tried to induce zoning reform by prescribing specific changes and paying municipalities to adopt them, whether to fix specific rules or adopt whole-building designs. This approach is quick to deploy, but it keeps breaking down during implementation as municipalities come up short on their end of the agreement.
This keeps happening because the federal government has no way to see what cities are or aren’t doing regarding zoning. Economically feasible housing remains blocked, yet without easily accessible measures, responsibility for failure falls to Ottawa.
What’s missing is a tool that measures development envelopes at scale and makes the results easy for anyone to understand. This would allow everyone to see whether zoning is becoming more or less stringent in their community. That transparency would remove the opacity that leaves the federal government and the public in the dark, permitting municipalities to avoid accountability.
An added benefit of this tool is that it would enable, for the first time, performance-based housing policy and zoning reform. Programs could be designed around outcomes rather than promises, with clear signals to everyone on who is doing the work and who is not. Enforcement would be proactive and automatic, rather than reactive and selective, as with prescriptive policymaking.
The Zoning Index
A development project can have all the financing in the world. But a conflict with a single zoning rule is enough to stop it dead in its tracks, regardless of demand. The federal government’s zoning reform programs assume targeted rule changes can fix this, but zoning does not work like a checklist.
It’s an all-or-nothing system where every applicable rule must be cleared. Different housing types face different constraints depending on the project.
Zoning also exists on a spectrum. More restrictive bylaws contain more interacting rules that block housing across a broader range of projects, while more permissive bylaws have fewer such barriers.
This is where a zoning index comes in. It distills the complexity of development envelopes, which are composed of many individual rules, into a single metric. It works the same way as the Consumer Price Index (CPI), which turns hundreds of prices in a basket of goods and services into a single number that tracks inflation over time.
Without this tool, zoning reform remains guesswork, making it easy for responsibility to be blurred and hard for meaningful change to occur. With a zoning index, it becomes possible to answer questions that are currently impossible to answer, like:
How restrictive is zoning in my community?
How has it changed over time?
How does it compare to other places?
How does it compare to a standard it should meet?
Being able to answer these questions clearly means municipalities can be assessed against both each other and a clear target, unlocking a performance-based policymaking approach that the federal government has not had access to before.
The result is that municipalities can no longer evade responsibility for restrictive bylaws they impose while people go without homes.
What Zoning Index Measures
The Zoning Index compares two conditions to arrive at a single number. The first is the development envelope provided by a zoning bylaw. This reflects the regulatory space above a piece of land created by the zoning. If a housing project extends beyond this conceptual area, it cannot be built.
The second is the benchmark development envelope. This could be based on the most permissive code already in use by a city, combining the best elements from multiple zoning bylaws, or on defined envelopes aligned with the federal government’s priorities and preferences.
There is considerable flexibility in how the development envelope standard is constructed. Critically, it does not necessitate the creation of a national zoning code.
Each municipality would have its development envelopes assessed against this benchmark to derive its final zoning index score. That score makes zoning performance observable. It shows, in a single number, whether a municipality’s zoning decisions are moving closer to or further from a clear standard over time.
The zoning index also need not rely on a single benchmark. Just as multiple CPI indices include or exclude specific goods, multiple zoning indices can likewise be based on different kinds of development envelopes. This would allow urban, suburban, and exurban communities to be rated by other standards. This is not a one-size-fits-all tool.
Compared to construction statistics, the zoning index scores municipalities based on their control over housing outcomes. Housing starts and completions reflect municipal decisions alongside those of many other actors, which makes responsibility harder to isolate. A zoning index avoids that problem by focusing directly on the rules municipalities control.
Without a national zoning atlas to standardize and compare zoning bylaws at scale, a zoning index like this cannot exist.
Performance-Based Zoning Policy
A zoning index allows the federal government to move from prescriptive zoning reform to performance-based policy. Instead of paying municipalities to adopt specific rule changes, Ottawa can define a clear benchmark for zoning permissiveness and reward municipalities based on how their zoning performs against that standard.
Where a municipality is below the benchmark but moving toward it, incentives can flow. Where it meets or exceeds the benchmark, those incentives can continue. Where zoning becomes more restrictive over time, funding can be scaled back or withdrawn. Enforcement becomes automatic rather than discretionary because performance is measured directly.
This approach restores accountability while preserving local flexibility. Ottawa does not need to dictate which zoning rules must change or enforce them by becoming the zoning police. Municipalities retain discretion over how they adjust their bylaws, but the outcome is transparent. If they want to qualify for funding, they can clearly see what level of zoning permissiveness they must achieve.
The federal government already uses this model in housing policy through building codes. The National Building Code sets performance thresholds using specific technical measures, such as insulation and energy-efficiency ratings, to define acceptable outcomes without prescribing how provinces or municipalities must achieve them. Because those outcomes are measured using standardized metrics, compliance is straightforward to verify.
Zoning differs in one key respect. There is currently no standardized way to measure how permissive or restrictive a zoning bylaw is. If Ottawa wants to use zoning as a performance-based policy lever, it must first create that measurement.
By defining both the metric and the benchmark, the federal government gains a form of influence it currently lacks in land-use planning. It cannot mandate zoning changes, but it can define what permissive zoning means and reward municipalities that meet that standard.
Canada now faces a clear choice about how to approach zoning reform. One path continues to rely on prescriptive rule changes, with Ottawa intervening after programs fail to deliver results. The other uses measurement to align incentives with outcomes, allowing municipalities to choose how to reform zoning while making their performance visible and accountable.
Choice and Local Control
The federal government needs the right tool for the right job. Past zoning reform efforts relied on prescription rather than performance, asking municipalities to adopt specific rule changes without a reliable way to determine whether zoning outcomes improved. That approach was always fragile because it depended on promises rather than measured results.
Municipalities have been held accountable to housing metrics before, and they objected on fair grounds. Housing starts and completions depend on many actors beyond municipal control, including financing conditions, labour, and demand. Those metrics blur responsibility rather than clarify it.
Zoning is different. Permissive zoning does not guarantee housing will be built, but restrictive zoning guarantees it will not. Zoning decisions sit upstream of every housing outcome. When it blocks viable projects, no amount of demand or capital can overcome that barrier.
A zoning index resolves this accountability gap. By measuring restrictiveness directly, it captures what municipalities directly control. It turns complex zoning systems into a single, comparable number that makes responsibility visible and hard to deflect.
The federal government lacks constitutional authority over land-use planning, but it can still exercise authority through measurement and standards, as it has done with building codes. By defining a zoning benchmark and measuring performance against it, Ottawa can reward outcomes rather than intentions.
Canada now faces a clear choice. The federal government can continue relying on prescriptive zoning reform, stepping in after programs fail to deliver results. Or it can adopt a zoning index, align incentives with outcomes, and make municipal responsibility for zoning decisions visible.
Without a zoning index, otherwise viable housing will continue to be blocked by rules no one can see, and therefore no one is accountable for.
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