The City of Toronto is embarking on a new and ambitious plan to build 65,000 rent-controlled homes over a seven-year period, the overwhelming bulk of which will be affordable units, and cost billions.
It’s admirable but fraught with difficulties.
First, cost is an issue. Funding has been secured to deliver 4,455 of those homes. The estimated cost to deliver the remaining 60,545 homes is up to $31.5B over the next seven years. The plan will require contributions from the federal and Ontario governments, something that’s up in the air.
Second, the plan proposes government get back into the business of building homes. Staff have been directed to explore and pilot models, whereby Toronto would take on the role of building contractor and manager. Five sites have already been identified where the city would act as a public builder.
Mayor Olivia Chow has suggested that the City could partner with Indigenous housing providers, non-profits and commercial developers.
Third, there is the small problem of land. A report by the City stresses that immediate access to federal and provincial land is necessary to support the City’s efforts.
So, before this thing gets off the ground, there are myriad hurdles to overcome. I just can’t see it working. To build 65,000 units, the City must start producing 11,000 units a year for the next six years.
That’s a tall order, in and of itself. But to become their own builder-developer is another thing entirely. The City will have to build and create an organization to do that, and it will take some time – something we don’t have.
A major problem that builders face right now in getting shovels in the ground on projects during this housing crisis is the bureaucracy and red tape involved in the process. In 2022, the average approval timeline for a project in Toronto was 32 months. That’s nearly three years – far too long.
Contrary to what some might think, the private sector is building rental units, we’re just not building enough of them. One of the reasons for that is we’ve got a very difficult, slow and uncertain approvals process that’s bogged down in red tape. It’s one of the worst in the developed world.
Systemic issues are preventing and slowing housing production. To build apartment buildings, you also need a small army of skilled trades and other professionals. It’s difficult finding the right people for the job and there is little room for error. If you fail, you’re done. You don’t get a second chance.
Given where we are right now in terms of delays to housing production, the City proposal just isn’t going to fly. One only has to look at the Housing Now program. The City intended to build 40,000 units over five years, but nothing got done. In fact, two of those sites are now rolled into this new program.
A better plan to boost housing would be to reduce the taxes, fees, levies and development charges on new residential construction. RESCON was part of a study done by the Canadian Centre for Economic Analysis that showed the fees and taxes account for 31% of the cost of a new home. We are taxing housing like we do luxuries like alcohol. Yet it’s an essential element for survival.
Presently, builders are unable to price housing at a rate that is affordable to the middle class. Interest rates obviously play a big role here. As a result, though, many people – often our brightest and best talent – are leaving Ontario and going to other parts of the country or the U.S. and Europe to find affordable housing. We have youth who are graduating but must depart because of the cost of living.
It would be great if Toronto could succeed in reaching its target of rent-controlled homes as we certainly need housing. In light of the hurdles, though, Toronto’s proposal just isn’t going to cut it.
Various levels of government have made some positive moves lately, one being the decision by the federal and Ontario governments to remove the GST and HST on purpose-built rental housing. That should help move the needle on construction of more apartment buildings although it will take time.
This isn’t the time for amateur hour. Competent private-sector builders must be part of the mix to help build the rent-controlled homes. They have the experience and know-how to get the job done.
There is no time to waste. We are in a generational housing supply and affordability crisis and must act quickly to right the ship.
