A public development model that, theoretically, could help to fast-track affordable housing creation in Toronto is being met with some skepticism and many questions from industry stakeholders.
The model, which was recommended in a new housing report from last week, would allow the City to act as a public builder for five publicly owned sites to start: 405 Sherbourne Street, 150 Queens Wharf Road, 1113-1117 Dundas Street West, 11 Brock Avenue, and 35 Bellevue Avenue. Precursory parameters for the model were adopted by the Executive Committee on Tuesday, and will be considered by City Council later this month.
In a recent interview with STOREYS, Mayor Olivia Chow said that if public development of the five aforementioned sites is successful — she noted that the hope is for “speedy delivery in terms of approval” — there are more than 70 sites in the pipeline that stand to be developed in the same manner, including 47 additional City-owned sites and 31 non-profit-owned sites.
Chow also explained that in order for this model to be viable, government funding is imperative. As such, she has indicated that she’s been in talks with the federal and provincial governments about creating a program that partnered entities can tap into to lower their financing costs, and she seems quite confident that the feds will pay up.
“With the run-up of costs, both hard and soft, the City has pointed out that they’re going to need a lot of support from senior levels of government,” Jason Lester, Vice-Chair of Development at Dream Unlimited, tells STOREYS.
“The extent to which the feds will support this will be absolutely critical to executing not just the amount of units but how quickly construction projects get off the ground and up and running.”
With the necessary funding, Lester says the model is promising and reflects the City’s well-intentioned desire to pave a new — and perhaps more effective — path to affordable housing development.
“The city does have a lot of land, so taking that land and trying to build more capacity is an initiative that we're willing to support,” he says. “I think, at the end of the day, given the crisis that we're in, that we need multiple models. It has to be the public and private sectors sometimes working together and sometimes working individually.”
A Good Start; A ‘Risky’ Move
Robert Ursini, Senior Planner with Trolleybus Urban Development, says the prospective model is a fairly modest measure considering the current pace of immigration and population growth. Even so, he calls the model a “great start” given the severity and worsening nature of the housing crisis.
“Everyone has a part to play in delivering more housing and we need to work more collaboratively together to achieve this. I think that the City can learn from their own expedited model and work with private developers to quickly advance projects that offer more community benefits and affordable housing,” says Ursini.
However, he also notes that clear goals and procedures will be critical if this model moves forward.
“I have a concern with how these models are communicated to staff who are directly involved in reviewing and approving development applications. There needs to be internal alignment to ensure that that the overarching goal to delivering more housing is achieved among all levels of staff,” Ursini adds.
Naama Blonder, Architect and Urban Planner with Smart Density, also voices her concerns about the model, saying that while she’s all for the government prioritizing affordable housing, it’s “risky” to not have the private sector involved in the initiative from the outset.
“We all know how risky construction is,” she says. “And it felt like the private sector — with all the expertise that they bring, with all their knowledge — is somehow being left out. But it’s too soon to tell.”
“The Private Sector Needs A Seat At The Table”
Sean Fleming, Executive Vice President and Managing Director at Cameron Stephens Equity Capital, says he’s hopeful but skeptical when it comes to the public development model.
“The City trying to lead an infrastructure project — you know, we haven't seen a lot of successes there. But that said, I think this is a good time for something like this,” he says.
Fleming says that this is an opportunity for the private and public sectors to come together. Echoing some of Blonder’s points, he notes that those immersed in private development understand the economics of housing, including how to ensure housing is “an asset that performs over time.”
“The City has not historically been the best at that,” says Fleming. “So I think the private sector needs a seat at the table, and the earlier the better. I think, conceptually, what's been presented is high level enough that there should be room for that discussion.”
What’s more, Fleming reckons that many private sector players would be up for the opportunity.
“Because of interest rates, because of the market, our industry is slowing down. So I think more people will be interested in exploring alternatives to the typical development model than they would have been a year or two ago,” he says.
Richard Lyall, President of the Residential Construction Council of Ontario, says that while he likes the “energy” of the recommended public development model, he’s somewhat wary of the City’s ability to pull it off.
“Look at the Housing Now model and what happened there. Virtually nothing happens for five years,” he says.
And while there are certainly lessons to take from Housing Now — which potentially, could set the City up for better success with respect to this latest public building model — Lyall says there are too many unknowns at this stage in the game, including but not limited to the private sector’s involvement. In the event that the City goes at this latest development model without the private sector’s help, Lyall has concerns.
“The question the city hasn't answered is if there’s a public builder that they can create that can build with the same efficiency as the private sector,” he adds.
Murtaza Haider, professor of Data Science and Real Estate Management at Toronto Metropolitan University, agrees that the private sector should be brought into the model — albeit in a strategic way.
“I think the best way forward is the city says ‘we are providing the land and we will provide the oversight and the parameters for which affordable housing be built and delivered,’” he says.
“So the City will set the standards, but then let the private sector come in. Because the private sector has the ability to mobilize resources and get the investments to make a reasonable profit. And there's nothing wrong with making profits on affordable housing.”
On another note, Haider questions the long-term viability of a model like this one. Getting affordable housing built is one thing, but ensuring it remains liveable in the years to come is another matter entirely.
“If you look at state-owned housing like the Toronto Community Housing Corporation, conditions have been so bad that ambulance drivers and paramedics refuse to enter the buildings because of safety concerns,” he says.
“Public sector ownership of housing does not necessarily mean a cheap, affordable, long-term, livable solution. It comes with its own challenges, and the trick is to balance the roles and responsibilities between the private and public sectors.”
The City-led development model and housing planin its entirety will be considered by Toronto City Council on November 8, 2023.