Tag Archives: development charges
With more than 60,000 households waiting for low-cost housing, Toronto politicians should stop driving up costs
Marcus Gee – Globe and Mail
Everyone agrees that something has to be done about affordable housing. The question is whether it is governments that should be doing it.
The consensus in city politics is yes, of course they should. Private developers and landlords, it is argued, will never supply enough reasonably priced housing for lower-income people. Developers prefer to build luxury condos. So governments simply have to step in to correct this market failure.
When the non-profit housing group Habitat for Humanity invited mayoral candidates to debate the issue on Tuesday evening, they were full of ideas for new, more vigorous ways for government to tackle the problem.
Joe Pantalone would push ahead with a plan to build 1,000 affordable housing units a year. George Smitherman would encourage home ownership, free up city-owned land for affordable housing and partner with non-profits to build more units.
Rocco Rossi, too, would use city land resources, while Sarah Thomson talked about using a “density bonus” that would allow developers to build higher density if they agreed to provide affordable housing. Giorgio Mammoliti would push ahead with a 10-year, 67-point, $484-million plan for affordable housing. Only the inimitable Rob Ford suggested that instead of supplying more housing, the city should give tenants more rent subsidies to help them rent units in private apartments.
The desire to do something big and ambitious about affordable housing is understandable. With more than 60,000 Toronto households on a waiting list for low-cost housing, a 15-per-cent increase since last year, there is clearly a need.
But most studies have found the private sector is better than government at tackling the problem. A recent report by the Conference Board of Canada said that, while governments had a significant role to play in providing affordable housing, “private companies are the most efficient at innovating to drive down shelter costs when markets are competitive. They have the best economies of scale and the core competency to deliver housing to the marketplace.” It also noted that previous reports found that “governments had significantly added to the cost of shelter through a wide variety of direct charges and zoning practices.”
Quite so. Taxes, development charges and new measures such as the city’s land transfer tax have made it hard for many developers to make money on anything but high-end projects. The Planning Act’s Section 37 measure, for example, allows the city to wring “community benefits” such as park or street improvements from developers in return for permission to build.
Now there is talk of an “inclusionary zoning” rule that would require developers to put aside a certain proportion of new housing units for affordable housing. A private member’s bill recently before the Ontario Legislature would give municipalities the right to require it. Ms. Thomson and Mr. Mammoliti are among those who support the idea, which would amount to another tax on developers.
Designed to address the affordable-housing problems, measures like this could make it worse instead, driving up the cost of housing when developers pass on the cost of various charges and regulations to home buyers and renters. As an added down side, new home buyers end up paying the freight for a social measure that would better be borne by society at large.
Economic consultant Peter Norman of the Altus Group says: “I always ask the rhetorical question: ‘Why is it the government feels the private sector isn’t prepared to bring forward housing that serves the lower-income segment in the population?’ “
It’s not because developers are all Scrooges. It’s because they can’t make a buck at it in the current environment. Sensible government policy would aim to free them up to supply the affordable housing that the city obviously needs.