Incentives needed to address Ontario’s housing affordability crisis

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Ontario’s Minister of Housing says we’re facing a housing affordability “crisis”.  He’s right. Supply is not keeping pace with demand, and prices are soaring.

We need an “all-of-the-above” strategy that combines rent control, major investments in social housing, protections for tenants, and incentives to spur housing development, particularly affordable housing for low- and middle-class residents.

This latter part of the strategy is getting renewed attention. In a new consultation, Premier Doug Ford’s government makes clear, “Government-imposed costs also make it more difficult and expensive to develop new housing…There is a need to balance efforts to lower the costs of development.”

It makes sense for a Conservative government to look at finding a solution based on cutting government-imposed costs out of the system; it’s part of their entire ethos.

Yet, in the previous Liberal government’s “Fair Housing Plan”, there was a somewhat convoluted program in which the province would facilitate a city rebating a portion of development charges and/or property taxes levied on new, affordable housing builds.  This program was shelved by the Ford government, but a simplified version could easily be brought back, allowing for municipalities themselves to defer or rebate development charges and other fees levied on new developments, where the municipality feels there are compelling public-policy goals to justify such incentives.

Indeed, this is precisely what occurred in my home town of Bradford West Gwillimbury.  The mayor and council were elected with a clear mandate from the voters to deliver housing for seniors, to address a major need in a suburbanising community where seniors were being priced out of the market, and there were no assisted-living rental options nearby.  By using a somewhat niche planning tool, a Community Improvement Plan, the town made a suite of grants available that essentially defrayed development charges for assisted-living seniors’ rental housing.  In less than three years, the town exceed its goal of 250 seniors’ rental units either opened or under construction.  The first such property (whose proponent is a client of mine) not only just opened — it also paid its first property tax bill, roughly $300,000 per year, a considerable figure in a small town with an annual operating budget of $24 million.  The facility also anticipates creating 130 local jobs.

Seniors’ assisted-living rental facilities not only address a dire demographic need as the baby-boomers look for housing that meets their ageing needs.  They also create as many good, well-paying jobs as a small factory, with nurses, personal-support workers, custodians, cooks and leisure staff, in addition to the fact the facility pays hefty property taxes.

There is a critical need for seniors’ rental housing — a city such as London, Ontario needs some 4400 units built in the north end of town alone — and satisfying this need can create a virtuous circle through job creation and new municipal tax revenue, monies that can be used to build social housing to satisfy the equally critical demand for low-income residents (to continue the exemplar city, London has a wait list of 4700 for social housing, the new mayor recently announced).

As Spacing’s John Lorinc argues, there is an emerging consensus across a wide spectrum of individuals from Premier Ford to left-of-centre activists and academics in favour of using incentives to spur the kind of middle-class, mid-rise housing options we need to boost supply. He writes, “Is there a policy case for exempting or sharply reducing [development charges] on missing-middle type development in order to promote more of it? Let us count the ways.”

Similarly, in its “Making Room for the Middle” housing plan, Mississauga argues, “Development charges, and property taxes represent a significant expense for building owners and developers.  For this reason, exemptions and deferrals that reduce an owner’s costs can be a powerful incentive tool.”

As the Ford government looks for ways to solve the housing affordability crisis, increasing supply is a key part of any strategy.  But, fittingly for a Conservative government, in order to increase supply, it would help to allow for targeted rebates for development charges, in order to spur development of new housing stock.

More from Jonathan Scott.   @J_Scott_

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