No new affordable units built linked to Toronto's Housing Now plan, 4 years after inception

When Toronto launched itsambitious new housing strategy in 2019, it aimed to transform valuable city-owned lands into 10,000 affordable homes but more than four years later, not a single shovel is in the ground.

Housing Now was designed to convert surplus city-owned properties, such as parking lots, into new housing developments, with a minimum one-third of those units affordable or at no more than 80 per cent of market rent.

The first 11 properties, all near transit nodes, were identified in early on. The plan was to build and hand back the projects to city-aligned housing agencies for management within four years through a fast-tracked approval process.

So far, that hasn't happened. Now, some developers blame what they're calling the city's onerous construction approval process including the Toronto Green Standard (TGS), which adds several levels of new regulation, on top of the provincial building code.

"We're calling it 'Housing Later,' or 'Housing Maybe'," said Richard Lyall, of the Residential Construction Council of Ontario (RESCON). "It's not a surprise, in a sad kind of way."

Since 2019, the original list of 11 city-owned sites has grown to 21. But the city has only contracted six of those projects to developers so far.

Pandemiclargely to blame, says city agency

Even so, CreateTO, the city agency that's overseeing Housing Now, denies there has been any problem getting developers on board.

"There is no problem at all in terms of interest level on most of our sites," said Vic Gupta, CEO of CreateTO, "because they are really strong, transit-oriented sites where the developers see an opportunity to have their small return."

He said the reason projects haven't evolved as quickly as anticipated has to do with the pandemic. The consequent increase in construction material costs and interest rates have made the projects much more difficult for the city to finance, he said.

He also blamed the province's Bill 23, which denies cities the ability to collect development fees on affordable housing projects.

Gupta predicted construction on three of the sites at Bloor Street and Kipling Avenue, Wilson Heights Boulevard and Merton Street will begin before the end of this year.

Paul De Berardis, director of building innovation for theResidential Construction Council of Ontarioagreed financing has helped to slow down Housing Now.

City not doing itself any favours: construction council

But he also said the city is not doing itself any favours.

"There's no clarity on when these projects will actually move to building permit and construction," he said. "So there's a lot of uncertainty there, and also just some of the additional requirements that come with city projects, some of the higher levels of the Toronto Green Standard that need to be met."

The Toronto Green Standard, introduced in 2010, lists roughly 20 measures that builders must satisfy in order to be allowed to build in the city.

They include things like installing electric vehicle charging stations in each parking spot, adding green roofs, or solar panels, and using windows and doors that help regulate indoor temperatures measures that can be especially expensive for builders and, eventually, buyers.

Although those standards are, in some cases, voluntary on privately-owned properties, they're all mandatory on city-owned projectslike Housing Now.

New, stricter rules

And the list of TGS requirements recently got longer, with builders now expected to take into account what the requirements call "embodied emissions." They include the emissions produced when a particular building material is manufactured,for example, during the making of a steel beam, or concrete for footings.

But Gupta denies that meeting new, higher green standards is hobbling developers.

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"Our sites, as directed by council, do have a have the higher-tier standard of the Toronto Green Standard, so our sites are closer to net-zero," he said. "It is a a slight additional cost, but again bidders know that as they go into these projects."

Gupta said the city agreed to some contracts with developers initially. But now, several years later, it's finding that paying those developers is a challengethanks to rising interest rates, increased construction costsand a lack of help from the federal government and its agencies.

That, he maintains, is why the projects have been slow to get off the ground.

"Nothing is perfect, but I'll say this: Our projects have very, very skinny returns for the developer," he said. "They're three and three quarters, four and a quarter-per cent yields. That's not a huge return for them to take on all the risk.

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The Housing Now model demands that a minimum 33 per cent of the units built be city-ownedand operated by city agencies, while the rest of the project including retail spaces and condo units would be left to the developers.

"The numbers have got to work for them," Gupta said referring to developers' bottom lines. "Hopefully the federal and provincial government will step up as well."

Last week, city council agreed to press the federal and provincial governments to add more funding to Housing Now.

Densities too low, say some

Mark Richardson, HousingNowTO.com's technical lead, told city council that the Housing Now projects' densities are too low to make them financially viable. The sites, with their easy access to transit, are very valuable, and there is "a limited pool of developers" with pockets deep enough to take on such sizeable projects.

"Just the one site, at Wilson subway station, 14 hundred or 15 hundred units, is a $700 or 800-million project," Richardson said. "The city doesn't have three quarters of a billion dollars sitting around in its pocket to spend on these things... We have to leverage federal loans. We have to leverage the private development community."

Richardson said retail and condo densities need to be increased in order to make the projects more palatable to developers.

But he agreed with Gupta that the more stringent green standards that are applied to projects like Housing Now are not a major added cost to developers.

The Building Industry and Land Development Association, which speaks for developers across the GTA, challenges that contention. It estimates green standards are adding 10 to 15 per cent to the cost of a build.

Meanwhile, RESCON's Lyall said the construction industry needs more consultation between planning bureaucrats and builders.

"There is a zealotry," he said. "And there's this belief that the industry can absorb just about anything, and the industry is going to pay for itnot the consumer.

"But it is the consumer that pays for it at the end of the day."

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