TorontoRealtyBlog

You heard this story from me last year, but I’m going to tell it again.

When I’m not selling houses and condos, I work on land consolidations.  “Land assemblies,” as they’re known.

Many of you have been approached over the years by that supposedly deep-pocketed developer who is going to give you 300% of fair market value for your home so he can build townhouses or condos, only to have your dreams quashed days, weeks, or months later.  I could talk for days about this, especially as a client of mine just went through this with a developer who promised him and his neighbours riches, only to lowball them with a below-market offer, and a two-year conditional period.

But what most people don’t realize is that this is how most condos get built.  There are only so many empty parking lots left in the city on which a 70-storey tower can be built.

So from time to time, I’m tasked with assembling six, eight, or twelve properties upon which a condo tower can be built.

It’s frustrating and often demoralizing, but when you succeed, it’s exhilarating.

I thought I had succeeded last year, having assembled twelve houses, on two sides of a street, upon which over 500 condos could be built – including 30% affordable housing.

But when the developer had his first call with the city councilor in this neighbourhood, he or she told the developer, “…..over my dead body.”

He or she said that this project would never move forward, as the neighbours would complain, and it was this city councilor’s job to appease the residents of the neighbourhood.

The project died.

The conditional agreements were terminated.

The deposits were returned.

And this city didn’t get the housing that it so desperately needs.

I’ve often said that 99% of attempted land assemblies fail, but I think that figure is low.

I had this site assembled, dead-to-rights, ready-to roll.  Central core, high density, steps to the subway, and some NIMBY, lefty city councilor shut it right down.

That is Toronto.

And that is what we need to change.

I took a LOT of flak for writing about the NIMBY’s in Leaside on multiple occasions this year.

May 4th, 2022: “Welcome To Toronto: The City Of NIMBY’s”

August 8th, 2022: “A Real Estate Case Of ‘Know When To Fold ‘Em'”

The people that contacted me and told me to “stay out of their business” are pathetic and bored, and above all, they’re wrong.

Because that is my business.  This city is my business.  And this city has been in trouble for a long time.

While it’s all the rage to write about how we “need more housing” in Toronto in 2022, I’ve been saying this on TRB since the late-2000’s.

When the government’s “changes” to public policy concerning real estate and mortgages was always addressing demand-side measures, I was the first to scream “It’s about supply.”

Now, I fear, it’s too little, too late.

It’s 2022.  We’re way behind.

Not just in terms of housing supply but in terms of public transit, which resembles something more suitable for the population in 1971.

Earlier this week, the Ontario government made an announcement with respect to the “More Homes Built Faster Act, 2022,” which, despite it’s stupid name, will probably do more to address the housing crisis than any piece of legislation before it.

HERE is the official press release.

There’s a lot to discuss in this, so while some of you will skim, others will skip to the comments, and a few of you have already read this press release in full, let’s cover all the bases here…

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Addressing the Missing Middle

Building on a suite of as-of-right residential tools Ontario has provided municipalities with since 2019, Ontario is proposing changes to the Planning Act to create a new provincewide standard threshold for what’s allowed to be built by strengthening the additional residential unit framework. If passed, up to three residential units would be permitted “as of right” on most land zoned for one home in residential areas without needing a municipal by-law amendment. Depending on the property in question, these three units could all be within the existing residential structure or could take the form of a residence with an in-law or basement suite and a laneway or garden home. These new units must be compliant with the building code and municipal bylaws. These units would also be exempt from development charges and parkland dedication fees.

This is a game-changer, folks.  And it’s long overdue.

In December of 2020, I wrote: “The Friday Rant: Mind Your Own Business!”

I took damage from that blog post.  It strained my relationship with some media members, as I took issue with certain reporters who authored an inaccurate smear piece on a young man who wanted to build a triplex on a piece of land that he bought.

Essentially, a young, enterprising individual purchased a dilapidated house and wanted to build a triplex, and the neighbours – one of whom was an architect with her own personal agenda, fought the Development, called the media to the site, and even tied themselves to the porch.

It was ridiculous.

And two years later, the young man has completed his triplex, thereby adding three homes to the city’s housing supply, and having paid through the nose in development fees.

It’s a shame that it took so long, cost so much, and had to be fought in the media.

And with the new legislation from the Ford government, this won’t happen again.

Note that I bolded two sections above, one noting that three units would be permitted in residential areas, but also that these would be exempt from development charges.

I find it incredulous that when an individual wants to tear down a bungalow to build a McMansion, there’s no development charges, but if that individual wanted to build a three or four unit property, which this city desperately needs, then several hundreds of thousands of dollars must be paid in development charges.

Then why would anybody want to build multi-unit?

That’s seemingly rhetorical because they wouldn’t.

If you tax people into inaction, you’re never going to get their help to build housing.

And this piece of legislation is great.

Does it open the door to somebody building multi-unit in an area where the residents don’t want it?  Yes, in theory.  But nobody is building a triplex on Edgar Avenue in Rosedale.  It would be cost-prohibitive and inefficient.  So I reject the argument that “residents in affluent areas are going to fight this,” since they simply won’t need to.

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Building More Homes Near Transit

Ontario is taking action to ensure that complete, sustainable communities are built near and centred around our historic investments in provincewide transit expansion. Proposed changes to the Planning Act would help move towards “as-of-right” zoning to meet planned minimum density targets near major transit stations, reducing approval timelines and getting shovels in the ground faster. Once the key development policies for major transit stations are approved, municipalities would be required to update their zoning by-laws within one year to meet minimum density targets.

Ha!

Hey, remember that time I wrote about NIMBY Leasiders who put yellow signs on their lawns to protest “bad planning” all because somebody wanted to build a condo 250 metres away from the multi-billion-dollar Eglinton LRT?

Sweet, sweet vindication, thy name is “More Homes Built Faster Act.”

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Improving the Ontario Land Tribunal to Support Building More Homes Faster

The Ontario Land Tribunal is a critical part of Ontario’s land use planning system. Proposed legislative changes to the Ontario Land Tribunal Act would help speed up proceedings, resolve cases more efficiently and streamline processes. This includes by allowing for regulations to prioritize cases that meet certain criteria (for example, that create the most housing), as well as to establish service standards (i.e., timelines for completing specific stages of a case). Proposed changes would also clarify the Tribunal’s powers to dismiss appeals due to unreasonable party delay or party failure to comply with a Tribunal order, as well as clarify the Tribunal’s powers to order an unsuccessful party to pay the successful party’s costs. Building on the $14.7 million over three years announced in the Budget, Ontario would also invest $2.5 million in other resources to support faster dispute resolution and to help reduce the overall caseload at the Tribunal.

Over the years, a lot of developments have been stalled or defeated by opponents tying up the developers with proceedings and appeals.

This is a lose-lose result, since there are going to be instances where appeals or opposition are genuine and with merit.  Unfortunately, those appeals and that opposition has been abused to the point where development has stalled and thus the tools for appeal must be completely removed.

The days of one person paying a nominal fee to the city and being able to hold up an entire development are gone, and I appluad that.

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Freezing, Reducing and Exempting fees for Building Attainable, Affordable, and Non-Profit Housing

Government charges and fees significantly impact the cost of housing—adding up to nearly $200,000 to the overall cost of building a home. That is why Ontario is proposing changes to the Planning Act, the Development Charges Act and the Conservation Authorities Act to freeze, reduce, and exempt fees to spur the supply of new home construction and help address Ontario’s housing supply crisis. This includes ensuring affordable, and inclusionary zoning units, select attainable housing units, as well as non-profit housing developments, are exempt from municipal development charges, parkland dedication levies, and community benefits charges. Rental construction would also have reduced development charges and conservation authority fees for development permits and proposals would be temporarily frozen. Ontario is also undertaking a review of all other fees levied by provincial ministries, boards, agencies, and commissions to determine what impact they may have on the cost of housing with the intent of further reducing, if not eliminating these fees altogether.

You know what I always say about removing government revenue, right?

Any time a tax is cut, a charge is removed, or a single dollar of government revenue is lost, those monies will be made up elsewhere.  So we’re not really removing these fees, but rather we’re shifting revenue from Column-A to Column-B.

Regardless, I do believe that development has stalled in many areas because of the excessive taxation, and making it more affordable to build will obviously result in more building!

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Streamlining Bureaucratic Processes to Get More Homes Built Faster

Proposed changes to the Planning Act would remove site plan control requirements for most projects with fewer than 10 residential units (with limited exceptions). This would reduce the number of required approvals for small housing projects, speeding things up for all housing proposals, while building permits and robust building and fire code requirements would continue to protect public safety. Proposed streamlining changes also include focusing responsibility for land use policies and approvals in certain lower-tier municipalities to eliminate the time and costs associated with planning processes by upper-tier municipalities. This would give the local community more influence over decisions that impact them directly, clarifying responsibilities and improving the efficiency of government services for citizens.

So long as safety isn’t impacted, then this is a no-brainer.

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Reducing Taxes on Affordable Rental Housing

Ontario is calling on the federal government to come to the table and work with us on potential GST/HST incentives, including rebates, exemptions and deferrals, to support new ownership and rental housing development. All levels of government need to work together to get more homes built and address the housing crisis.

You know how I feel about the government of Canada’s view of Ontario, right?

We make money, they take it, and use it elsewhere.

I have a hard time believing that Doug Ford will convince Justin Trudeau to remove, reduce, or defer federal revenue, but it’s nice to see this point included.

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Strengthening the Non-Resident Speculation Tax

At 25 per cent and provincewide, Ontario now has the highest and most comprehensive Non-Resident Speculation Tax (NRST) in the country. This initiative is meant to further discourage foreign speculation in Ontario’s housing market.

This was mentioned in every newspaper column last week, but I think it’s much ado about nothing.

Free coffee to whoever can find and link the 2021 revenues from the non-resident speculation tax in Ontario.

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There are more points in the press release, but at the risk of this becoming tiresome, we’ve just addressed the more important points.

What has the response to this announcement been like?

“Doug Ford Believes His Housing Bill Is ‘Bold.’ It Isn’t.”
The Globe & Mail
Editorial Board
October 27, 2022

From the article:

“The new bill contains some interesting measures – such as cutting taxes and fees on affordable housing and addressing tax inequities on rental buildings – but in sum it is totally inadequate. Mr. Clark was unable to say how many homes the new measures are expected to generate. That’s a glaring problem.”

Interestingly, the article concluded with this:

“Mr. Tory now also has “strong mayor” powers. He could deliver the change that Mr. Ford didn’t. Will he?”

So I was rather amused when I read this article shortly thereafter:

“Toronto’s Housing Crisis Is Choking The City. It’s Time For Mayor John Tory To Act.”
The Globe & Mail
Alex Bozikovic
October 26, 2022

From the article:

Right now, Toronto bans apartment buildings almost everywhere. That may sound incredible if you’ve noticed those new condos going up. But generally these are approved with the help of the Ontario Land Tribunal, which trumps the city’s obstructionist rules.

Even then, new housing is heavily concentrated in less than 5 per cent of the city. Everywhere else, there is slow or zero growth. Many Toronto neighbourhoods are actually shedding people.

This is madness. Many people want to live in the city. It should want to welcome them, not least for the taxes some would pay as homebuyers and homeowners. Instead, Toronto has pushed them out to suburban municipalities, driving up prices there and forcing them into long commutes.

Toronto’s government can do much to change this. The city should update its official plan and radically increase its targets for growth. The planning department should get a mandate to change zoning – the detailed regulations that govern each site – and allow apartment buildings to be built everywhere.

One thing that was not included in the Ontario government’s press release last week was the fact that they’ve given Mayor John Tory “super-powers.”

Mr. Tory, if he wants, can be at the forefront of change in this city.

Mr. Tory, if he wants, can now choose to stand up to obstructionist city councilors and those who hate development in any form, and instead, spearhead a building boom the likes of which Toronto has never seen.

I don’t dislike John Tory, but I don’t like him either.  And that’s because he’s never really accomplished anything in this city.  He’s just sort of managed it.  We’ve just coasted.  We haven’t had any wars and we haven’t eaten each other, but avoiding disaster isn’t really an achievement.

If we’re actually going to build more homes in the Toronto, or the GTA, or the Golden Horseshoe, or the entire province of Ontario, it has to involve all three levels of government.

The federal government needs to respect that 40% of the country lives in Ontario and thus make us a priority, however possible.

The provincial government needs to continue what they’ve been doing, namely removing the red tape that exists at the municipal levels (words like resist, obstruct, oppose, appeal, delay, veto, cancel, block come to mind…) and ensure that one city councilor or one Torontonian can’t stand in the way of massive progress.

The municipal government needs to recognize that if they’re not getting on board, then they’re going to be left behind.  Those who have visions of ice-cream stands lining a quaint street that was formerly Lakeshore Boulevard and the Gardiner Expressway need to see that this is not a cute little town, but rather it’s a growing Metropolis, and as it stands right now, the city is literally a tumour that’s about to burst.

I’ve long maintained that it’s impossible for any politician to truly enact meaningful long-term change, since politicians serve four-year terms, and consistently worry about re-election.  The politicians with the longest tenures are often those that ruffle the fewest feathers, and you do that, in essence, by doing nothing.

Do nothing.  Don’t act.

Don’t plan, don’t envision, and thus don’t aspire.

For this city to successfully expand into the future, politicians are going to have to take risks and often make decisions that are unpopular.  Those politicians will have to put their own job security on the line.

Who’s going to do that?  And at what level of government?

There were no shortage of critics last week, lined up to take aim at the Ford government’s announcement.  Some who criticized did so while admitting that the announcement was a step in the right direction by saying, “The government’s announcement doesn’t go far enough.”

But the reality is: the government isn’t going to be the one actually building houses.  The private sector is.  And the private sector can’t do that while obstructionist legislation and/or politicians are in place, and they certainly can’t be expected to do that without the guarantee of profits.

For those that read the announcement and lamented that the government, themselves, haven’t announced how 1.5 Million homes are going to be built, perhaps those folks need to understand who’s going to be building them.

I, for one, applaud last week’s announcement, and have a few choice words for the government: don’t slow down.

The post Monday Morning Quarterback: Ontario’s Big Housing Announcement appeared first on Toronto Realty Blog.