Toronto's affordable housing plan could stall if Ontario doesn't fill gap created by Bill 23: report

Toronto's push to build affordable housing could stall later this year if isn't made whole after the province cut fees for developers last year in a bid to spur housing construction, city staff warn in a new report.

The warning comes in an update on Toronto's Housing Now plan headed to the city's housing and planning committee on Thursday.

In the plan, staff provide an in-depth update to councillors on the progress to build more affordable housing across the city. But they warn without assurances from Premier Doug Ford's government to replace the $120 million in annual funding slashed with the elimination of development charges, projects that are set to get underway later this year will be stalled by July.

The province has said that municipalities will be made whole for the hundreds of millions they will be out because of the change. Despite that, the city has yet to receive confirmation of how that will happen.

Province giving 'vague assurances': councillor

Coun. Gord Perks is among those sounding the alarm.

"Council has repeatedly spoken up and asked the province to make us whole so that we can continue to build housing and affordable housing," Perks said.

"The province just keeps giving us vague assurances, but we have yet to see anything in writing that will allow us to continue with our housing program."

Late last year, Ford's government introduced Bill 23, the More Homes Built Faster Act. It said the legislation would help spur growth and help it hit its target of building 1.5 million homes over the next decade.

The policy offers builders waivers or freezes on development charges. But without those fees, critics have said communities will struggle to build sewers, sidewalks and roads that service new homes.

"In the event that the provincial government does not provide or commit to a multi-year reimbursement of lost revenues beginning in 2023 by the third quarter of 2023, the City will not be able to advance any future Housing Now sites, including the ones earmarked to proceed in 2023/24," staff say in the report.

Pandemic, labour shortages stalled construction: staff

Housing Now is part of the city's $1.3-billion effort to unlock city land and provide capital funding and other financial incentives to create "purpose-built affordable and market rental housing within mixed-income, mixed-use" communities.

Council adopted the plan in 2019, but staff acknowledge that while 10 sites have been re-zoned to date and six have gone to market, construction has not yet begun on any site.

City staff blame the pandemic, government actions, a labour shortage and a 63 per cent increase in construction costs since 2019 for many of the projects being stalled.

The report makes a number of recommendations to help "unstick" the projects, but notes they are contingent on Toronto receiving "written confirmation of reimbursement" from the province on development charge funding. 

It does say that three projects in Scarborough, Etobicoke and North York are shovel-ready, and with a few council approvals, they could get underway this year provided the province makes the city whole.

Perks said it will be up to council, and the city's new mayor, to push back.

"I'm hoping that during the mayoralty campaign ... Torontonians speak up and say, 'No more Mr. Nice Guy.' We have to push hard with these people," he said.

A spokesperson for Municipal Affairs Minister Steve Clark said the province eliminated development-related fees on affordable, non-profit and select attainable housing through Bill 23 in order to lower costs and spur the construction.

The province said the city has recently agreed to the terms of a third-party audit to get "a factual understanding" of its finances. The auditor will be announced soon, Victoria Podbielski said in a statement.

"The purpose of the audit is to determine the impact of the More Homes Built Faster Act on City finances as well as whether the City's growth-related capital planning decisions have been managed with due regard for economy, efficiency and effectiveness," she said.

Province must address uncertainty: expert

Coun. Shelley Carroll agrees the province's policy is putting Toronto's plan to build affordable housing at risk. It runs in complete contradiction to the Ontario's goal of building more housing, she said.

"The Housing Now progress report tells us, here are the real addresses of places that would have housing on them by the end of this year, or the end of next year, if not for this problem," she said. 

Toronto Metropolitan University real estate management professor Murtaza Haider said the province's push to reform the development process is needed. The current system has resulted in project delays at the municipal level and not produced much-needed housing, he said.

"If it did not really deliver in the past 50 years, chances are that if things were left as they were, it wouldn't have delivered in the next 50 years as well," he said.

But Haider said the lack of certainty around development charges needs to be resolved, and the sooner that happens the better. Municipalities need that funding, he said.

"I think the right thing for the province is to act quickly," he said. "A lack of funding means that we will see more challenges within the city." 

Deputy Mayor Jennifer McKelvie said the Housing Now report shows the three "shovel-ready sites" could help the city deliver more than 1,949 affordable and market rental homes. Council's approval of the report will move the projects forward, but the city needs the support of the province, she said in a statement.

McKelvie said she met with Minister Clark earlier this month to discuss the impact of the bill.

"Toronto will be the first municipality audited to assess the impacts of Bill 23 and I am confident that audit will make it clear growth needs to continue to pay for growth."