Want More Affordable Housing?

Tell governments to stop making it so expensive

By Mike Chopowick, November 4, 2015

 

On Monday I appeared before the Ontario Standing Committee on Social Policy to deliver FRPO’s recommendations on Bill 73, the Smart Growth for Our Communities Act. This committee was reviewing important amendments to how development charges are imposed on new homes.

My goal was to voice the rental housing sector’s basic position that it’s almost impossible to build affordable rental housing when governments heap $50,000 to $60,000 on each new apartment unit.

The committee hearing went very well, and it’s worth noting that the MPPs were very attentive to my 5:00pm presentation, and special thanks goes to MPP Jagmeet Singh (Bramalea—Gore—Malton), who expertly and professionally chaired the meeting. Many diverse views were being presented on the issue of development charges and planning for new housing projects.

High development charges ave one result: higher rents for tenants

High development charges have one result: higher rents for tenants

 

On one hand are municipalities and environmental groups, who stand in favour of high charges to pay for new infrastructure and parkland. On the other side are housing providers, who have no choice but to pass on these high taxes to residents who move into newly constructed homes.

The missing theme from this debate, and what I pointed out, was the issue of housing affordability. Governments and elected officials are practically tripping over themselves to champion policies that make housing more affordable. And yet, before us is a piece of legislation that does exactly the opposite: It makes prices of new houses higher, and increases rents for tenants.

There are some positive aspects to Bill 73. It will make development charges more transparent and make governments more accountable for how they are imposed. It will also reduce the requirements for “parkland dedication” while still ensuring communities benefit from sufficient open space.

“When affordable housing is in short supply, Canadians feel less secure and our whole economy suffers.”
Rt. Hon. Justin Trudeau, October 5, 2015

The key issues that remain are fairness and housing affordability. It is inherently unfair to make one group of residents (those in new homes) pay a higher cost for transit, roads, parks and community centres that benefit all residents, including the majority that live in existing homes. These infrastructure assets benefit the entire community, and should be paid for equally by all citizens and businesses.

And, when development charges make up 15% to 20% of the cost of a new rental apartment building, it is clear that reducing them is the best way to ensure more affordable rents. Home builders can’t reduce the cost of bricks, mortar, land and construction labour. These costs are fixed and rising. But government can reduce development charges and taxes.

This is what Vancouver did. The result? Over 3,700 new apartments built in the past years, secured as purpose-built rental housing for the next sixty years – on their way to a goal of 5,000 new rental units.

If local infrastructure is so important (and I believe it is) then let’s all support everyone paying for it – from income, sales and property taxes and debt financing. By charging only residents of new homes and apartments for these investments, the government is making new housing less affordable, and economic security weaker for the middle class.

The solution is simple: If we want more affordable housing, then the government should stop making it more expensive with unfair development charges and taxes.