Toronto city councillors want to make housing even less affordable. Ontario’s stopping them

Originally published in the Financial Post. 

Building more homes just became easier in two of the most densely populated areas in Ontario: Toronto’s downtown core and its “midtown,” a small strip of land centred at Yonge St. and Eglinton Ave. For anyone interested in finding a place to live in those areas, this is great news.

Unfortunately, the responses from many Toronto city councillors and city staff have been more dire. After spending several years preparing and conducting studies, surveys and consultations with the current residents of those neighbourhoods, the city was set to introduce a wide array of (generally unprecedented) new constraints on new development through its “Midtown in Focus” and “TOcore” plans. Among other provisions, it had plans to prescribe how many two- and three-bedroom units must be included in larger new buildings including condo developments, and wanted to prescribe an increase to the required minimum sizes of those units.

The government of Ontario last week wisely overruled those plans. The province determined that the new proposals were incompatible with its growth expectations for the city. In midtown, not only did it significantly relax height maximums, it also introduced language to the plan that will make it easier to build more duplexes, triplexes and other “gentler” forms of density in the area’s so-called stable neighbourhoods. The city’s proposed increases to minimum-unit-sizes requirements were also scrapped. But, cementing a policy analogous to requiring sports stadiums to dedicate 10 per cent of their seating capacity to box suites, the multi-bedroom prescriptions unfortunately survived.

The word du jour in Toronto planning circles is “liveability,” but there is no clear definition of what it means. Municipal planners seems to agree, though, that what the Ontario government did on Wednesday definitely made Toronto less “liveable.” Never mind that by building taller towers and more homes, more people will literally be able to live in Toronto — apparently, that kind of liveability doesn’t count.

Deciding what is and isn’t liveable is a personal affair. Planners seem to be worried about the old aphorism, “it’s too crowded, nobody goes there anymore.” If people were really concerned about liveability, then they would vote with their feet and live somewhere else.

Maximum height and density limits do have a loophole, however. Enabled by Section 37 of Ontario’s Planning Act, the city may give a developer permission to build more units than what city regulations allow if the developer offers enough payoffs to the city in return, in the form of cash or by paying for in-kind “community benefits,” such as building a park or an expensive public art piece. Often referred to as “density bonusing,” this practice creates perverse incentives for planning. The city sets limits on height and density that it knows will be too low to support the kind of structures necessary to make building economically feasible, and forces developers into payoff negotiations that have no limitation whatsoever.

Radically, the province is now proposing a formulaic approach to community-benefit payments based on land values. This will increase cost predictability for developers and will lower costs for buyers.

Ending the arbitrary nature of this practice is being met with threats from city councillors to delay or deny permits for road occupancy and other necessary legal permissions administered by the city. This way, construction can still be brought to halt by the city, despite the fact that the building is allowed by the provincial changes. Needless to say, halting construction will only make the affordability problem worse.

This raises the question of whose side Toronto’s city councillors are really on: Those looking to live in this city in an affordable manner? Or existing constituents hard-bent on keeping new homebuyers out?

Of course, the harder it gets to build legally, the more expensive homes will continue to become in Toronto. This makes it not only harder for low- and moderate-income households to live in Toronto, but it also makes it harder for local employers to find talent as well.

Moreover, many services in the city are running well under capacity. For example, while the Mount Pleasant branch of the Toronto Public Library saw in-library usage increase by 29 per cent in 2017, the Forest Hill branch saw a 27-per-cent decline. Citywide, in-branch usage has been declining since 2011. And nearly one in three schools are operating at 65-per-cent capacity or lower.

Evidently, investigating its own existing planning policies that might be contributing to such a ridiculous mismatch of growth in the city, namely by partitioning 40 per cent of the city for detached homes only, is a bridge too far for most Toronto politicians. Instead, they prefer to demonize those who are working to meet the demand of people who simply want to live in this city. Nothing could be more economically counterproductive. And more politically divisive.

Supporting growth means enabling an organic process of mutual exchange. By ignoring the market process and imposing micromanagement by politically hamstrung government planners, we can only expect more dysfunction. The only solution is to let the market work. The new changes handed down by the province, while not perfect, move us closer in that direction.