Three ways the new Tory government could tackle housing in Ontario

ANALYSIS: Housing is going to be a key issue for the incoming Progressive Conservatives, writes John Michael McGrath. Here are some policies that might appeal to the market-oriented, small-government party
By John Michael McGrath - Published on June 15, 2018
a house with a For Sale sign on it
A large chunk of the price of a new home in the GTA is made up of fees that new developers have to pay for infrastructure or new parks or community amenities. (Fred Lum/CP)

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The Tories won’t even technically be in government until June 29 — but we can already identify some of the problems they’ll face when they’re in office. One of the biggest will be what to do about the housing market in the GTA. Incoming premier Doug Ford has said that it’s a priority and that young families can’t afford to buy family-size homes without moving to places like Milton.

So what’s to be done? During the campaign, Ford ruled out allowing development in the Greenbelt and scrapping rent control. That still leaves plenty of options for a provincial government that wants to increase the supply of “ground-oriented” housing, as Ford has said he wants to. Given the Tories’ partiality for lowering taxes and cutting red tape, here are a few ideas the new government may want to consider.

1. Legalize the housing you want to see more of

Most of Toronto could not be built today if developers had to stick to the rules set out in the city’s current zoning bylaws — which they don’t, because the bylaws can be appealed. But doing so is a time-consuming and costly process that gives power to both deep-pocketed developers (who have the money to slog through) and local residents (who often use the process to extract concessions). Nobody involved in the process has a strong incentive to keep the sticker price of new homes low, so they don’t.

It’s provincial planning law that makes all this possible by putting such decisions in the hands of local municipalities, but the province can limit their power however it wants to. (The most obvious example is wind turbines, which are approved by Queen’s Park and not subject to local control — though the Tories may change that.) The Tories could, if they wanted to, expressly allow “gentle density” that wouldn’t have to endure municipal opposition. And they’d be helping repopulate Toronto’s shrinking, aging neighbourhoods while they were at it.

The PCs might want to consider Los Angeles’ small-lot subdivision policies. More generally, they could look at allowing increased density in residential neighbourhoods: according to the city, the average detached home lot in Toronto is nearly 40 feet wide. Replacing squat bungalows with three-storey semis and rowhouses would accomplish a lot, cheaply and quickly.

The obvious catch is that municipalities like the current level of scrutiny; even making it possible for laneway houses in Toronto to bypass the show-trial phase takes years of lobbying. For some people, there’s no density that’s gentle enough that it can be allowed without a fight, and a fight is what the Tories will have if they want to tackle this.

2. Freeze or reduce development fees

A large chunk of the price of a new home in the GTA is made up of fees that new developers have to pay for infrastructure or new parks or community amenities. A report earlier this year from Altus (produced on behalf of BILD GTA, the lobby group for regional developers) estimated that government fees add up to more than $200,000 on every new home in Toronto – and Toronto isn’t even the most expensive city in the region. To put it another way, fees and taxes alone now cost as much as the average Toronto house did 20 years ago. (Admittedly, I’m not adjusting for inflation.)

Even a more restricted estimate — one that doesn’t include HST, land-transfer taxes, or other more general charges — comes to more than $88,000.

The last time the Tories were in power, they clamped down on what municipalities could use these kinds of fees for. When the Liberals took over in 2003, they started loosening the rules again — most recently, they let municipalities pay for new transit services with development charges. It’s likely that under the new Tory government, the pendulum will swing back the other way, reversing some of the Liberal allowances and perhaps freezing charges where they are for now.

3. What of the OMB?

One of Kathleen Wynne’s most significant land-use-planning moves came late in her term, when the Ontario Municipal Board was formally renamed and its rules changed to give more power to municipal councils. The Local Planning Appeal Tribunal (LPAT), as it’s now called, has barely gotten started, and its influence could very well end up being short-lived if the Tories listen to voices in the development industry. Builders were understandably leery of the changes to the OMB, which they saw as the only body that was actually enforcing provincial planning rules in the face of municipal obstruction.

Interestingly, the People’s Guarantee — the platform the PC party introduced under then-leader Patrick Brown, then abandoned when Doug Ford won the leadership — included a little-noticed policy that’s relevant here. The now-defunct document pledged to cut the length of time municipalities are given to consider matters before they’re appealed to the OMB (or LPAT, now). The McGuinty Liberals gave municipalities 180 days to consider a new application before it could be appealed to the OMB (the period was subsequently extended to 210 days under Wynne). The People’s Guarantee proposed rolling back the deadline to what it’d been before the Tories were defeated in 2003: 90 days.

The effect would be dramatic, even if the Tories did nothing else: the LPAT would be in a position to impose a final decision in less than half the time allowed by the current law. Speedier timelines would be welcomed by developers, not least because they’d mean that some municipalities would simply not bother to contest decisions at all.

All of these changes would irritate municipalities, and some (such as restricting development fees) could have the knock-on effect of increasing municipal property taxes as councils are trying to fill budget holes. Indeed, one of the big questions the Tories will have to answer is how they’re going to balance their priorities: Doug Ford’s stated conviction that the market needs new subdivisions versus the economics of the denser homes developers are actually bringing to market; reduced fees for new homes versus higher taxes for all; and less red tape for builders versus local control “for the people.”

Now that they’re in government, the Tories are going to have to start making choices — and not all of them will be popular.

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