Finance Committee on Oct. 16th, 2023

[Julie Dzerowicz, Liberal, Davenport, ON]

Have you heard some developers say that they have been able to—

[Josh Morgan]

Yes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Have you also heard that, Mr. Lee? Yes? Okay.

I don't want anybody to believe that this is the magic bullet. We know there are a lot of issues. One key thing that I find very frustrating when we're having this discussion here is that a lot of measures are needed at the provincial and the municipal levels.

Often when you're talking about things, people don't know that when you're talking about rent control, it's actually provincial. When you're talking about zoning, that's municipal. When you're talking about the Ontario tribunal, that is Ontario. It's difficult.

In your responses, it would be very helpful if you can speak to that as well. It helps us to understand the complexity and how we craft those together when we're making recommendations.

One thing that our Minister of Housing, Infrastructure and Communities is focused on is how we protect the existing affordable stock. It's a real issue for us.

Maybe I will start with you, Mayor Morgan. Can you spend 30 or 45 seconds telling us what some of your recommendations for doing that might be?

[Josh Morgan]

To protect the existing affordable stock, the challenge we have with the affordable stock, particularly in Ontario, where we were able to create a number of units under bonusing with provincial rules, is that much of the housing that is below market rate will expire at some point in time. It may be 40 years, 30 years or 50 years—it depends on what it is—so we need to have the ability to create more.

Even with that market rate housing, one of the vulnerable pieces we found is that you can use certain tools that we used to have to create some level of affordability, but there is a depth between rent-geared-towards-income housing and slightly-below-market-rate housing, where there have to be other partners involved who are supported.

In London, the municipality is directly involved in builds now—one of them is in partnership with the federal government on Sylvan Street—because we know that we can't find a spot to produce those rents that are in that missing middle gap. Unfortunately, in a rising interest rate environment and when what people can afford is diminishing and their mortgages are coming due, there may be more people moving into that space. Supporting and creating that missing deeply affordable middle piece is important.

You want to ask how we protect it, but there's a gap there anyway, so it's a point of creation.

We've been very successful in using the rapid housing initiative money to try to create those. We'd always be happy to take more money, and a fourth and a fifth round would be great. It has helped municipalities to partner, but something that was said was that the market isn't going to produce it on its own. I don't think it's just protecting the ones that are expiring; it's creating that piece in the gap.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'm going to go to one final question in a minute.

We've heard that when someone moves out of their apartment in Ontario, it can be rented out again, and the average price increase is 29%.

Would you agree that there's a provincial role in terms of putting some regulations around not allowing that amount of increase?

[Josh Morgan]

Yes, there is a provincial role. There's a role for all levels of government. That is an issue. Whether it's renovictions or the difference between existing people in housing and the new builds and the difference in rental rates, it's a huge issue, and the province absolutely has a role to play on the rental rate side of things.

[Julie Dzerowicz, Liberal, Davenport, ON]

My final question is to Mr. Richardson.

Thank you so much for being here. Welcome on your first time here.

One thing that I know has been talked about is a need for us to change the equation for non-profits that are trying to create deeply affordable homes. Do you think that's something we need to look at?

[Mark Richardson]

Yes, 100%.

I'll add a number in for you as well on the HST that you mentioned earlier: The HST savings we calculate on a 600-square-foot affordable housing unit in Toronto is about $48,000 a unit.

I'm sorry; I'm going to need you to repeat your question.

[Julie Dzerowicz, Liberal, Davenport, ON]

Do you believe that we need to change the equation for non-profits that are trying to create deeply affordable houses?

[Mark Richardson]

Yes, 100%. They need speed and they need certainty.

The monies change a lot. The co-investment fund was $150,000 a door; then it was $25,000 a door, and then it was $75,000 a door. That's all changed, so they don't know what they're entitled to when they're trying to do these calculations.

If you want deeply affordable units that are renting for under $800 a month in the city of Toronto, you need to be offering long-term, stable subsidies in order to be able to keep those deeply affordable prices.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Dzerowicz.

Now we go over to MP Ste-Marie, please.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Good morning to all the witnesses. We really have an extraordinary panel of witnesses. We're covering a lot of ground and taking notes.

I have some questions for Ms. Bolduc before she leaves us.

Madam Reeve, if you have to go, I'll direct my questions to your colleague, Ms. Drolet.

Ms. Bolduc, do you want to finish your remarks? The chair, who times these things, had to interrupt you.

[Claire Bolduc]

In short, I was saying that decisions should be made as close to home as possible, and the municipal sector should play a major role. Locally managed housing programs work better.

I would also note that both cities and rural communities are facing challenges, but they are each facing very different challenges. Solutions can potentially be implemented faster, but it's much harder to find the means.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

The programs are meant for everything from small towns to the megacity of Toronto, but they're not tailored to distinct needs. You mentioned a need for flexibility and agility.

Can you explain that, please?

[Claire Bolduc]

When we talk about housing, we're talking about land use planning and infrastructure that allows for the deployment of the types of housing units that will best suit local populations. In rural communities, people are more interested in single-family homes and less interested in multi-unit housing. Who better than local authorities to identify and meet needs?

I've heard about all the problems with bureaucracy in cities. We know Quebec has those problems too, but it's a lot quicker and easier to get permits and construction facilities in rural communities.

Housing and land use planning are key. As such, agility is also about how we meet those needs. I am very familiar with rural Canada, and I know there are town cores in every established rural community in Quebec and across Canada. Unfortunately, those town cores tend not to have local services, which hinders the construction of what is typically affordable housing there.

We also have to think about how to make the best possible use of all the spaces we have. Here again, RCMs, associations of municipalities in Quebec, are experiencing similar circumstances in similar places. These municipalities are often in the best position to make good decisions about development types and supports, and to plan for that. We need to do a good job of planning and coordinating development and taking concrete action in our regions. We have to make the best possible decisions and have a comprehensive vision for our regions.

That vision needs to cover the medium term and the long term. Current programs are only for the short term. Ontario builders and municipalities have complained about how there's no predictability, so a short-term vision is a real obstacle to getting all kinds of housing—be it social, affordable or higher-end—to market.

Thank you for your question.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you very much. You've given me a lot of very interesting information.

I fully understand the importance of predictability. We hear about that a lot. Meaningful development can't happen without predictability, which is why medium‑ and long‑term vision is so important. At the same time, there is a crisis right now, and we need new housing urgently.

One of the points you raised struck me. You talked about the importance of making sure town cores get their share too. When governments in Ottawa and Quebec City grant funding, it seems tricky to come up with an approach that is equitable for town cores where there's lots of development potential.

Can you expand on that?

[Claire Bolduc]

Thank you for your question.

I'll illustrate that very simply.

It's not complicated: for proper planning and agile, effective execution, you need both feet on the ground and mud on your boots. Parliament Hill in Ottawa is very far removed from the day‑to‑day, concrete reality of municipalities. The same goes for Quebec City, Toronto and Victoria. Provincial governments are also far removed from the day‑to‑day reality of contractors, municipalities and the infrastructure that supports building and project deployment.

Municipal governments are still the closest to the people and quickest to respond to their needs and ensure their day‑to‑day well-being. It's also the level of government that can best guide developers and those seeking housing. That all takes proper coordination based on the actual options available, be that in a community, a city neighbourhood or a rural community in an RCM. The closer to the ground you get, the better you can coordinate the process to connect people who need housing and those who build it.

That said, municipalities need support. As I said, in rural municipalities—and I think this is probably true across Canada—bureaucracy is a lot less cumbersome than in cities, where processes can take a very long time, as some builders have said. Rural communities tend to have a hard time accessing funding and finding developers that want to invest or work in rural areas.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That's very clear. Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Bolduc and Mr. Ste-Marie.

Now we'll go to MP Blaikie, please, for six minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing today.

Dr. MacKinnon, in your opening statement, you talked about the challenge Canada faces in terms of losing far more social and affordable housing than we're building. I think Stephen Palmer has estimated that it's a ratio of 1:15. We're losing 15 social affordable units for every one unit we're building.

I'm wondering. There was a decision taken under the Harper Conservatives, which was largely continued by the new government, to end operating agreements and mortgages for affordable and social homes that were built decades ago. It was a decision, as those mortgages expired and the operating agreements expired, not to renew those agreements. I wonder if you can speak a bit to how that helped precipitate the loss of a lot of social and affordable housing over the last 10 or 15 years.

[Dr. Shauna MacKinnon]

Sure. Thank you for the question.

That is a big challenge, and that is in part why we're losing some of the low-cost supply. Here in Winnipeg most recently, we had a large non-profit seniors' complex that was sold by a non-profit to a for-profit. Their argument was that they couldn't maintain it anymore because their operating agreement had expired, and this is the case for many non-profits.

When we talk about how we maintain existing supply, we need to renew these operating agreements. Otherwise, it's not possible for non-profit organizations to sustain them at low rents and to do the maintenance that's required. That's what is happening. They're selling off some of that supply or else they're increasing their rents to market rates.

The other issue that's happening, of course, is that there's a lack of supply and a lack of regulations, and yes, this is not a federal issue, but it is really a significant challenge in relation to all levels of government needing to be part of the solution. If we don't have strong regulations, we'll be losing a significant amount of supply through renovictions. Also, units are not being maintained, but the rental rates are increasing.

We're losing supply in the private sector and we're losing units in the non-profit sector, and then, of course, there are virtually no new units being built. It's a significant problem, but yes, operating agreements need to again be part of the solution.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

In regard to building new social housing, I know that having operating funding in place for social housing is important. We've also heard others say that low-interest loans for financing that are below market levels might create financial space to offer either affordable rents or social rents.

What do you think about the kind of mix of those solutions, such as trying to provide some of that subsidy up front on the capital side in order to reduce the operating costs of the project over time, versus having an operating agreement in place that would continue to roll out funds over time? Is one better or worse? Does it depend on the project? Are there some examples of success recently under the national housing strategy you could point to in the Winnipeg context that would light the way forward?

[Dr. Shauna MacKinnon]

I can't think of any examples off the top of my head, but the reality is that we need all of those things. We're not suggesting that we don't need to increase rental housing more generally, but the reality is that deeply affordable housing really needs significant subsidy.

If you want non-profits to be building it, they need significant capital grants, but they also need ongoing subsidies. When you're renting units at less than market value and deeply less than market value, as we're suggesting is needed if we're looking at rent geared to the lowest-income renters, then you're going to need ongoing subsidies, and that means operating agreements.

Part of the challenge is the loss of even the public housing supply across the country—and this, again, is more of a provincial issue—because we're not maintaining the budgets to do the maintenance. Again, you have units falling into disrepair and becoming vacant because they're in such poor repair.

There are multiple things that need to be done, then, but we maintain that if we don't focus on the lowest-income renters, the group of people who are in most dire need.... We're not going to solve this problem if we just keep developing market-level and above, or even just slightly below.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

One of the things we've heard is that whatever else happens, it's going to cost a lot of money to be able to build an adequate amount of social and affordable housing, and there's a lot of emphasis on the cost.

Are you aware of any efforts to quantify the cost of not having this housing? We also hear from business owners who say that they can't attract talent to come work for them because there's no place to house the workforce. Are you aware of efforts to quantify the cost of not building housing so that we're not just talking about how much it costs to get that housing there?

I'll go first to Dr. MacKinnon, and then I see that another witness has put her hand up.

It's Ms. Bolduc. I think she has to leave soon.