Human Resources Committee on May 16th, 2022

[Marilyn Gladu]

Thank you.

What do you think, Mr. Racette?

[Jean-Pierre Racette]

In Quebec, it's tricky.

The Société d'habitation du Québec is responsible for allocating funds. Municipalities are clearly better suited and know the area better. Montreal has a particular status, as does Quebec City, I think.

In Quebec, the problem is that it can lead to disagreements, which would delay investments. That could also lead to Quebec not investing in housing, leaving it to the municipalities and the federal government. That's not a good idea because some small municipalities are unable to take action. If Quebec or the other provinces don't work at the regional level, that can cause problems for small municipalities.

In Quebec, there's a political issue, but the municipalities certainly know the area better and are better suited to find solutions.

[Marilyn Gladu]

Another issue that I think is making the problem worse, and doesn't really have a solution, has to do with immigration. We see the temporary foreign workers coming who are looking for affordable housing. In my riding, we have 100 Ukrainian families coming, who will be sponsored by people, which is great, but as they start to support themselves and move out and look for housing, it's not there.

With Roxham Road, we have a steady stream of people coming in. I don't see that there is a plan.

Monsieur Racette, do you have any suggestions on what the government could do to help there?

[Jean-Pierre Racette]

We have experience in Montreal North, a neighbourhood that's home to a lot of newcomers. We have developed territorial strategies. We do a lot of projects in which the area must be considered and services offered. We not only offer housing; we create a community. Our vision is to create united and inclusive communities in these urban centres. The projects must therefore be thought out in terms of the urban centre.

Naturally, there are host areas where housing is not as expensive and where there's already a population of newcomers, and that has to be dealt with. It is not simply a matter of carrying out a project that falls from the sky and lands somewhere. The issue of territorial strategies is essential.

As for immigration, Quebec usually welcomes about 50,000 newcomers per year. Of those 50,000 newcomers, 80% settle in Montreal and in certain neighbourhoods. That represents an integration challenge that cannot be ignored. As for investments, more comprehensive strategies need to be developed, and the cities—

[Marilyn Gladu]

Mr. Racette, my time is up.

Mr. Barndt, if you could maybe submit your answer in writing to the committee, that would be great.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Gladu.

Thank you, Mr. Racette.

Now we will move to Mr. Coteau for five minutes.

[Michael Coteau, Liberal, Don Valley East, ON]

Thank you very much, Mr. Chair.

I want to thank the witnesses today.

This issue around housing affordability is a huge issue, and I know it impacts the entire country. In my riding, currently there are 81,000 home requests just for Toronto community housing, which is astonishing. I know that's replicated right across the country.

I just want to say thank you to the witnesses for the work they're doing to look for alternatives to bring in affordable housing.

My first question is to Joshua.

You talked about the difference between short-term and long-term affordability. You said 49 years versus a short-term period. Can you briefly explain that a bit more, please?

[Joshua Barndt]

Yes. One basic example is in the City of Toronto. When a rental building is demolished, rental replacement policies require that the affordable rental units in that prior building be rebuilt in the new building and that they be affordable for 10 years. That produces an affordable unit for 10 years. We often find at the end of that 10 years, as units turn over, that those rents are increased to above market rents. There is an idea that we're producing affordable units, but they disappear at 10 years.

In the U.S., they've experienced crises of funding hundreds of thousands of affordable units that had 20-year affordability periods, and then when those periods end, they are gone.

It's very important that when funding is going to a project that the affordability requirements be long term—the life of a person. Someone needs to live there. The affordable housing should be there past that tenant so that it's available to future members of that community. We advocate for 49 years of affordability, which is a very long-term period.

[Michael Coteau, Liberal, Don Valley East, ON]

To jump back in, I have a quick question. We all use this term “affordable housing”.

To both witnesses, very briefly, is there a common definition of what that actually means, and does it mean different things in different jurisdictions? I think it's important for us all to be on the same page when we talk about what affordable housing really means.

[Jean-Pierre Racette]

Yes, absolutely. It has to be based on household income. A unit that costs 50% of the market price can be said to be affordable, but if the rent doubles, the household occupants would no longer be able to pay it because their income would not have doubled. A unit that costs no more than 30% of the household's income is therefore an adequate target.

As for long-term affordability, I believe that the owners must not be profit-oriented. That's an important condition. Otherwise, in the private sector, over time, sale is inevitable due to the lure of capital gains.

The last thing I want to point out is that, over time, non-profit organizations with large real estate stocks build the equity needed to refinance their mortgages and repay their debts. They thus financialize the housing, but to build long-term affordable housing, not to make a profit. For sure, there's currently a short-term crisis. However, in 15 or 20 years, those property owners will have been able to repay their debts and, as in the private sector, build and purchase housing units, renovate existing units and develop their real estate stock. That's something that's been greatly neglected in Canada. Projects are carried out, but the owners aren't taken into consideration.

[Michael Coteau, Liberal, Don Valley East, ON]

I don't mean to interrupt. I probably have a minute and a half left. I want to get a definition of affordable housing from Joshua.

From your perspective, what do we mean when we talk about affordable housing? Is there a universal definition that's out there?

[The Chair, Liberal, Bobby Morrissey]

You have less than a minute.

[Joshua Barndt]

There's definitely not a universal definition out there.

The City of Toronto defines affordable housing as housing that is below 100% of average market rent. The city's funding programs target rents to be set at 80% of average market rent or less when they are providing capital funding or other significant incentives. Of course, in the city of Toronto 80% of average market rent is not affordable to most residents.

When non-profits put together projects for folks who have lower incomes, we will often layer in rental housing supplements or other forms of rental supplement, like an RGI supplement, to ensure that the tenant's portion of the rent is affordable and that the subsidy is meeting that difference. All projects that target lower-income people or folks on fixed income—like ODSP, Ontario Works or OAS—require those types of layered rent supplements in addition to the other supplements.

In addition, in the U.S. a common strategy is to have mixed buildings owned by non-profits, in which rents for some units are above market to subsidize the lower-rent units for folks who need lower rents. That's a model that is more common in the U.S., but we should be increasing the use of that here in Canada.

[Michael Coteau, Liberal, Don Valley East, ON]

Thank you very much to both of you.

[The Chair, Liberal, Bobby Morrissey]

Thank you to the witnesses.

As you can see, this is an engaging subject. Thank you for your contribution.

A number of committee members asked that if you have anything written that you would like to submit to the committee and that you think may help us in this study, to please submit that to the clerk. Again, thank you for taking the time to participate this afternoon.

We will suspend for a moment while we change to the next group of witnesses. Thank you.

[The Chair, Liberal, Bobby Morrissey]

I'm going to move directly into opening statements, as each one of you introduced yourself and the committee knows who you represent. We have the City of Montreal, the City of Saint John and the Town of Newmarket. Each witness will present for five minutes. I will interrupt you if you move over five minutes, because we are stretched for time today.

We'll begin with la Ville de Montréal with Monsieur Dorais.

[Benoit Dorais]

Good afternoon, Mr. Chair, vice-chairs and members of the committee. Thank you very much for having me today and giving the City of Montréal the opportunity to take part in this discussion as part of your study on the housing accelerator fund.

First, the City of Montréal wants to acknowledge the housing investments announced by the Government of Canada in its latest budget, as well as all the investments in recent years through the national housing strategy. We recognize the importance of housing and the existence of a real crisis in housing. The Government of Canada deserves credit for these investments, which will clearly help to achieve concrete results. We therefore applaud the desire to create the housing accelerator fund, a measure that adds to other recent federal initiatives.

Before discussing our expectations for this new fund, I'd like to take a few moments to present the projects under way in Montreal. In Montreal, we've had record years in terms of building construction and the addition of units, and we've seen a real estate boom in recent years. Despite everything, we're seeing an explosion in property and rent prices. In Montreal, we're getting close to an overheated market. The problem is in part due to the basic supply, but to adequately address the current housing crisis, targeted action must be taken now in the area of off-market social and affordable housing construction.

The City of Montréal has shown that it can quickly adopt the tools needed to do so, and one of the solutions it has already put in place is an inclusion strategy, which recently evolved into a by-law for a diverse metropolis. That by-law sets out the terms for inclusion of affordable social and family housing in private residential projects.

Over the last year, a right of first refusal has been added for social housing and housing in general, which has allowed the city to act in terms of property by acquiring lands and buildings. These tools are at the heart of an ambitious strategy, with the city's partners, of accelerating the preservation and construction of 60,000 affordable housing units over the next 10 years, not to mention the construction of 2,000 social housing units per year. In terms of acceleration, the city did not wait to act, because it has needs. We set ambitious targets, and the city developed mechanisms for achieving them and enhancing its tool box.

The metropolis of Quebec also has private and community partners who have projects ready to launch but who cannot do so due to inadequate funding. With our local partners, the city needs help from the various levels of government in relation to four elements.

First, stable, predictable and recurring funding must be disbursed quickly and directly to cities to fund affordable off-market projects. Financial resources must be focused on the construction of housing.

Second, flexibility is needed in the use of the funds, because the city knows the needs, knows how to propose solutions, knows local actors and is trying to work with them. As we saw with the rapid housing initiative, it worked well.

Third, a coordinated and efficient approach is needed, because the increased number of programs, terms and criteria hinder the acceleration of the completion of projects. Federal programs must be consistent and must actually meet local needs, not to mention that they must absolutely align with provincial and municipal programs.

Fourth, an approach is needed that takes into consideration the unique features and challenges of large urban centres, to make it possible to limit urban sprawl, to increase the density of land in a smart way, to innovate and to optimize the use of existing infrastructure.

The City of Montréal reiterates that municipalities are best suited to find opportunities and meet local needs. We have the flexibility needed to take action, and we can create partnerships with the private sector and communities to accelerate development. We have proven this, and we continue to want to prove it with the necessary financial support.

I also note that the problem of acceleration is not really linked to municipal by-law barriers like zoning or the issuing of permits. The problem is related more to the exponential increase in land value, the increase in construction costs, the labour shortage and the cost of construction materials. In short, the cost of development is increasing, and is hindering affordable and social housing projects. In this respect, the housing accelerator fund is a unique opportunity for the federal government to concretely and quickly support cities, which are on the front lines fighting the housing crisis.

We therefore invite you to continue working with large cities in Canada and to accelerate the preservation and construction of affordable and social housing.

I'll conclude by very briefly noting the federal lands initiative. Access to surplus public buildings is certainly useful.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Dorais.

[Benoit Dorais]

Thank you very much, Mr. Chair.

[The Chair, Liberal, Bobby Morrissey]

You can follow up in the answer round.

Now we will go to Mayor Noade Reardon for five minutes.

[Donna Noade Reardon]

Good afternoon, members of the committee. Thank you for the opportunity to address you today on this critical issue for the city of Saint John.

I am Mayor Donna Noade Reardon, and I'm pleased to be here on behalf of our city to introduce this topic.

First let me say that we commend the federal government and this committee for your leadership and action on the affordable housing agenda. We welcome this opportunity to engage with the committee to ensure that the needs of smaller cities like Saint John are front and centre in the design of the housing accelerator program.

I would like to pass the floor to our city manager, John Collin, to deliver our remarks.

Thank you.

[John Collin, Manager, City of Saint John]

Good afternoon, members of the committee. I am indeed honoured to be here speaking on behalf of our community, and I will, of course, limit my comments to the Saint John perspective.

When it comes to affordable housing, the city of Saint John is in crisis. We estimate that in 2021, home ownership was not achievable by 60% of the households in Saint John, and approximately 40% of our very large rental household community did not have access to affordable housing. We know that affordability issues continue to have a severe impact on the quality of life of our citizens and that the crisis will worsen without intervention. We also believe that there are many more living very close to the line, if you will, and with housing costs on a dramatic upward curve, there is no doubt that our needs for affordable housing will increase significantly in the years to come.

Please allow me to offer a few quick themes.

First, as you develop this program, it is, in our opinion, important that the funding be provided directly to the municipalities without any requirement to pass through the province or to having matching dollars. The need is too great to slow the process down or to leave money on the table because provincial matching dollars or support are not potentially achieved in a timely manner. It is, after all, the municipalities that best understand their local situations and how to solve them.

My next point is on eligibility criteria, which we urge you to make as broad as possible. Every municipality is different and has different needs, so one size does not fit all. Also, as we develop our plans, we are trying to be bold and innovative. Restrictive criteria would limit the creative solutions. Funding should cater to the entire range of possibilities, including the staffing or horsepower for the development thereof.

The program should recognize that smaller cities like Saint John need to take a balanced approach that aligns with innovative urban plans that do not place unnecessary burdens on the private sector to build the much-needed supply and that keep us nimble and quick through the approval processes. At the same time, we need to ensure that the core housing needs of our most marginalized citizens are met by addressing the entire housing continuum and not just affordable housing.

We would also recommend streamlining funding applications. While we recognize the need for oversight, and we do have a small professional planning team who are able to pursue opportunities, approvals must be quick and easy to achieve. I think we would all agree that the hard work should be in the creation of the solutions and not in the completion of funding forms.

In closing, I will leave you with a few more statistics.

Saint John is now experiencing rents that are comparable with those in mid-sized cities, yet the average family income in Saint John is approximately, and only, about $66,000 per year before tax. The story is much more compelling, because it's also a tale of haves and have-nots. Over 30% of our renter households make less than $35,000 a year, and some make much less.

Using a standard definition of affordable housing, which is 30% of total family income, we estimate that our greatest need is for units in the $500 to $800 per month range. I would suggest to you that it does not matter how innovative we may be, developers cannot produce these units for that cost per door. We simply do not enjoy the economy of scale that larger cities may have and use to drive down construction prices. We need significant direct funding assistance and special programs, and the time for them is now.

I am joined here today by our commissioner of growth and community services, Jacqueline Hamilton, and between her, the mayor and me, we would be pleased to answer any questions you may have.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Collin.

We'll go now to Mayor Taylor of Newmarket for five minutes.

[John Taylor]

Thanks very much.

I'm here speaking as the mayor of the Town of Newmarket—we're about 90,000 people—and as a member of York Regional Council. That's about 1.2 million people.

I'm also here as the chair of Housing York. Housing York is our regionally owned housing corporation and is responsible for providing housing for residents with low and moderate incomes.

We have about 43 community housing providers that we work with in York Region. We manage and maintain just over 2,700 homes in 36 properties across all nine cities, towns and townships, and we're providing subsidized and market rental options for more than another 4,500 residents. Our properties are very well maintained, and we're financially sustainable in each property.

York Region residents, like residents across the greater Toronto area and other parts of the country, have seen unprecedented affordable housing challenges. Ownership affordability is out of reach for most households.

This is a very important piece here. Recent analysis has shown that in 2021 less than 1% of the new ownership supply—and we're talking about supply a lot today—was affordable to households with incomes at or below the sixth income decile. That means 60% could afford only 1% of what was built, and that's for those who earned $132,000 a year or less. They could not afford anything but that 1%. Ninety-nine per cent was out of their reach.

We also have a rental housing challenge in York Region, a massive one. As the 2016 census found, we have low supply. York had the lowest proportion of rentals in the GTA, and we have an affordability challenge, with 52% of renters spending more than 30% of their income on housing. We have seen growth in the purpose-built rental market, but only 275 units were constructed in 2021 for a population of 1.2 million.

We also have a historic deficit of community housing, limiting our ability to provide homes for people living on low incomes. Compared to other large municipalities in Ontario, we have the lowest proportion of historical community housing supply. We have a 15,000-household wait-list. That wait can be up to 11 years on average. We're able to offer subsidies to about 350 applicants per year, but the wait-list grows by about 760 applicants per year.

To respond to these issues, York Region Council declared a housing crisis in 2021 and initiated a housing affordability task force to identify solutions. Like most municipalities, we're doing our part, including increasing the community housing supply by more than 1,200 units since 2006.

We've funded 66% of the capital costs for new supply from the municipal tax base, with the federal and provincial governments funding the remainder. We're providing grants to offset development charges for not-for-profit housing developments, and we're setting ambitious goals to double the supply of community housing developments through Housing York's strategic plan.

We're accessing available federal programs, including the co-investment fund, where we've had some success, and the rapid housing initiative, where our application unfortunately was turned down twice due to program demand—again, 1.2 million people and two applications turned down.

We've introduced a regional development charge deferral program for market rental housing developers to add to the purpose-built rental supply, which is working somewhat, and we're creating a community housing development master plan to establish a development pipeline to increase Housing York and non-profit housing supply.

Those are just a few examples of what we're doing. We know that it takes an all-of-government approach, and we know that there isn't just one solution, of course.

We were encouraged to see the 2022 federal budget focus on housing affordability, including commitments to restructure the rental construction financing initiative to require deeper levels of affordability and updating the co-investment fund to provide an increased share of grant funding over loans.

The success of these programs in York Region has been limited. They require proponents to access funding on a project-by-project basis, making it difficult to plan for the long term. We also continue to receive cost-shared funding from the federal and Ontario governments, but it's a fraction of what is needed to address our housing priorities and is expected to decline in the coming years.

We were also encouraged to see that the budget committed to a $4-billion housing accelerator fund with the goal of 100,000 new homes across Canada by 2025. We're increasingly hearing that more supply is needed to address affordability and ensure we can accommodate our growing population.

As you consider the design of this program, there are some key principles to keep in mind, please.

The complexity of the issue and the wide-ranging needs of Canadians make it critical for the federal government to be clear in identifying the issue the accelerator is trying to solve. What type of housing will the program accelerate and how will that be accomplished? We need to accelerate the right type of supply. This includes affordable and family-sized housing.

One lesson learned to date since the launch of the national housing strategy is that government investments should be targeted based on needs. In York Region, while we've added supply to meet growth targets, prices have continued to escalate, suggesting that demand factors also pose an issue. We are required by the Planning Act of Ontario to have a three-to-seven year supply. We have a 4.5-year supply.

These homes are not affordable, and the problem will worsen as construction and labour costs continue to escalate. We've also found in the region's monitoring that new homes that meet the provincial definition of affordability tend to be one-bedroom investor condos. Housing options for families, including for first-time homebuyers, are increasingly limited. Actions that focus on increasing supply without affordability requirements miss addressing demand factors, including the impact that speculation has on the market.

Through the accelerator, the federal government should incentivize the supply we need most—ownership and rental housing in particular for low- and moderate-income households. This can be achieved by attaching affordability requirements and size standards to the funding. The accelerator could require municipalities to adopt inclusionary zoning policies, which are often the only tool available to require developers to build affordable supply.

If the government is providing per-door funding through the accelerator, allowing municipalities to use the funds to ensure inclusionary zoning can provide deeper affordability and sufficiently sized homes for families. The program won't be successful if it secures only small one-bedroom units.

Second, a Canada-wide housing accelerator needs to be flexible. While the 2022 budget spoke to up-front funding for investments in municipal planning approvals, many municipalities experiencing growth pressures, such as York Region and several of its local municipalities, have already updated their technology and business processes. The Province of Ontario has also offered financial support for similar initiatives.

The accelerator needs to be flexible enough to support municipalities that have already made these improvements to allow us to use the funding for other supply-related alternatives. These could include tools like funding to offer fee waivers or rebates for development charges, permit fees, HST, land transfer taxes, funding for pre-development work and capital gains, etc. A one-size-fits-all approach will not work.

[The Chair, Liberal, Bobby Morrissey]

Mayor Taylor, I have to ask you to conclude your remarks shortly.