[homeles_ot-l] The Ontario Chamber of Commerce & affordable housing

[Lynne Browne]

Hello all,

 

Please find attached the policy resolutions from the Ontario Chamber of
Commerce at its Annul General Meeting May 2007 just sent to us by Jennifer
Ramsay at the Advocacy Centre for Tenants Ontario (ACTO).

 

Pages 22 to 25 focus on affordable housing – “Affordable housing is critical
to our competitiveness. The supply of affordable housing affects the success
of all businesses in Ontario and our opportunities as citizens. Government
must ensure that the policy framework is in place to encourage the private
sector to build more affordable housing.”

 

This is useful to refer to when speaking with Provincial and Municipal
politicians and with provincial election candidates.

 

Lynne

Lynne Browne 
Coordinator, Alliance to End Homelessness 
147 Besserer Street, Ottawa ON  K1N 6A7 
613-241-7913 x 205, lbrowne at ysb.on.ca 
www.endhomelessnessottawa.ca 

 

Ontario Chamber of Commerce 

Approved Policy Resolutions for the 95th 

Annual General Meeting 

London, Ontario 

May 4 - May 6, 2007 Pages 22-25

Developing More Affordable Housing 

Developing More Affordable Housing 

Issue: 

Affordable housing is a major factor in creating attractive, liveable, and
competitive cities. Along with other infrastructure components, it
determines whether businesses locate or expand their operations and
influences the willingness of employees and their families to move to or
remain in a city. 

Background: 

Recent investments by governments 

In April 2005, the Government of Canada and the Government of Ontario signed
the Canada-Ontario Affordable Housing Agreement, which committed $301
million from the federal and provincial governments, which brought the total
amount invested in affordable housing in Ontario by all three levels of
government to $734 million ($132 million was committed through previous
investments). All three levels of government believe that this will create
more than 15,000 units of affordable housing and provide housing
allowances/rent supplements for some 5,000 lower-income families in Ontario.


Affordable housing is still important to the business community 

Affordable housing is a strong selling point for attracting and retaining a
skilled labour force. The supply of affordable housing affects the success
of all businesses, along with other infrastructure components; it helps to
determine whether companies and employees locate in a city. 

Housing costs are a major source of wage pressure for businesses. City-based
affordable housing is part of the solution to urban sprawl. When there is
available affordable housing in the city, this helps mitigate against lost
productivity and absenteeism when employees must commute long distances to
work. A lack of affordable housing can lead to a host of other, more serious
social and economic problems. 

Affordability is still a pressing challenge 

Affordability becomes an issue when more than 30 per cent of household
income is spent on housing. At that level of spending, it is likely that
inadequate funds will be available for other necessities such as food,
clothing, and transportation. 

Affordable housing has been a challenge in Ontario for some time. From 1991
to 2001, the percentage of Ontarians spending more than 30 per cent of their
income on housing rose from 29.1 per cent to 37.2 per cent. In some areas,
the increase is significant. For example, approximately 40 per cent of
Thunder Bay and London households spent more than 30 per cent on rent in
2001. There is also a sizable group of Ontarians paying more than 50 per
cent of their income on rent. As of 2001, Windsor had the highest percentage
of people at 13.8 per cent, followed by London (12.4 per cent), Sudbury
(11.9 per cent), and Toronto (11.7 per cent). 

Economics of investing in affordable housing 

Many private developers believe it is not economical to construct affordable
rental units. According to a Ministry of Municipal Affairs and Housing
report, developers could not build units renting for less than $1,000 per
month and would require a subsidy of over $75,000 per unit to justify
construction of units with a targeted monthly rent of $900.6 Without
government action to stimulate new rental construction, the problem will
only get worse. 

Government policies also strongly affect a developer’s decision to construct
affordable housing units (rental or ownership). The federal and provincial
income tax environments have a large impact on this investment.
Specifically, the bulk of Ontario’s rental housing stock was built during
the 1960’s and 1970’s when there was preferential tax treatment to encourage
the construction of rental housing and no GST existed at that time. 

Local property taxes on rental units, which typically account for 20 per
cent of rent, have a significant impact on the returns available from rental
investments. Although there have been some recent reforms to the property
tax system, older multi-residential buildings generally continue to pay high
property taxes compared to ownership housing, including condominium
projects. 

The cost of borrowing has a profound effect on the amount that a developer
can invest. The lender will want to ensure that debt servicing and other
operating costs do not exceed the expected cash flow from the project, which
can directly impact the return of a potential housing project. Interest
rates also affect the attractiveness of rental housing investments relative
to alternative investments, particularly fixed income. 

Procuring land for development 

Procuring and using suitable land for affordable housing is another big
challenge. In particular, investors sometimes have problems gaining access
to financing, meeting onerous zoning requirements and dealing with NIMBYism.
Part of the solution could be to give investors intending to build
affordable housing priority to purchase government lands at market value.
Institutions responsible for selling government surplus land could also show
greater flexibility by accepting conditional offers with a one-year term
instead of six months, and by requiring only a nominal deposit on the land
(less than the current 10 per cent). 

NIMBYism refers to public opposition to new housing developments in existing
areas because of personal opinions and fears against new residents. Many
municipalities have responded to public fears with distancing requirements
between certain types of housing, zoning by-laws that restrict development
based on the people who will live there, development moratoria, and onerous
public consultation protocols. 

Such discriminatory objections are usually overturned at the Ontario
Municipal Board but the costs of these appeals are huge for both the housing
proponent and its funders. For example, an appeal to the Ontario Municipal
Board appeal costs only $125 to file. However, it can cost between $15,000
and $400,000 for the legal, planning, transportation and environmental
experts often needed to defend the project. As a result, many housing
proponents abandon these projects or opt to start them at all.7 Ontario
needs a systemic approach to respond to discriminatory NIMBYism that
prohibits these municipal practices and focuses public consultations on
legitimate planning issues.8 

Brownfields 

Brownfields are idle or underused properties located in established urban
areas on old industrial sites, where existing municipal services are readily
available or along transportation corridors. It has been estimated that
there may be as many as 30,000 brownfield sites in Canada.9 While some
brownfields may be contaminated, they have the potential for remediation and
development of new affordable housing units. Greater Toronto and Hamilton
have the largest number of old industrial sites in Ontario, and an estimated
10 to 15 per cent of these sites are brownfields.10 

Those interested in redeveloping brownfields often face several challenges,
including financing, environmental liability, and cleanup costs. Despite the
good work of the province in removing barriers to remediation and
redevelopment of brownfields, much more progress can be achieved. 

Affordable housing is critical to our competitiveness. The supply of
affordable housing affects the success of all businesses in Ontario and our
opportunities as citizens. Government must ensure that the policy framework
is in place to encourage the private sector to build more affordable
housing. 

 

RECOMMENDATIONS: 

The Ontario Chamber of Commerce urges the Government of Ontario to: 

 

1. With respect to surplus land: 

o        Give the agencies in charge of selling surplus land greater
flexibility on conditions when dealing with developers planning to build
affordable housing units. 

 

2. With respect to brownfield sites: 

o        Create financial incentives that would help defray the costs of
cleaning up sites for developers of affordable housing. 

o        Continue to streamline the approvals process for the development of
sites for affordable housing. 

o        Take further steps to protect those remediating sites by clarifying
and limiting the liability for contamination that has migrated to another
property and to develop a procedure to provide indemnities to protect those
involved in brownfield redevelopment for affordable housing. 

 

3. With respect to financing: 

o        Work with developers and investors to improve the financing tools
available to investors seeking to develop affordable housing (e.g.
accelerated capital cost allowance depreciation rates, expanded definitions
of deductible soft costs, etc). 

 

 

 


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