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Throughout October UrbanToronto is featuring a special State of Housing editorial series to examine the pressing housing challenges facing Toronto and the Greater Golden Horseshoe.
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In early September, the City of Toronto, along the LiUNA Pension Fund of Central and Eastern Canada, Fengate Properties, The Hi-Rise Group, and the ITC Construction Group broke ground on a new purpose-built rental housing project in the Mount Dennis neighbourhood. The Dennis, located at 8 Locust Street, will be a 37-storey tower designed by WZMH Architects providing 448 rental homes including 89 affordable rental homes.
It marked the latest in a series of initiatives indicating the City’s long overdue return to developing quality rental housing as The Dennis is one of the first projects supported through the Purpose-Built Rental Housing Incentives stream, designed to encourage and support developers to return to rental housing development.
“The City of Toronto is taking bold steps to build more affordable homes for Torontonians,” said Mayor Olivia Chow at the ground breaking. “Through our incentive program that waives development charges and taxes, we’re breaking ground on 448 new homes in York South-Weston, with 20% designated affordable. The Dennis is proof that our approach providing incentives, waiving fees, and speeding up approvals can help get shovels in the ground and deliver more affordable housing for Toronto.”
This initiative is part of the City’s broader work to deliver rent-controlled, affordable rental housing and rent-geared-to-income homes with more than 44 projects currently under construction. When completed, these projects will create more than 10,000 new homes, including nearly 7,100 that are purpose-built rental, nearly 50% of which will be rent controlled and affordable rental homes.
In the 1950s and 1960s, rental housing seemed to be the only residential development being built in the city, witnessed by Thorncliffe Park, St James Town, Graydon Hall apartments in Don Mills, apartment blocks on Lawton Boulevard near Yonge and Davisville, and other Tower-in-the-Park style sites across the city. Sixty or seventy years ago, the word ‘condominium’ wasn’t even part of the real estate lexicon, at least in Toronto.
As Toronto matured and the economy boomed during the 1980s, developers and architects discovered the city to be fertile ground for investment and construction of high-end, shiny condo towers. While condo castles-in-the-sky have been getting most of the attention since, they have become pie-in-the-sky when it comes to affordability for most mortals.
With the current drastic downturn in condo sales, rental buildings now seem to be the only tenure residential developers can secure financing for, leading to a renewed emphasis towards building rental apartments that people can actually aspire to live in. Many of today’s rental developments could easily be confused for high-priced condos, with elevated design, landscaping, generous grounds, and a full suite of amenities for residents.
Average rental rates are falling across Canada as more supply is delivered. In Toronto, average rental rates fell two per cent in August to $2,137, third highest in the country behind only Vancouver and North Vancouver. The average rental rate in Toronto for a one bedroom is $2,314, down 5.5 % year-over-year, and $2,946 for a two bedroom, down 7.4 % year-over-year... but yet that remains unaffordable for most families looking for spacious enough apartments in which to raise their children.
To span some of the gap, the City is offering incentives to developers through its Rental Housing Supply Program (RHSP). The RHSP provides City financial contributions including capital funding, relief from development fees and charges, and exemptions from property taxes. To be eligible for these incentives in building affordable rental housing, developers must have 30% of units deemed Affordable, rents may increase by no more than the Provincial Rent Increase Guideline annually, and units must be kept affordable for a minimum of 40 years. Units may also be operated as rent-geared-to-income housing.
The RHSP is geared to support the delivery of rent-controlled homes with a target of approving 17,500 units in the next five years. Under the City’s RHSP is the City’s income-based definition of affordable rental housing under the Official Plan. The City defines affordable rents with the following current rent levels: $1,109 for a studio apartment, $1,404 for a one-bedroom, $1,985 for a two-bedroom and $2,250 for a three-bedroom.
The available financial support offered developers by the City under RHSP includes exemption of development charges (municipal portion only), Community Benefit Charges, Parkland Dedication fee (cash in-lieu), Planning Application Fees, Building Permit Fees, and Residential Property Taxes (for the term of affordability). This can mean significant savings to developers and depending upon the size of the project, can be in the millions of dollars.
Canada Mortgage and Housing (CMHC) is also joining the incentive party with its Apartment Construction Loan Program, with access to low-cost loans to build rental apartments across Canada. The Program provides low-cost loans to eligible borrowers during the riskiest phase of development: construction through to stabilized operations. The CMHC Program offers loans ranging from a minimum of $1,000,000 up to 100 % of the cost of the residential component of a project. It also has options to build or convert non-residential buildings into sustainable rental housing.
So, a new day has dawned and the pivot has been made to rental housing. Clever planners, architects and savvy developers who wish to organically grow their enterprises and keep themselves vital and active should be embracing not only the market opportunity but the incentives and assistance being offered by all levels of government to provide affordable rental housing – that is the future.
“Build it and they will come” is not just a memorable line from a 1989 movie, it has become a mantra and signpost for Toronto, which is making a long overdue return to building rental housing. Given today’s new economic reality, build it, and they will surely come.
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UrbanToronto's research and data service, UTPro, provides comprehensive data on construction projects in the Greater Golden Horseshoe—from proposal through to completion. Other services include Instant Reports, downloadable snapshots based on location, and a daily subscription newsletter, New Development Insider, that tracks projects from initial application.
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Thank you to the companies joining UrbanToronto to celebrate State of Housing Month.
