Mayor John Tory’s signature affordable housing plan is moving forward after the city’s realty agency signed off on business cases for four sites, the details of which are being kept from the public.
The sites range in size and location, from a plot less than an acre in midtown Toronto to a sprawling eight acres at a site in North York. The other two in Scarborough measure seven and two acres.
When completed those four projects are expected to include a total of 989 affordable rental units built on city-owned land as part of larger developments that will also see market housing, parks, child-care centres and some office and retail space.
The business cases, which were created with expert consultant input, are being withheld, city officials say, to ensure the city doesn’t compromise its position in future deals with yet-to-be-selected development partners.
What is known at this stage is that these new units are expected to cost the city $180,000 each, considering financial incentives like breaks on development charges and the value of the land being offered under 99-year leases, the CreateTO board heard Tuesday.
The city is leveraging a total $100 million in land value by leasing the land to developers to build on, and offering $71 million in additional financial incentives across the four sites, a city staff report says.
Councillor Ana Bailao, Tory’s chosen affordable housing advocate, called those contributions significant.
“We never had this kind of investment from the city,” Bailao told the Star.
Through her role on the CreateTO board Bailao has access to any confidential details surrounding negotiations with developers and additional costs associated with the deals. She told the Star she is comforted by the level of analysis that has gone into the sites and comfortable with the process to date.
“These are very credible organizations in the industry. There’s people with lots of experience on our staff,” she said.
The four priority sites are part of the mayor’s larger Housing Now program, previously called Open Door — the main strategy to achieve the mayor’s 2018 campaign promise of building 40,000 new affordable units in the next 12 years.
Sean Gadon, who heads the city’s housing secretariat, told the CreateTO meeting Tuesday that they are confident the sites are being used to the best potential that the market will allow, noting the affordable rents will also be secured for 99 years.
“It is a terrific public outcome, if we are able to achieve it.”
City spokespeople and Tory himself cited financial implications in releasing the business cases, saying it could interfere with a competitive bidding process set to get underway for development of the sites.
“The mayor expects as much information as possible will be made public once any competitive process — which typically requires some information to be kept confidential to protect the City’s interests in real estate negotiations — is complete,” Tory’s spokesperson Don Peat said in an email.
The Star asked CreateTO to release as many details as possible, including by answering specific questions about the incentives being offered to developers, the value of each piece of land, the conclusions of consultants assessing the plan and other elements of the projects to allow the public to know whether the plan is good value for the city.
CreateTO refused to offer specifics about each site, but said city staff are working with broker CBRE to “establish a scoring mechanism to evaluate bids” and that the business cases were developed by doing a market sounding, hiring Cushman & Wakefield to appraise the value of the city land, and preparing financial models based on research by Urbanation and Altus. Broker CBRE also did financial analysis that CreateTO spokesperson Susan O’Neill said is “in-line with the CreateTO analysis.”
Earlier this year, council approved moving ahead with 11 properties to be developed with potentially 10,000 housing units, with a commitment that one-third would meet the city’s definition of “affordable.”
At the four sites — 140 Merton St. in midtown, 777 Victoria Park Ave. in Scarborough, 705 Warden Ave. in Scarborough and 50 Wilson Heights Blvd. in North York — all within a seven-minute walk of a subway stop, the current plan is to aim between 33 per cent to 50 per cent of units being affordable, while also looking to “encourage” bidders at three of the four sites to push for 100 per cent affordability.
O’Neill said because the evaluation criteria in the bidding process will include the number of affordable units being proposed and how affordable they are, bidders will have incentive to “maximize” those aspects of their bid.
The affordability target is set at no higher than 80 per cent of the city’s average market rent — a calculation done by the Canada Mortgage and Housing Corporation.
In 2019, average market rent for Toronto was listed at $1,270 per month for a one-bedroom. Eighty per cent of that is $1,016 monthly.
Average market rent is far lower than what you would pay to rent an apartment available today. The CMHC calculation is based on the rent paid in occupied, purpose-built rental units many of which have housed the same tenants for years and are protected by rent control.
According to the rental listing site PadMapper, which releases a monthly analysis of rent in major markets, the median rent for a one-bedroom in Toronto in September was holding at $2,300 for a one-bedroom unit, making the city’s affordability target a significant discount but still out of reach for the city’s low-income and vulnerable residents.
CreateTO said that, as per council direction, a minimum of 10 per cent of all units will be “deeply affordable” — rentable at 40 per cent average market rent. In 2019, that would be $508 for a one-bedroom unit.
The new units in the four sites are expected to be occupied throughout 2022.
According to the mayor’s office, since the launch of the previously-named Open Door program in 2016, 6,694 affordable units have been approved, but just 237 have actually been completed. Another 782 are under construction, with 163 of those expected to be completed by 2020.
At that rate, the city continues to remain well behind the previous goal of creating 1,000 new affordable rental units annually. Tory’s renewed Housing Now plan increases that target to 3,300 annually.
Past reports about the mayor’s housing plan went to council for consideration. Under a new structure the business cases for the four sites do not need council approval, as the responsibility now lies with realty agency Tory pushed to create.
Written by Jennifer Pagliaro