HomeMy WebLinkAboutPD 07-02
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REPORT TO COUNCIL
FROM:
Neil Carroll
Director, Planning & Development
and
Gillis A. Paterson
Director, Corporate Services & Treasurer
DATE: February 19,2002
REPORT NUMBER: PD 07-02
SUBJECT:
Report from the Regional Chair's Task Force on Sustainable/Affordable Housing
RECOMMENDATION:
1.
That Report PD 07-02 of the Director, Planning & Development on the Report from the
Regional Chair's Task Force on Sustainable/Affordable Housing be received;
2.
That the Regional Chair be advised that the City of Pickering supports in principle,
subject to further discussion and review as outlined in recommendation #3 below, the
concept of Area Municipalities being a partner in a multi-partner approach to assist in
providing financial incentives to encourage the supply to affordable rental housing;
3.
That the Regional Chair be requested to establish an Affordable Rental Housing Working
Group with appropriate Regional and Area Municipal representation to further refine,
clarify and identify specific implementation program details, for presentation back to
local Area Municipal Councils, including but not limited to the following matters:
. investigating options and implementation mechanisms, other than direct reduction!
waiving of fees, to off-set the area municipality costs attributed to an affordable rental
unit program;
. ensuring that the costs incurred by an area municipality in waiving area municipal
fees and charges are fairly shared among the tax-payers of the Region, and do not
result in an unfair financial burden to any area municipality;
. ensuring a fair distribution throughout the Region of the maximum 100 subsidized
units per year;
. limiting the proposed area municipal participation for cost reductions/waivers to the
Region's 100 subsidized units per year (whether private or public sector initiatives);
. ensuring that subsidies result in reduced rental rates for the tenants;
. ensuring the monthly rents will not be increased beyond the target affordable rents;
. ensuring the units with subsidized production costs will remain as rental units;
. establishing 3; completion date for the program; and
. identifying a monitoring process for the program;
4.
That Pickering Council advocates a key role for both the Provincial and
Federal governments in funding affordable housing, and urges most strongly the
Premier of Ontario and the Deputy Prime Minister to act on those recommendations of
Durham Region's Task Force directed at the Provincial and Federal Governments; and
5.
That a copy of Report PD 07-02 be forwarded to the Regional Clerk, the Regional Chair,
the Clerk of each of Durham's Area Municipalities, the Premier of Ontario and the
Deputy Prime Minister.
0 ~? 6 Report to Council PD 07-02
Date: February 19, 2002
Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Page 2
ORIGIN:
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December 5th, 2001 Regional Committee of the Whole recommending the Report from the
Regional Chair's Task Force on Sustainable/Affordable Housing be referred to the area
municipalities for consideration and comment; January 23rd, 2002 Regional Council extending
deadline for comments to March 13th, 2002 in anticipation of Regional Council consideration on
March 2ih, 2002.
AUTHORITY:
The Planning Act, RS.O. 1990, chapter P.13
FINANCIAL IMPLICATIONS:
The recommendations of the Task Force Report, if implemented by the City of Pickering, would
have both short and long-tenn financial impacts. There would be short-tenn loss of revenue
through the proposed waiving of application fees, engineering fees, cash-in-lieu of parkland fees,
development charges and other fees. There would be long tenn loss of revenue from proposed
changes to taxation rates for affordable rental housing. Both types of revenue loss would have to
be made up by the municipality, most likely through the tax rate.
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The financial impact of the recommendations will, if adopted, be felt directly by each
municipality in which development takes place under the program. If the development under the
program is concentrated in one or more municipalities, an undue financial burden may result.
Since the population in general, and the Region of Durham specifically, will be the beneficiaries,
both policy wise and financially, it is suggested that the Region at least examine the concept of
offering offsetting funding to any municipality so affected, thereby sharing the costs. The other
municipalities in Durham would similarly benefit.
While the waiving of fees is not debated, the lack of cost-sharing is. Without some mechanism
for cost-sharing, staff views the proposal as a "downloading" of costs to area municipalities to
meet Regional and Provincial objectives. Finally, should such financial exemptions be granted,
there are no guarantees in the Task Force Report that the cost savings will flow through to the
end renter of the dwelling unit.
The exact extent of the impacts, or the fiscal implications, are not yet clear. However, there may
be conditions that could be identified and applied to the financial obligations of the program that
would help secure participation by the area municipalities.
EXECUTIVE SUMMARY:
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We congratulate the Region on completion of the Regional Chair's Task Force Report on
Sustainable/Affordable Housing. The Task Force Report recommends area municipalities
consider implementing financial and other incentives to stimulate the production of "affordable"
rental housing in the Region of Durham (see Pages xi and xii of the Task Force Report's
Executive Summary, Attachment #1). "Affordable" is defined as units that would rent in
Durham Region for less than $1,250 per month, and serve households having low and moderate
incomes of up to $50,000.
Pickering has a consistent track record of working with groups and organizations to assist in the
supply of affordable rental housing, which at different times has included reductions or waivers
of nonnal fees and charges. Pickering continues to support such initiatives in principle.
Report to Council PD 07-02
Date: February 19, 2002
o. ~)I":!
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Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Page 3
We concur that local municipalities have an important role to play in accommodating affordable
housing. However, the important role the Provincial and Federal governments should play in the
funding of affordable housing must not be overlooked. The concept of an inclusive action plan
aimed at involving each level of government in the provision of affordable housing is supported.
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The extent to which local municipalities take on financial responsibilities that have been
"downloaded" to the Region should be limited, recognizing the smaller financial capabilities of
area municipalities. Before the City of Pickering can fully commit to the level of participation
envisaged by the Task Force recommendations, we need to more clearly understand the fiscal
impacts of the recommendations of the Task Force, and further investigate and discuss specific
implementation details of the program.
There may be alternative approaches that accomplish the Task Force's objectives while ensuring
that implèmentation costs are fairly distributed across the Region. We recognize that local
municipalities are part of the solution, and would be pleased to work with the Region in
detennining an appropriate level of municipal participation. To this end, it is recommended that
the Region establish a "working group" with Regional and Area Municipal representation, to
develop a defined program for presentation back to Pickering Council and the other Durham
municipalities.
BACKGROUND:
1.0
Ref!ion of Durham Task Force
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In May, 2001, Durham Regional Council approved the creation of a Regional Chair's
Task Force on Sustainable/Affordable Housing in response to the need for more
affordable housing in the Region. There are approximately 4,500 households on the
waiting list for affordable housing.
The objectives of the Task Force were:
. to review with the private sector the types of barriers which impede developers from
constructing a range of affordable housing in Durham; and
. to develop an action plan that identifies ways to overcome these barriers and provide
incentives to stimulate the creation of new affordable housing in the Region.
The Task Force presented its report at the December 5th, 2001, Regional Committee of
the Whole meeting. The Task Force should be commended on its comprehensive report.
A copy of the Executive Summary of the Report is provided as Attachment #1 to
Report PD 07-02, and a copy of the memorandum from the Regional Chair to the
Regional Committee of the Whole is provided as Attachment #2. A full copy of the
Task Force Report is available for viewing at the City of Pickering Planning
& Development Department.
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The Task Force concluded that barriers preventing the construction of affordable rental
housing in Durham Regional can be addressed. However, the Report suggests on the
basis of infonnation available, that any proposed federaVprovincial housing supply
strategy will require contributions from other funding sources, including municipalities.
Furthennore, the Task Force's analysis concluded that new affordable rental housing will
not be achieved in Durham without the participation of area municipalities.
2.0
Definition of "Affordable Housine"
The Task Force developed a working definition of "affordable housing" and various
assumptions for use in applying the definition. The definition and the assumptions are
provided on Page ii of the Executive Summary. The Task Force's aim is to supply
affordable housing at both the low and moderate levels of income.
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Report to Council PD 07-02
Date: February 19, 2002
Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Page 4
The Task Force Report concludes that for Durham Region, affordable housing initiatives
should be aimed at producing rental housing with rents lower than $1,250 per month
(exc1uding utilities) and ownership housing costing less than $172,900 (excluding
insurance and utilities). This corresponds to household incomes ofless than $50,000.
.-..
The private market is creating ownership housing at the $100,000 to $173,000 price
range. This range is within the Region's defined affordable limits. However, the gap
between the rents required to support private sector rental accommodation and the
Region's defined affordable limits is quite great. Private sector rental production for
townhouses, walk-up apartments and high rise apartments is requiring monthly rents
generally between $1,400 - $2,000. Consequently, the Task Force concluded its action
plan would be focused on stimulating the construction of new rental housing, not home
ownership.
3.0
Task Force Recommendations Directed at Area Municipalities
The Task Force Report recommends actions directed at each of the levels of government
involved in the supply of housing, inc1uding:
. Area Municipal;
. Regional;
. Provincial; and
. Federal.
The Task Force recommends that area municipalities be encouraged to:
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1. Consider waiving the following fees and charges for new rental housing projects that
meet the definition of affordable housing:
. fees and charges for planning approval applications, including official plan
amendments, zoning by-law amendments and site plan approvals;
. building permit fees;
. development fees and charges;
. parkland dedication fees; and
. stormwater management fees;
2. Consider innovative designs, reduced floor areas and reduced landscaped open space
requirements for new rental housing proj ects as defined;
3. Amend zoning by-laws to permit accessory apartments as-of-right in all detached
dwellings, subject to Fire Code, Ontario Building Code and local building codes and
standards;
4. Review zoning by-laws to eliminate any barriers to the provision of residential
accessory apartments in commercial areas and permit standards and criteria that
support such activity;
5. Amend official plans and zoning by-laws to permit rooming housing, boarding
housing and lodging houses under specified conditions in appropriate zones;
6. Amend minimum floor areas where aprropriate to permit bachelor apartment at the
Ontario Building code standard of 22 m ; and
7. Adopt a policy supporting the conversion of "brownfield" sites to residential use for
affordable housing under specified conditions and prepare inventories of such sites
for consideration by developers and other housing providers.
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The full set of recommendations commence on Page x of the Executive Summary of the
Task Force Report, provided as Attachment #1 to this Report.
The recommendations of the Task Force Report complement existing Regional strategies
aimed at addressing the supply of affordable housing. These other strategies include
maintaining the current portfolio of affordable housing, and providing rent supplements.
Report to Council PD 07-02
Date: February 19, 2002
029
Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Page 5
4.0
Discussion
The preparation of this Report was a collaborative effort between the Departments of
Corporate Services, Operations & Emergency Services, and Planning & Development,
with input from the Chief Administrative Officer.
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Staff is supportive of a multi-level strategy aimed at stimulating the production of
affordable rental housing. However, the Province and the Federal governments should
playa key role in this matter. The City and the Region should continue to advocate the
involvement of these senior levels of government in the funding of affordable housing in
Durham Region, and to urge the Province and the Federal governments to act on the
Task Force recommendations aimed at the Provincial and Federal governments.
The recommended municipal zoning initiatives are consistent with current Pickering
Official Plan policy and are supportable. The Planning & Development Department
anticipates forwarding a Report to Council respecting as-of-right accessory apartments
later this year.
The recommended policy support to enable conversion of "brownfield" sites to
residential, and the recommended decrease in minimum floor area sizes to allow bachelor
apartments, are also supportable. Contrary to infonnation published in the Task Force
Report, a number of site-specific by-laws passed in Pickering for "affordable" housing
projects do not have a minimum unit size, and one example of a senior citizen's project
pennitted I-bedroom units at a minimum floor area of 51 square metres. Pickering has
been and will continue to be responsive to such needs.
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The recommended use of innovative designs is also supportable. However, the
recommended reduction of required landscaped open space requires careful review.
While landscaping is an element that can be examined at the site plan stage, the decision
to reduce landscap"ed open space must be appropriate given such matters as the overall
site design, target resident group, and surrounding land uses. Strategies such as reduced
landscaped open space would reinforce the image of affordable housing as being "lower"
quality development. Recognizing that the proposed unit mix within an affordable rental
housing development would still target one-third of the units at market rent, the design
objectives for the project should be to make the quality indistinguishable from a building
that is 100 percent market rent. Great caution should be exercised in advocating a
reduction in development standards.
Lastly, the recommendations on waiving planning application processing fees, building
permit fees, development fees, development charges, parkland dedication fees, and
stonnwater management fees may be supportable in a selective, and defined manner.
This would be consistent with Pickering's approach in the past where Council waived the
parkland dedication fee for the Rougemount Co-op, and waived a variance application
fee and reduced legal agreement preparation fees for a recent Habitat-for-Humanity
project. In addition, the City's current Development Charge By-law allows Council to
grant a full or partial exemption for development charges for non-profit housing.
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The Task Force Report estimates that the total cost to the City to waive all the
recommended fees and charges for a 90-unit, walk-up, rental apartment project in
Pickering would be $451,546. The Report further estimates that, with the recommended
change in tax class for affordable rental apartment units from multi-residential to
residential, the annual reduction in total project taxes paid for a 90-unit project in
Pickering would be $155,139. These revenue and tax losses are very significant, and
would have to be made up, primarily through the tax rate. Thus, participation in the
Task Force's recommended program will impact municipal finances, especially
considering current budget pressures.
030 Report to Council PD 07-02
Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Date: February 19, 2002
Page 6
Using the same 90-unit, walk-up rental apartment noted above, the Task Force Report
estimates that a municipal waiver of fees and charges could result in a per unit cost
reduction of over $5,000. Waiving, or off-setting these municipal fees and charges, can
certainly playa role in making rental housing more affordable, particularly when coupled
with parallel Regional, Provincial and Federal cost reductions.
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However, before endorsing the reduction of or waiving of municipal fees and charges as
recommended by the Task Force, staff would like an opportunity to further discuss and
analyze options, including mechanisms other that direct reduction or waiving of
municipal fees. For example, some fees may be more supportable than others, or should
perhaps only be waived in part. Or, there may be other strategies that result in funding
from other sources being allocated to off-set the municipal costs. Funding may be
established at the Regional level, where a higher responsibility for housing rests, and
where a larger tax base exists to absorb the impacts than at the local level. Alternatively,
Provincial or Federal money may be available to off-set the municipal fees and charges,
thereby accomplishing the same affordability goal.
The Task Force Report indicates that the Region will commit to waive its fees and
charges, and change tax rates, for a maximum 100 units per year. However, area
municipalities can choose to consider waiving fees for a greater number of units. Further
discussion is required to confinn a limit that would be acceptable to Pickering.
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The Task Force Report provides little or no infonnation on what controls would be put in
place to ensure that production incentives (savings) are passed on to the tenants once the
units are available for rent, and to ensure that the units remain as rental suites, within the
Region's defined affordability target. Staff is concerned that the establishment of a
'Regional rent review board' or similar administrative mechanism would be required to
monitor and enforce these conditions. More clarity is required on these matters.
It is also unclear from the Task Force Report whether this incentive program is intended
to represent a long tenn approach to the provision of affordable housing, or whether the
program has a specific implementation timeframe (e.g. 3 years, or 5 years). Further, we
recommend that any program that may be adopted be subject to an audit, or monitoring
program to assess the success of the strategy.
5.0
Conclusion
Although the Task Force recommends Regional, Provincial and Federal levels of
government implement financial and other incentives, the Task Force clearly views
municipal financial incentives as being required to stimulate the supply of affordable
rental housing in Durham Region. We support a multi-partner approach to addressing
this critical housing need in the Region. However, without further review and
consultation with the Region and other area municipalities on the details of the program,
the proposal to eliminate the entire range of municipal fees and charges cannot be fully
endorsed at this time.
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Staff would be pleased to participate on a "working group" that would explore the
implementation details of the Task Force recommendations and address the issues
identified for further review and analysis in this Report to Council. Through this process,
funding models can be explored and a defined program developed for Council's
consideration, incorporating Pickering's financial contribution to stimulating rental
housing supply across Durham Region.
In addition, Pickering and Regional Council should continue to strongly urge the
Provincial and Federal levels of government to resume their key roles in funding
affordable rental housing and to act on the important tax refonns and initiate/implement
affordable housing supply strategies.
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Report to Council PD 07-02
Date: February 19, 2002 0:'11
Subject: Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Page 7
ATTACHMENTS:
1.
2.
Report from Regional Chair's Task Force on Sustainable/Affordable Housing
Covering Memorandum from the Regional Chair to the Regional Committee of the
Whole
Prepared By:
~ -,f~
Catherine Rose
Manager, Policy
CLR~f
Attachments
Copy: Chief Administrative Officer
Director, Operations & Emergency Services
Recommended for the consideration of Pickering
City Council
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Approved / Endorsed By:
Ne~
Director, Planning & Development
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-- -"-,,,
Gillis A. Paterson
Director, Corporate Services & Treasurer
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032
ATTACHMENT I ¡ TO
REPORT I PO 01.. 0 ;¡
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DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5, 2001
EXECUTIVE SUMMARY
1)
Region of Durham Creates Task Force
Within the Regional Municipality of Durham a wide diversity of residential
dwellings by type, size and tenure to satisfy the social and economic needs of
residents has not been provided in the last few years. A number of factors
demonstrate the need for more affordable housing in the Region, including low
rental housing vacancy rates (1.7%); rental rate increases outstripping inflation'
and real household income; the significant percentage of residents paying more
than 30% of their gross income on shelter (22% of homeowners and 43% of
tenants); the three-to-five year waiting list of some 4,700 applicants for social
housing; and the growing number of homeless.
JIWIt,
The Region recognizes that the public sector lacks the resources to fill these
gaps. Accordingly, in May 2001, Durham Regional Council approved the
creation of a Regional Chair's Task Force on Sustainable/Affordable Housing.
The objective of the Task Force was to review with the private sector the types of
barriers which impede developers from constructing a range of affordable
housing in Durham and to develop an action plan that identifies ways to
overcome these barriers and provide incentives to stimulate the creation of new
affordable housing in the Region. '
2)
Recent Provincial Legislation on Affordable Housing
The Province of Ontario recently passed new legislation (i.e. the Social Housing
Reform Act) and made a number of changes to existing legislation (i.e. Municipal
Act and Planning Act) and regulations to provide municipalities with many of the
tools necessary to address local housing needs. The Province has provided
these new tools for municipalities designated as service managers to encourage
affordable housing production.
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In particular, recent amendments to Section 210 of the Municipal Act allow
designated municipalities (i.e. service managers) to add 'housing' as a class of
municipal facilities and complement the new municipal authority for housing
under the Social Housing Reform Act. The amendments give the Region of
Durham (and other service managers) the authority to stimulate the production of
new affordable housing by providing grants, loans and exemptions from
development fees' and charges. Other forms of assistance can include providing
land at less than market value and establishing a reserve for housing.
ATTACHMENT tI I TO
REPORT I PD (}I Î - () l
03a
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DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5, 2001
3)
Definition of "Affordable Housing"
In order to provide these incentives, the Municipal Act amendments require the
Region of Durham to pass a municipal housing facilities by-law which would
define "affordable" housing, establish policies for public eligibility, and set out
provisions to be contained in site'specific agreements for housing created under
the by-law. The Ta$k Force developed the following definition of affordable
housing for use in the necessary by-law:
Affordable housinQ means housing which would have a market price or rent that
would be affordable to households of low and moderate income. Households of
low and moderate income are those households within the lowest 40 percent of
the income distribution (4dh percentile) for the Region of Durham.
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Housing that is affordable to households of low and moderate income is defined
as follows:
a)
Affordable rental housinQ is housing where monthly rent costs (excluding
utilities) do not exceed 30 percent of tenant gross monthly household
mcome .
b)
Affordable ownership housing is housing where monthly housing
expenses (including mortgage principle, interest and properly tax but
excluding insurance and utilities) do not exceed 30 percent of gross
monthly household income.
For the purposes of calculating affordable rent and housing prices the following
criteria shall be applied:
. Household income distribution for the Region of Durham shall be in
accordance with the most recent available Statistics Canada Census
information or other accepted information.
. Ownership housing costs will be calculated using the following assumptions:
a monthly tax rate equal to O. 125% of the house value; a 10% down payment;
a mortgage interest rate consistent with current average rates and a 25 year
amortization period. ' . .
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The following table illustrates that affordli'ble housing initiatives should be aimed
at producing rental housing with rents lower than $1 ,250 per month (excluding
utilities) and ownership housing costing less than $172,900 (excluding insurance
and utilities).
11
034
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ATTACHMENT /I I TO
REPORT # PO () ~7'- D :;..
DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5. 2001
Affordable Rent and Ownership Costs Based on Household Income
Household Income
Under
$10,000
$20,000
$30,000
$40,000
Sub-total
$50,000
.....
,Total
$10,000
to $19,999
to $29,999
to $39,999
to $49,999
Number of % of Total
Households Households
Àffordable Rent Affordable Ownership
(Monthly) (Unit Cost)
Under $250 Under $34,600
$250 to $500 $34,600 to $69,200
$500 to $750 $69,200 to $103,700
$750 to $1,000 $103,700 to $138,300
$1.000 to $1,250 $138,300 to' $172,900
6,295 4.1%
14,600 9.5%
13,660 8.9%
15,220 9.9%
15,475 10.0%
65,250 42.4%
88,8~0 57.6%
154.100 100.0%
Source: Statistics Canada, 199B Cen,sus, and Region of Durham Calculations
and over
$1,250 and higher $172,900 and higher
The Region of Durham Housing Directions Study, anticipated to be published in
2002. is exploring ways to ensure the production of new affordable housing units
occurs. Information gathered for this study has demonstrated that the private
market is creating housing in the $100,000 to $173,000 price range. Forthis
reason, the Task Force decided to focus on an action plan that addresses the
construction of new rental housing, not ownership housing.
Accordingly, the target of , the Task'Force's action plan is the construction
of new rental housing with rents below $1,250 per month (excluding
utilities ).
4)
Barriers to the Production of New Affordable Housing
Significant research has been undertaken in the last few years that identifies
numerous barriers to the construction of new affordable housing in Ontario.
By understanding and addressing these barriers, approaches can be developed.
to help overcome identified concerns and generate the housing required to meet
the Region's affordable housing needs.
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The barriers to the provision of affordable housing that are most commonly
mentioned in the research and which were considered by the Task Force are
listed by topic area below. They are discussed in detail in Section Bofthe Task
Force report.
111
....
....
c)
d)
e)
f)
g)
h)
i)
j)
5)
ATTACHMENT # I TO
REPORT II PO Ö 7 - (j J.
035
DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5, 2001
a)
b)
Official Plan
Zoning By-laws
. Accessory apartments and Garden Suites
. Rooming/Boarding/Lodging Houses
. Development Standards
. Minimum Unit Sizes
Intensification
Development Costs
Development Fees and Charges
Municipal Approval Process
Control of Demolition and Conversion of Rental Housing
Municipal Taxation Practice
Affordable Housing Sites
Senior Government Policies a!1d Regulations.
. Key Income Tax Rules Affecting Rental Housing
. Goods and Services Tax (GST)
. Canada Mortgage and Housing Corporation (CMHC) Mortgage
Insurance
. Provincial Sales Tax (PST)
. Decline in Federal and Provincial Funding for Social Housing
Development
Region's Potential Partners
The Region can only achieve significant results in its action plan through working
together with a number of key partners. These partners bring a variety of
resources and capabilities to help meet the Region's housing needs. They
include the private sector (e.g. development and finance industries), community
agencies (e.g. non-profit housing agencies, service clubs, religious institutions),
Area Municipalities, the Provincial Government and the Federal Government.
6)
...
Cost to Develop New Rental Housing
The Task Force used a real estate model to develop a number of "generic" case'
studies to illustrate the nature of the problem of developing affordable rental
housing in Durham Region. The model is detailed in Section D of the Task Force
report. The case studies determined development costs, operating costs, rate of
returns on investment and resulting rents.
The following table summarizes average monthly rent charges for existing rental
units and the monthly rental amounts required to cover costs for newly
constructed units as illustrated by the case studies:
tV
036
ATTACHMENT # I TO
REPORT # PO ¿) 7.> 0 -;¡
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DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5, 2001 .
Monthly Rent Cost for New Rental Housing Units
Building Form Unit Type CMHC Required Rent Required
Average Amounts for Household
Rents in Reasonable Rate Income To
Existing of Return (10%) Afford
Buildings Rent*
***
Townhouse** 1-bedroom n/a n/a n/a
2-bedroom n/a $1,410 $56,400
3-bedroom n/a $1,610 $64,400
Walk-up Apartment 1-bedroom $684 $1,065 $42,600
- 2-bedroom $778 $1 ,265 $50,600
3-bedroom $879 $1,365 . $54,600
High-rise Apartment 1-bedroom . $684 $1,700 $68,000
2-bedroom $778 $1,900 $76,000
3-bedroom $879 $2,000 $80,000
* Assumes 30% of household income is spent on housing
** Does not include utilities
*** Average rents for Oshawa CMA, All Private Apartments
Without incentives, the case studies demonstrated that the cost of constructing
new rental housing would require monthly rent charges that exceed current
average market rents and the affordability threshold of $1250 per month. The
Task Force concluded that affordable rental housing cannot be constructed
without incentives being introduced to reduce development costs.
7)
Impact of Incentives on Monthly Rents Required to Cover
Costs
þ
It is clear that, if some approaches could be found to help offset costs, rents
could be reduced and the range of households able to afford such
accommodation increased. Given the high demand for rental housing in the
Region, there would be an incentive for private developers to move ahead with
new rental development in the Region.
v
ATTACHMENT #- I TO
REPORT # PO () Î -C' ')...
037
""
DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
Final Report: December 5, 2001 .
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The Task Force considered the following incentives:
. waiver of Regional development charges
. waiver of Regional and area municipal development fees and charges
. property taxes equal to residential property tax rate
. inclusion of the proposed Federal capital grant of $12,500 per unit
. availability of surplus government lands contributed at no cost
The table below shows the cumulative effect on required monthly rents of
potential incentives for two generic case studies. High-rise construction was
deemed too expensive by the Task Force to warrant detailed analysis.
Cumulative Effect on Monthly Amounts Required to Cover Construction
and Operating Costs
(Whitby Townhouses and Pickering Walk-up Apartments)
....
Incentives
Monthly Amounts Required to Cover Costs
Whitby Pickering
Townhouses Walk-Up Apartments
2~~ 3~~ 1~~ 2~~ 3M~
Full Cost Recovery of Construction and
Operating Costs/No Incentives
. .
Regional Waiver Only 1,320 1,5201,010 1,210
Area Municipality Waivers Only 1,345 1,550 ,1,015 1,215
Reg+Area Waiver+Residential Tax 1.080 1,280:885 1,035
Reg/ArealTax+ Fed. Grant 950 1,150. 715 915
Reg/ArealTax/Fed + Free land 750 950 615 ,815
Note: Shaded areas reflect monthly amounts below the ~affordable" threshold of $1 ,250.
($)
1,410
($)
($)
1,065
($)
1,265
($)
1,365
1,610
1,310
1,315
1,135
1,015
915
..
This table clearly shows the reductions in rent levels that are achievable through
the various measures noted above and incorporated into the scenarios. It also
shows the significant affordability gains that can be achieved through the
combined efforts of several levels of government.
The Task Force concluded that for every $10,000 reduction in development cost
per unit, the rent required can be reduced by approximately $85 per month,
which equates to a reduction in required housffJhold income of approximately
$3,400 per year.
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Similarly, the rent reductions achievable by taxing units at the residential rate as
opposed to the multi-residential rate are also significant, although they vary ,
depending on the type of housing and local tax rate. The scenarios show that
taxing units at the residential rate can bring rents down by over $100 per month
for most forms of rental housing in most parts of the Region. Each $100 per
month reduction in rent equates to a $4,000 per year reduction in required
household income.
8)
Regional Rent Supplement Program
The above incentives can be successful in brin~tng market rents to levels
affordable by households with incomes- up to $50,000. However, such rent levels
are out of reach of those households WItt-incomes at the lowest levels,
particularly tho!3e in receipt of social assistance or on fixed incomes.
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An approach that has been successfully applied by senior levels of government
in the past has been to provide rent supplements to households at the lowest
levels of income to enable them to pay no more than 30% of their income on
housing. With the transfer of social housing to the municipal level, the
responsibility for creating and funding any new rent supplement program is likely
to fall on service managers such as the Region of Durham.
The following table provides an example of-potential costs for a rent supplement
program for a 100 unit walk-up apartment in Pickering. The example assumes all
available incentives have been applied and that rent suppl~ment would be
available to two-thirds of the tenants of which 50% would be at the deep level
and 50% at the shallow level.
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Potential Rent Supplement Costs
For 100 Unit Pickering Walk-up with Full Incentives Applied
Type of Unit Type Monthly Monthly Annual Annual Annual
Supplement Amount Rent! Unit Operating Rent Regional
Required/Unit by Type of Cost Revenue Supplement
to Cover Costs Supplement Costs
(A) (B) (C) (D) (D Minus C)
No Rent 1 bdrm $615 $615 $81,180 $81,180 $0
Supplement - 11 units
Full Cost 2 bdrm $815 $815 $107,580 $107,580 $0
Recovery 11 units
3 bdrm $915 . $915 $131,760 $131,760 $0
Rent Amount 12 units
Shallow 1 bdrm $615 . $461.25 $81,180 $60,885 . $20,295
Supplement* 11 units
2 bdrm $815 $611.25 $107,580 $80,685 $26,895
- 11 units
3 bdrm $915 $686.25 $120,780 $90,585 $30,195
11 units
Deep 1 bdrm $615 $246 $81,180 $32,472 $48,708
Supplement* 11 units
2 bdrm $815 $326 $107,580 $43,032 $65,548
11 units
3 bdrm $915 $366 $120,780 $48,312 $72,468
11 units
TOTAL 100 units $7035.00 $5041.75 $939,600. $676,491 $264,109
NOTE: For the purposes of calculating shallow and deep supplement levels, the median
amounts of 40% income to rent and 75% of income to rent was used
The annual costs for a rent supplement program for newly constructed rental
housing will vary, depending on the unit rent amount and the actual household
incomes of all tenants. In this example, the annual cost to the Region would be
$264,109.
9) Impact of Incentives to Regional Levy & Foregone
Revenues
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An analysis was conducted to show the maximum financial impact on the Region
of the various incentives proposed. A number of assumptions were made in the
analysis:
. 100 units per year would be eligible to receive incentives
. All 100 units receiving incentives are walk-up units
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DURHAM REGION AFFORDABLE HOUSING TASK FORCE REPORT
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. One-third of the units produced would be at the cost recovery amount,
one-third would require shallow supplement to make rental units .
affordable to moderate income households, and one-third would require
deep supplement to make units affordable to households with very low
income
. All other assumptions used in the case scenarios to estimate development
costs are used (e.g. unit mix, land costs, construction costs).
Cost Impact to Region of Potential Incentives
100 Unit Walk-up Apartment Example
Incentive
Potential Cost One Time Impact to Foregone
for 100 units or Ongoing Regional Revenues
Cost Levy . ($)
(%)
$581,500 . One-time 0.24 n/a
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Regional
Development
Charge Waiver
Regional Rent
Supplement (66
units)
Regional Property
Tax Reduction
$264,109
Annual
0.11
n/a
$172,300/year
Annual
n/a
$247,600/year
The impact to the Region to provide incentives to the private and public sector to
create new affordable rental housing is estimated to be as follows:
. one-time impact to the general levy of approximately 0.24% to supplement
the development charges reserve fund;
. annual impact to the general levy of approximately 0.11 % to provide rent
supplement for two-thirds of the units;
. approximately $172,300 per year in foregone tax revenue.
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Final Report: December 5, 2001
10)
A)
Task Force Recommendations
Areas of Regional Control
It is recommended that Regional Council:
1. Adopt the Regional Chair's Task Force on Sustainable/Affordable Housing
report as Regional policy and that Area Municipalities be requested to also
endorse the report.
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2. Enact a by-law to implement the Section 21 0 Municipal Act amendments that
would enable the Region and Area Municipalities to provide incentives to
stimulate affordable rental housing development. The by-law would include
the definition of affordable housing developed by the Task Force, state
policies regarding eligibility for the housing units to be created and summarize
the provisions that agreements for affordable housing would be required to
contain. .
For new rental housing projects that meet the definition of affordable housing
established by the Region and other conditions set out in the Regional by-law
related to Section 210 of the Municipal Act, ,incentives could include the
following:
. waiving the Regional portion of development charges;
. waiving Regional fees and charges for planning approval applications,
including official plan amendments; and,
. property taxation at the residential rate.
Project specific by-laws and associated agreements would need to be created
detailing the incentives to be provided and the conditions under which they
would be made available.
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3. Establish a "housing first" policy for surplus Regio'nallands in order to
consider surplus Regional lands for housing first and make them available at
a minimal amount (e.g. $1) on a long-term lease basis to applicants for
projects that meet the definition of affordable housing established by the.
Region and other conditions set out in the Regional by-law related to Section
210 of the Municipal Act.
4. Establish a maximum of 100 units' as the annual allocation of new rental
housing units that would be eligible for the various affordable housing
incentives approved by the Region. Ensure projects are distributed across
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Area Municipalities. One-third of the units produced would be offered at
market rent, one-third would require shallow subsidy and the remaining one-
third would be occupied by households eligible for deep subsidy. .
5. Establish a complementary Regional Rent Supplement Program that would
provide rent geared-to-income for up to two-thirds (maximum 66 units per
year) of the new rental housing units that meet the definition of affordable
housing established by the Region and other conditions set out in the .
Regional by-law related to Section 210 of the Municipal Act. Households
eligible for rent supplement would be selected through the Housing Access
Centre.
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6. Seek affordable housing proposals from the public and private sector that.
give consideration to a variety of procurement techniques and management
options, including using the Durham Regional Local Housing Corporation to
build new rental housing, with a view to selecting the most cost-effective
approach for the allocation of affordable housing incentives across the'
Region.
7. Refer the findings and recommendations of the Regional Chair's Task Force
on Sustainable/Affordable Housing to the ongoing Regional initiatives, in
particular the Housing Directions Study, Property Tax Study, Revitalization
Incentive Study, Official Plan Review and Development Charge Study, and
any other related initiatives for consideration in future policy development.
8. Maintain Regional Official Plan policies that permit accessory apartments, infill
and other intensification opportunities. .
9. Maintain Regional Official Plan policies discouraging condominium
conversion and demolition of existing affordable rental housing.
10. Work with Federal, Provincial and Area Municipal governments to identify
surplus government sites that may be suitable for affordable housing. Create
an inventory of such housing and work with non-profit housing organizations
and/or private developers to make these sites available at nominal cost for
affordable housing purposes.
-
B) Areas Beyond Regional Control
Area Municipalities
It is recommended that Regional Council:
11. Encourage Area Municipalities to consider waiving the following for new rental
housing projects that meet the definition of affordable housing established by
the Region and other conditions set out in the Regional by-law related to
Section 210 of the Municipal Act:
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. Fees and charges for planning approval applications, including official
plan amendments, zoning by-law amendments and site plan .
approvals;
. building permit fees;
. development fees and charges;
. parkland dedication fees; and
. storm water management fees.
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12. Encourage Area Municipalities to consider innovative designs, reduced floor
areas and reduced landscaped open space requirements for new rental
housing projects that meet the affordable housing definition established by
the Region and other conditions set out in the Regional by-law related to
Section 210 of the Municipal Act.
13. Encourage Area Municipalities to amend their zoning by-laws to permit
accessory apartments as-of-right in. all single detached dwellings subject to
Fire Code, Ontario Building Code and local building codes and standards.
14. Encourage Area Municipalities to review their zoning by-laws to eliminate any
barriers to the provision of residential accessory apartments in commercial
areas and permit standards and criteria that support such activity.
15. Encourage Area Municipalities to amend their official plans and zoning by-
laws to permit rooming houses, boarding houses and lodging houses under
specified conditions in appropriate zones.
16. Encourage Area Municipalities to amend minimum floor areas where
appropriate to permit bachelor apartments at the Ontario Building Code
standard of 22 m2 (250 sq'). .
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17. Encourage Area Municipalities to adopt a.policy supporting the conversion of
"brownfield" sites to residential use for affordable housing under specified
conditions and prepare inventories of such sites for consideration by
developers and other housing providers.
Provincial Government
It is recommended that Regional Council:
18. Encourage the Ontario Government to reintroduce the Provincial Sales Tax
(PST) rebate program for rental housing.
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19. Pursue the allocation of additional provincial rent supplement units for the
Region of Durham. .
20. Encourage the Federal and Provincial Governments to investigate how the
low-income U.S. federal housing tax credits program could be applied in
Canada.
21. Advocate to the Province that it adopt an affordable housing strategy and that
it participate in the proposed new federal housing program.
Federal Government
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It is recommended that Regional Council:
22. Advocate to the Federal Government for changes to federal taxation policies
identified by the Provincial Housing Supply Working Group. regarding capital
cost allowance. deductibility of soft costs, treatment of rental losses,
treatment of capital gains and designation of rental housing as a "passive"
investment. .
23. Advocate to the Federal Government to amend GST legislation to: eliminate
or lower the GST on the costs of new rental construction; allow developers to
pay GST on a pro-rated basis as units are rented; and, re-classify rents as
"zero-rated" for GST so that input tax credits can be claimed against
expenses.
24. Advocate to the Federal Government adopt a national housing strategy and
that it immediately launch its proposed new federal housing program.
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FROM:
Roger Anderson
Regional Chair
RECEIVED~"'
. DEC - 3 2001 ,
CITY OF PICKERING ~
PLANNING AND
_DEVELOPMENT DEPARTMENT'
--j
Memorandum
TO:
Committee of the Whole
DATE:
December 5,2001
RE:
Report from the Regional Chair's Task Force on
Sustainable/Affordable Housing
-
The demand for affordable housing in our community is evidenced by a number of
factors including the growing waiting list for social housing, increased demand for
emergency shelter services - especially from women and children leaving abusive
relationships, low vacancy rates, rising rental housing costs, and the increasing number
of individuals and families who are homeless. A new supply of rental housing to meet
this demand has not been forthcoming since 1996.
In May 2001, Regional Council approved the creation of the Chair's Task Force on
Sustainable/Affordable Housing. Over the past few months, representatives from
Regional Council, the business community including real estate, property management,
housing development and finance joined with representatives from the non-profit
housing sector, agencies servicing the homeless and individuals with an interest in
affordable housing to identify the barriers' preventing affordåble housing construction in
Durham Region. The findings and recommendations of the Task Force are presented
in the attached report for your consideration.
The Task Force has concluded that barriers preventing the construction of affordable
rental housing in Durham R~gion can be addressed. Information available at this time
suggests that any proposed federal/provincial housing supply strategy will require
contributions from other funding sources, including municipalities. Our Greater Toronto
Area neighbours are all actively exploring means to create affordable rental housing.
Initiatives approved to date include:
-
. The City of Toronto's Let's Build Program makes available capital funding along with
sites for certain projects and exemptions from fees and charges in the case of non-
profit rental housing. A $21 million revolving capital fund has been established to
provide grants and loans repayable over multi-year periods. In June 1999 Toronto
approved a "housing first policy" for surplus or potentially surplus City-owned sites.
In addition, a new multi-residential tax class has been established at the residential
rate (1.07%). To date 214 units are under development with average City
contributions of $45,500 per unit. .
. Peel Regional Council has approved in principle that $3 million 'of its $12 million
social housing reserve fund be used as its contribution towards creating affordable
housing. In addition, three regionally owned sites are being made available at no
cost for non-profit housing.
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To:
Re:
Committee of the Whole
Report from the Regional Chair's Task Force
on Sustainable/Affordable Housing
. York Region has approved the use of $400,000 from its over $20 million social
housing reserve to provide project development funding re-payable upon mortgage
approval.
To address housing needs in Durham Region, the Chair's Task Force on
Sustainable/Affordable Housing is recommending that a "municipal facilities by-law" be
created. This by-law will establish a framework under which incentives could be offered
to stimulate the construction of a modest number of new affordable rental housing units
in our community.
-
It is clear from the Task Force's analysis that new affordable rental housing will not be
achieved in Durham without the participation of our area m~nicipalities. While the
Region can take specific åctions as outlined in the Task Force recommendations, we
look to our area municipalities to also provide incentives and to ensure that their
planning policies promote affordable housing opportunities.
Programs that address the needs of our most vulnerable residents ultimately enhance
the economic and social well being of the Region of Durham. The development of an
åffordable housing strategy significantly contributes to this principle and will ensure the
long-term viability of our community.
In closing, I would like to express my sincere thanks to members of the Task Force for
their time, energy and insights. I would also like to thank the members of Regional staff
who provided their support in this effort.
Yours truly,
~/-~
- Regional Chair