Mississauga housing: incenting affordable housing

NRU
Nov. 16, 2016
Andrew Cohrs

Faced with increasing home prices, little rental housing development and a low vacancy rate, Mississauga is making affordable housing a priority and considering incentives to encourage its construction.

“[Housing] is a crisis across the country and obviously very pronounced in major centres like the GTA... Increasingly what we are seeing is the whole notion of affordability to the middle class becoming very difficult... One in three households in Mississauga has an affordable housing issue,” Mississauga planning and building commissioner Ed Sajecki told NRU. “We have seen an increase in [detached home prices], which has really gone up over 40 per cent in the last four years... We haven’t had that much new rental stock built... and the vacancy rate is very tight.”

Monday, planning and development committee considered a report by N. Barry Lyon Consultants that examined the cost of providing incentives to private and not-for-profit residential developers to construct more affordable ownership homes and purpose-built rental housing. Using a financial analysis, the report illustrates the gap between affordable and market housing, detailing the cost that would be required to offer incentives to developers to build different forms of housing for both low- and middle-income households.

“[Mississauga and Peel Region] are taking a proactive approach in trying to understand what it might mean from a developer’s perspective in terms of how much it might take to incent the private market to provide some real affordable housing,” N. Barry Lyon Consultants associate Matthew Bennett told NRU.

The report, which was funded by Peel and Mississauga, provides a dollar value on what it would take to close the gap. With an affordable ownership model, $200,000 per unit is required to construct a unit for a low-income household compared to a $100,000 per unit to create the same product for a moderate-income household—defined as a household earning between $55,000 and $100,000. A purpose-built rental apartment or townhome maintained in perpetuity at 100 per cent of the average market rent—currently about $1,157— would require an incentive of $84,000-$125,000 per unit.

The consultant’s report notes that the reasons purpose-built rental housing has slowed— higher exposure to risk, less market demand, lower rate of return and higher property taxes associated with constructing rental housing instead of condominiums. The report also suggests potential funding sources for incentives such as section 37 provisions, an annual property tax allocation similar to the city’s arts and culture grant program, inclusionary zoning and land value capture tools.

“Council had a lot of discussion about [the report] and I think there was a strong recognition that something does need to be done but the larger question was who will do what and where will the revenue sources will come from,” Sajecki said.

Committee also considered a staff report detailing comments that had been submitted to the federal government with respect to the creation of a National Housing Strategy. The report outlines Mississauga’s affordability issues. It emphasizes the importance of recognizing the housing challenges being experienced by the “forgotten middle.” It recommends support for new affordable homeownership and purpose-built rental, provision of a surplus federal land housing program, taxation laws that consider programs such as the Low Income Housing Tax Credit used in the United States and programs that are designed to be predictable and lasting.

“Probably most important among all [priorities] is really the need for systems reform right from the top,” Mississauga policy planning director Andrew Whittemore told NRU.

The federal government plans to share results of its consultation, including an announcement from families, children and social development minister Jean-Yves Duclos on November 22, National Housing Day.