Toronto’s best hope for affordable rental housing faces hardships

Theglobeandmail.com
May 5, 2017
By Marcus Gee

If Toronto really wants to fix its housing problem, it needs people like Gloria Salomon. Ms. Salomon and her family own four rental towers in suburban Toronto. They lodge 1,200 households in decent apartments for reasonable rents. At their property at 25 St. Dennis Dr., near Eglinton Avenue East and the Don Valley Parkway, a bright two-bedroom on the 10th floor with a fresh coat of paint and refinished floors is going for $1,550 a month.

The city needs lots more like it to have any hope of housing all the people who want to live here. More rental stock is a key to making housing affordable at a time of ballooning real estate prices.

But as Ms. Salomon tells it, being a landlord can be tough and governments haven’t made it any easier. While authorities claim they want more rental, and Ontario just brought in new incentives to promote supply, it sometimes seems almost as if they are actively conspiring to discourage the rental option. “It’s just getting harder and harder,” Ms. Salomon says.

Her family has been in the rental business for half a century. Her father, David Salomon, a Holocaust survivor, came to Toronto after the Second World War. He worked as a painter and did other odd jobs. He opened a grocery store with a friend. He started buying small houses, fixing them up and reselling them. His first new building was a sixplex at Lawrence and Bathurst.

Eventually, he teamed up with some other survivors to build apartment buildings. Concrete apartment towers were the dominant building type back then. Hundreds went up around Toronto as it spread out and up to cope with a wave of postwar immigration. Drive the city’s highways and you can see them all over, slabs of white and beige against the sky. Usually built for the middle class, they have become multicultural landing spots for newcomers from around the globe.

But apartment construction dropped off sharply after the Ontario government imposed rent controls in 1975, making it harder for developers to recover their investment by raising rents over time. Instead of apartment towers, builders started putting up condominium towers, with units owned by individuals instead of by companies such as Ms. Salomon’s.

Her firm, Preston Group, hasn’t built any new towers for decades. Maintaining the four it has is a constant struggle. Repairs to balconies, roofs and parking garages can run into the hundreds of thousands of dollars. Water and hydro rates have been rising much faster than the rents she is allowed to charge. Property taxes are far higher than for ordinary homeowners. The city is charging landlords a new fee to help cover building inspections.

Ms. Salomon doesn’t want to make it sound as if she is whining. Government regulations allow her to raise rents when one tenant moves out and another moves in, which helps. Her family has done well by the rental business. Her two sons now work for the company.

She works hard to keep her buildings in good shape despite the cost. She is proud of what she does. She remembers how mad her father got when someone compared his buildings to human filing cabinets. For many, these apartments are a first home in a new country, the bottom rung on the housing ladder. Over the years, her buildings sheltered successive waves of immigrants: European refugees, Vietnamese boat people, Somalis, Pakistanis, Filipinos and now Syrian refugees. As she gives a tour of the building, teenaged boys just out of school for the day horse around in the lobby and a woman with a pink shawl draped over her head pushes a stroller onto the elevator. “Our buildings are a whole United Nations of people,” she says.

She believes that well-managed rental buildings could put a roofs over the heads of thousands more Torontonians. “That is the future for Toronto. People need housing. That’s what we do.”

But the barriers to rental are prohibitive. Condo developers can throw up a tower, presell most of the units, pay off their loans and make their money. Rental developers must wait years, even decades to win back their investment. “It is very, very hard to make the numbers work,” Ms. Salomon says.

She and her sons hope to put up a couple of extra buildings on the spacious property at 25 St. Dennis. Well-served by public transit and close to the Parkway, it is an ideal spot for “intensification” - putting more people on available land. Ms. Salomon says that, after decades when little new rental accommodation was built, there is lots of pent-up demand for housing like this: modern mid-range apartments for young families or older people who find condo rents too high and old buildings too shabby.

But the company has been struggling to get city hall approval for the project and now the provincial government has thrown Ms. Salomon a curve ball. Premier Kathleen Wynne announced last month that she would extend rent controls to cover new buildings, ending an exemption for buildings constructed since 1991. That adds one more risk factor to what was already a risky enterprise. Ostensibly intended to protect renters, the decision could hurt them instead by dampening the recent upsurge in rental construction and choking off the supply of new apartments.

Ms. Salomon says she knows there is a need for new quality rental units, “and I wouldn’t hesitate if the ability to build was a little easier.” But with this ill-considered move, the government has made what is already a tough business even tougher.

That’s an awful shame. Instead of discouraging people like her, authorities should be cheering them on.