Are Liberals to blame for York Region missing its land development target?

BILD and MGP said: ’As land supply dwindles and as municipal delays increase, the value of serviced land has increased by over 300 per cent since 2006.'

Yorkregion.com
December 4, 2018
Dina Al-Shibeeb

An advocacy group recently sounded the alarm about the former Ontario Liberal government's “lengthy” process for developing vacant land to provide housing amid booming population growth.

But a GTA-based real estate analyst says that argument is "disingenuous."

The Building Industry and Land Development Association (BILD), which advocates for expanding residential development, published a report on Nov. 20 jointly with Malone Given Parsons Ltd. (MGP), slamming the “highly regulated” Liberal government policies from 2006 to 2017.

The report said the process had the “unintended consequence” of “lengthening the land development and approval process” in the GTHA, which could take up to 10 or 15 years.

For any new lands either for residential or employment, the Planning Act dictates a four-step process, starting from undertaking a Municipal Comprehensive Review (MCR) to getting an update of the municipality Official Plan.

“After these processes are completed, and barring any appeals, then secondary plans, tertiary plans (block plans where required) and development applications of the normal development process can be undertaken,” the report said.

It added: “As land supply dwindles and as municipal delays increase, the value of serviced land has increased by over 300 per cent since 2006.”

The supply of vacant residential Designated Community Greenfield land, where builders have traditionally developed, has also been on the decrease.

Justin Sherwood, BILD’s senior vice president of stakeholder relations and communications, further explained what the Designated Community Greenfield lands are. He said they are “within settlement areas but outside of delineated built-up areas that have been designated in an official plan for development and are required to accommodate forecasted growth to the horizon of the [2017] Growth Plan.”

Land supply overview within the GTHA as of October 2018. Courtesy of BILD.

What the report found is that the percentage of available land that has been approved for development was merely 4.5 per cent of the total 285,000 hectares of vacant residential Designated Community Greenfield land in the GTHA as of October.

That land has already been “designated in an official plan for development and (is) required to accommodate forecasted growth to the horizon of the [2017] Growth Plan,” Sherwood added.

So far, the 2017 Growth Plan Designated Greenfield area density targets of 80 residents and jobs per hectare is being applied to 12,800 hectares of vacant Community Area lands at the outermost parts of the GTHA.

But the report said that the 12,800 figure is down from “the 17,200 hectares or 6 per cent of the total of Settlement Area lands in the GTHA measured in the 2017 report.”

York Region, where the population is expected to reach 1.8 million by 2041, has also “missed” its 2009 land development target, Sherwood said.

As of 2018, York Region had the most vacant community land at 3,900 hectares followed by Halton Region at 3,500, Durham Region at 2,900, Peel Region at 1,800 and finally Hamilton at 800.

Blaming govt ‘disingenuous’?

John Pasalis, president and broker of record at Realosophy Realty, who often provides insight into Toronto’s real estate market, said blaming the government is “disingenuous.”

He said builders are already sitting on land they can start developing but they have a profit-focused approach and are holding off on developing land since this year’s real estate prices aren’t as high as 2017.

“When it comes to low-rise projects, they're not selling well and as a result builders are holding back their new launches,” he said.

Liberals 'put a damper'

Daryl Chong, president and CEO of the Greater Toronto Apartment Association (GTAA), which represents the interests of firms in rental housing industry, acknowledges that “apartment developers would build new apartments, if there was reasonable return.”

“Despite the huge demand for purpose-built rental in York Region, there is very little new supply,” he said, urging more financial incentives for developers.

Chong criticized rent controls and said the former Liberal government “put a damper” on the industry just as developers were gaining momentum on new rentals.

He said rent controls “have capped annual rent increases at about 1.8% per year over the past few years,” especially since they acted “as a disincentive to build rental.”

“Thankfully, the new Ontario government recently announced an exemption from rent control for new rental projects,” he added.  “This should have a positive impact on new supply.”

York Region’s Rental Housing Incentives “combined” with the Conservative government “reinvigorating builders of rental housing,” the CEO expects to see results in “new rental supply.”

So far, York Region’s the Draft Rental Housing Incentives Guideline and Community Improvement Plan includes initiatives for developers such as a 48-month deferral for regional development application fees for purpose-built rentals.

Meanwhile, the Canadian arm of Mattamy Homes Ltd, the biggest real estate builder in North America, told Bloomerg in a recent interview that thanks to government regulations, Canada has been saved from crashes seen in other countries such as the United States.

It cited government regulations, including a foreign buyers tax and stricter mortgage regulations, as benign forces in allowing the real estate market to cool gradually, softly and not abruptly. Mattamy Homes, however, are pushing for a pullback of the tougher mortgage regulations, saying: “It’s been achieved so its kind of overkill now.”