Doug Ford asked 50 municipalities to build housing to get cash. Were they set up to fail?

Most cities and towns are missing their housing targets. They blame a lack of infrastructure, and a system that measures what they can’t control.

Thestar.com
Nov. 8, 2023
Diana Zlomislic

Construction is seen at a Markham residential housing projects. The municipality is among 38 cities in towns -- out of 50 -- who are failing to meet the province’s assigned housing targets, making them ineligible for funding.

With a majority of 50 municipalities poised to fail their first high-stakes provincial housing assignment, city officials across Ontario are sounding the alarm on a “fundamental flaw” in the government program that may further stall development.

Ontario’s housing ministry, they say, is rewarding and punishing municipalities for something beyond their control.

The Ontario Big City Mayors (OBCM), a coalition of 29 municipal leaders that represents 70 per cent of the provincial population, is urging the province to rewrite the terms of its housing strategy, which is using a pot of $1.2 billion to award municipalities that reach at least 80 per cent of their provincially assigned target. The housing ministry clarified that target late last month, telling municipalities they would be accountable for “housing starts” -- the number of foundations laid during the initial stage of construction.

But municipalities, the mayors group said, can’t force developers to pour concrete. They can’t lower interest rates, expand the number of skilled labourers or carry water into communities that have none.

“Tying funding eligibility to a foundation being poured is holding the municipality to account for something we can’t control,” said OBCM chair Marianne Meed Ward, who is also the mayor of Burlington. “That’s one of the reasons why so few of our members are qualifying.”

Burlington is among 26 cities, including Mississauga, Brampton, Markham, Newmarket, Oshawa and Vaughan, that are less than halfway toward meeting their targets this year. As of late October, 76 per cent of the municipalities Ontario is tracking -- 38 of 50 -- did not qualify for funding.

“If this is not fixed, the municipalities that won’t get the funding will have to do one of two things: raise taxes or not build infrastructure,” said Meed Ward. “Neither option is appropriate or palatable.”

Municipal Affairs and Housing Minister Paul Calandra told the Star his government “will continue to work with our municipal partners in order to achieve our shared housing goals.

“At the same time we have been clear that the Building Faster Fund is a tool through which our government is supporting municipalities committed to growth … with costs related to the housing enabling infrastructure required to support that growth,” Calandra said in an email Thursday.

“We will not allow for any distractions … we are counting on each municipality to do their part.”

Later that day, the province released its fall economic statement, which set aside additional money for municipal infrastructure projects, but OBCM said the pot won’t go far.

The Star reached out to municipal staff and elected officials in a dozen communities across Ontario to understand the challenges keeping them from meeting their provincial targets and building more homes faster.

They talked about the true costs of building new neighbourhoods, being publicly shamed by Premier Doug Ford and why most of the municipalities that signed up for this challenge never had a fighting chance of winning.

The ‘moon shot’
The Smart Prosperity Institute, a think tank at the University of Ottawa, describes the province’s challenge as a “moon shot.”

Earlier this year, OBCM asked the think tank to provide an overview of the housing crisis and how to deal with it. The mayors group includes municipal leaders from cities with populations of 100,000 people or more, including Toronto, London, St. Catharines and Brampton.

When the think tank’s report landed in August, it made quick work of explaining how necessary but incredibly hard it would be to meet the province’s goal of building at least 1.5 million homes in just 10 years.

“Ontario has not built 750,000 homes, half of what is needed, in any 10-year period since 1973-82, when new episodes of the television (show) M*A*S*H were being aired,” the report states. “In fact, Ontario has never built more than 850,000 new homes in any 10-year period. Ever.”

Big-city mayors received their housing targets in October 2022. The province added 21 smaller municipalities to the challenge this summer, and shortly after upped the ante.

In August, the province turned its housing strategy into a contest, announcing it would use its three-year, $1.2-billion Building Houses Faster Fund to award up to $400 million per year to municipalities that reach 80 per cent or more of their assigned annual goal.

“Until recently, we didn’t know what the government was actually measuring when it talked about targets,” economist Mike Moffat, the think tank’s founding director, told the Star. “Was it starts? Permits? Completions?”

The housing ministry confirmed its plan to tie funding to housing starts late last month.

The funds were expected to help municipalities cover a shortfall created by Bill 23, the More Homes Built Faster Act, which requires municipalities to freeze, deeply discount or lift fees it charges to developers. Municipalities have relied on this money to pay for critical infrastructure including roads, trails, community centres, fire stations, libraries and growth studies. The new law is meant to entice developers to build by reducing their costs.

“To measure us for something we don’t control and then to withhold funding for something we don’t control is not good public policy,” said Meed Ward. “We issue approvals for units so judge us on that. How quickly we do that.”

The ‘outlier’
John Taylor was the only mayor who refused to sign a pledge to the provincial government that would have committed Newmarket to adding 12,000 homes in the next decade.

“Because it’s physically impossible,” Taylor said.

During a news conference in March where Premier Doug Ford thanked “all the municipalities for passing our housing plan,” he seized the moment to publicly shame Taylor as “the one outlier.”

“I’m going to call him out,” Ford said. “The mayor of Newmarket, Mayor Taylor … It’s called team Ontario, team effort … We need to build homes. We need to build them quick.”

Federal housing data shows the town hit a record high for residential construction in 1992 with a total of 1,065 units. In the last decade, Newmarket has added an average of 308 homes annually.

The problem is human waste. There’s nowhere to put it.

About 10 years ago, the town identified this issue as a barrier to future growth and started working on a plan to fix it with York Region and the provincial government. They spent millions planning a state-of-the-art project for a treatment facility that would drain into Lake Simcoe. Last November, the province killed that plan because of concerns over its environmental impact and approved a new plan that will rely on an existing facility that drains into Lake Ontario.

Taylor said his town won’t have access to the new system until 2027.

Last week, Newmarket council approved a recommendation to formally revise its housing target to 6,400 units, roughly half of what the province asked for, by 2031.

“That’s as ambitious as we can get,” Taylor said. “We’re not out there trying to limit things or hold back. We’re very interested and committed to adding as much housing as we can responsibly.”

Whether Newmarket can even achieve this revised goal, which has been forwarded to the province for review, will hinge on the success of a short-term Band-Aid.

It is relying on developers to repair some sewage lines, creating capacity by stopping leaks.

Aurora and East Gwillimbury will also be serviced by the new wastewater system.

Both municipalities are among those Ontario added to its target campaign in late summer. Both have met less than 40 per cent of their assigned goals.

Ontario’s fall economic statement set aside $200 million for the repair, rehabilitation and expansion of municipal water and wastewater systems.

OBCM says the money is a “good start” but not enough to service and expand these systems.

The cost to expand York Region’s wastewater system to service growth in Newmarket, Aurora and East Gwillimbury was estimated at $861 million.

‘The key to it all is water’
Halton Hills has had a massive housing development in the works for more than a decade called Vision Georgetown. The plan will add about 8,000 housing units and twice as many people to more than 400 hectares of land between 10 and 15 Side Roads, and Trafalgar Road and Eighth Line.

Mayor Ann Lawlor said the town is unlikely to see a shovel in the ground on this project for another two years.

“The key to it all is water,” said Lawlor, whose town currently holds the record as the worst-performing municipality for housing starts in Greater Toronto, recording five per cent of its assigned goal of 697 housing starts for the year.

The existing stock of Halton Hills’ 21,000 homes are supplied by groundwater aquifers, which have limited reserves. Halton Region is laying a piping system to draw water from Lake Ontario for new housing. Water and wastewater infrastructure won’t be available for Vision Georgetown until 2025 with construction expected to start toward the end of that year.

“One of the key constraints for the actual start of construction of housing is that we need operating fire hydrants within the subdivisions to ensure that life safety and property safety are maintained,” the town’s chief administrative officer Chris Mills told a council meeting in September.

Lawlor said she’s relayed the town’s challenges in meeting Ontario’s annual targets to the housing ministry as well as concerns about losing funding.

“It takes years to build these things,” she said. “It’s not just the money but the capacity and time to actually build. Otherwise you’ve just got houses in the middle of a field.”

What the numbers really show
The city of Toronto alone stands to receive more than $76 million plus a bonus from the province this year for, well, being Toronto.

“They’re paying us to perform a function we didn’t perform,” said Coun. Gord Perks, chair of Toronto’s housing and planning committee.

The “only reason” Toronto reached 125 per cent of its assigned housing target this year, said Perks (Parkdale--High Park), “is because private investors can still make money here.”

 

While Toronto’s building forecast looks promising enough for the city to qualify for a full payout from the province plus more bonus money over the next three years, a city spokesperson said there’s no guarantee that the timing of housing starts, interest rates, labour availability and construction material costs won’t dramatically change that picture.

“It is important to be cautious about the direct relationship between the actions of a municipality and any single year’s housing target outcome,” the spokesperson said. “The nature of land development and economic cycles means housing production in any given year is highly variable and uncertain.”

In short, Toronto is not gloating. In fact, the city is supporting the OBCM in petitioning the province to change its funding metric.

And looking at building permits tells a very different story.

The city of Vaughan issued more than 6,775 building permits this year but completed just 42 per cent of its 3,080 assigned housing starts, making it ineligible for funding.

Burlington has more than 40,000 housing units in its pipeline, which puts it on track toward meeting the province’s 10-year target of 29,000. But for 2023, provincial data shows the city has recorded just 10 per cent of its 2,127 assigned housing starts.

Mississauga had approved building permits for 10,988 housing units by the end of September. But the city is lagging in housing starts, achieving just one quarter of its assigned target of 8,800.

“With millions of dollars on the line,” said Andrew Whittemore, Mississauga’s commissioner of planning and building, “we think it is only fair that we be measured on areas we actually control and not be penalized for the decisions of developers and the market.”

Newmarket’s Mayor Taylor is worried. He thinks others should be, too.

“I am significantly concerned about the financial viability of towns and cities into the future,” said Taylor, who was a teacher and co-owner of a logistics company before being elected mayor of his hometown in 2018, a decade after his father, Tom, left the office.

“If you set an ambitious plan to build 1.5 million homes by 2031, a wildly ambitious plan, I would have expected to get a wildly ambitious funding program … to accompany that, not less funding,” he said.

The strategy, he lamented, was “fundamentally flawed” from the outset.

“Most of the communities that have signed on won’t meet the pledge and really didn’t have a fighting chance.”