Comment
Horse with no name
The barn doors still swing wildly when the wind picks up. Meanwhile, the horse has been gone so long no one can quite remember what it looked like. Yet Council will make a show this week of attempting to bar the door. Or burn the barn to the ground. To teach that horse a lesson.
Councillor Phil St-Jean (Picton) will ask Shire Hall staff this week how he and his colleagues can compel residential developers to build homes that average folks can afford to buy. After a decade and a half of neglect on this file, some on council appear ready to embrace radical means to force developers to build homes that fit Council’s idea of affordable. Either by financial incentive or mandate. Since Shire Hall doesn’t have a pool of cash lying around, it seems the councillor’s only option is to dictate what developers will build and how much they can charge for these new homes. This should go well.
It is not a new idea. Inclusionary zoning is a planning tool that has been used in some overheated markets since the 1970s to bend the market toward lower-cost homes and apartments. The objective is to compel a percentage of new home building constructed to be made available at a cost defined by the municipality as affordable.
It doesn’t work very well. Inclusionary zoning has been tried mostly in dense urban areas in the US that are growing rapidly (where the original goal was mainly to desegregate communities). Where it works, inclusionary zoning represents a bargaining gambit in which the municipality has something to trade—in the form of direct subsidies, increased density or both.
Some lucky lottery winners have been able to purchase homes at below-market rates, but too few to make a meaningful dent in the overall community’s affordability. More often, inclusionary zoning tends to dampen homebuilding altogether, shrinking the supply of new homes and driving prices higher. Moreover, the benefit tends to be short-lived. In most jurisdictions, the special zoning lapses in a generation and the homes or apartments return to market rates.
Inclusionary zoning doesn’t work at all, however, in communities that aren’t growing. It really won’t work in one that is population thin and averages about 115 new homes built a year. There is no stream of investment to be diverted.
Lots of folks, however, look at the various plans of residential developers in Prince Edward County and convince themselves that they can see the future—one in which subdivisions sprawl outward from Picton and Wellington in every direction. Maybe. But those predictions have been with us since the turn of the millennium. (And fuelled many bad decisions.)
Certainly, there is pent-up demand for new homes at this moment. We can see this plainly in the rising valuations of homes sold. But we have no means to measure the depth of this demand, how long it will endure or the impact of competitive pressures emanating from Belleville, Quinte West, Brighton, Cobourg, Port Hope and every other community between Grafton and Courtice.
The instant the equation fails to produce a return-on-investment, new homebuilding will stop—perhaps before it starts. The first whiff of undue risk and these developments return to brownfields.
This is the bit successive councils have failed to comprehend. Or refused to consider. Prince Edward County competes—mostly unsuccessfully— for new homebuilding with these neighbouring jurisdictions.
Since at least 2005, it has been much more attractive for developers to build in these surrounding communities—a fact borne out by the much-faster rate of homebuilding across the bridges. In 2016 the development framework report detailed how to level the playing fields with these communities. But these 30- some recommendations remain mostly ignored.
Yet council, in a sudden panic, is skipping over these hard-earned findings, pinning their hopes instead on fanciful tools used in San Francisco or Washington DC. A solution so wrong it suggests some still don’t understand the problem.
So here it is.
We have a supply problem. We aren’t building enough homes to meet the demand. We also have a not-in-my-back-yard problem. No one, it seems, wants townhomes or apartments (or any development really) in their neighbourhood. Neither of these problems will be fixed by inclusionary zoning or further restricting planning regulations.
If and when Council chooses to get serious about restoring some semblance of affordability in this community, the path is clear:
- Streamline new home development to increase supply (start with the development framework recommendations).
- Address the NIMBYs (leadership means helping folks understand such policies will benefit them).
- Directly subsidize and incentivize new affordable housing projects (i.e. Municipal Housing Corp.)
Mandating residential development won’t work here. More likely, it will just make the problem worse. There are no magic potions.
You offer three suggestions to promote some form of affordability. Streamlining, I suspect your will define as removing some of the studies and requirements that a developer must go through in order to get shovels in the ground. The problem with that thought is this: many of those requirements exist to protect public interests. For example, environmental, heritage, indigenous issues and so on. Many of these requirements are outside of the purview of County Council. Those folks you refer to as NIMBY’s have a right to raise their concerns. It may be somewhat difficult to convince a property owner to change his mind if he perceives that his property will suffer a decrease in value. You third suggestion is one that you discounted at the outset of your article. “Since Shire Hall doesn’t have a pool of cash lying around, it seems the councillor’s only option is to dictate what developers will build and how much they can charge for these new homes. ”
I look at how many developers seem to be interested in building here now as opposed to even a few years ago. It seems to me that there interest in building here is directly related to the uptick in prices of the existing housing stock. The returns on investment are now looking promising as opposed to just a few years back.
During a developer’s presentation Council Member, Mr. Harper asked where all the new buyers are going to come from. The response did not answer that question but instead deflected it by stating that it will be more of a problem to slow demand. Well, recent history can likely give us an answer to Mr. Harper’s question. These buyers will be seniors cashing out on houses they bought 40 years ago for a fraction of their present value. They will be ‘knowledge’ workers who can work from home and realize they can do that in a market with prices lower than the GTA. They will be folks looking to take advantage of the tourist industry here: i.e. restaurant, bar, hotel owners, STA owners. They will not be those that work in those tourist businesses. They won’t be minimum wage earners. They won’t be what you refer to as ‘average folks’. The process is called gentrification. That is, formerly affordable locations become popular and folks with the means move in, buy relatively cheaply (to them) and soon the original residents are on their way out. When you think about it, it is those ‘average folks’ that are selling their houses for ‘ridiculous’ prices. Of course, having done so they have no option but to move elsewhere, because their neighbours are looking to do exactly what they did.