The conundrum of affordable housing in a stagnant market

Council wants to see more affordable housing developed in the County. Shire Hall has little resources to build such housing, so it has to be creative.

Encourging developers to build affordable housing is a tough thing to do in a jurisdiction where thousands of homes are built each year, harder still where just dozens emerge from the ground annually.

Nevertheless, County staff are hoping new policy “carrots and sticks” will help them pry more of this kind of housing from developers—if not actual housing, then some money to fund it.

And so, for the past while, consultants Ken Foulds and Ed Starr have been looking at the County’s various land planning and development tools with the view of drafting policies to attract/incent/extract consideration from developers and builders.

Last week, the pair laid out, in general terms an array of tools they feel might be written into the County’s official plan, secondary plans and zoning bylaws that council or its staff might wield to stimulate affordable housing. This includes carrots in the form of a reduction in development charges; and sticks, such as inclusionary zoning that obliges a developer to make available a portion of their development at a prescribed affordable price. Carrot: allow smaller building lots. Stick: Block conversion of apartment buildings to condominium ownership.

Councillor Bill Roberts wanted to know how these policy proposals would in play out in practice.

“How will they help us crack this nut?” asked Roberts.

The County’s works commissioner Robert McAuley acknowledged that these tools are more commonly deployed where there is more development activity on larger tracts of land. But without these tools, McAuley says he has little to bargain with when a developer happens along.

“We are finding it difficult to negotiate in a vacuum,” said McAuley. “Our carrots are hypothetical.”

He described the current scenario with a developer of a proposed condominium project in Wellington. He has been trying to extract concessions from the developer for affordable housing, in the form of a cash-in-lieu payment. But he has no policy tool with which to demand this payment. McAuley said he stalled the developer for a few weeks, but that the planning act compels him to move the file forward.

“It’s a bit of a Mexican standoff,” said McAuley. “It would be much clearer if we could point to policies that say, this is the carrot and this is the stick.”

Some councillors instinctively flinched at the prospect of measures that would pose another obstacle to development in Prince Edward County. Councillor Treat Hull pointed to the chronic under-investment that has stricken the County since 2008.

“Any new policies should be about allowing things, not prohibiting them,” said Hull.

Others were equally wary about arming planning staff with sticks.

“We can’t discourage development,” said Councillor Barry Turpin. “And I’m not sure we can afford incentives.”

Councillor Lenny Epstein wasn’t interested in carrots and sticks—nor does he want to wait for years for such policies to be approved and adopted. Epstein is the council representative on the Prince Edward Lennox and Addington Social Services committee that tackles such issues regularly.

“It is easy to get mired,” warned Epstein.

“Without precluding any of this work, I would like to look at opportunities to do something today. What is the low-hanging fruit?”

Answering his own question, Epstein suggested the County could look at lowering the minimum building lot size and reducing development and connection charges for affordable housing projects.

“We have barriers to affordable housing,” said Epstein. “Let’s move forward with some short-term measures.”

McAuley didn’t disagree with Epstein, but urged council to give his department some basic policy direction.

“Do you want to forgo development charges? Yes or no? Do you want to use tax measures? We need some direction. With that, we will craft specific policies,” said McAuley.

He did, however, agree to bring back to council, a list of zoning bylaw amendments that could be implemented in the short term.

Spare the stick

Builder warns against adding costs in an overburdened development market

The County is veering toward a dangerous precedent says the past head of the Ontario Home Builders Association. Eric DenOuden, principal of Hilden Homes, is warning against inclusionary zoning or charges on development aimed at funding affordable housing.

Inclusionary zoning is where a developer is obliged to make available a certain portion of a proposed development at a reduced price, set by the municipality as affordable.

But carving up one project into market-priced and subsidized housing components is highly problematic and has been largely rejected across the province.

“It was wrought with problems,” explained DenOuden, “and it doesn’t work. Someone could qualify for the low-cost unit and then put it back onto the open market, selling it for a wider margin. It didn’t make sense for 90 condo buyers to subsidize the housing for 10. The responsibility for affordable housing resides with the municipality, it belongs to the community.”

It is why inclusionary zoning, as the practice was known, never became legislation, according to DenOuden.

He describes the cash-in-lieu of affordable housing as a troubling prospect in this market at this time.

“I have a hard enough time developing there now,” said DenOuden. “Existing projects in the County are struggling. Anybody who has experience developing in the County isn’t going to pay this fee. The market isn’t there—it’s not there in terms of demand and it’s not there in terms of the cost of doing business.”

DenOuden worries about what this might do to building in the County

“The province is mandated to encourage the development of affordable housing and a mix of housing varieties. It doesn’t mean inclusionary zoning or extracting money from developers. That is a slippery slope.”