By Luca Bucci, CEO of the Ontario Home Builders' Association
OHBA recommendations clear path for affordable, expedited home construction
LAST MONTH, the provincial government outlined its priorities in its Speech from the Throne, reiterating its commitment to increasing housing affordability—welcome news for future Ontarians. Underscoring the return to affordability is the need to build 1.5 million homes over the next decade. To help reach this goal for the coming generations, the OHBA and our partner local associations released our top policy recommendations in a five-point plan for consideration by the provincial government in its new mandate. These priorities are based on the February 2022 recommendations of the Housing Affordability Task Force (HATF) and are aimed squarely at lowering home costs and increasing housing supply for Ontario residents.
First is the need to speed up approval times for new housing. Years of delays and approvals often mean it takes over a decade to go from dirt to door in many parts of the GTA. Years to navigate municipal approvals processes results in higher costs ultimately being passed on to new home buyers. In fact, every year that a municipality delays an approval decision costs homebuyers an additional $36,000 for a typical low-rise home and an additional $26,000 for a typical high-rise apartment.
This status quo is failing new Ontarians who want to call our province home, but cannot rely on their local city or town to have their back when it comes to approving new homes. The province can incentivize and encourage municipalities to meet existing standards set out in the Planning Act, cutting red tape throughout local approval processes and providing better resources to the Ontario Land Tribunal, which settles planning disputes.
Second, we must make it more affordable to build homes in the province by adding certainty to the costs of building, while reeling in skyrocketing development fees that new-home buyers also eventually get stuck with. Right now in Ontario, up to 25% of the cost of a new home is composed of fees, taxes and charges imposed by the government. Over half of these are imposed by municipal governments. Municipal levies on new homes have increased by 300%-1,000% since 2004. In addition, in some municipalities, new policies like Inclusionary Zoning (IZ) will add up to $60,000 per unit in hidden costs to a new homeowner.
This will ultimately bring the burden of government-imposed fees and taxes to over 30% of the cost of a new home. All of these fees are passed on to homebuyers to the benefit of local governments. Through these fees and charges, municipalities have amassed large reported surpluses. For example, in the GTA alone, these surpluses are currently in excess of $5 billion. We can add certainty to new buyers by exempting any project that include IZ units from development charges, parkland charges and Community Benefit Charges. Furthermore, immediately freezing parkland cash-inlieu and development charges to an “inflation-plus-costs” model across all municipalities for a period of two years while a new funding model is developed to support investment in growth and communities is a must.
Third, we cannot build the supply that we need without the land to build it on. Housing supply and costs are highly dependent on land availability, and having lands designated for growth across municipalities is dwindling rapidly. Similarly, the addition of new housing within existing communities is severely restricted by municipal zoning. This prevents the addition of supply and drives up costs for Ontario residents. As a result, land values for serviced lots across the province have increased, and in some cases have tripled or quadrupled, adding hundreds of thousands of dollars to the cost of a new home.
We can meaningfully add more land supply while preserving our natural and agricultural spaces by identifying housing as provincially significant infrastructure, requiring municipalities to allow as-of-right zoning to unlock “missing middle” housing and fixing population and growth outlooks by matching them to Ministry of Finance projections.
Fourth, we must lay the groundwork for future growth. Housing supply is highly dependent on critical services and transportation infrastructure. Prolonged delays of infrastructure projects, such as those experienced with the GTA West Corridor (Highway 413) and the Upper York Sewage Solution, delay and threaten the delivery of much-needed housing. The province can identify and prioritize significant infrastructure projects that will support and build housing and streamline the processes involved in bringing new infrastructure online to support growing communities.
Finally, we have to take the politics out of planning. There is a strong incentive for individual municipal councillors to get behind community opposition to growth and development, because they are elected by existing residents, not future residents. In addition, as a means to slow or block development, various designations and forums are open to misuse. This can lead to local decisions that limit the ability to add housing and commercial spaces, as was recognized by the HATF in its recommendations. Preventing abuse of the heritage preservation and designation process is a good start that the province can pursue. Prohibiting bulk listing on municipal heritage registers and ending reactive designations after an application has been filed will dramatically cut down on the abuse that penalizes future Ontarians.
Tinkering around the edges with a patchwork of tiny changes will not generate the sustainable change that Ontario needs. Our five priority actions set out forward-thinking initiatives that most critically support new housing and therefore future Ontarians who are counting on more attainable housing options.