Report of the Ontario Housing Affordability Taskforce – A Review

February 28, 2022

A Housing Affordability Taskforce set up by the Ontario Government recently released a much-anticipated report recommending ways to combat the province’s housing affordability crisis. The Taskforce proposes several recommendations to increase the supply of market housing as the key way to resolve the problem. Broadly, the recommendations include a combination of changes to urban design rules, streamlining the housing approvals process, curtailing delays in developments that result from appeals at the Ontario Land Tribunal, promoting density, and targeting financial support towards municipalities who align their priorities with similar policy changes. The role of non-profits in increasing supply of affordable rental housing is only covered in the appendix of the document while other key options such as measures to protect affordable housing stock and rent regulations to curb arbitrary rent increases are not explored.  

The Taskforce had only a couple of months to produce its recommendations during which it made some attempts to consult with myriad actors in the housing ecosystem. However, criticisms have been raised by housing advocates and experts regarding the limits to outreach, particularly in not adequately engaging with enough housing advocates, and the membership of the deliberating body being heavily comprised of representatives from the private sector.  

Since the report’s publication, the Taskforce’s 55 recommendations have received a mix of supportive feedback and much skepticism. However, there seems to be some consensus that there is a need to act and be bold given the growing scale of the problem in Ontario. This sentiment is captured throughout the report, beginning with a call to prioritize housing in the province’s planning guidelines. 


Is Lack of Supply the Problem? 

Many of the Taskforce report’s shortcomings stem from criticisms around scope and conceptual clarity. For example, the Taskforce’s restricted mandate to find “market housing” solutions overlooks the fact that the private sector has historically been unsuccessful in creating sufficient affordable housing options without some government support. More public interventions and the role of non-profits in filling this gap is only covered briefly in the document appendix.  

In addition, the diagnosis of the problem, that a shortage of supply is leading to escalating housing prices, is questionable. Specifically, the target of creating 1.5 million homes over ten years has been criticized as not reflective of the problem at hand. In particular, the estimate in the report appears to be based on the assumption that every individual in need of housing is to live alone in a unit, rather than as part of a household. As such, the target appears to be too high and ought to be modelled instead at the household level, which would be a more useful reference to determine housing need. Using the latter frame, it may very well be the case that housing starts, at least for homeownership options, are keeping up with population growth across the country, as the trends of the past few years suggest. However, a shortage of affordable rental options remains no matter what lens is applied.  

The implication is to make use of more accurate and granular data to enable nuanced distinctions between factors such as tenure choices, and in turn, help create more appropriate targets and associated interventions to meet those targets. The report does acknowledge that better data is required to determine housing needs including to understand, in more depth, which groups are facing the greatest barriers to accessing housing options. 


Barriers – Approvals, Politics, Exclusionary Zoning 

Based on the premise that housing supply shortages should determine policy priorities, a variety of the recommendations are intended to remove barriers that slow development. Setting aside the contested premise, there remains a compelling case to fix bottlenecks in the development process to speed up construction. For example, the report shows how the development approvals process in Canada is one of the slowest among OECD countries, and that Ontario is particularly slow compared to the rest of the country. To this end, proposals to simplify policy documents and find efficiencies in existing urban design guidelines, for example, may hold promise.  

However, stalled projects may not just be on account of the approval processes. For example, 19,000 units in Barrie that have received approvals have not yet proceeded with construction for various financial, engineering and related matters that are largely under the control of developers. In Toronto, the figure for a similar set of approved projects that are yet to get off the ground stands at 70,000. Plus, even as approvals may be perceived as roadblocks, the mechanisms still serve a fundamental purpose of upholding the integrity of the development process from environmental, social, economic and aesthetic perspectives. Any efforts to find efficiencies cannot be in good faith if not done deliberatively and measured against a rigorous process such as a cost-benefit analysis. 

The report also recommends changes to the approval process through depoliticizing it and through fixing gaps in how existing mechanisms to appeal development proposals are perceived to be vulnerable to exploitation by local interests that may halt development for years. Indeed, there is a compelling case to be made against NIMBYism. Pushback from those living in existing neighbourhoods is not just exhibited in opposition to specific developments but against broader changes to regulatory practices, such as changing exclusionary zoning rules to be more inclusive. As the report finds, such practices have resulted in cities such as Toronto restricting 70% of its land for single family homes. 

To this end, the report has made bold proposals to permit developments, as of right – in other words, without the need to go through the necessary zoning procedures – to, among other things, promote gentle density across the province, allow “unlimited density” for new construction near major transit stations, permit multi-tenant houses (rooming houses) to operate, and enable housing growth in underdeveloped land. These proposals are significant in acknowledging how the current trajectory of subdivisions for detached homes and condo-led developments are not producing the sufficient variety of housing options that Ontarians need. Notably, the report also states at the outset that existing land is sufficient for development with no further need for urban sprawl.  

However, the menu of proposed regulatory rollbacks may also run the risk of watering down local powers. Various local governments have raised such concerns and noted how the province’s diverse demographic, socioeconomic and geographic conditions warrant a continuation of localized, democratic approaches to planning and development. For example, the recommended density threshold for as of right developments generally and across transit corridors might not be suitable in mid-sized communities, broadly implying the need to retain room for differentiated approaches to providing housing options across the province. Proposals to add guardrails to prevent potential delays at the Ontario Land Tribunals by local citizens has also been critiqued for stacking the cards in favour of developers.  

To the extent that the province has contemplated ways to push municipalities to adopt these proposed reforms, it has been through recommending the creation of a Housing Delivery Fund that would reward those municipalities that synchronize their policies with the priorities of the Taskforce.  


What is Affordable? 

How the combination of proposals will lead to the creation of affordable housing options is not entirely clear in the Taskforce’s recommendations. Indeed, an affordable home is left undefined even though the report calls for a province-wide definition in the appendix. This does not mean that the question of affordability is not addressed. For example, as part of its proposed approaches to align government fees with promoting more housing, the Taskforce recommends waiving development charges for all affordable housing options that are guaranteed to remain affordable for 40 years.  

In addition, there is likely room to find cost savings in a bloated regulatory regime. One study suggested that in eight cities in Canada, it costs an additional $229,000 to construct every new single detached house because of requirements such as zoning regulations. Bottlenecks in the labour supply chain can also do with fixing to reduce costs, the broad strokes of which are referenced in the report. Indeed, the premise of the report, that through finding an equilibrium between supply and demand, prices will become “affordable” is another circuitous route to which the document endeavours to fulfill its namesake – “The Ontario Housing Affordability Taskforce.” 

And yet, the report overlooks many nuances. First, even if costs are reduced for developers through, for example, efficiency gains in the approval process and savings found in the supply chain, there is no guarantee that the proceeds will be passed on to the consumer, and by extension, a house be made “affordable.” Private developers and their financial backers are instead incentivized to maximize profits with little concern for broader public interest matters such as affordable housing unless they are required to take an interest in such matters. Absent any conditions, developers will likely continue to sell at rates as high as the market can bear.  

Similarly, more density does not necessarily lead to more affordability, at least in prosperous areas and hot housing markets. On the contrary, this change may inflate the value of land and produce the opposite effect of making housing less affordable. In part, this is because such regulatory changes attract more people who will demand more services, which in turn, will attract more investments into the neighbourhood, all of which drives up the value of the area, and can be aggravated further by prospective buyers’ speculations of further price increases in the future. Such changes can gentrify neighbourhoods, in turn displacing traditionally lower and moderate-income residents from their communities. 

The report does not contemplate such perverse impacts.  It does indirectly explore the applicability of inclusionary zoning in its appendix but not in the context of how the policy could dampen the inflation of land prices and contribute to more affordable housing developments. Instead, it is more concerned about possible constraints placed on developers on account of its current iterations in cities such as Toronto. 

In general, the Taskforce report pays little attention to how the role of managing “demand” has the potential to moderate prices. It rightly says that current government policies to manage demand, largely those adopted by the federal government, has not worked well. This is likely because the interventions amounted to tweaks to lending and borrowing requirements that effectively tinker at the edges and don’t have much of an impact on affordability. However, more consequential interventions to disincentivize investors to treat houses as investments – such as through charging a vendor a land transfer tax as opposed to the purchaser (which the province has control over) – have been given little attention. Plus, a more thorough investigation into the trade-offs between more rent regulation and vacancy control and its potential impacts on supply could add value to the current crop of proposals. 


Affordable Rentals and Public Options

The report pays some attention to how investments in purpose-built rentals over time have declined. It rightly acknowledges feasibility constraints that inhibit further development of this much needed form of housing. To promote more construction of purpose-built rental apartment buildings, it largely recommends leveraging property tax incentives along with a combination of federal and provincial loan guarantees to support rental projects including affordable options. 

There is also much promise in solutions explored to increasing the stock of affordable rentals in the appendix, where more public options are considered. The private market, after all, will not create affordable housing options alone, if at all. As such, proposals to providing incentives for affordable housing providers and surplus land for affordable housing are a good start. Importantly, the report acknowledges that many of the non-profit housing providers face the same barriers that private developers do – costly and time-consuming approvals coupled with restrictive zoning and local pushback to development. However, given the topic is not the focus of the report, a more detailed look into creating the conditions for and strengthening providers of deeply affordable housing options is missing. 

As Ontario begins its legislative session, many of the report’s recommendations may be taken up for further consideration. These proposals offer a good starting point. However, the limitations of market solutions to creating affordable housing options are also made clear. Moving forward, a more integrated and effective strategy would more creatively incorporate the role of deeply affordable housing providers, retain a significant degree of local engagement to account for the province’s socio-economic diversity, and entertain matters beyond creating new supply such as through advancing strategies to preserve affordable housing stock. 

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