London 'progressing' toward goal of 3,000 new affordable housing units

Despite increased borrowing costs and other challenges, London is closing in on a target set by city council to create 3,000 affordable housing units by 2027. 

The so-called "Roadmap to 3,000" was intended to bring various partners together to spur development of housing units  offered at below-market rates. It was a response to an ongoing housing crisis that has made accommodation unaffordable to many.

The original 10-year window for the 3,000-unit target set in 2019 was accelerated to five years in 2021. The latest city staff report said since the updated target was set, 498 units have been completed and occupied. Other units are in progress (598) or in the planning stage (1,825).  

That leaves 1,175 units that need to be approved to hit the 3,000-unit goal by 2027. 

Greg Playford, a consultant who helps non-profit organizations navigate the complex process of getting housing projects funded and approved, is confident the city will hit its 3,000-unit goal. 

"It is progressing," said Playford. "I think everybody would like to see it happen faster but it takes time to develop projects. Things don't happen quickly." 

To help speed things up and maintain momentum, last summer city council approved a $45,000 per-unit incentive for each affordable housing unit built. Generally "affordable" for new rental units is defined as 80 per cent of average market value. 

Higher borrowing costs

Playford said every cent of subsidy money is needed, in part because interest rate increases that began in 2022 added to the borrowing costs of construction projects. 

"When you're able to borrow less money because of higher rates, then it requires more grants and subsidies," he said. 

The incentive helps make up for changes to provincial planning rules that came into effect in 2022. Those changes eliminated the ability of municipalities to offer "bonusing" to developers. Once common practice, bonusing allowed municipalities to relax certain planning rules in exchange for extras from developers, including affordable units. 

Joan Atkinson, chair of the London Affordable Housing Foundation (LAHF), said the higher borrowing and construction costs have put pressure on the margins for non-profit groups trying to get below-rent units built. 

Her organization is one of six non-profit developers behind the Vision SoHo Alliance, a project now underway to redevelop the former Victoria Hospital site into housing. It's slated to add 690 units, more than half of them affordable. 

However cost continues to be a challenge. Of the 77 units in the portion of the SoHo project that LAHF is overseeing, less than 10 will be at 80 per cent market value or below. 

"Our original capital estimate was somewhere [around] $21 million for our project and it's now up to about $30 million," said Atkinson. "That's a big jump for a small non-profit. Some of the units we will have to rent at market value." 

As for the city's $45,000 incentive per affordable unit, Atkinson said it's a help but ongoing support from federal and provincial government remains crucial.

Atkinson also said adding units that meet the definition of "affordable" helps, but doesn't fill all of London's housing needs. She said additional money is needed to provide supports for high-needs tenants, including people dealing with addiction and mental health challenges.  

London does plan to open 50 supportive housing beds this year in a former seniors residence on Elmwood Avenue in Old South. 

In an interview on London Morning on Thursday, Mayor Josh Morgan said keeping up with the need for affordable housing will remain a challenge for the rest of this council term. 

"We have a supply problem but we also have an affordability problem," he said. "We're creating as many affordable units as we can ... market-rate rents are out of reach for so many."