What should Doug Ford's government do about developers who go years without building homes?
Some Ontario cities want power to slap 'use it or lose it' penalties on stalled housing projects
At least 20 Ontario municipalities are so far away from reaching their provincially-mandated targets for new home construction starts that they have virtually no chance of hitting the mark, and will face stiff financial consequences in 2024.
The problem is something municipal politicians say puts Ontario at risk of failing to meet the goal of 1.5 million new homes in a decade unless the provincial government does more to prod hesitant developers into starting construction.
Under current rules set by Premier Doug Ford's government, cities that fall short of the 2023 target for housing starts will not get any money next year from the province's $1.2 billion fund to help cover the costs of housing-related infrastructure.
Mississauga is among the municipalities most likely to miss its target. That's why city councillor Alvin Tedjo feels particularly frustrated when he looks across the half-empty parking lot of a shopping plaza that the city approved for housing a decade ago.
"I don't think it's fair at all that the province is measuring our success on housing starts and not on housing approvals," said Tedjo in an interview at the site. "We can't control whether or not the developer starts building the projects that we've already approved."
Tedjo is far from the only municipal politician raising concerns about the role developers play in Ontario's housing crisis. They're pointing to housing projects that have all the necessary municipal approvals, but developers have yet to put a shovel in the ground.
The nine municipalities in York Region, including the cities of Vaughan, Markham and Richmond Hill, have approved more than 49,000 housing units that are not yet under construction, according to data from the region's chief planner.
Figures from the City of Mississauga show construction has not begun on approved projects totalling more than 29,000 homes.
"We need to compel them to move forward," said Tedjo. "We need these developers and these landowners to show that they're interested in building."
'Use it or lose it' policy in the works
There is precious little that municipalities can do to compel a developer to build. Some cities are calling on the province to give them the power to impose some sort of penalty on approved projects that are stalled for unreasonably long periods, often called a "use it or lose it" policy.
The Ford government is developing a proposal along these lines, but Municipal Affairs and Housing Minister Paul Calandra is signalling that it won't involve slapping penalties on developers.
"We will work very closely together to make sure that we have an effective use-it-or-lose-it policy, one that is not punitive, but one that works for everybody," Calandra said in a speech this week at a housing forum with municipal, industry and non-profit leaders.
Calandra said municipal infrastructure for such things as water and sewer lines should be made available to developers who are ready to build homes "without punishing" those who are not ready to start construction.
The question this provokes in city halls around Ontario: why then is the Ford government taking a punitive approach to municipalities?
The government's Building Faster Fund is a $1.2-billion pot of money to help municipalities cover housing-related costs, such as infrastructure. Only cities that come within 80 per cent of their annual target for new home construction in a given year will be eligible for the fund in the following year.
Calandra said Monday he is not considering changing the rules on how municipalities qualify for the fund, but said all of the money will be used.
Newmarket Mayor John Taylor calls the policy not only unfair to municipalities, but also potentially damaging to the government's own plan for 1.5 million new homes by 2031, because he believes it will hamper the building of the water and sewer facilities needed for housing.
Put some pressure on developers, says mayor
Taylor says it's wrong for the province to make future infrastructure funding contingent on past housing starts, which he contends is influenced far more by market demand, interest rates, labour shortages and construction costs than by any factor under municipal control.
"I'm not aware of one policy or one financial tool that has actually put pressure on developers as opposed to municipalities," Taylor said in an interview. "They're the ones positioned best to get things done, far better than we are."
He is concerned about property owners asking municipalities for zoning and planning approvals merely to push up the value of their land, with no intention to build homes.
"Not only is it a significant problem, but it's a problem that's been going on for a very long time," said Taylor.
Sunset clause, boosting development charges
Ontario's Big City Mayors, which represents cities with populations of 100,000 or more, have asked the province to give municipalities powers to try to spur developers into starting construction.
One suggestion is for a sunset clause on housing projects, allowing municipalities to revoke planning approvals if construction hasn't begun within a specified time period.
Another involves development charges, the fees that cities levy on projects to cover infrastructure costs. The Ford government has mandated that cities reduce these charges, but cities would like the power to boost the fees if a developer delays construction post-approval.
Dave Wilkes, president and CEO of the Building Industry and Land Development Association (BILD), rejects the notion that developers are fuelling the housing crisis by sitting on properties for too long.
"I don't think it is a contributing factor," said Wilkes in an interview. "It's at worst a distraction, and at best a misdirection."
Why construction gets delayed
Wilkes says there are various legitimate reasons why construction may be delayed after approvals, such as financing falling through, market demand shifting or construction costs rising.
He said the industry would like to find out from municipalities more specifics about which projects are stalled, why they aren't moving forward, and what needs to happen to get them going.
The province posted the latest figures on its housing supply tracker last week, tallying new home construction starts as of the end of October.
The figures show that 23 municipalities are less than half-way to their 2023 target, and face losing out on the Building Faster Fund in 2024 barring a sudden rush of housing starts in November and December or a change in the government's criteria.
They include some of Ontario's largest cities, such as Mississauga, Brampton, Markham, London, Windsor, Kitchener and Burlington.
The town of Newmarket is also well short of the mark: housing starts so far in 2023 amount to just seven per cent of its target.
Taylor, Newmarket's mayor, says there is a "misguided perception" that the municipal approval process is to blame for the slow pace of new home construction in Ontario.
"This narrative that the housing crisis lies at the feet of municipalities just does not hold up to scrutiny," he said. "If anybody believes that if you could reduce the planning process timeline by 30 per cent, then we wouldn't have a housing crisis, I think you're fairly naive."