The stated policy goal of inclusionary zoning is to to produce more affordable housing. We can debate who ultimately pays for this below-market housing, and we have many times before on the blog, but for the purposes of this post let's just focus on its stated goal.
Given this ambition, it makes sense to carefully measure the number of affordable homes produced. And that is ordinarily what is done: "We implemented this new policy on this date, and since then we have produced X amount of new affordable housing."
It is then likely that we will take X and form opinions on whether it was a successful policy or not. If X seems like a lot, then maybe we think it's a good policy. And if X doesn't seem like a lot, then maybe we think it was a bad policy, or perhaps just an ineffective one.
But what is largely impossible to measure with any real precision is the number of new market-rate homes that are now not being built as a result of a policy. Let's call this number Y. It is, of course, possible to come up with an estimate by looking broadly at rents across the city, plugging in some development costs, and seeing what pencils. But this is a rough approximation.
It does not capture the countless times that a developer has looked at a possible housing site, only to come to the conclusion that it is not feasible to build. There is no official Y figure. And any amorphous estimates of Y are going to be easy to ignore by the general public anyway. Unbuilt homes? Opportunity costs? What?
I am saying (okay repeating) all of this because I continue to feel like most people believe that development will just happen no matter what is thrown at it. There is a housing shortage, right? So developers should just do what they do best and build today. Surely they could if they were genuinely nice people and really wanted to. Hmm.
What many people seem to ignore (or not know) is that development, and in turn new housing supply, operates under this very simple decision tree:
Find development site
Underwrite said site
If math works, seek capital/investors and then build
If math does not work, do not build
If math works, but capital doesn't like it, also do not build (most can't in this scenario)
Repeat
Just because you aren't seeing or noticing something, it does not mean that it doesn't exist and that it's not happening behind the scenes.
Let's assume that you're Mayor of your city and that, for whatever reason, you have no need to pander to voters. You're a benevolent dictator. You can do whatever you think is best overall for the city and it will just happen. What would you do? This is more or less the question I asked on Twitter this morning, and I think it's only fair that I answer my own question. So here is a non-exhaustive list of items that came to mind while thinking of Toronto:
Substantially increase the pay of public sector workers throughout the city and bonus them based on measurable outcomes. Forget things like time limits on development applications; instead align incentives. For example, if we're trying to get more shovels in the ground on affordable housing, incentivize people based on building permits issued. I'll never forget what Roger Martin told me while I was at Rotman. When he became Dean of the school, Rotman was a whatever business school that wasn't faring all that competitively in the rankings. One of the problems he discovered was that the school's professors were getting paid far less than those at Wharton, Harvard, Stanford, and so on. So if you were a star, why would you ever want to teach at Rotman? He immediately matched the salaries of those top-tier schools and then, not surprisingly, the top-tier talent arrived. You get what you pay for.
Immediately price roads and congestion, and direct, to the fullest extent possible, the funds toward transit and cycling infrastructure. At the same time, the planning and building of transit would be depoliticized. There would be a reccurring funding stream and a plan that we're continually building out. Minimize protracted debates. Never stop building. There's a lot of talk this mayor election about solving traffic congestion. I have yet to see a plan that will actually work. Accurately pricing congestion likely won't be popular, but I can guarantee you that it will be highly effective.
Ensure that property taxes are sustainably covering the costs of operating the city and then, at a minimum, peg all future increases to CPI.
Make any new housing development less than 12 storeys as-of-right. That would mean, no rezoning process and no site plan approval; just straight to building permit.
Empower the private sector to build affordable housing through incentives and subsidies. Affordable housing isn't feasible to build on its own, which is why nobody is doing it. Inclusionary zoning also won't get us there. Make developers want to build it and they'll do it.
Liberalize licensing and cut red tape to empower small entrepreneurs across the city in various industries. A perfect example in my mind is street food. Toronto is the most diverse city in the world with some of the best restaurants, and yet the only thing you can buy on the street is a stupid hot dog. If we empowered small entrepreneurs to setup shop on our streets, we would easily have the best street food scene in the world. And I am positive that there are countless other latent opportunities in this city that are being held back by dumb and archaic rules.
Make dramatic improvements to our public realm with an eye toward becoming the most beautiful and livable city in the world. Finally pedestrianize Kensington Market, remove the elevated Gardiner Expressway, make it so that we can swim in the Lake, build beautiful public washrooms all across the city that are actually open and aren't gross, and the list goes on. And yes, "beauty" should be requirement so that we don't end up with shit like this.
Focus on art, design, culture, and innovation as central pillars of Toronto's brand. Miami is a good example of what this approach -- along with favourable taxes and nice weather -- can do for a city. I've said this before, but here's just one example: Toronto is in many ways the birthplace of the cryptocurrency Ethereum. Why is nobody talking about this? Why are we not celebrating and leveraging this? It's a missed opportunity. Broadly speaking though, I think just having and doing three things can be effective in promoting new ideas for these pillars: have reasonably affordable housing, be a city that young people want to live in, and remain open and tolerant to immigrants.
Stop thinking of the night-time economy as a nuisance and instead think of it as a powerful economic development tool. I recently responded to this "night economy survey" that the City of Toronto released and the obvious bias is that nighttime things are seen as a terrible nuisance. In other words, "tell us how do we make all of this less annoying for grouchy voters." My response was to extend last call to 4am and to start thinking of it as an opportunity to draw in young people, tourists, and whoever else. This complements my previous point.
This is, again, a completely non-exhaustive list. But if I had to summarize the overall ambition, it would be to make Toronto a truly exceptional and remarkable city. We should never be happy with mediocrity.
What else would you do? Leave a comment below.
Photo by Aditya Chinchure on Unsplash
I went to bed last night watching President Biden's address to the Canadian Parliament (full transcript, here.). And I woke up this morning to this Globe and Mail article about Canadian competitiveness. In it, Tony Keller talks about some of the things that are broken in this country (shockingly housing comes up), and compares Canada to Argentina (an example of too many bad decisions) and to South Korea (an example of many good decisions).
All of this got me thinking about leadership.
Leadership is a great burden. As a leader, people are looking to you for decisions, for direction, and for you to instil confidence. They are also scrutinizing your every word and action. And in today's world, they are waiting to criticize you on social media and/or make a funny meme out of your most recent misspeak. As a developer, I get to interface with municipal politicians probably more than your average person, and I can tell you with confidence that it is a thankless job I would never want.
I can only imagine having to constantly worry about your employment and what people are thinking. Given this incentive structure, I'm sure we'd all act accordingly. It is truly public, service. At the same time, I know that it is not only unproductive -- but dangerous -- to pander to just what is thought to be politically popular. And we have spoken many times before on this blog about housing and land use policies that may be popular, but aren't at all effective -- or worse, are counterproductive.
What we should be demanding from our leaders are difficult decisions. These are the decisions that probably feel uncomfortable and that may require some personal sacrifice, but that are ultimately the right decisions for our collective long-term prosperity. It is about ambitiously deciding where we want to go and who we want to become, and then taking meaningful actions, however unpopular they may be, to get there.
Don't just tell me what I want to hear. Lead me. Push me. Be bold. In the end, we will respect you for your personal sacrifices and the difficult decisions you are making on our behalf. This is the great burden -- but also the great opportunity -- of leadership, and it behooves us to empower it. To borrow from Tony Keller, "there's no reason we [Canada] can't be the most prosperous and successful society on earth."