This past week, Toronto City Council approved the launch of a new affordable housing initiative called the Rental Housing Supply Program. Here's the agenda item if you'd like to dive into the details and read some of the supporting reports. There are a number of components to the program, and one of them is a subsidy that will be administered by way of a forgivable interest-free loan:
Subject to the adoption of the Rental Housing Supply Program, the City will continue to support RGI and affordable rental homes through the allocation of up to $260,000 per eligible affordable rental and RGI home. This is the maximum allowable funding allocation under the Rental Housing Supply Program. Actual funding per project will be determined based on the evaluation of applications on a site-by-site basis, in consultation with the Chief Financial Officer & Treasurer, and based on project parameters and additional sources of funding that can be leveraged to support the project’s financial viability. These funds will be provided as interest free forgivable loans to eligible and approved projects and will be tied to milestones and requirements in agreements with housing providers.
Total funding for the program is $351 million. And the intent is that these funds will be distributed in the near term to 18 affordable housing projects in the city, all of which are expected to start construction sometime between now and the end of 2025. In total, this is anticipated to create about 6,000 new affordable rental homes. That's a good thing.
Now, I don't know anything about these projects. I don't know if $260k is the right figure. And I don't know if a forgivable interest-free loan is the exact right mechanism to deliver these funds. But what the program does do is recognize this: Deeply affordable housing cannot be built without some form of subsidy.
Developers are often criticized for only building expensive housing. But the reality is that developers are, for the most part, takers of market pricing. In other words, we can't just decide to build for less. We can reduce build and finish quality to get costs down, but at a certain point, the cost to build is the cost to build.
And if that cost to build isn't what the market would view as affordable, then you're not going to get there without a subsidy. No developer is going to build if their expected revenues are less than their costs. Directionally, that's what this new program appears to recognize.
One of the debates I came across on Twitter this week was about multi-tenant houses (also known as rooming houses) in Toronto. Currently, they are allowed in the former city of Toronto, parts of Etobicoke, and in York. But they are illegal everywhere else in the city.
The reason why the rules differ is simply because they weren't harmonized following amalgamation in 1998. And so right now we are debating whether or not things should be changed so that multi-tenant houses are permissible across the city.
As you can probably guess, it's a divisive issue.
The more urban councillors believe that rooming houses are vital because of their relative affordability. The more suburban councillors are, on the other hand, speaking for their constituents and saying that homeowners really don't want them in their communities. It's about "protecting the integrity of single-family communities."
No surprise here.
For this reason, a recent vote on the issue was deferred. It's expected to come back to council in September. Maybe there will be more support at that time. Or maybe there won't be. Either way, rooming houses will continue to exist all across the city. Some of them may just be illegal.
