Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Category: Urbanism

  • Who should pay for affordable housing?

    Deeply affordable housing is mostly infeasible to build.

    This is why you don’t see the market naturally building this kind of housing on its own. It, for the most part, doesn’t make any economic sense to do so. So this is also why the US has fabricated things like low-income housing tax credits. They are a way to make up the economic shortfall that exists with low-income rental housing and get the private sector building this kind of housing.

    We sometimes try to convince ourselves — or maybe it is a way of shirking responsibility — that there can be such a thing as no-cost affordable housing through things like inclusionary zoning. But I think we all know that there’s no such thing as a free lunch. Somebody is ultimately going to need to pay. The big question, of course, is who should that be?

    By definition, we acknowledge that the people who will ultimately live in these affordable homes cannot afford to pay market rates. So by default, the subsidies will need come from somewhere else. But again, from where and from who? Should it be specific people who pay or should it be mostly everyone who pays?

    If we return to the Toronto building industry’s favorite topic right now — development charges — you’ll see that under the current rates, every new 2 bedroom or larger apartment that is constructed must pay $3,727 toward affordable housing. Under the proposed rates, this will increase to $12,545 for every new large apartment. It’s by far the largest proposed percentage increase (237%) and also one of the largest service items.

    This raises two interesting philosophical questions.

    One, should the buyers of new housing be responsible for contributing to affordable housing in this way? Because what we are in effect saying to these people is, “Hey, you can afford to buy a new market rate home, so we’re going to collect some additional money from you — $12,545 to be exact — so that we can try and help those that aren’t in the same position as you. We’re also going to mandate additional affordable homes within your building and we’d like you to subsidize those too.” This is one way to redistribute wealth.

    But if the goal is to try and create more broad-based affordability, an alternative approach might be, “Hey, you already own a home and it has gone up a lot in value, so we’re going to collect some additional money from you over time so that we can try and help those that aren’t in the same position as you.” This would be the property tax approach. It’s probably not perfect, but might it be a more fair and equitable way to redistribute wealth?

    The second interesting philosophical question has to do with whether this is consistent with the dogma that growth should pay for growth. The idea behind development charges (also known as impact fees in some parts of the world) is that they should pay for the cost of new development. This makes complete sense. When you build new housing you certainly need some additional stuff — everything from additional school capacity to emergency services.

    But the question here is whether the construction of new housing in and of itself creates a direct need for more affordable housing, and therefore should be charged for it. Asked in the opposite way, if you weren’t building this new housing, would you then no longer need this affordable housing, just like you no longer need that additional school capacity?

    This is definitely not the case. In fact, I would argue that the opposite is true. If you don’t build any new housing in a growing city, you actually exacerbate the problem of affordability. So here’s a provocative thought. Rather than a charge, should this affordable housing line item actually be a credit towards each new project given that it benefits affordability?

    While it may not make any economic sense to build affordable housing, I think that many of us would agree that it makes a lot of social sense to build affordable housing. We know that our cities are at their best when they are both diverse and inclusive. The problem is that we can’t agree on who should pay for it.

  • Where Americans moved over the last decade

    Today’s post is perhaps a good follow-up to yesterday’s post about housing supply in Ontario. Below are a few charts taken from a recent article by Wendell Cox looking at net domestic migration across the US. The takeaway here is that the shift from larger cities to smaller cities seems to be accelerating, following a trend that started before COVID.

    The data in these charts is organized according to population and by Core Based Statistical Areas (CBSAs). At the bottom are America’s two megacities: New York and Los Angeles. Both have metro areas that exceed 10 million people. As you can, these two city regions have been losing the most people, both in terms of total humans and on a percentage basis. The goldilocks sweet spot seems to be cities in the 500k to 1 million range.

    But the most telling figure is probably this one here:

    This chart adds up all major metropolitan areas with a population greater than 1 million, and then shows net migration over the last decade. Here you can see when this trend started (around 2016) and how it has been accelerating. In this case, it does appear that COVID added some fuel to the fire. But the question remains: Why is this longer-term trend even happening?

    Is it a short-term phenomenon? Is it because once a city reaches a certain size it simply becomes more annoying to live in it and people would prefer to live elsewhere? Or is it more about overall affordability? That is, if we could figure out how to deliver more affordable housing in our cities, could we stymie the bleeding toward smaller and more affordable ones?

    I don’t know the answers to the questions. But they have been widely debated and I still think they’re interesting ones. If all things were equal (or closer to equal), how and where would most people choose to live? Put differently, how much of this is some sort of natural market outcome and how much of it is a direct result of our actions (or inactions)?

  • Are all red light districts bad and undesirable?

    Times Square in New York has, as we all know, a checkered past. For much of its history, it has served as an important civic gathering space for New Yorkers. But it has also alternated between being a place for New Year’s Eve countdowns and being a place for salacious entertainment. This was the case as far as back as the late 19th century when prostitution from New York’s entertainment and red light district (then known as the Tenderloin) started moving northward.

    But it was also the case during the economic fallout of the Great Depression and again the case from the 1960s to 1990s when the area become a symbol for a more broadly decaying New York City. The area was seedy, dangerous, and according to tax records, fairly vacant, notwithstanding all the sex shops. Most would probably agree that this was not a high point for the area. As a rule, cities are generally better off when their buildings aren’t vacant and decaying.

    But are all red light districts bad and undesirable?

    Last year, Amsterdam voted in favor of closing down its famed city center red light district and moving it to some kind of new “erotic center” on the outskirts of the city, in a location that is yet to be determined. Not surprisingly, this decision hasn’t been without some controversy. Local sex workers seem to be generally against the idea and petitions are now circulating, such as this one here from Failed Architecture, asking the building industry not to participate in the build out of this new center.

    In some ways Amsterdam has the opposite problem compared to what Times Square experienced between the 1960s and the early 1990s. Amsterdam is too popular. Back in 2019, prior to COVID, the city saw some 22 million unique annual visitors. And I am guessing that more than a few of these visitors probably got drunk, wandered through the narrow streets of De Wallen, and peed on the side of a few buildings. Is it unsafe? I don’t know. I’ve never been. Is it immoral? Depends on who you ask. Is it annoying for locals? Probably.

    The city has been clear in that it views this as over-tourism, and also the wrong kind of tourism. Rather than rely on sleaze, Amsterdam wants to “reset” its tourism approach and focus more on highbrow things like art and culture. This is an understandable objective. Because presumably the tourists who actively seek out art and culture attractions are, you know, a bit less reckless and a bit less likely to pee on the side of buildings. Of course, you never know.

    But is this really the right city planning approach? Is there any cultural value to these historic uses? And what does this say about the city’s famously liberal attitudes? More specifically, does wanting to move your red light district from the middle of the city to some less conspicuous location — in an effort to dissociate your city brand — a reflection that you’re becoming maybe a little less tolerant towards the activities that take place in said district? It certainly seems like it.

    But I don’t know, maybe that isn’t entirely the case. Maybe there’s a tenuous argument that the city is just as liberal and permissive. After all, the city is still generally okay with this kind of debauchery. It just wants this debauchery to take place in a different area outside of the overcrowded city center. In other words, the activities themselves aren’t the problem. It is arguably the negative externalities that come along with them that need to be managed. And a suburban “erotic center” is simply better for that.

    What are your thoughts? And what would you do if you were the mayor of Amsterdam?

    Photo by Joan Oger on Unsplash

  • Le Pen’s voter base: France’s poor rural drivers

    The presidential election that is underway right now in France is playing out exactly as one might imagine. The first round of votes took place on April 10, and the second and final round — which is now between Macron and Le Pen — will take place on April 24.

    How people voted in the first round can be mostly explained by geography. If you live in an urban center, an attractive tourist center, or have reasonably good rail connectivity to either of these two kinds of places, you likely voted for Macron.

    On the other hand, if you live in a poorer rural area, you were more likely to vote for Le Pen. Our spiky unequal world remains, even in France, where more wealth tends to be redistributed compared to places like the UK and the US.

    But there’s another potentially correlative factor that should interest readers of this blog (even if it is somewhat obvious). If you voted for Macron in the first round, you were also less likely to rely on a car to get to work. Here are two charts from the Financial Times:

    This point is perhaps obvious because geography and built form largely determine whether or not you want/need to drive. And the way to not drive is to live in a dense city. But I think it’s also a useful reminder that owning a car does not necessarily need to correlate with high economic status.

    In fact, when I look at these charts, not having to drive to work feels like a good thing.

  • Three in four Americans believe it’s better for the environment if houses are built farther apart

    Living in a low-density place with lots of greenery and open space can feel like a pretty “green” way to live. Maybe you’ve even got a little garden where you grow delicious tomatoes. And indeed, a lot of people seem to think this is the case. According to this recent YouGov poll (which surveyed 1,000 Americans), 75% of US adult citizens believe that “it’s better for the environment if houses are built farther apart.” The number drops slightly to 68% for Democrats, but we’re still talking about a clear majority.

    Most experts will tell you that the opposite is, in fact, true. One of the best ways to be green is to live in a high-density urban setting and get as far away as you can from the natural environment so that you don’t screw it up. There are multiple reasons for this, but it generally comes down to the fact that cities use land and other resources far more efficiently on a per capita basis. Smaller living spaces, fewer cars, more things that are shared, and so on.

    The reason why this isn’t so obvious is that per capita thinking is perhaps harder to grasp. Living in the countryside certainly feels more green than living in the middle of New York City. But what if the 8.5 million or so people in New York City suddenly decided to sprawl outward into the countryside to consume more housing (that would then need to be heated and cooled), and then started driving everywhere (in lieu of taking transit, cycling, and walking)?

    This would be a less green outcome. It’s about the collective here, not what feels nice and green for any one individual.

  • Forget infill development, why not just build entirely new cities?

    We talk a lot on this blog about how best to intensify and add housing to our existing cities. But here’s alternative approach: Why not just built entirely new cities? This way you don’t have to worry about fixing any of the things that are currently broken in our existing cities or worry about messy things like community engagement.

    Now, I disagree with many, or perhaps most, of the points that Nathan J. Robinson puts forward in the above Current Affairs article, but I think this is an interesting question to unpack. Robinson’s argument is that the main obstacle for building new cities in the US is ideological rather than technological. You need a bit more central government planning if you’re going to pull off a completely new urban center. And that’s not how things are generally done in the US.

    However, I think the real problem is that cities have powerful network effects that encourage centralization (even if some people are working from home). It’s easy to look at a large country like Canada and say to yourself, “but look at all that empty land. How could we possibly have a housing shortage?” The reality is that most of our land is empty and cheap because it has little value. The jobs are in our cities and that’s why Canada is a largely urban country.

    Indeed, this is how most cities have emerged historically. They start with some sort of economic purpose, be it an important trade route, access to resources, or some other driver of prosperity. It is for this reason that urbanists like Alain Bertaud will tell you that, typically, urban infrastructure follows the market, and not the other way around. Because who wants to live in a city with nice infrastructure but no jobs? More importantly, how long can a city without a strong economic purpose even last?

    Take for example Delhi. By 2030, Delhi is expected to be the largest city in the world. This has made it exceedingly difficult for the city to build enough new housing. So government there has been focusing on building new cities on the outskirts surrounding Delhi. These cities are referred to as “counter magnets”, and their purpose is to intercept and literally attract new migrants before they reach Delhi, thereby relieving some of the urban pressures on the capital.

    The fact that these cities are referred to as “counter magnets” speaks to exactly my point about centralization. It is recognition that Delhi is by far the biggest urban magnet. Because of this, these satellite cities haven’t been as successful as everyone had initially hoped. Migrants seem to still want Delhi. You can build new housing, but without jobs and economic opportunity, people will continue to flock to the biggest urban magnets.

    So sooner or later, you’ll need to fix what isn’t working.

    Photo by Ravi Sharma on Unsplash

  • The infamous 45-degree angular plane

    The Toronto mid-rise housing typology is known for architectural forms that often end up looking something like this:

    The reason for this is the infamous “45-degree angular plane” that gets applied when new developments abut low-rise residential neighborhoods. It is a way to transition down and mitigate some of the impacts associated with this kind of infill development — usually the concerns are overlook, privacy, and shadowing.

    These are, of course, legitimate concerns. But here’s the other side: Should we really be reducing the number of homes that we can build on our main streets by carving away area like this? Is overlook and shadowing more important than additional housing? Stepping buildings like this also makes constructing them more expensive and cumbersome. Are higher costs the goal?

    It is for reasons like these that some people have been paying attention to the new Danforth Avenue Planning Study that went to Toronto City Council this week. Among other things, the study recommended the relaxation of the 45-degree angular plane standard along a portion of the Danforth.

    This is certainly a step in the right direction. But in my humble opinion, it’s not nearly enough for an area that will ultimately sit at the intersection of two subway lines.

  • [Video] Are NIMBYs selfish?

    Peter Baugh tweeted this out on Monday. Essentially, he attended a community meeting for a new housing project in his neighborhood. He spoke in favor of the proposed development. And was then accused of being a developer shill. His comments were subsequently no longer allowed at this “public” meeting. I mean, how could anyone possibly be in favor of new urban housing? Surely he must be a developer “plant.”

    This is wrong, disappointing, and a whole host of other unsightly things. So today I thought I would share a recent City Beautiful video that asks: “Are NIMBYs selfish?” I have shared Dave Amos’ videos before. He’s an assistant professor of city planning at Cal Poly and a well known YouTuber. And I think this video does a great job explaining some of the tensions and trade-offs at play when it comes to development, particularly infill development.

    But as Dave clearly explains in the video, he is not a neutral actor when it comes to this topic. His view is that, yes, NIMBYs are selfish.

  • Destructive development?

    Planner Sean Hertel shared this (embedded above) on Twitter over the weekend. It is a lawn sign from Toronto’s Junction neighborhood that is calling for a stop to demolishing family houses for high rises.

    From what I can tell, this law sign is trying to communicate a few key messages.

    One, high-rises are monstrous beings that enjoy praying on innocent low-rise houses and squashing them with their feet, and sometimes their asymmetric hands.

    Two, it is mostly impossible to conceive of a world in Toronto where families live in high-rises and don’t live in grade-related housing with a backyard.

    And three, there is little value in building more, rather than less, housing in order to help with affordability concerns. Perhaps the thinking is that it needs to be low-rise affordable housing, or nothing.

    With all of this said, let’s do a little thought exercise today on the blog.

    Let’s for a second assume that there aren’t any high-rises proposed in the Junction; only European-scaled mid-rise buildings that sit on the area’s main avenues and back onto low-rise single-family neighborhoods. Let’s also assume that these buildings will be sculpted in complete deference to their rear neighbors so that things like shadows are minimized.

    Let’s assume that more housing is better than less housing.

    Finally, let’s assume that, get this, noble families may actually be able to live in mid-rise and high-rise buildings. And that there are already many successful examples of this taking place in the city, such as over here in CityPlace.

    What key messages would this lawn sign be then communicating?

  • Toronto breaks ground on new Ontario Line

    This past weekend it was announced that ground has been broken (i.e. construction has started) on the new Ontario subway line that will connect Exhibition / Ontario Place to the Science Centre by way of the light purple line labeled “C” on the above map. (The other image is a rendering of the proposed Exhibition station.)

    This transit line has gone through many permutations over the years and was previously called the Downtown Relief Line (but that was seen as too downtown-centric); the Yonge Relief Line (still too specific); the Relief Line (not Ontario-specific enough, I guess); and probably a bunch of other names corresponding to various lines on a map.

    So it is exceedingly easy to be cynical when you hear of an announcement like this. Is it really happening? Are we actually building new and much-needed transit? And as you might imagine, if you read through the chatter on Twitter, you will find an overabundance of this sort of cynicism, along with what appears to be a general dissatisfaction with the current state of everything.

    But in my simple view, I reckon that it is far better to be starting construction on an important new transit line than not starting construction on an important new transit line. So this is exciting! Let’s go! If you’d like to learn more, I also tweeted out the initial renderings for the 14 stations that are planned for the Ontario Line.

    Images: Province of Ontario