cityscape Build Toronto Torn Between Affordable Housing and Making Money

How should City agencies balance social responsibility with financial needs?

In 2010, the arms-length development agency Build Toronto agreed with the City to build 1,250 units of affordable housing over the following five years. As of March, 2015, it built 12.

Over the past year, Build Toronto has taken steps to sell more land to be developed into affordable housing, and while 400 units are in the works, none have yet been built. At issue is a conflicting mandate for the agency which raises questions about how City agencies balance social responsibility with financial obligations.

Build Toronto has a mandate to maximize the financial value of surplus City real estate. The City then uses that dividend from Build Toronto to fund capital projects like transit or road repairs. Build Toronto expects the dividend paid to the City in 2016 will be $25 million.

This was the mandate in place when Build Toronto agreed to the 2010 MOU that requires it to facilitate 1,250 units of affordable housing.

Facilitating affordable housing is contradictory to getting the maximum value for land in the city–market-value units are worth much more–and Build Toronto says it feels the pull of both responsibilities.

“We can’t do everything. We can’t do affordable housing, we can’t do city building, and be relied upon for an annual dividend when we’re constantly being tugged both ways,” Bill Bryck, CEO of Build Toronto told Torontoist. The Build Toronto mandate is up for review, and faces possible revisions this summer.

Ana Bailão (Ward 18, Davenport), City Council’s housing advocate, also views Build Toronto’s mandate as muddled.

“If you say ‘you have to bring me 50 million dollars, and oh, by the way, on top of that you also have to build 1,000 units,’ is that realistic?” Bailão said. “There just has to be clarity,” she added.

Even with a mandate and MOU that can run at cross-purposes, Build Toronto has taken some steps to provide affordable housing.

“We currently have, in the marketplace, in excess of 200, and by the end of this year we’ll have an excess of 400 done,” Said Bryck.

Part of the reason for the climbing numbers is in the contracts Build Toronto signs with developers. Two years ago, developers were not contractually obligated to provide any affordable housing units. This, according to Bryck, was a key factor in Build Toronto failing to hit targets from the MOU.

“That is not the case now. Every residential land sale of Build Toronto incorporates some element of affordable housing. That has to be balanced between the value of the land and the need to return a financial dividend to the city for the other things the city wants to do with Build Toronto’s money,” says Bryck.

Though Build Toronto is excited to finally start to climb out of the hole, the 400 affordable housing units sold by the end of 2016 does not translate into 400 livable units in 2017. Build Toronto is only the seller and it may take years for developers to actually build the units.

Sean Gaddon, the director of the City’s Affordable Housing Office, says that while Build Toronto has taken steps to meet the goals set in 2010, many of the problems that have plagued Toronto’s affordable housing projects of the past few years have been external.

“We have been challenged in delivering the affordable housing targets because we have been reliant in the past on the federal and provincial governments to contribute their share of funding,” says Gaddon.

Bryck echoed this sentiment, “What’s really hindered us is the lack of available funding. And so, we’ve decided to move along without the funding, but it does come out of our dividends,” said Bryck.

While Build Toronto’s mandate can be unclear, Bailão says its responsibility should be to more than the bottom line, and the agency has the potential to help the City meet its policy goals.

“A lot of value might not be a dollar sign back to the City, but the creation of housing has a huge impact,” Bailão said.

In 2015, Mike Layton (Ward 19 Trinity-Spadina) dug up the MOU from 2010 after he discovered a Built Toronto affordable housing development in his ward was not being built. He says that the lack of funding for affordable housing projects is a problem that lies with the provincial and federal governments, and the City’s financial limitations.

“They have all the taxing power. The City has nothing as far as major fundraising capability beyond property taxes. So until the federal or provincial government gives us those powers, they have a requirement to continue to help support us affordable housing to our citizens,” Layton said.

The problem of funding hasn’t been solved by any stretch, but the provincial and federal governments have allocated funds for affordable housing in the City. The 2016 federal budget allocated $2.3 billion for affordable housing, some of which will end up in Toronto, and the provincial government has slated money for the partial support of 1,500 “supportive” housing units in Ontario.

“We’re quite anxious to work with the both the federal and provincial governments to confirm the allocation of funds that will come to Toronto, and put them to work in specific projects,” said Gaddon.

Layton is a bit more weary of the exact impact of the federal funds that have yet to be distributed. “We’re waiting to see what this federal money will look like. Will it be going to state of good repair to our existing housing stock, which is sorely needed, or will there be money to start doing new builds of affordable housing?” Layton said.

Along with worry about the allocation of federal funds, Layton says that the provincial government has failed to assign more powers to the City to really tackle the issue of affordable housing.

“We don’t have the regulation from the provincial government to put into effect bylaw changes that would require affordable housing by all new developments, this notion of inclusionary zoning,” said Layton.

According to Layton, the City has been in contact with the provincial government, but the discussions have reached a standstill.

“Some people in the province say we already gave [inclusionary zoning powers] to you, but no, our lawyers insist there needs to be a regulation that has to come from the minister. They really just need to sign it. They’ve said they would do it for a long time, but sadly we haven’t seen anything happen in that regard,” said Layton.

For Gaddon, the problem of affordable housing is far from solved, but the City is taking steps that it hasn’t before and is beginning to show signs of advancement.

“Part of the turning the corner is a federal commitment to create a national housing strategy, and to have longer term investments in affordable housing, so it’s not the tap turning on and off, but that we actually have certainty going forward over the next decade,” said Gaddon.

Build Toronto’s role in providing affordable housing may change this summer, if City Council decides to amend the Build Toronto mandate. Whatever change in the mandate would be a collaborative effort worked out by Build Toronto and City Council.

One thing that’s clear between all parties involved is whatever responsibilities Build Toronto has to the City, there needs to be more clarity when it comes to Build Toronto’s role.