The Housing Now Initiative is a signature affordable housing program in Toronto and across Canada. It is also a key housing supply program to support the City's HousingTO 2020-2030 Action Plan and Housing Action Plan 2022-2026. Through the Housing Now Initiative, the City of Toronto has dedicated 21 of its prime transit-oriented sites, and earmarked another five pipeline sites, for the delivery of purpose-built affordable and market rental housing within mixed-income, mixed-use and complete communities. To-date, the City has committed over $1.3 billion in land value, capital funding and financial incentives to the program, making it one of the most significant municipal financial investments in housing underway today. Although the Housing Now Initiative was first approved by Council at its meeting on January 30 and 31, 2019, (Item EX 1.1), and ten sites have been re-zoned to-date, with six market offerings completed, construction has not yet started on any site. This is primarily due to slow downs resulting from the COVID-19 pandemic, current macroeconomic factors impacting the delivery of construction projects, and recent federal and provincial actions impacting Toronto. Specifically, construction costs have increased by over 63% (more than 20% year-over-year) since 2019, making Toronto the most expensive city in Canada to build high-rise residential. Construction costs have also increased nearly four times faster than rents over the last three years. Additionally, recent changes to federal National Housing Strategy programs have resulted in capital grant funding allocations being capped at levels insufficient to support the cost of developing new housing in this city. At the provincial level, the implementation of the Bill 23, More Homes Built Faster Act (“Bill 23”) has eliminated housing services Development Charges revenues, which has been the City's primary funding tool to deliver new housing supply. These factors, along with significant increases in interest rates, labour shortages and global supply chain disruptions impacting the availability of materials, have resulted in many housing projects being stalled in Toronto. At the same time, the need for more purpose-built affordable and market rental housing in the city has never been greater. The current residential vacancy rate is around 1.7%, there are over 10,800 people experiencing homelessness each night, about 40% of the city's renter households (223,188 households) are living in unaffordable housing, and home ownership rates are dropping as affordability falls to the lowest level on record. There is also increased pressure to expand rental housing supply to support population and economic growth through immigration, with federal immigration targets of 500,000 annually by 2025, and a significant portion likely to settle in Toronto. This report makes a number of recommendations to City Council to help 'unstick' Housing Now projects that can be quickly activated, including ones where developer partners have been selected, and others that have been re-zoned and are ready to be offered on the market in 2023. The sites referred to in Recommendations 1, 2 and 3 of this report are already in-flight and are anticipated to start construction in late 2023, subject to Council's approval of the instructions to staff outlined in Confidential Attachment 1. To advance all other sites, key recommendations include taking a geographic-specific approach to site delivery (including the tenure, mix and types of units), and offering financial grants/contributions particularly for non-profit projects and those located in market zones with lower land values, provided that the City is reimbursed by the Government of Ontario for the housing services revenue losses being incurred as a result of Bill 23 ($120 million per year). In the event that the provincial government does not provide or commit to a multi-year reimbursement of lost revenues beginning in 2023 by the third quarter of 2023, the City will not be able to advance any future Housing Now sites, including the ones earmarked to proceed in 2023/24. Furthermore, this report outlines a number of other urgent actions required by the federal and provincial governments to support City efforts and to meet their own ambitious supply and growth targets. In the absence of coordinated and sustained action across all orders of government, and new and enhanced investments in housing, the City of Toronto, the Government of Ontario and the Government of Canada will be challenged to deliver the 'right' type of housing supply to meet the needs of current and future residents and support the economic and social growth of the region, province and country. The recommendations in this report are intended to balance the critical need for more purpose-built affordable and market rental homes with the current market and regulatory forces impacting development projects. They also support the City's shift towards a human rights-based approach to housing by ensuring that a range of new homes, for a range of incomes and needs, can be delivered in all areas of the city despite sub-market differences. This report has been informed by a number of key stakeholders including City and CreateTO staff, and external housing policy and housing development experts and academics who comprise the Rental Housing Opportunities Roundtable which was initiated in January 2023 following City Council direction through Item 2022.EX34.1.
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