Michael de Lint / RESCON
Toronto recently acquired the distinction as one of the most unaffordable cities in the world.
Is this because Toronto has suddenly become a world-class city? Toronto certainly has many good qualities including its distinct and liveable neighbourhoods, its waterfront, dynamic downtown, and ravine parks system. However, Toronto’s sky-high prices are also the result of factors limiting housing supply relative to demand.
These factors include regulatory inefficiencies, out-of-date zoning and a transit system that has not kept up with growth. In a nutshell, we have three deficits; an efficiency deficit, a zoning deficit and a transit deficit. They collectively reduce new housing supply relative to demand, resulting in artificially high housing prices.
Last summer, Ontario’s Secretary of Cabinet convened meetings to streamline provincial and municipal development approval processes. A “Development Approval Roundtable Action Plan” was released in November which included measures aimed at: streamlining regulatory agency review process, expanding e-permitting and updating out-of-date zoning. RESCON president Richard Lyall was invited to the Roundtable. RCCAO executive director Andy Manahan and I also attended.
We pointed out at the Roundtable that even for simple projects, Toronto’s building approval process is very slow. Toronto (representing Canada) now ranks 54th out of 190 economies in process efficiency, according to World Bank metrics based on a basic warehouse project.
Slow approvals reduce supply by causing developers to drop some of the more complex residential infill or redevelopment projects subject to even greater delays resulting in increased cost and risk. But these are precisely the projects we need. The result: artificially reduced supply and higher housing prices.
RESCON, which is releasing a report in May that includes specific ideas on how to speed up building approvals and innovation, supports many of the directions in the provincial action plan. Hopefully RESCON’s recommendations and the provincial actions, can help move the city up from 54th to the top 10.
While speeding up the process is an urgent priority, other systemic deficits must also be fixed.
LAND USE FETISH
The Action Plan also aims to “strengthen the alignment of provincial infrastructure investments with provincial and municipal plans ...” It’s a rather bland comment on a very big problem.
Ontario has plenty of roads but the region needs more transit infrastructure which is the lifeblood of any large city, under-pinning urban development. But in Toronto, land-use planning is far ahead of the enabling transit infrastructure. This has led to townhouse developments in highly planned urban fringe communities with inadequate transit where families need two cars and drive everywhere. Contrast this with pedestrian- and transit-friendly Toronto “streetcar suburbs” where people walk from their detached homes to shopping and transit located along higher density arterial routes.
An example of pedestrian-friendly main streets with mid-rise gentle density providing a pedestrian- and transit-friendly urban form (in Copenhagen).
The preoccupation has been with “land use planning” as almost an end in itself – resulting in premature, “one hand clapping” celebrations by land use planners thinking that with higher density alone, something has been achieved.
This land-use fetish has diverted attention from a bigger issue which is the need to update zoning along existing transit and find ways to fund and build the transit we need to shape future growth in a way that provides housing choices that people want in pedestrian- and transit-oriented communities which include detached housing.
So how can we fix the zoning and transit deficits?
MEASURING THE ZONING AND TRANSIT DEFICITS
Let’s start with measuring the size of the zoning and transit deficit. Firstly, we are underutilizing existing transit infrastructure and transit potential.
A BILD study from 2013, "Unlocking the Potential for Mid-Rise Buildings,” found that 160 kilometres of under-zoned Toronto arterial roads, some with transit, is eminently suitable for mid-rise buildings yielding 123,000 residential units based on conservative assumptions. These arterials, mostly zoned for two storeys, should be zoned to five to 11 storeys to align the Official Plans (OPs) “Main-Streets” policies. The Planning Act requires updated zoning within three years of a new OP, but this is not happening.
The problem of underutilized transit development problem is not limited to arterials. Only 31% of subway stations meet Metrolinx density targets.
Secondly, we have, as we all know, a huge transit deficit in the region.
Melbourne – with a population of 4.8 million – has 390 kilometres of subways and high-capacity transit. The GTA – with a population of 6.5 million – has 77 kilometres of subways, including the new subway extension to the Vaughan metropolitan centre.
Melbourne transit map
Toronto subway map
We need more transit lines and existing routes need more capacity, including the long-awaited Relief Line, with previous variants proposed in plans going back to as early as 1910. One of the big reasons Toronto lags behind in transit investment is that it has not embraced more innovative approaches to transit funding.
LAND VALUE CAPTURE (LVC)
Innovative funding includes public-private partnerships, but goes much further. Hong Kong’s transit system, MTR (Mass Transit Railway), is self-funding. MTR is a “rail plus property” company that develops land above and adjacent to new subway and transit stations capturing the enormous increment in land value relative to pre-subway station values, and uses those funds for capital improvements and expansions in the transit system.
A subway station on the Spadina line in north Toronto: a missed opportunity to build an attractive station incorporated into a beautiful, mixed use residential building providing much needed new housing supply.
While Toronto will never be Hong Kong, there are some lessons to be learned from the MTR rail plus property approach. MTR manages the entire systems in both Melbourne and Stockholm where densities are more in line with Toronto. New York’s Grand Station is an example from the early 1900s. Metrolinx has looked at the LVC approach, but apparently it has not yet been implemented in its new Eglinton light-rail transit line that is now under construction.
Richard Lyall, RESCON president
Structured in the proper way, with design competitions to produce beautiful buildings above and adjacent to transit stations, the LVC approach achieves a real and tangible alignment of transit and development, which in turn, creates a template for a more transit-centric approach to development.
“Residential and ICI development can help fund transit investment that, in turn, allows for an expansion of the transit network,” Lyall says. “The expanded transit network allows for more residential development and supply along transit lines – while making the GTA more competitive. This is a win-win-win proposition.”
In November, I attended on behalf of RESCON, a C.D. Howe Institute conference on housing issues. Included in my presentation was the LVC idea which was well received by the institute and attendees. In December, Ryerson University published a report advocating for transit companies to engage in real estate development through joint ventures.
Similar opportunities exist with Ontario’s GO system, where most stations are still surrounded by parking.
“There is potential with our GO system and the TTC, to capture huge value increments that are possible from new development above and adjacent to stations, and plow that money back into the system,” says Andy Manahan, executive director of the Residential and Civil Construction Alliance of Ontario. “This is not a new idea. GO and TTC stations can be hubs for office, commercial and residential development that is well designed, neighbourhood friendly, and an asset to the city and the local community.”
Andy Manahan, RCCAO executive director
After all, LVC was used to help finance the trans-Canada railway which binds the country together – so the idea goes back to the very creation of the Canadian federation.
LVC is also something the provincial Roundtable should consider as part of aligning land use and transit through, perhaps, a dedicated task force that moves quickly to get things going. Land value capture can help cover some of the cost of the much-needed Relief Line, while beginning to address the GTA’s enormous transit deficit that holds back new housing supply, adding to Toronto’s affordability problem. We need both hands – transit and land use – working together. Then we can really start clapping.
Michael de Lint is RESCON’s director of building regulatory reform and technical standards. Email him at email@example.com.