More Affordable Rental Housing is Coming to Mississauga
While the lack of affordable rental housing is a significant issue throughout the GTA, discussions regarding the derth of such housing in Mississauga, in particular, have generated action.
Several years after launching its important and middle-class focused Making Room For the Middle plan, the City of Mississauga is moving forward with a plan to generate more affordable rental housing for lower and middle-income earners.
At a time when the average monthly rent in Mississauga sits at $1,768 for a one-bedroom apartment and $2,099 for a two-bedroom unit, the move will no doubt come as a relief.
This week, Mississauga city council approved a proposal to develop a Community Improvement Plan (CIP) to offer incentives that will spur the creation of new affordable rental dwellings.
“Mississauga, much like many other growing cities across the Greater Toronto Hamilton Area (GTHA), is facing a housing affordability challenge,” said Mayor Bonnie Crombie.
“This plan will help Mississauga take another meaningful step toward building more affordable rental housing in our city. It will also allow us to continue to make progress on our Making Room for the Middle Affordable Housing plan and ensure that everyone, no matter their background, can afford to live in Mississauga.”
A CIP can be created when what is needed in a community will not be built by the market without intervention. Recently released data indicates that the city's rental vacancy rate sits at just 0.8 per cent (a healthy rate is 3 per cent), so the need to grow the supply of rental units is pronounced.
The city says the CIP could encourage the development of new affordable purpose-built rental units by providing both financial and non-financial incentives. Only units meeting defined affordability criteria would be considered for incentives by council.
The CIP follows other recent council actions to advance the city's affordable housing strategy including the Demolition Control and Rental Protection By-laws—both designed to ensure that existing rental stock is protected and/or replaced after a demolition.
The city currently has a CIP in place for office space in the downtown area.
"The need for housing that is affordable to low and moderate-income households is a pressing issue in the city. Without affordable places to live, Mississauga will face challenges attracting a diverse labour force, achieving economic growth, and offering a vibrant community for residents of all income categories," the city said in a report.
Housing affordability is an issue for almost 1 in 3 households in Mississauga, and renters are facing more significant affordability issues than owner households.
A city document indicates that, as of 2016, 42 per cent of renters were facing affordability issues. Among renters with affordability issues, 20 per cent were in deep housing need, and 12 per cent were in severe housing need.
How did this happen?
One major factor driving rental prices is the lack of purpose-built rental supply in the GTA in general. Over the past few decades, more tenants have needed to seek out privately-owned low and high-rise units because developers have invested more in condominium buildings than ones built strictly and exclusively for tenants.
Some developers and their partners have argued that the business case for constructing more purpose-built rental units is not there. Rental buildings provide much slower ROI, as condos generate money from sales almost immediately, while apartment buildings generate revenue over the long-term.
The push towards condo-building--driven almost entirely by concerns over access to quick capital--has left tenants reliant on private landlords rather than property management companies.
And the shortfall of purpose-built rental housing has left tenants in serious trouble—especially at a time when the average home price sits at $750,747, thereby ensuring huge swaths of current tenants won't be able to make the shift from tenant to owner anytime soon.
To achieve a healthy vacancy rate of 3 per cent, over 900 additional “vacant” units need to be available in Mississauga, the city says.
In the past 30 years, only approximately 2,300 units have been added to the purpose-built rental inventory, whereas approximately 118,500 units have been added to the ownership or secondary rental market.
While there have been development applications for purpose-built rental buildings in recent years, rents are coming in above 1.5 times average market rent, which puts these units out of the affordability range for Mississauga’s lower-income earners.
The city says it will recommend the appropriate affordability thresholds through work on the CIP.
"We are suggesting a city-wide CIP for affordable rental units because these are not being built by the market anywhere in the city, with the exception of developments supported by the Region of Peel and other levels of government," said Andrew Whittemore, Commissioner of Planning and Building.
"With a current primary rental vacancy rate of 0.8 per cent in our city, compared to a balanced market vacancy rate of 3 per cent, supply has not kept up with demand."
The city's recent approval begins a three-step process which includes the introduction of a by-law to designate the entire city as a Community Improvement Project Area for the purposes of affordable rental housing; preparation of the Plan including an analysis of incentive options, and consultation with the community and industry, including a statutory public meeting
“We will work in tandem with our Regional partners who are also undertaking a CIP," said Jason Bevan, Director of City Planning Strategies, who presented the report at Council.
"The Region is currently conducting a business case and financial assessment with an update expected to Regional Council this Fall. Mississauga's CIP would be significantly more effective with Regional participation, given their share of overall development charges and property taxes."
One hurdle that the city could face is ensuring the CIP plan considers the recent changes to municipal planning and financial legislation introduced in Bill 108.
Bill 108, which was designed to incentivize the creation of more affordable and rental housing in Ontario, transforms Ontario’s land-use planning system by essentially making it easier for developers to proceed with projects.
The City of Mississauga issued a critical statement on the bill in May, arguing that it wasn't sure the legislation—which involves reducing fees and timelines for developers—would ultimately produce more housing.
The city also argued that the legislation could lead to increased costs for consumers.
“While we support the aim of this legislation, to bring new housing supply to market more quickly, it does so by lessening the burden on developers by reducing fees and approval,” said Mayor Bonnie Crombie in a previous statement.
“We have not seen any evidence that reducing fees and timelines for developers will result in the creation of more affordable housing or that savings will be passed along to consumers. In Mississauga, we have well over 20,000 housing units ready to be built, which doesn’t include the pre-zoned lands within the downtown core. Further, the long-held principle that ‘growth pays for growth’ would no longer apply, resulting in existing taxpayers and residents footing a larger share of the bill for new growth. I urge the government to consult more with municipalities on this important piece of legislation.”
The city also said it was concerned the bill would hurt its coffers, as slashing development charges—one of the city's few revenue-generating tools—is part of the bill.
“We are concerned this will result in a loss of Development Charge revenue to the City,” said Janice Baker, City Manager and Chief Administrative Officer.
“As well, the currently separate charges for cash-in-lieu of parkland, Section 37 (bonus zoning), and soft services development charges will now be combined into one Community Benefit Charge. Any reduction in funds as a result of this change will limit our ability to provide adequate park, recreation, library and other infrastructure. This is the very infrastructure that promotes health, social inclusion and drives quality of life in a community.”
But while it might be challenging to reconcile the CIP with Bill 108, the emphasis on the need to act as quickly as possible to produce more rental housing—especially as the city grows and continues to develop—is more than welcome.
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