Transcript Document

Affordable Housing in Ontario
Mobilizing Private Capital in an Era of
Public Constraint
André Côté, Manager of Programs and Research
Institute on Municipal Finance and Governance
University of Toronto
About the IMFG
The IMFG is a non-partisan research hub
based in the Munk School of Global Affairs at the
University of Toronto.
What types of work do we do?
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Research (e.g. academic & shorter papers)
Events (e.g. conferences, speakers, etc)
Presentations in Canada & abroad (Tokyo, Helsinki, …)
Roundtable convening & government advising
What issues do we focus on?
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Local finance and governance issues in cities in Canada
and internationally
The fiscal health of big Canadian cities
Recent work touched on borrowing and P3s, housing
and Section 37 agreements, transportation, etc.
IMFG’s Affordable Housing Project
 IMFG’s focus on broader fiscal
challenge housing poses for cities
 Asked to convene public, private &
non-profit sector representatives, in a
neutral space
 The paper: a ‘primer’ to frame the
discussion
How do you create the conditions for
greater private participation in
affordable housing?
The Shifting Landscape
 House prices and rents have raced ahead
 Incomes have not been rising for most
 Households have taken on much more debt
 Nearly 20% of Toronto CMA households in ‘core
housing need’ (CMHC)
 A condo boom but little new affordable housing or
purpose-built rental development
House prices (and rents) race ahead…
MLS® Average Residential Price, $
500000
450000
400000
350000
Canada
300000
Ontario
Ottawa
250000
Toronto
200000
Greater Sudbury
150000
London
Windsor
100000
50000
0
2002
Source: CMHC, CREA (MLS)
2003
2004
2005
2006
2007
2008
2009
2010
2011
But most people’s incomes have not been rising…
Ontario After-Tax Income Quintiles, 2010 Constant $
160000
140000
120000
100000
Highest quintile
Fourth quintile
80000
Third quintile
60000
Second quintile
Lowest quintile
40000
20000
Source: Statistics Canada CANSIM Table 202-0703
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
Household debt levels have spiked…
Canadian Home Prices and Household Debt
$400,000
180
$350,000
160
140
$300,000
120
$250,000
100
Average
Canadian
Home Prices
(Left)
$200,000
80
$150,000
60
$100,000
40
$50,000
20
$0
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Canadian Real Estate Association, Statistics Canada
Household
Debt to
Disposable
Income, %
(Right)
Nearly 20% of Toronto households in need…
Households in Core Housing Need*
20
19
18
17
16
% 15
Canada
14
Ontario
13
Toronto CMA
12
11
10
2002
2003
2004
2005
2006
2007
2008
2009
Source: Canada Mortgage and Housing Corporation
*Factors in affordability based on the 30% household income measure, suitability based on size and number of
occupants, and adequacy based on state-of-repair, as well as availability of alternative housing.
A condo boom but little new rental supply
Toronto CMA* Housing Completions
35,000
30,000
25,000
20,000
Freehold
Rental
15,000
Condo
10,000
5,000
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Canada Mortgage and Housing Corporation
*Roughly analogous to GTA, minus Burlington, Oshawa, Barrie and some smaller municipalities.
The Problem
1.
Housing affordability is getting worse for many households
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Housing costs have been increasing faster than incomes
Few new affordable units built in recent years
2. Social housing providers struggling to maintain units
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Huge repair liabilities: ~$850M and rising in Toronto
Significant demand: 150,000 households on wait-lists across Ontario
3. Limited scope for big new fed-prov investments
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Long-term trend: withdrawal from social housing field
Drummond: for Ontario to address their budget crisis, a “sharp degree
of fiscal restraint [is needed] over the next few years.”
The Moral of the Story
 The old model of paying for social housing –
through large-scale, direct federal/provincial
subsidies – is likely a thing of the past
 New funding models and sources of investment
are needed – with an expanded private sector role
 Onus on local governments to innovate and
develop these new funding & partnership models
What can we learn from Other Countries?
 Looked at the US, Australia and the UK
 All face similar housing affordability issues and
budget constraints
 Using different tools to mobilize private players
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US Low-Income Housing Tax Credit Model
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Australian National Affordable Rental Scheme
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UK austerity and the growing role for private investment
Conclusions
 Toronto can’t wait on other orders of government
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Leverage the IAH funding, and use the assets and tools Toronto has
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Many viable options in Private Roundtable & “Putting People First” reports
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Ensure housing discussion links with OP review & transportation planning
 Need to present housing as a ‘win’ to the Province
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An opening to re-engage on the housing file
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Focus on enabling conditions for local strategies, not new funding ask
Deepen relationships with private and non-profit players
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Public and private interests are starting to align
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Create spaces for discussion, analysis and experimentation (e.g. piloting
initiatives)