Municipalities and Housing

In the last post we looked at how a lack of housing supply has driven prices up, and how this is a feature of a housing market that treats housing as a commodity to be traded and invested in rather than as a human right and necessity. But why are there so few housing units?

The former Deputy Mayor of Toronto is quoted in this story as saying that there are three things you need to get housing built: “You need the approvals, you need the people to build these things and you need a way to finance it…Right now, we’re having issues in all three.” In this post we’ll look at the first of these: approvals.

How Housing Development is Approved

One of the first posts I wrote here was about the development process, because it’s a doozy: it can take tens (or hundreds) of thousands of dollars, and months or years of bureaucratic exercises, to meet all of the necessary standards to receive all of the necessary approvals to sever and rezone property and get all of the necessary permits to build on it. This is for good reason: we want to ensure that the right types of development go in the right places in our community, and that they’re built in ways that are safe and environmentally sustainable. We also want to ensure that the process is followed with integrity and transparency, and that the public has the opportunity to comment on development within our community.

There are three major hurdles in this endurance race: municipal regulation, environmental regulation, and public pushback. Any of them can lead to long delays in getting housing developments approved.

The Public

Much has been said about the “NIMBY” problem: Not In My Back Yard, shorthand for the idea that things like affordable housing are something that everyone thinks should exist, but few people want next door. The sprawling neighbourhoods we build in North America are enshrined in zoning bylaws, and changing those zoning bylaws to allow for more density (e.g., apartment buildings) tends to get a lot of people’s backs up. There is rightly some condemnation for folks who complain about the high cost of housing on one hand, and then oppose the building of affordable housing on the other.

The provincial government talks about this problem a lot, and they’ve cited it as a key problem that keeps affordable housing from being built. As such, they’ve targeted the problem with some significant changes to public processes: they’ve reduced the public’s ability to participate in planning decisions, eliminated the ability of third parties to appeal planning decisions, and given the Minister the ability to overrule municipal councils (ostensibly so that councils that cave to NIMBY pressure can be bypassed). This is also explicitly why the province has granted Strong Mayor powers to the mayors of Ontario’s largest cities: now mayors of those cities don’t need a majority of council to approve these projects, they can pass them with the support of 1/3 of council. This is a serious tradeoff: what we gain in expediency, we lose in democracy and transparency.

I would argue that they’ve been just as bad about NIMBYism as any members of the public. A large provincially owned property in downtown Cobourg has been sitting unused for a few years now, and when I contacted the provincial government to suggest it be used for affordable housing I was told “we don’t want another Jane and Finch,” referring to a troubled neighbourhood in Toronto that contains a major subsidized housing project. And the type of housing they’re promoting is simply more and more single-family detached dwellings and, at best, auxiliary units on those detached dwellings. They’ve actively promoted “the dream of home ownership” for years. When they refer to NIMBYism, they’re actually referring to environmental groups who don’t want to see “greenfield” development (i.e., housing built on previously undeveloped land).

Environmental Regulation

Conservation Authorities (CAs) have existed for about a hundred years, and became a major force in Ontario after Hurricane Hazel wiped out a section of Toronto in the 50’s. The idea was to regulate the building of housing so that people didn’t live in floodplains where their houses could be washed away in big storms. Over time, CAs also became the main way that we controlled topsoil erosion and protected the habitat of endangered and threatened species, mostly just by regulating where people can build things. Someone who wants to develop land must first check with the local CA to ensure that it isn’t provincially significant wetlands, that it isn’t in a flood plain, or that it isn’t in significant habitat for species at risk.

At least, that WAS how it worked. But last year the province decided that was too much regulation: as part of Bill 23, the More Homes Built Faster Act (and through other bills both before and after Bill 23), Conservation Authority regulatory powers were reduced in strength and scope. They no longer protect habitat for species at risk, and their comments on a given property are limited to whether the ground will be stable, no longer including concerns about pollution or significant erosion. CAs have also had their budgets reduced significantly, and the work they’re allowed to perform for municipalities has been massively curtailed, all in efforts to “cut the red tape” and, at least ostensibly, get “more homes built faster.”

I can’t speak for any other Conservation Authority, but my experience with Lower Trent Conservation Authority is that they’re fast, efficient, and easy to work with. The changes the province has made have already shown to increase how long it takes to get a project approved; the CA was the most efficient part of the process, and by reducing their role we’ve lost a lot of time. But perhaps more importantly, it matters where we build, even if that’s not as regulated anymore. A healthy community is not built on sensitive habitat, and doesn’t tolerate pollution and erosion.

Municipal Regulation

Most of the regulation of development happens through the municipal planning process, but it’s important to note that this process is set by the province. Municipal regulations are framed by county regulations, which are framed by provincial regulations. At best, we add our own flavour to a prescribed recipe.

The provincial PCs and the federal Conservatives make a big deal about “getting approvals” – they want to measure progress in terms of the number of permits issued. The provincial government promised strong mayor powers to mayors who meet targets for approvals, while the CPC leader promises to fire public servants who don’t get enough approvals fast enough, and worse, tie municipal funding to the number of approvals issued.

Is it good to get approvals faster? Sure. But there are four big problems with this kind of focus on approvals.

First, it over-simplifies the problem. If you’ve followed this issue at all, or even just read the rest of this post, you can see that it isn’t just a matter of the speed of approvals. In fact, there are over a million approvals already waiting to be built. There are all sorts of reasons why developers aren’t getting them built.

Second, it paints regulation as strictly negative. Every rule we have protects us from some kind of harm, and we should be very careful about replacing them, much less cutting them. If streamlining processes means approving buildings that shouldn’t be approved, we lose more than we win.

Third, it creates incentives to approve as many developments as possible, and as I said last time, not all developments are equal. The simplest project to approve is a single-family detached dwelling, and the simplest way to get a whole whack of permits approved is to get a sprawling subdivision full of them. That kind of housing won’t be affordable, for residents OR municipalities.

Fourth, it financially penalizes municipalities who insist on good planning practices that will save residents money in the long term. Municipalities depend on the provincial and federal governments for a LOT of our funding (only 8% of all taxes are collected by municipalities), and yet, the buck stops here. Tying our cashflow today to implementing policies that will bankrupt us in the long term is bizarre.

tl;dr (too long, didn’t read)

We’ve seen that the provincial government (and federal Conservatives) hold municipal regulation responsible for the lack of housing. They’ve used that theory as the basis for reducing public participation and transparency; cutting environmental regulation; and creating perverse incentives for municipal regulators that ultimately encourage costly sprawl. And all of this despite knowing that there are over a million projects already approved that aren’t being built.

So is the long development process a problem? Sort of. Is it the cause of the housing crisis? By no means. Next week we’ll look at labour and supplies shortages, followed by financing.

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