York Region considers how to incentivize developers to build affordable housing

York Region considers how to incentivize developers to build affordable housing

Council balked at a consultant’s recommendation that the region spend $33 million a year, which could help create 110 to 330 affordable housing units.

York Region is considering ways to incentivize private market developers to build affordable housing, but councilors have balked at possible prices.

The region is preparing a plan to implement affordable housing in the private market to create incentives for more developers to include affordable housing as part of larger developments.

Nick Michael, a partner at N. Barry Lyon Consultants, recently proposed three generalized scenarios to the region’s affordable housing task force. However, the firm recommended the most expensive scenario: creating a construction grant program that could cost $33 million a year but help create 110 to 330 affordable housing units a year.

It’s the way to deal with “how serious the housing crisis is, how big the housing deficits are that we’ve identified, how high the cost of inaction is,” Michael said.

The region has struggled to meet its affordable housing goals in recent years. The region has set a goal of making 35 percent of new housing in regional centers and 25 percent outside of them affordable. But new developments have fallen short of this target for five consecutive years, with only 11% reaching an affordability threshold in 2022.

The region is already trying to encourage more targeted rentals through the deferral of development charges and the allocation of services.

But the new plan would add to that. At a minimum, Michael proposed the region work on advocating to higher levels of government for help, create a concierge program to help guide developments, and consider a property tax reduction in plus development fee deferrals for purpose-built rentals.

However, to improve the economics of affordable housing, Michael suggested the region could consider a formal land program that could help developers obtain land for their projects, in addition to a construction grant program that could go $10 million to $12 million per year – which could bring in 40 to 120 units per year – for $33 million.

Although developers are interested in building purpose-built rental housing, the economics remain challenging, Michael said. It is also difficult to obtain affordable housing.

“Affordable housing, unfortunately, it’s quite complicated, it’s expensive, it requires such unilateral agreements between all levels of government, nonprofit groups and developers,” Michael said. “That’s certainly the type of synergistic environment we hope to create through AHIP.”

Councilors were somewhat skeptical about the price tag. Newmarket Mayor John Taylor said there should be an assessment of Housing York undertaking projects at these figures themselves rather than putting everything on the private market.

“There is an alternative model that might be more beneficial and should at least be thoroughly researched,” Taylor said. “If it stays equal or close to equal, I don’t know why we wouldn’t move in that direction.”

Whitchurch-Stouffville Mayor Iain Lovatt agreed.

“We can do it. We’ve proven ourselves,” he said. “I just don’t want to give $33 million to the private market when we can do it ourselves.”

Michael responded that the advantage of the private market option is that accommodations tend to be considerably less expensive at a per door rate.

Staff are expected to report to council in September, with a recommendation based on feedback and consultation.

“This is a good opportunity for us to think outside the box,” said Wayne Emmerson, president and CEO of York Region. “This is what everyone must do in the future.”