Olivia Chow’s wrong turn on boosting housing in Toronto

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Toronto’s new-ish mayor, Olivia Chow, recorded her biggest victory to date this week. City council approved her housing plan by an overwhelming margin: 24-1. Under it, city hall would stop relying on the private sector and get into the housing business itself. Ms. Chow, who took office in July, wants to see 65,000 affordable rental units built by 2030.

But whether the plan is affordable, or even sensible, is open to question.

Consider affordability first. Building tens of thousands of new low-cost housing units will cost a fortune. The figure $36-billion is being kicked around. That is more than twice what city hall will spend this year on everything, from policing to transit to road work.

Toronto simply doesn’t have that kind of money. It is already in the worst financial crisis since amalgamation in 1998.

It faces a shortfall of $1.5-billion on its operating budget – and isn’t allowed to just borrow the money, as higher levels of government do. Look ahead 10 years and the projected shortfall grows to $46.5-billion, a staggering figure for a government with no income or sales tax.

Like generations of mayors before her, Ms. Chow is going to the federal and provincial governments for help. She has rattled her tin cup in front of Premier Doug Ford, Prime Minister Justin Trudeau and any other minister or functionary who will listen.

But those governments have already helped Toronto cover pandemic expenses, build more public transit and redevelop the Port Lands, a big stretch of real estate at the east end of Toronto’s harbour. Their resources are not limitless.

Now Ms. Chow is coming to them with another big ask. She wants each to kick in $500-million to $800-million a year for seven years, no small change even for Ottawa and Queen’s Park. A headline in the Toronto Star put the problem succinctly: Toronto has a bold plan to make housing more affordable – now it needs money to make it happen. That’s all, no biggie. Just the money.

The sole councillor to vote against the plan, Stephen Holyday, said Toronto is proceeding on a wing and a prayer. “I don’t see the financial plan on how we’re going to pay for all of this. And that is quite alarming.” Indeed it is.

Bozikovic: Olivia Chow’s housing plan for Toronto is big. But is it big enough?

Even if Toronto could afford it, Ms. Chow’s plan would be dubious. The centrepiece is to make city hall a force in the housing business, starting with five small city-owned plots of land and then scaling up. The mayor argues that private developers have not been building low-cost housing because they are driven by profit and there just isn’t enough in it for them. So the city has to step in and become a developer itself, taking a “people-centred” approach.

“It’s about government taking a role,” she told city council. “For decades the government has not taken a role. We’ve washed our hands and said, ‘Let the private sector build.’ Well, what happened? We have a housing crisis. Are we surprised?”

Her argument would make sense if city hall had the means and the experience to play such a part. It doesn’t. Developing real estate is a complicated business. It involves calculating borrowing costs, assessing building methods, controlling construction expenses and a thousand other things.

Toronto’s public housing corporation has struggled for decades just to keep its buildings habitable. It has been plagued by repair backlogs and cost overruns. What makes the mayor think the city will fare any better when it tries to build thousands of new rental units from scratch?

As another skeptical councillor, Brad Bradford, pointed out, the city’s plan is exceedingly vague. Nowhere in the wordy staff report could he find what it means to say the city would become a “public builder.” Would it build, own and operate the buildings? Just build them? Leave the building to a developer and act as overseer?

There has to be a better way. Instead of plunging into the development business, with all the uncertainties, liabilities and risks, why not form a partnership with a developer, as the city has done so successfully in places such as Regent Park and Alexandra Park? In those former public housing projects in Toronto’s downtown, developers were sold the rights to put up market-value housing on the land, with the proceeds going toward new public and affordable housing.

Instead, the city is stepping into the fog on its own, ill-equipped and badly prepared. Ms. Chow’s first victory could end in her biggest defeat.