Analysis: Funding shortage among many challenges facing Toronto’s affordable housing plan

By AMARACHI AMADIKE, Local Journalism Initiative Reporter

Over the past few years, major cities across Canada have consistently reported increases in the cost of living as post-pandemic inflation persists. Residents have now become well acquainted with conversations surrounding housing affordability.

Toronto’s story, however, is a little more dire with one in five households currently living in core housing need – double the national average, according to city staff. Knowing the critical state of the city’s housing market, Olivia Chow – along with a promise to tackle the budget deficits through “moderate” tax increases – vowed to provide more affordable housing options during her successful campaign to become Mayor of Toronto last June.

Since her arrival at Toronto City Hall, things have been moving. Although it is too early to pass judgement as to whether we are in fact moving in circles, there is not yet a reason to doubt Chow’s leadership. However, there is plenty of reason to be sceptical about expectations that Toronto’s newly updated HousingTO 2020-2030 Action Plan, which has shifted from its original goal of providing 40,000 new affordable units by 2030 to 65,000 units in the same time frame, will fix the city’s current affordability issues.

If successful, the new plan would have created 41,000 affordable units, 17,500 rent-controlled units, and 6,500 rent-geared-to-income units in the next seven years. But residents, like myself, are wondering if even this is enough to counter the years of sluggish behaviour that has seen Toronto fail to protect the affordable rental units it already had.

According to affordable housing experts, even if Toronto supplies 65,000 more units as it is suggesting it can, there would still be a net loss of low-income rental units by 2030 assuming the current trend of a decline in affordable housing continues.

Between 2016 and 2021, Toronto lost more than 73,000 affordable units that are priced under $1,000. The 2021 census reported 210,000 missing apartment units that rent for below $1,700 a month. This, according to HousingNowTO Volunteer Technical Lead Mark Richardson, makes 65,000 units about one-third of the actual affordable housing demand in Toronto. HousingNow TO is a grassroots organization calling for affordable housing on city lands.

“That’s a big gap to fill,” Richardson said in an address to city councillors. “If you’re going to create a lot of [rent-geared-to-income] units, which we support, someone’s going to have to pull up the money truck.”

Inflation certainly played a role in some of the unit prices creeping above the affordable threshold, but the fact is 79 per cent of all rentals in Toronto are privately owned and these owners can further inflate the market by increasing the cost of rentals at a moment’s notice.

For this reason, tackling Toronto’s lack of affordable housing units simply by pledging non-existent investments into construction of new affordable homes is a futile strategy. If we are losing affordable units at a more rapid pace than we are providing them, then even if Toronto Council is successful in its mission to approve 65,000 units, they would have made great strides in theory while remaining stagnant in reality.

To be fair, Toronto does have a program in place to protect the current supply of affordable units. MURA (Multi-Unit Residential Acquisition), according to the city, is a “non-market, public and community-based rental acquisitions strategy to preserve the existing supply of affordable rental housing in the city.” This is good. Acquisition is a significantly cheaper solution to creating affordable housing than construction of new units.

City officials have reported it would cost about $560,000 for each newly built affordable unit. This covers just the construction and doesn’t include any of the other fees and taxes. On the other hand, acquisition of a unit with aims of keeping it affordable can be achieved for as little as $150,000.

Considering the potential MURA has shown creating 1,082 new affordable and supportive homes and the approval of 3,340 new affordable rental homes between the start of 2022 and June 2023, it is surprising the program isn’t receiving much more funding than it currently gets. Although the city says it is exploring this avenue while also constructing new units, very little investment has been allocated to MURA as can be proven by the $46 million which was aimed towards securing 260 affordable units.

Focusing investments on programs like MURA would create a climate in Toronto for future investments into constructions of new affordable units. At the moment, we are attempting to fill the bathtub with water without plugging the drain. These efforts, through a long-term outlook, seem pointless.

Toronto’s current housing delivery framework is broken into three stages – pre-development; securing partners; and building. The second phase, securing partners, is where Toronto Council is expected to encounter its biggest hurdle as it entails partnerships with the provincial and federal governments.

With 60,545 affordable units left to be built in the city’s housing plan, Toronto Council will miraculously have to come up with at least $33 billion in the next seven years. The current strategy to achieve this heavily relies on a $17 billion contribution from upper levels of government.

Although Chow has managed to get the provincial government to discuss a new financial framework for Toronto – the federal government is also showing interest in joining the conversation as of late – Toronto’s tumultuous history with funding from other levels of government makes one wonder how quickly these affordable homes will be built.

Toronto is currently facing a $1.5 billion budget shortfall it has yet to figure out how to overcome. With the proposed tax increases only covering 30 per cent of this deficit, councillors will be hard pressed to convince residents of their ability to generate $33 billion over the next seven years.

–  Amarachi Amadike is a Local Journalism Initiative Reporter for Beach Metro Community News. His reporting is funded by the Government of Canada through its Local Journalism Initiative.