Item - 2024.PH13.8

The Planning and Housing Committee recommends that:  

New Rental Supply Housing Program

1. City Council approve the Rental Housing Supply Program, as outlined in this report, to assist the City in achieving its approved rent-controlled, affordable and rent-geared-to income rental housing targets.

2. City Council authorize the Executive Director, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, to provide City financial incentives to eligible rental housing units under the Rental Housing Supply Program, up to the number of rental housing units approved annually through the Housing Secretariat Budget, including exemptions from development charges, parkland dedication fees, community benefits charges, if not exempted by provincial legislation, and waivers of planning application and building permit fees, to eligible housing developments.

3. City Council direct Executive Director, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, to develop a review and evaluation process to assess the financial impact of Rental Housing Supply Program applications and recommend approval of financial incentives for Council approval.

4. City Council authorize the Executive Director, Housing Secretariat, to launch a three-year Pilot Community Housing Pre-development Fund, to provide funding to Community Housing Providers for the purpose of undertaking pre-development activities in accordance with guidelines included in Attachment 3 to the report (May 30, 2024) from the Executive Director, Housing Secretariat.

5. City Council authorize the Executive Director, Housing Secretariat to approve projects eligible for the Pilot Community Housing Pre-development Fund, in accordance with guidelines included in Attachment 3 to the report (May 30, 2024) from the Executive Director, Housing Secretariat, up to the number approved annually through the Housing Secretariat Budget.

6. City Council request the Executive Director, Housing Secretariat, to report to City Council annually on the results of the Rental Housing Supply Program and Pilot Community Housing Pre-Development Fund from the prior year, including any recommended modifications to the programs.

7. City Council adopt the updated Municipal Housing Facility By-law in Attachment 4 to the report (May 30, 2024) from the Executive Director, Housing Secretariat, and repeal Municipal Housing Facility By-law 183-2022.

8. City Council authorize the City Solicitor make such stylistic and technical changes to the draft Municipal Housing Facility By-law as may be required.

Financial Support for Affordable Rental Housing Projects

9. City Council authorize the Executive Director, Housing Secretariat, to provide capital funding to the projects listed in Confidential Attachment 1 to the report (May 30, 2024) from the Executive Director, Housing Secretariat, up to $260,000 per affordable rental unit, in a total amount not to exceed $351,515,142.

10. City Council authorize the Executive Director, Housing Secretariat to negotiate and execute, on behalf of the City, the following:

a. a municipal housing facility agreement ("Contribution Agreement") with eligible proponents for funding and financial incentives, and to set out the terms of the development and operation of affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor;

b. a municipal housing facility agreement ("Contribution Agreement") or amendments to existing Contribution Agreements with the proponents listed in Confidential Attachment 1 to the report (May 30, 2024) from the Executive Director, Housing Secretariat, or related entities, for funding and financial incentives and to set out the terms of the development and operation of affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor;

c. a pre-development funding agreement with eligible proponents approved under the Pilot Community Housing Pre-development Fund, including the projects outlined in Confidential Attachment 1 to the report (May 30, 2024) from the Executive Director, Housing Secretariat, to secure the financial assistance and to set out the terms of the pre-development funding, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor; and,

d. to enter into agreements or other suitable arrangements with City of Toronto agencies and/or corporations, the Government of Ontario and/or its agencies, community agencies, private entities and/or individuals, as appropriate, to deliver projects approved under the Rental Housing Supply Program.

11. City Council direct the Chief Financial Officer and Treasurer, the Executive Director, Housing Secretariat, and the Executive Director, Financial Planning to develop an implementation plan to establish a revolving Affordable Housing Fund to be overseen and used by the Executive Director, Housing Secretariat in consultation with the Executive Director, Financial Planning to support future rent-geared-to-income and affordable rental housing projects.

Expediting Development Review and Legal Due-diligence

12. City Council request the Executive Director, Development Review Division, in consultation with the Executive Director, Housing Secretariat, Chief Executive Officer, CreateTO and Chief Planner and Executive Director, City Planning, to identify projects approved by the Rental Housing Supply Program that will be reviewed under the Priority Development Review Stream.

13. City Council increase the 2024 Operating Budget for Legal Services Division by $0.166 million gross and $0 net, fully funded from the 2024-2033 Capital Budget and Plan for Housing Secretariat and increase the approved staff complement for Legal Services by two permanent positions to support a range of housing initiatives.

Intergovernmental Considerations

14. City Council request the Government of Ontario to support the implementation of the Rental Housing Supply Program, which is also necessary to support delivery of the Ontario's more Homes for Everyone plan targets, by:

a. urgently allocating land to develop new purpose-built affordable, rent-controlled and rent-geared-to-income homes and require that as part of any future Provincial land offerings, at least 30% of the gross floor area be allocated for affordable housing for 99 years;

b. partnering with the Federal Government on their Canada Builds program and the City of Toronto to launch an Ontario Builds housing program and:

1. allocate between $500 million and $800 million per year in grant funding to Toronto over the next seven years;

2. allocate between $6.5 billion and $8 billion in low-cost financing/re-payable loans to Toronto over the next seven years;

3. provide loan guarantees for non-profit, co-op and public led purpose-built affordable and market rental projects, as well as for affordable homeownership projects;

c. allowing zoning with conditions to enable the City of Toronto to secure purpose-built rental housing as part of individual site-specific zoning by-laws;

d. allowing for Inclusionary Zoning to be applied across the city and approve the City’s Protected Major Transit Station Areas delineations, and require the homes to meet the City’s income-based definition of affordable housing and ensure that affordability is secured for 99 years; and,

e. adopting the City of Toronto’s income-based definition of “affordable housing” and harmonizing all provincial housing programs to create certainty and predictability.

15. City Council request the Government of Canada to support the implementation of the Rental Housing Supply Program, in alignment with Canada’s Housing Plan, and the subsequent 2024 Federal Budget, by:

a. urgently allocating land to develop new purpose-built affordable, rent-controlled and rent-geared-to-income homes and require that as part of any future federal land offerings, at least 30% of the gross floor area be allocated for affordable housing for 99 years;

b. launch the Canada Builds program in partnership with the Province of Ontario and the City of Toronto to:

1. allocate between $500 million and $800 million per year in grant funding to Toronto over the next seven years;

2. allocate between $6.5 billion and $8 billion in low-cost financing/re-payable loans to Toronto over the next seven years; and,

3. provide loan guarantees for City-supported non-profit and public led purpose-built affordable and market rental projects.

16. City Council direct that Confidential Attachment 1 to the report (May 30, 2024) from the Executive Director, Housing Secretariat remain confidential in its entirety as they: outline a position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City; and contain financial information, supplied in confidence to the City of Toronto and CreateTO, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.

17. City Council direct the Deputy City Manager, Development and Growth, in consultation with the Chief Financial Officer and Treasurer, to consult with stakeholders including BILD, and report back to Planning and Housing Committee by the October 30, 2024 meeting with options on supporting the delivery of purpose-built rental homes, in partnership with both existing and potential funding and program supports from the federal and provincial governments.

The Planning and Housing Committee:

1.  Directed the Executive Director, Housing Secretariat to report directly to the June 26 meeting of City Council with an intergovernmental request for additional funding and financing required to complement the City’s proposed capital funding of $351 million, referenced in Part 9, in advancing approximately 6,000 rent-controlled homes, including 2,600 affordable rental homes.

2. Requested the Executive Director, Housing Secretariat to provide a supplementary report directly to City Council for the June 26, 2024 meeting reviewing the merits and rationale informing the rent-control provisions applying to the mid-range moderate rent units created through the proposed Rental Housing Supply Program, including:

a. An analysis of the feasibility of limiting rent increases to the provincial rent increase guideline under the Residential Tenancies Act, 2006 and the impact on the financial viability of the 30% of income-based affordable units within the contemplated projects and the financial viability of the contemplated projects as a whole;

b. An analysis of the affordability of the mid-range moderate rent units over time relative to the private housing market in the context of the rent-control provisions as contemplated in the report; and

c. A jurisdictional scan of the long-term viability of the not-for-profit and co-operative housing market in current market conditions and the sector’s resilience to withstand market fluctuations with regards to financing, debt servicing, and other relevant factors.

Toronto is facing two housing crises – one where there is a lack of deeply affordable and supportive housing for low-income marginalized and vulnerable residents; and a more recent one in which rising rents have made it increasingly unaffordable for middle income earners, key workers and professionals to live in the city. This was noted by the City’s Perspective on the Rental Housing Roundtable report in 2023. Urgent action across the entire housing continuum is required to prevent more residents, specifically renters, from experiencing housing instability and potentially homelessness; to avoid Toronto’s social service sector facing a deepening key worker staffing crisis; and to allow Toronto’s businesses to attract the workforce and labour supply they need to grow.

City Council has recognized the need to expand the City's HousingTO 2020-2030 Action Plan (HousingTO Plan) targets beyond affordable rental homes, to include rent-geared-to-income (RGI) and rent-controlled homes, thereby advancing a generational transformation of Toronto’s housing system by 2030. In support of the delivery of a full range of homes, City Council has further directed staff to recommend revisions to the Open Door Affordable Rental Housing program (Open Door program). This report responds to City Council’s request to review the Open Door program in light of the revised HousingTO Plan targets that include rent-geared-to-income, affordable rental, and rent-controlled homes (2023,EX9.3).

The Open Door program has been the City’s signature affordable rental housing initiative since its launch in 2016, and has provided City funding and incentives (including waivers of fees and charges, and property tax exemptions) to support the development of over 21,000 affordable rental homes on public, non-profit, co-op and private land.

The Open Door program has been able to support a healthy pipeline of affordable rental homes across Toronto, with 1,911 of these homes constructed and an additional 3,011 currently under construction. There are an additional 16,530 homes that are currently stuck in pre-development phases due to requiring additional support, including funding and financing, and acceleration of approvals, to move them into construction. 

This report provides recommendations to transform the Open Door program into the Rental Housing Supply Program in light of the updated HousingTO Plan targets, recent legislative changes to the Development Charges Act (DCA) through the More Homes Built Faster Act, 2022 (Bill 23); the More Homes, More Choice Act, 2019 (Bill 108), and the Affordable Homes and Good Jobs Act, 2023 (Bill 134); federal and provincial housing policy and funding changes; and the current macroeconomic context which is making it increasingly difficult to adequately scale-up the purpose-built rental housing supply in Toronto.

To respond to the housing and homelessness crises and support City Council’s new target for 65,000 rent-controlled homes, this report proposes:

1) Allocating capital funding to 18 affordable rental and rent-geared-to-income housing projects, outlined in Confidential Attachment 1, aimed at accelerating delivery of over 2,600 new affordable rental homes. Through this funding, non-viable projects will be able to move to construction start and secure financing. Staff estimate that in addition to unlocking over 2,600 affordable rental homes, a further 3,380 market and rent-controlled rental homes will enter construction for a total of almost 6,000 new rental homes.

2) Launching the new Rental Housing Supply Program which:

• Aligns the program definition of affordable rental housing with the City’s Official Plan income-based affordable housing definition and the provincial Affordable Residential Units Bulletin definition.
• Establishes a framework for prioritizing and recommending capital funding for affordable and rent-geared-to-income rental homes, up to a maximum of $260,000 per unit.
• Introduces a proposed program definition of rent-controlled homes where rent levels are higher than income-based affordable rents and at or below 150% of the average City of Toronto rent, by unit type, as reported annually by Canada Mortgage and Housing Corporation. This new program definition is consistent with the Official Plan definition of mid-range moderate rents and will include limiting rent increases to the provincial rent increase guideline under the Residential Tenancies Act, 2006 plus 2%.
• Provides proposed incentives to not-for-profit corporations, non-profit housing co-operatives (co-ops), Indigenous housing providers, (collectively referred to as “Community Housing Providers” throughout this report), as well as the Toronto Community Housing Corporation (TCHC) and the Toronto Seniors Housing Corporation (TSHC) to support the development of new rent-controlled homes.

3) Launching a Pilot Community Housing Pre-development Fund to support the intensification and re-development of Community Housing sites.

4) Working towards launching a sustainable and revolving Affordable Housing Fund to attract funding from government and non-government sources including financial institutions, philanthropic organizations, and private sector organizations (including large employers) to support a range of City-supported and City-led affordable rental housing projects.

These measures also complement the “Community Housing Modernization and Growth Strategy” (the Community Housing Strategy) report that is also to be considered by the Planning and Housing Committee at the same meeting on June 13, 2024. The Community Housing Strategy includes concrete measures to support long-term sustainability and affordability of the city's existing community housing stock over the next decade as they navigate expiry of mortgages, ending of land leases with the City, and escalating maintenance costs. The Community Housing Strategy also proposes a number of policy and planning measures aimed at increasing the community housing stock including enhancements to the Multi-Unit Residential Acquisition Program (MURA) to enable Community Housing Providers to better compete in the city’s speculative market and to acquire properties that can be operated as affordable rental housing in perpetuity.

The proposed new Rental Housing Supply Program aims to support a shift in Toronto's housing market, where purpose-built rentals are the most common form of rental housing but have contributed the least amount of new supply over the past 10 years. During this time, most new rental supply has derived from condominiums, which according to the Canada Mortgage and Housing Corporation Rental Market Report are generally more expensive and do not offer the same level of security of tenure for tenants. The proposed new Rental Housing Supply Program also aims to support a generational transformation of Toronto’s housing system to shift Toronto’s housing system and increase the supply of non-market, community housing.

Despite an increase in purpose-built rental housing starts in 2023, the rental housing supply is not forecast to keep up with demand. Canada Mortgage and Housing Corporation (CMHC) anticipates a decline in housing starts that will persist through 2024 and 2025, reflecting the lagged effect of higher interest rates, labour shortages, and supply chain issues. Toronto is continuing to face high rental demand driven by strong population growth and an increasing number of renter households squeezed out of homeownership market. The rental market in Toronto is expected to remain tight without significant action by all orders of government to facilitate the development of purpose-built rental housing. This proposal responds to stakeholder feedback in the City’s Perspective on the Rental Housing Roundtable report, which recommended that the City study additional means of incentivizing purpose-built rental housing supply beyond what is already available in the Open Door program, and recognize the vital role of the non-profit sector in providing affordable housing.

While the City is committed to taking every possible action within its jurisdictional and financial capacity to tackle the housing crisis, strengthened partnerships with the federal and provincial governments are needed to complement Toronto’s efforts. Recent federal and provincial measures introduced to support purpose-built rental construction, such as providing a 100% rebate on the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on new purpose-built rental housing is an example of government policies aligning to advance collective housing objectives.

However, new and enhanced policy, program and financial tools are urgently needed to meet Toronto, Ontario and Canada’s respective housing supply targets. This includes a new fiscal deal to support the structural changes that will put Toronto on a path to long-term financial sustainability, as well as a commitment from the federal and provincial governments to invest in the HousingTO Plan.