Pubnight Pics!    Check out the images here.

Love those stashes!

The attendance was amazing for the first pubnight of the 2011-2012 year. It was an amazing event. If you didn’t make it this time, be sure to come out for the next event.

The event is also of note, as a celebration will be held to honor the 40th Anniversary of Bloor-West Village, which became North America’s first BIA, and start off the trend of downtown districts, and neighbourhood retail districts, starting BIA’s to market, and renew their retail areas, to compete with suburban malls which were the craze 40 years ago.

I was in contact with the IDA today, and the best they can offer students is a $275 registration fee, which is less than half the price members are paying.

Check out the event at

http://www.ida-downtown.org/eweb//DynamicPage.aspx?WebKey=1F9D19E6-C349-4730-B830-AACBB721986D& </eweb/DynamicPage.aspx?WebKey=1F9D19E6-C349-4730-B830-AACBB721986D&

If you are interested in coming, please email me ASAP at mbinetti@ryerson.ca

Wednesday April 7th

7:00 – 8:00pm - Bloorcourt VillageB.I. Strategic Directions

Thursday April 8th

9:00 – 10:00am - Maple Leaf Entertainment. New Toronto FC Academy & Practice Facility

10:30 – 11:30am - Bousfields Inc. The Toronto Transit City Light Rail Plan

12:00 – 1:00pm - Elspeth Hayworth centre: Settlement Centre

1:15 – 2:15pm - Doppelmayr Group. Cable Propelled Transit

2:30 – 3:30pm - Councillors, Fletcher & Vaughan; Re-Purposing Churches

3:45 – 4:45pm - Smart Growth Secretariat: Greater Golden Horseshoe

5:00 – 6:00pm - Ontario Reality Corp. 407 Subway station

1:00-1:45pm – Planning for Age Friendly Communities (Client:  Ontario Professional Planners Institute)
2:00-2:45pm – Food and Farm Innovation in the Greater Golden Horseshoe (Client:  Sustain Ontario)
3:00-3:45pm – Quality of Life in the Region of Peel (Client:  Region of Peel)
4:00-4:45pm – Planning for Employment Lands in the GTA (Client:  Ontario Growth Secretariat)

Please email raps AT ryerson.ca if you are unable to come at these times and want to arrange a time pick up the clothing. However, we would appreciate if you made arrangements to come at the above listed times.

On a related note, we have small quantities still available for sale, if you are interested, please email raps AT ryerson.ca to inquire.

In some parts of the world, many people live in “boomed developments”.

Without looking this up online, can anyone guess what a “boomed housing development” is? Post your answer in the reply section, and lets see if anyone can figure it out!

WHEN: March 26, 2010, 9pm – ???!!!!

WHERE: the Rivoli, 332 Queen Street West

The City of Toronto strives to provide affordable housing and subsidized housing but cannot afford to build new units, or properly maintain the ones they have. One proposed solution is to mandate the inclusion of affordable condo units in new developments at the expense of the developer. Developers are understandably upset by the prospect of missing out on potential revenue and claim that the burden of paying the difference in value for the affordable units will fall on the market-rate owners in the building.

There is a huge need for affordable and subsidized housing in Toronto but I see a piece missing from this whole debate. About 50% of Toronto’s households are in rental units and the population of the city keeps increasing. By 2031 the number of rental units required to meet demand will increase by 20% but only 5% of new housing units between 1996 and 2006 were rental units. Of the few new buildings built specifically for rentals, most were for social housing.

20% of rental units in the city are in converted houses, often in basements. 5% are rented out condos. This is considered the secondary rental market and are unstable as their existence depends on the whim of the home owner. Apartment buildings are the primary rental market but they continue to age and deteriorate becoming less desirable, healthy, energy efficient and safe. Despite all this rental prices in Toronto remain relatively high and will only increase as demand grows.

There are virtually no incentives for developers to build new rental housing. Managing rental properties is time-consuming and difficult and the return on investment is slow to come and dependent on fluctuations in the market. Condo buildings on the other hand can sell out before construction begins allowing the developer to walk away with debts paid and a tidy profit upon completion.

Forcing developers to build affordable housing may not be the most economical way of creating affordable housing. Perhaps the best way to create affordable housing is to make existing housing more affordable.

Maybe we shouldn’t mandate the inclusion of affordable housing and subsidized housing. Maybe we should mandate the inclusion of rental housing, with no provision for subsidy or incentives at all, leased by the building owner directly at whatever price the market will allow.

What would this look like, and how could it lead to a more affordable housing market in Toronto?

Scenario 1: Mandate Inclusion of Affordable Condo Units

Imagine a shiny new condo building. It’s tall, it has balconies, a gym, concierge, underground parking, everything that anyone would want in a brand new condo in downtown Toronto.

20% of the units in the building are mandated to be “affordable”. The definition of affordable means that these units are priced below the average price of a comparable unit. However it is at the discretion of the developer to decide how far below the average price to sell the unit for. 80% of the units will be sold at the full market value, with 20% sold slightly below that.

Essentially 80% of the condo owners subsidize the construction of the other 20%. Of that 20% a portion of the units are reserved for community housing to be owned and managed by Toronto Community Housing Corporation. The rest of the 20% are legislated to remain at an artificially low price when the owner decides to sell.

The Trade-Off

Critics have said that any arrangement like this would require some kind of carrot to be offered by the city. This could be added height or reduced development charges or some other alteration of the rules set out in the zoning. The argument is that the city would be giving up a little to get a lot. But the way I see it, the city gives up a little in order to give up a little more, and a little more. I might be wrong on this, but I would think the owners of the affordable units would pay less property tax and the city would be paying just slightly below high end condo prices for subsidized units.

Social Implications

The little socialist on my left shoulder says it’s good to have a mix of incomes in a new development but remember that affordable just means less than market price, it doesn’t mean cheap, and the owner will still have to qualify for a mortgage and pay condo fees. Residents of the community housing units managed by TCHC will find that all the stores in the neighbourhood set their prices to pay for the expensive commercial space and to take advantage of the thick wallets of the 80% of the local population who can pay full price for their condo. The social make-up of the building is primarily high-income with some moderate income and a small minority of lower income residents. Imagine being the only person in an elevator of 8 that doesn’t make six figures.

Flexibility

During an economic downturn the owners of the market-rate units may find themselves unable to afford their condo, or may want to move to follow work somewhere else. Regardless of whether of not there are affordable units in the building it may be difficult to make their money back when they sell the condo and the owner loses. Demand for the affordable units will go up during a recession, or economic downturn, which may drive down the price of the market-rate condos even further. Furthermore the owner of an affordable unit will only be able to break even when they sell the unit, putting them in an identical financial situation as when they bought the unit.

The End Result

• More middle income residents in downtown condos
• Minimal impact on the rental housing market
• Continued dependence on subsidy for low income residents
• Disgruntled development industry
• Lost revenue from development charges
• Fewer Section 37 benefits
• Better integration of mixed incomes.

Scenario 2: Mandate Inclusion of Rental Apartment Units

Imagine a shiny new condo building. It’s tall, it has balconies, a gym, concierge, underground parking, everything that anyone would want in a brand new condo in downtown Toronto.

20% of the units are mandated to be rental apartments. The rental units can be managed by a property management company and there’s no cap on the rental price. None of the units are required to be reserved for community housing.

The Trade-Off

Developers may choose to increase the price of their owned units to cover the cost of the rental units upfront. This could result in lower rents, or increased profits for developers, also known as “gravy”. Some developers will still take issue with the requirement of providing rental units in their buildings. If they choose to leave the city the demand will be met by companies with experience building and managing rental buildings. The city will not see any immediate increase in affordable housing but will not have to offer any valuable carrots either.

Social Implications

Most of the residents own the unit they are living in and plan on staying there for a long time with the hope that when they eventually sell it, it will be worth more than when they bought it. The rest of the residents are renters. Some of the renters pay individual condo owners for their unit. This rent covers the owner’s mortgage payments, condo fees, possibly a parking space but probably not utilities. The majority of the renters pay the property manager. This rent is calculated to recover construction costs, pay for administration and management of the property, condo fees and tax but may be adjusted to reflect demand. Parking, gym access and utilities is extra. The social make-up of the building is essentially uniform.

Flexibility

In the event of a major economic downturn condo owners will be in the same predicament in scenario 2 as in scenario 1, but renters will be able to move into a more affordable home at the end of their lease at no loss to them. The property manager may choose to reduce the rent of units as demand drops off. Rental units will continue to provide revenue to the developer as condo sales drop off during the recession.

The End Result

• More rental housing in the city
• Ongoing revenue for the developer
• Increased property tax revenue since rental properties pay higher taxes than ownership properties
• Continued exclusivity of condo neighbourhoods
• Revenue to the city from development charges
• Section 37 benefits or simple adherence to existing zoning and guidelines
• Less griping from the development industry

The Plasticity of Toronto’s Rental Housing Market

By my casual observation there are four types of rental units in Toronto. The determinants of types are: quality, style, price, smell, attentiveness of the landlord, location, noise, comfort (including degrees of temperature, stuffiness and awkwardness), size and whether or not they are a basement. The four types are:

• Shitty basement apartments (worst value)
• Shitty aboveground apartments
• Reasonable aboveground apartments (best value)
• Expensive aboveground apartments

Transformation of Apartment Type

Each type satisfies different demands but individual units may transform from one type to another to meet different demands. Reasonable abovegrounds can easily become expensive abovegrounds when rental demand is high. The landlord doesn’t even need to do renovations to justify the price. Shitty abovegrounds only become reasonable abovegrounds when rental demand is low, because without major renovations they can’t compete against the reasonable abovegrounds. An expensive aboveground can become a reasonable aboveground (or eventually a shitty aboveground), but only after years of neglect, or as a result of dire economic circumstances or dramatic shifts in the market.

Fig. 1: Direction of Transformation of Rental Unit Types. SB - Shitty Basement Apartments; SA - Shitty Aboveground Apartments; RA - Reasonable Aboveground Apartments; EA - Expensive Apartments

A Note on Basement Apartments

All basement apartments are shitty all the time. The relative shittiness of a basement apartment is inverse to its price. The lower the rent of a basement apartment the better your situation is. The more expensive a basement apartment is, the shittier your situation is. Any basement apartment that would otherwise be considered to be of excellent value is still a shitty basement apartment.

Transition of Renters Between Apartment Types

The two apartment types with the highest demand are shitty abovegrounds and reasonable abovegrounds. This is because all renters in shitty basements aspire to live in any kind of aboveground but are very unlikely to make the transition directly from shitty basement to expensive aboveground.

Renters who can afford an expensive aboveground will prefer an expensive aboveground but will settle for a reasonable aboveground. Also, if a renter is no longer able to afford an expensive aboveground they are unlikely to make the transition from expensive aboveground directly to any kind of shitty apartment.

Renters in shitty abovegrounds aspire to live in a reasonable aboveground but may find themselves in shitty basements when times are tough.

Renters in reasonable abovegrounds will move to a shitty aboveground if necessary, but are unlikely to move to a shitty basement. Renters in reasonable abovegrounds are most likely to move to a different reasonable aboveground, or transition to an expensive aboveground.

Fig. 2: Most Likely Movement of Renters. SB - Shitty Basement Apartments; SA - Shitty Aboveground Apartments; RA - Reasonable Aboveground Apartments; EA - Expensive Apartments

Potential Influence of Mandatory Inclusion of Rental Housing in New Condo Towers

The mandatory inclusion of rental units in new condo towers will increase the supply of high end rental units in the city. This will lead to a reduction in demand for reasonable abovegrounds among the wealthy. This will help keep reasonable abovegrounds reasonable and prevent them from raising the rent and transforming into expensive abovegrounds. When there is a greater supply of reasonable abovegrounds at a reasonable price there is less demand for shitty abovegrounds. This spurs landlords to transform their shitty abovegrounds into reasonable abovegrounds through renovations and other improvements. Shitty basements will remain shitty, but the increase in overall quality of rental units available in the city may lead to a reduction in willingness to pay high rents for shitty basements, bringing down their price.

Many rental units will remain unchanged by the introduction of more, new, high-end rental apartments. This is due to landlord complacency, generosity, apathy or malice.

The Impact of Rental Unit Transformations on Affordable Housing

People purchase housing for two reasons. The first is when a renter, or a pair of renters, find themselves living a very stable lifestyle in a long-term job and/or relationship and they feel the need for their housing situation to reflect that level of stability. The second reason is as an investment. The purchaser may buy a house with the intention of fixing it up and selling it for a higher price, or they may buy a condo with the intention of renting it out until the rest of the development is completed and the value increases. A purchaser may also fall into both categories, wherein they buy a condo and live in it until they can sell it for a higher price and use the proceeds to purchase a more expensive home.

Renters rent because they cannot afford to buy, or because their lifestyle is too unstable to accommodate home ownership. 21% of renter households spent more than 50% of their income on rent in 2001. These people have no option for home ownership and are likely to require government subsidy for housing in the near future. The provision of “affordable” home ownership in new condo towers will do nothing to improve their living situation. Subsidized housing provided by the city may help low income households to get back on their feet but without quality rental housing they can afford they will quickly find themselves back on the fringe. Developers cannot justify the cost of constructing new low rental units in Toronto. Developers can justify the cost of constructing new high end rental units with careful planning. This will reduce some of the demand for other types of rental housing and make existing rental units more affordable.

This scenario would result in affordable rental housing at virtually no cost to the City of Toronto and would encourage improvements to existing rental housing.

Meet Ryerson Planners working for the following companies and organizations:

• Ontario Ministry of Transportation
• The Goldberg Group
• TAS Design Build
• First Gulf Development
• Delta Urban Inc
• Rockport Group
• Tridel
• The City of Toronto

And more!

When: Tuesday, March 9th from 5:00-8:00pm Where: SBB 312