Feds’ $176M contribution no silver bullet to solve housing crisis, Ottawa developer says

Home construction crane

An advocate for Ottawa’s homebuilding industry says a $176-million influx of federal cash to speed up the pace of housing construction in the capital could make it more cost-effective for developers to build much-needed affordable units.

Federal and municipal officials announced the new funding Monday at Wateridge Village, an Ottawa Community Housing project on the site of a former military base in the city’s east end.

The cash comes from the federal government’s $4-billion Housing Accelerator Fund, which aims to spur construction of new homes across Canada. In a news release, the feds said they expect the funding to fast-track more than 4,400 housing units in Ottawa over the next three years and more than 30,000 units over the next decade.

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“This funding won’t solve the housing crisis on its own,” Ottawa Mayor Mark Sutcliffe said at a morning news conference. “But it is a giant leap forward for our city and allows Ottawa to take bold and immediate actions to mitigate the housing crisis, build more homes and build faster.

“We want to open the doors, eliminate the obstacles, reduce the barriers and make it as easy as possible to build as fast as possible.”  

The City of Ottawa said Monday that 90 per cent of the funds will be used for affordable housing, such as capital funding for shovel-ready projects and financial incentives for developments that include affordable units.

The rest of the money is expected to go toward measures that help streamline development approvals, such as electronic permitting and digital applications, and enhanced services. 

Jason Burggraaf, the executive director of the Greater Ottawa Home Builders’ Association, said cutting red tape at city hall would save developers time and money as they ramp up construction of more units to meet the city’s ambitious housing goals.

“We want to see what the timelines are, what those deliverables are,” Burggraaf said. “There’s a lot of talk of improving the application process, the timelines, reducing barriers, which all contribute to housing affordability. Let’s see what those details are and make sure that they fulfil the intent.”  

The city said the new agreement with the feds will pave the way for “more housing options,” including rentals, affordable units and “missing middle” housing that could be achieved by allowing up to four units on a single lot instead of the maximum of three that are now allowed in Ottawa.

Federal Housing Minister Sean Fraser has pushed for more fourplex developments when rolling out HAF funding in other cities. Last November, Ottawa council approved a motion directing city staff to look at allowing four units on all serviced lots as part of their review of the new zoning bylaw.

Sutcliffe said Monday a new bylaw will be introduced before the end of June, adding he expects it to be approved by council some time next year. 

Fraser did not attend Monday’s announcement. But Kanata-Carleton MP Jenna Sudds, who also serves as the federal minister of families, children and social development, told reporters there is an “expectation” that council will follow the process to consider allowing four units per lot. 

“I have full confidence in our community and in our city that we will reach that (goal),” Sudds added. “I think we’re in a very good place.”

Burggraaf said clearing the way for fourplexes would make it more economical for builders to launch new projects because four units per lot is the threshold for developers to qualify for relief from GST and HST under new guidelines for purpose-built rental housing.

“This kind of low-rise conversion into multiple units is critical for the city if it wants to achieve its housing goals,” he explained.

“We really need (the four-unit policy) so that … really small developers can start taking advantage of building those smaller, for-purpose rental units.” 

However, one of the city’s leading property developers said taxpayer dollars might be better spent on upgrading sewers and other infrastructure in neighbourhoods that aren’t equipped to handle additional density.

“It’s fine and dandy to promise we’re going to rezone for four units on every single-family-home-zoned property, but there are some infrastructure shortfalls that need to be addressed to get there,” Claridge Homes vice-president Neil Malhotra said in an interview on Monday afternoon. 

“The pipes in the ground were not built for every house to turn into four units. Somebody’s going to have to figure out how to pay for that.”

Malhotra noted that development fees – one-time charges levied on homebuilders to help pay for growth-related infrastructure expenses – now account for the second-biggest chunk of his firm’s construction costs. 

The fees went up nearly 10 per cent last October, and Malhotra expects them to rise even more as the strain on municipal infrastructure grows with each new housing development.

Developers will have no choice but to pass those extra costs on to homebuyers, he said.

“If the city’s working assumption is that development charges are going to pay for all this, it’s going to have a little bit of a negative impact on the housing market at the end of the day,” Malhotra said. 

While acknowledging there is a “desperate need” for more affordable housing, Malhotra said the latest funding won’t solve the underlying issues – such as soaring construction and financing costs – that have driven prices out of the reach of many Ottawa residents.

“It’s not going to take the strain off the middle market – especially if these changes trigger higher development charges, which they’re going to,” he said.

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