May 30, 2020
What’s New with Housing Now – City of Toronto Announces Phase Two Sites
Housing Now, the City of Toronto’s initiative to unlock city-owned sites for the creation of long-term affordable housing, just got a little bit bigger this past week. When it was initially announced in December, 2018, the Phase One of Housing Now included 11 city-owned properties, with the objective of creating 10,750 new units in new mixed income and mixed-use communities. Now 18-months later, City Council, during a COVID-induced online session, passed a motion adding six Phase Two sites to the program. These sites will, in total, contain up to 1710 new units (note these sites are significantly smaller than their Phase One counterparts).
In this second Phase, two-third of the units will be constructed as purpose built rentals, with half of those being rented out at affordable levels. Like other City initiatives, a unit will be considered affordable so long as its rent does not exceed 80% of the average market rent for Toronto. The remaining third of the units will be sold as ownership units. Based on the numbers released by the City, Phase Two will create between 530 and 620 new affordable units. When combined with Phase One sites, the Housing Now initiative projects to create approximately 4,500 new affordable housing units in the City. While some may argue that this amount is insufficient given the size of the sites and the need in the City, any number of new long-term affordable units is a welcome addition.
Similar to Phase One, the Phase Two sites will be marketed to the public through a CreateTO procurement process and the successful proponent will be invited to enter into a 99-year ground lease for the lands. On any site the successful proponent could be a large developer, a non-profit housing provider or a housing co-operative, or even a partnership amongstof the threetwo. In terms of the deal structure, it remains to be seen whether the entirety of the land will be leased by the proponent or if the portion of the lands containing the ownership units will in fact be subdivided and sold to the proponent – remember a third of all Housing Now units are slated for ownership. While it is possible to provide unit-ownership in a leasehold condominium, my prediction is that successful proponents will push to have those lands sold to them outright as it is much easier to market and make money off the sale of freehold condominium units. This of course, is all speculation as only four of the Phase One sites have even been offered for public tender and, as of the date of this post, no site has been awarded. We may, however, have this answer sooner than later as during the May 28th Council meeting, City-staff disclosed that they were in negotiations for two of the four Phase One sites.
The six sites announced as part of Phase Two are:
1. 1627 & 1675 Danforth Avenue (at Coxwell), currently the location of the TTC’s Danforth Garage and Danforth-Coxwell Public Library. (tThis site is also the subject of the Danforth Garage Master Plan);
2. 1631 Queen Street East (at Coxwell), currently a city-run employment and social services centre and daycare;
3. 158 Borough Drive, currently a two-story parking garage adjacent to the Scarborough Civic Centre;
4. 2444 Eglinton Avenue East, currently a surface parking lot for the Kennedy Go/Subway Station;
5. 405 Sherbourne Street, currently a surface parking lot; and
6. 150 Queens Wharf Road, currently vacant land in the CityPlace neighbourhood located just to the north of the Fort York library branch. During the May 28th meeting, the Executive Director of the Housing Secretariat confirmed that this site would contain at least 80 affordable units and that the aim is to issue this site to a non-profit housing provider.
If you are exploring opportunities on these sites, our Real Estate and Housing group would love to help. Give us a call.
One final interesting piece of information coming out of the May 28th Council meeting was an update on the Non-Profit Housing Capacity Fund. Often overlooked in the Housing Now conversation, this One-Million Dollar fund was established in order to provide non-profit and co-operative housing providers with financial resources to promote their participation in the initiative. This program, which appears to be similar to CMHC’s Seed Funding Program, will provide non-profits with funding to cover some of the initial pre-development and due diligence costs such as the retention of consultants. During the Council meeting, City staff acknowledged that details on how to access the funds would be released later in the year.
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