Ontario Opens Greenbelt to Housing, Redefines Affordable

Ontario’s provincial government passed a new housing law this week intended to speed up a plan to build 1.5M new homes in 10 years, over objections from critics who say it will lead to higher property taxes and put an affordable label on houses that aren’t affordable.

The new law from Premier Doug Ford’s Progressive Conservative government also permits housing development in some of Ontario’s Greenbelt environmental protection zone, and it allows the mayors of Toronto and Ottawa to pass bylaws enabling development with just one-third support of their city councils.

The law also expands the definition of affordability to include homes that are sold at 80% of the market rate—in markets where the average home prices peaked earlier this year at nearly $1M, or about $750K in Canadian dollars.

The new housing measures come as the government is revising downward its projection for housing construction next year to 80,000 new homes in the face of rising interest rates that are stalling new development.

The law’s expansion of development into the protected Greenbelt—which the government at first promised not to touch, but then offset by adding more protected land to areas adjacent to the Greenbelt—appeared to backfire as whistleblowers accused prominent developers with ties to the government of buying up tracts in the Greenbelt before the law was introduced to make them available.

Canada’s Greenbelt is a protected zone encompassing 2M acres in the region surrounding Toronto known as the Golden Horseshoe. The protected land, said to be the world’s largest no-development zone, includes farmland, forest, wetlands, rivers and lakes.

Municipal Affairs and Housing Minister Steve Clark declared the new law a series of “bold solutions” to what he labeled a “severe” housing crisis in Canada.

“If we are truly going to build affordable housing in this province, if all the mayors and councilors who said during their municipal election they want to incent more housing opportunity in their communities, this is a way that the government has very clearly said we wanted to investigate,” Clark said Monday after the bill’s passage, according to a report in the Toronto Star.

The most controversial provisions of the new law involve adjustments to affordable housing program. The government is freezing, reducing and exempting fees developers pay to build affordable housing, non-profit housing and inclusionary zoning units—i.e. affordable housing in new developments—as well as those covering rental units.

These are fees that go to municipalities to offset the cost of road and sewer infrastructure. According to the Association of Municipalities of Ontario, the changes to the fee structure could result in a $5B shortfall that will see taxpayers picking up the tab in higher property taxes.

The government positioned the fee reductions as an effort to lower housing prices, with Clark arguing the in Greater Toronto, the average homebuyer pays nearly $117K in municipal development charges that are added to the price of a home.

Critics, including a United Way project known as Ontario for All, said the fee reductions and freezes do not require developers to pass on the savings to home buyers. They also questioned the validity of the government’s new definition of affordable.

“By setting the definition of affordability for home ownership at 80% of the market rate, units that would have sold for a million dollars are now considered affordable and exempted from development charges if they sell for $800,000,” Ontario for All coordinator Sean Meagher told a government committee when the bill was being debated.

“Eight hundred thousand-dollar homes are not affordable homes,” he said.