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On September 15th, 2016, ULI hosted an Electric Cities debate on perhaps the most contentious issue of land-use planning in Ontario: the impact of proposed amendments of the Growth Plan on housing affordability in the GTA.

ULI Toronto Vice Chair, Emma West told the crowd who gathered at the Toronto Reference Library for the event that the purpose of the debate was not to advocate for a particular stance on the issue. Instead, it was to educate the public on how land can be used optimally to benefit the environment, economy, quality of life, affordability and social equity. West also pointed out that , as one to the fastest growing regions in North America, it was important to balance how the shape and form of our region impacts other indicators, including housing affordability.

ULI Chair Derek Goring spoke after West, providing context for the debate by highlighting that the provincial government is in the midst of updating major land-use legislation that includes the Growth Plan and the Greenbelt Plan. Both these plans have been in place for 10 years and represent some of the strongest public policy related to land-use in North America. The purpose of the debate was to understand whether the policies had impacted housing affordability and how the proposed amendments to the land-use plans would impact the housing market.

Professor David Amborksi from Ryerson University’s School of Urban and Regional Planning, took the podium first to argue that the new proposed amendments to the Growth Plan would further erode housing affordability. He argued that as the supply of land was further regulated, developable land would become more scarce, thereby forcing prices to go up. He also argued that the Growth Plan was a form of urban containment and the economic implications could be dramatic. Amborski supported his views by referring to research from the United States which demonstrated how growth management policies had led to house price increases in markets studied.

Dr. Markus Moos of the University of Waterloo countered Amborski’s view, arguing that the Growth Plan and the Greenbelt Plan cannot be held responsible for the region’s affordability issues. He argued that there were several other factors that were contributing to the significant increases in house prices seen in the GTA, including the growth of the region as a whole. He said that land values in Toronto are increasing due to strong economic performance and the agglomeration effect in the region. The single biggest contributor to housing prices was, thus, the location. Housing supply needs to be added in the centre, where economic activity is focused. Building more houses in the suburbs does not improve affordability.

Moos argued that another possible cause of the region’s affordability issues was the withdrawal of the federal government from the housing sector. In the 1980s, the National Housing Strategy contributed to at least 15,000 to 20,000 new affordable housing units annually. By the 2000s, that number had dropped significantly to only 1,000 to 2,000 units annually. Moos also noted that policies promoting home ownership were causing distortions in the housing market and leading to elevated prices. Additionally, among OECD countries, Canada has the second highest construction subsidy for owner occupied housing, which encourages developers to build housing for ownership instead of rental. The presence of foreign equity in the market is also pushing house prices upward, he said.

According to Moos, in order to fully understand the impact of the Growth Plan and Greenbelt Plan, one must not only look at the business case, but also reflect on the economic analysis that includes all the costs and benefits. The benefits of the Greenbelt and Growth Plan such as agri-tourism, leisure, recreation and the costs of not having these plans including higher infrastructure costs due urban sprawl and the impacts on climate change due to automobile ownerships and higher levels of emissions must also be considered before giving a verdict on the economic implications of land use regulations.

Ownership is expensive from a national and urban context and new ways of financial engineering need to be introduced in Canada. Moos closed by stating that we may hold an opinion that we should be able to afford ground-oriented housing, but it is not good public policy that looks at the costs and economic benefits of different types of land development patterns.

Russell Mathew, a partner at Hemson Consulting, said that, in his view, the Greenbelt Plan has little to do with housing affordability, but his concern was the shortage of serviceable land which was partly, impacted by the Growth Plan. The shortage of supply is evident with bidding wars for single-family homes. The Growth Plan, in the long run, is limiting the supply in hopes that people will prefer living in high-rise condos. “The millennials will have to move out of Liberty Village, once they grow up,” Matthew said.

He also raised concerns about the proposed changes to the Growth Plan. In his opinion, the changes were very radical as the market is already tightly regulated. He stated that more analysis and evidence was needed to understand the effects of the Growth Plan as the proposed changes are doubling down on the current targets. He went on to contend that the suburbs in the GTA are already the densest in North America and the new Growth Plan was proposing densities that would outdo those found in the Paris metropolitan area. “We seem to be aspiring to be a super Europe,” he joked. He stated that his biggest fear was that when public policy is pushed too far, sometimes, it can have the opposite of the desired effect.  The region may be better off with the existing Growth Plan rather than the plan with the proposed updates, he said.

Pamela Blais of Metropole Consulting said that there were global and local factors that were impacting house prices and that it was important to keep a broad perspective when approaching the topic of affordability. The impact of the Growth Plan and the Greenbelt Plan on housing affordability was overstated and the nature and execution of planning would need to be looked at much more deeply before coming to a conclusion. Blais mentioned that there was a need for a monitoring and evaluation mechanism to be developed in the new Growth Plan to estimate and ensure progress. She also argued that, presently, our planning was based on a reactive model and, in order to better shape our environment, we needed to switch to a more proactive model.

The session was followed by a vibrant question and answer session involving the audience. As the debated concluded, the panelists agreed that they shared a lot of common ground. They all felt that there is more research and analysis to be done to fully understand other implications of these regulations and to mitigate them.