Big kickstart for rental housing
Toronto Star - May 31, 2002
One of Canada's biggest pension funds has put up $300 million to help build 2,300 to 2,500 rental apartment units, mostly in the Toronto area.
And rents should be affordable thanks to a federal-provincial subsidy program signed yesterday.
Even without subsidies, the units will rent in the $1,000-a-month range because of tax advantages enjoyed by pension fund investments, said Dale Richmond, president and chief executive officer of OMERS, the Ontario Municipal Employees Retirement System.
Rents can drop even lower for units that receive government construction subsidies totalling $50,000 a unit, Richmond told a conference sponsored by the Canadian Urban Institute.
"I think on balance, there have been some very significant and positive initiatives by all levels of governments to kickstart the provision of new rental housing in Toronto," he said. "OMERS has started building and we remain committed to the objective of providing between 2,300 and 2,500 new units."
Work is already under way on a 306-unit building near Yonge St. and Sheppard Ave. financed by OMERS and Concert Properties, owned by a group of British Columbia pension funds, he said.
"We set up the program to address the Toronto problem," he said in an interview. "There's no new rental being built. We can deliver it at a more favourable cost because we have tax benefits and we've committed to put those benefits through to the renter."
The long-awaited subsidy agreement between Ottawa and Queen's Park was welcomed by Toronto Councillor Brad Duguid, chair of council's community services committee.
"I'm excited the dollars are finally flowing," Duguid said. "I've got a project right now in my ward that's eagerly waiting for these dollars."
The program will provide about $60 million in Toronto to help fund about 500 new units a year for five years, short of the city's target of 2,000 new units annually.
Currently, 61,200 families and single people are on the waiting list for social housing and 4,500 adults and children use emergency shelters nightly, Duguid said.
In advance of yesterday's expected announcement, the city recently decided to offer up three parcels of land it owns near SkyDome as possible sites for new rental housing and will seek development proposals.
In all, the federal government is putting up $245 million for Ontario over five years, and the money is being matched by a combination of provincial and municipal contributions of land, tax breaks and cash.
Toronto housing officials estimate Ontario municipalities are putting up $178 million, the provincial government is chipping in $57 million and charitable donations make up the remaining $10 million to total $245 million.
"This is a very good announcement but it would be a great announcement if the province were pulling their share of the weight," said Duguid (Ward 15, Scarborough City Centre).
Ontario Housing Minister Chris Hodgson defended his province's contribution, saying the Ontario government and the province's municipalities are already spending $879 million a year on social housing.
"We could have actually asked the federal government to match our $879 million," he told reporters yesterday.
Richmond told his audience at the Canadian Urban Institute conference that demand is intense in Toronto for rental housing, virtually nothing is being built and the current climate of low interest rates makes it a favourable time to tackle the problem.
OMERS can offer rents lower than other developers and still make money, he said.
It has more than $35 billion in assets. It provides pension services for the more than 1,000 government employers and 300,000 active and retired plan members.
With files from Les Whittington