Mayoral Candidate’s $300-million Housing Initiative will Build New Homes at Cost

April 11, 2023 – Josh Matlow announced today that as Mayor he will deliver truly affordable housing by establishing Public Build Toronto, a City agency that will develop housing on City-owned lands. Currently, most development on public lands is outsourced to private developers. With Public Build Toronto, by removing developer profits, the City will be able to build housing at cost on 25 million square feet of public land. Public Build Toronto will be funded with $300 million in seed funding from the City, and by waiving all municipal fees including  property taxes and development charges. 

“No municipality can address the affordable housing crisis on its own, but that won’t stop Toronto from getting started,” said Matlow. “While senior levels of government must provide meaningful investment in affordable housing construction, Toronto can move ahead right away by putting up significant funding, and enough public land to build 100,000 new homes. Toronto can put its foot forward with a new approach.”  

The City currently has the capacity to establish Public Build Toronto by enabling existing CreateTO and Housing Secretariat staff to directly hire construction companies and partner with non-profit or co-op builders. Public Build Toronto would utilize City land, including Green P and TTC parking lots, to provide a mix of deeply affordable rent-geared-to-income units, affordable homes for working-class Torontonians who are becoming priced out of our city and market-rate units with rent control. 

This mix of housing would create a “revolving fund” model of housing, similar to Vienna, which allows for the new buildings to be financially self-sufficient. In other words, they would not require ongoing government subsidy. Through rents, this model would also provide the City with funds to reinvest in the construction of new housing.  

While the unit mix in both size and affordability will be determined through extensive consultation with Torontonians, the following conceptual model demonstrates what could be created by moving forward with $300 million in seed funding:

• Establishment of Public Build Toronto

• 8,250 rent-controlled market apartments

• 6,750 affordable apartments, including 750 deeply affordable units for Torontonians on very low or fixed incomes

Of those new apartments, 10% would be three-bedroom units and 20% two-bedroom units. The buildings would be financially self-sustaining, with ongoing maintenance costs included in rental fees. Through rents, $60 million would be generated annually for new construction.

Public Build Toronto will be a significant shift from the existing Housing Now program, which attempted to build affordable housing through public-private partnerships with for-profit developers. This model was attractive as the City did not have to invest any money upfront before contracts were signed, but it has not yet led to one shovel in the ground, and was not designed to provide much housing for those on low or fixed incomes.

“To deliver truly affordable housing we need to move forward with Public Build Toronto, which will allow us to provide housing at cost,” said Matlow. “The City already has the expertise on its payroll to manage housing construction – let’s put them to work for us instead of giving contracts to the private sector.”

The $300 million in seed funding to establish Public Build Toronto would come from money saved in the City’s capital budget by rebuilding the portion of the Gardiner Expressway east of Jarvis at ground level instead of as an elevated expressway. This will unlock 5.4 acres of City land for residential construction. In total, the ground level Gardiner will free up at least $500 million.   

To learn more about Josh Matlow’s mayoral campaign to make Toronto a city that works, the safe, affordable, livable city that we all know it can be, please visit VoteMatlow.ca.

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Backgrounder - Public Build Toronto

The conceptual model used to project 8,250 rent controlled market units and 6,750 affordable and deep affordable units is based on a notional 500-unit building. This requires $10 million of equity (associated with the additional assumptions and inputs below), which was then extrapolated to $300 million worth of equity investment, and no required return (profit) on the equity investment.

 Assumptions:

• Maximum 95% loan-to-cost, which qualifies it for CMHC financing via the Rental Construction Financing Initiative program at today's rate of 3.5%.

• Elimination of the following municipal charges on all units (both market and affordable): DCs (development charges), property taxes, planning application fees, parkland dedication fees and assuming a $0 land cost.

• Affordability mix is: 55% rent-controlled purpose-built market (2% guideline increase per year); 45% affordable rental, of which 30% is set to 100% of AMR, 10% is set to 80% of AMR, and 5% is deeply affordable rent-geared-to-income (RGI) .

• 60/30/10 unit mix (1B/2B/3B), average unit sizes of 495/700/880sf, respectively, and an overall building efficiency of 80%.

• Vehicular parking ratio of 0.25 per unit.

• Zero non-revenue-generating gross floor area (i.e. community space, etc.).

• All-in hard costs of $404 per square foot.