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City of Toronto Media Relations has issued the following:
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News Release

October 30, 2024

City of Toronto staff report aims to unlock 20,000 new rental homes, immediately kick-starting process to create 7,000 new rental homes

City of Toronto staff are recommending – through the staff report, Build More Homes: Expanding Incentives for Purpose-Built Rental Housing – actions to support the development of 20,000 new rental homes including up to 16,000 purpose-built rental homes and a minimum of 4,000 affordable rental homes. Of this, the City is committing to build 7,000 rental homes through its own resources.

Toronto is facing a significant shortage of purpose-built rental homes due to insufficient investments from all orders of government since the early 1990s, amongst other factors. This gap is likely to worsen due to high interest rates and financing costs, inflation and increasing construction costs which have caused a significant slowdown in new residential development. Meanwhile, demand for new rental homes is only expected to grow due to population growth and a home ownership market that remains out of reach for most moderate and low-income residents.

Recent actions by all orders of government to support new rental homes have not proven sufficient to significantly increase rental housing supply, and consultation and analysis by City staff has shown that more is needed. The City is prepared to lead the way in building a housing system that delivers the new rental homes Toronto’s current and future residents and economy need to thrive.

Activating new purpose-built rental homes

To meet the targets to build new rental homes that all governments share, the City is proposing a new Purpose-built Rental Homes Incentive that will support 20,000 new rental homes including 4,000 affordable rental homes to move through the pipeline and into construction. This program, developed and initiated by the City in partnership with all orders of government, will advance the City’s own targets of 41,000 affordable rental homes, targets under the federal Housing Accelerator Fund and the provincial Building Faster Fund and the City’s pledge of 285,000 housing starts by 2031.

The City aims to kick-start the first phase of this program and immediately release a call for applications to identify and approve 7,000 new rental homes, including 5,600 purpose-built rental homes and at least 1,400 affordable rental homes, through its own resources.

Eligible projects will receive City incentives of:
- an indefinite deferral of development charges on purpose-built rental homes, estimated at $37,636 per unit, as long as the development remains rental tenure
- a recommended 15 per cent property tax reduction for 35 years estimated at a total of $20,396 per purpose-built rental unit
- full financial incentives, including foregone taxes and fees for affordable rental units, estimated at $97,264 per unit.

To qualify for these incentives, projects will need to include at least 20 per cent of units as affordable rental homes which meet the City’s new income-based definition of affordable housing, for a period of up to 99 years and for at least 40 years. Projects will also have to start construction by the end of 2026.

Staff also recommend that Toronto City Council approve a new Multi-Residential Property (Municipal Reduction) Tax Subclass to provide a 15 per cent municipal tax rate reduction for eligible rental developments through the 2025 budget. This tax reduction will apply to all new rental housing, providing an efficient tool to support and encourage rental housing growth.

Enhanced need for provincial and federal funding

The City’s financial capacity is limited and it cannot respond to the housing crisis alone. The staff report recommends that City Council call on the provincial government to provide the City with a Build More Homes Rebate estimated at $1 billion equivalent to the value of development charges and 85 per cent of the value of property taxes for 35 years for new purpose-built rental homes. This funding will allow the City to launch a second phase of this incentive stream and extend its call for applications to approve an additional 13,000 new rental homes, including 10,400 purpose-built rentals and 2,600 affordable rental homes.

The report also includes a request to the federal government to immediately allocate a $7.3 billion portfolio of low-cost financing to support the delivery of the 20,000 new affordable and purpose-built rental homes outlined in this report.

Staff also recommend City Council request the establishment of a Canada-Ontario-Toronto Build program and enable provincial and federal grant funding of $225.3 million each to support the creation of at least 2,600 affordable rental homes.

The Build More Homes: Expanding Incentives for Purpose-Built Rental Housing staff report will be considered by the Executive Committee on Tuesday, November 5 and by City Council in November. The full report is available on the City’s website: https://secure.toronto.ca/council/agenda-item.do?item=2024.EX18.2

Quotes:

“Toronto is taking bold action to address the housing crisis. We’re offering up incentives to build thousands more purpose-built rentals and affordable homes. With partnership from the provincial and federal governments, we can build thousands more homes and reshape the housing landscape for a more inclusive and affordable Toronto for everyone.”
– Mayor Olivia Chow

“Our city has reached a critical point in the need for stable, rental housing, and today’s steps will lay the foundation for creating secure, long-term housing options for all income levels, including middle-income earners and essential workers. This is a crisis that has been decades in the making, and now we are asking other levels of government to join us at the table and ensure we have a robust, affordable housing system that meets the needs of current and future residents.”
– Councillor Gord Perks (Parkdale-High Park), Chair, Planning and Housing Committee

Toronto is home to more than three million people whose diversity and experiences make this great city Canada’s leading economic engine and one of the world’s most diverse and livable cities. As the fourth largest city in North America, Toronto is a global leader in technology, finance, film, music, culture, innovation and climate action, and consistently places at the top of international rankings due to investments championed by its government, residents and businesses. For more information visit www.toronto.ca or follow us on X at www.x.com/cityoftoronto, on Instagram at www.instagram.com/cityofto or on Facebook at www.facebook.com/cityofto.

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Media contact: Media Relations, media@toronto.ca

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