MONTREAL — As Toronto and Vancouver struggle to keep housing affordable for anyone but the wealthy, Montreal says its new, first-on-the-continent development model will help it succeed where other big cities have failed.
Montreal led big Canadian cities in 2018 with economic growth of almost 3 per cent, while its real estate market outperformed Toronto and Vancouver’s for the first time since 1998.
As home prices continue to climb, the city is getting ready to table a bylaw this month requiring condo developers to build a certain number of off-market units for every shiny new residential tower they want to erect.
The city promised the new rules will be flexible enough so as to not stymie the building boom, but developers are worried Mayor Valerie Plante’s administration will make future projects unprofitable.
“It will be a first in North America,” Robert Beaudry, city councillor for economic development and housing, said about the new policy. “It was fundamental for us to be pioneers ... We will deliver and I am convinced it will inspire other big cities across the country.”
The city had initially planned to table its new policy months ago but negotiations with developers have taken longer than anticipated. Plante remains undaunted, however, and is determined to go ahead with her major campaign promise to increase housing affordability.
Montreal’s rules are being introduced to help people like Richard Martin, a 54-year-old man who was paying almost 85 per cent of his monthly welfare check on a $495-per-month apartment before he moved into social housing in January 2017.
“I used to have to go to a food bank every month,” Martin said in an interview at his community housing centre in the city’s east end.
Now his rent is subsidized 75 per cent, primarily by the provincial government. He lives in a new co-operative housing project where all the residents are co-owners and manage the building together.
Paying 85 per cent of his monthly income was unsustainable for Martin, who remains on welfare. But that is the reality in Vancouver, according to RBC Economics in its March 2019 housing report.
Vancouver’s housing prices increased so dramatically in such a short time the provincial government slapped a 15 per cent foreign-buyers’ tax in 2016 — but the measure has not solved the problem. RBC’s research revealed home resales in the city have dropped 58 per cent since early 2016 but home ownership costs still represent 85 per cent of the average household income.
In Toronto — where a provincial foreign buyers’ tax was instituted at the end of 2017 — the average-income household spends 66 per cent of revenues on housing costs. Montreal is still far behind — the percentage is 44.5, according to RBC.
Plante’s policy would apply to residential towers containing a yet-to-be-determined number of units, said Beaudry, who wouldn’t give too many details because of ongoing negotiations. But Plante had campaigned on a promise known as “20-20-20.”
‘Social,’ ‘affordable’ and ‘family’ units
For example, if a developer wanted to build a 100-unit building, 20 per cent would need to be considered “social” — subsidized in full or in part by the government. Beaudry said the 20 social units wouldn’t need to be within the project itself, but could be built on nearby land ceded to the city.
The rules would also require the tower contain 20 units considered “affordable.” The city’s housing authority would advance prospective buyers most of the down payment, which would be reimbursed when the owner sold.
Finally, Plante also wanted projects to contain 20 per cent “family” units — or condos with three or more bedrooms.
How flexible the Plante administration will be with her campaign promise remains to be seen.
Beaudry said his office created a detailed map dividing the city into various sectors according to property values. It put together a software program that will allow promoters to plug in their project’s data and come away with a list of the social, affordable and family units needed.
Roger Plamondon, president of the real estate arm of Broccolini, a major developer in Montreal and Toronto, said the Plante administration must understand the “20-20-20” policy can’t be applied uniformly across the city.
Land prices and demand for condos downtown are not the same as further out, he said, and the city shouldn’t apply the same policy. Following meetings with the city, he said he’s “confident” the administration appreciates his point of view.
No foreign buyers’ tax
Plamondon said he recognized the need for a “balanced market,” where high-end apartments co-exist with social and affordable housing. But the developer warned the city needs to understand that “capital in the market is very mobile.”
But so far capital in the city is staying put — and growing. Montreal benefits from the fact it doesn’t have a foreign buyers’ tax like Vancouver and Toronto. And the city’s luxury real estate market broke records in 2018 and is projected to do the same this year, according to Sotheby’s International Realty.
The city is hoping the good times can be shared by more than the wealthy.
Martin said his co-operative is sometimes hard to manage because some residents don’t fulfil their duties on certain committees, or don’t pay rent.
But he is thankful he can live in a new, clean apartment in the city, because many people in his situation aren’t as lucky. “The city’s plan is good because we need more social housing,” he said. “The waiting lists are long.”
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