De­vel­oper pushes af­ford­able hous­ing

The Prince George Citizen - - Money - Natalie WONG Bloomberg

Mitchell Co­hen writes pol­icy pa­pers and show tunes about af­ford­able hous­ing. He wears a pork pie hat, fa­vors fleece over pin­stripes and is easy to tear up when talk­ing about lo­cal “em­pow­er­ment.”

He’s also pres­i­dent of The Daniels Corp., one of Canada’s big­gest devel­op­ers.

The closely held firm has built about 30,000 homes around Toronto, a quar­ter of which were sold be­low-mar­ket prices. It’s also a lead de­vel­oper in the trans­for­ma­tion of Re­gent Park, one of North Amer­ica’s big­gest so­cial­hous­ing makeovers – and the sub­ject of Co­hen’s mu­si­cals.

Be­ing an af­ford­able hous­ing ad­vo­cate and a big-time de­vel­oper may not be a con­tra­dic­tion for Co­hen. But he said gov­ern­ments are go­ing to have to nudge more com­pa­nies into ac­tion to tackle the grow­ing af­ford­abil­ity cri­sis.

“With­out the gov­ern­ment en­gage­ment, the pri­vate sec­tor is not go­ing to create af­ford­able hous­ing,” said the 68-year-old in an in­ter­view at Bloomberg’s Toronto of­fice.

Cities from Syd­ney to San Fran­cisco are grap­pling with how to do just that af­ter years of relentless price gains. Berlin plans to freeze rents for five years. And in San Fran­cisco, tech gi­ants are try­ing to re­verse some of the hous­ing inflation their wages have helped create: Google has said it would spend $1 bil­lion over the next 10 years re­pur­pos­ing its own land for res­i­den­tial use and in­cen­tivis­ing devel­op­ers to build af­ford­able hous­ing.

Toronto is no ex­cep­tion. Home prices surged 60 per cent in the five years through June and the va­cancy rate for rentals is hov­er­ing near one per cent. Mayor John Tory has pledged to create 40,000 af­ford­able rental units in the next 12 years and Prime Min­is­ter Justin Trudeau is push­ing a $55 bil­lion, 10-year pro­gram promis­ing 125,000 new homes.

Tack­ling sup­ply is key and that means devel­op­ers have to be at the ta­ble, said Co­hen, who runs the day-to-day op­er­a­tions of Daniels, which has av­er­aged an­nual rev­enue of about $200 mil­lion in its last two fis­cal years. The com­pany was founded in 1983 by John H. Daniels, for­mer chair­man and chief ex­ec­u­tive of­fi­cer of Cadil­lac Fairview, now owned by the On­tario Teach­ers’ Pen­sion Plan Board.

“Devel­op­ers are creative, they will find a way to work within the sys­tem,” Co­hen said. Com­pa­nies are be­com­ing sen­si­tized to the fact that af­ford­abil­ity is be­com­ing im­por­tant, even if it might not be as “crazy profitable.”

Co­hen reels off a few poli­cies that could work: in­ten­tional dis­po­si­tion of land, where gov­ern­ments sell or lease pub­lic land to devel­op­ers on the con­di­tion they build af­ford­able units; in­clu­sion­ary zon­ing which re­quires de­vel­op­ments to in­clude af­ford­able units; and down-pay­ment as­sis­tance for first-time buy­ers – now part of the fed­eral gov­ern­ment’s plat­form.

“You want to create an en­vi­ron­ment where devel­op­ers can not only live with but hope­fully even be­come com­fort­able with the reg­u­la­tions be­cause ul­ti­mately you want them to be your al­lies,” Alan Mal­lach, a se­nior fel­low at Wash­ing­ton-based Cen­ter for Com­mu­nity Progress, said.

Cre­at­ing al­lies has been Co­hen’s play­book since 1973 when he was work­ing for the YMCA in Mon­treal. Ten­ants in the dingy com­plex that housed his of­fice came in wav­ing evic­tion no­tices. The land­lord wanted to de­mol­ish the site and build con­dos – they had 30 days to va­cate.

“I saw how vul­ner­a­ble peo­ple are and how close to the mar­gins peo­ple can be,” he said. “All of a sud­den, I was a com­mu­ni­ty­de­vel­op­ment worker turned shit­dis­turber ac­tivist overnight.”

Justin Trudeau’s fa­ther, Pierre Trudeau, was prime min­is­ter and had just cre­ated a na­tional hous­ing plan that of­fered fund­ing for co-op­er­a­tives to buy or lease land. It was the am­mu­ni­tion Co­hen needed: he marched 300 ten­ants to city hall to protest the de­mo­li­tion. Un­der the me­dia glare, he ne­go­ti­ated with the land­lord to build con­dos on half the land, and formed the co-op on the other. It had a 99-year lease and is still op­er­at­ing to­day.

Fast-for­ward nearly 50 years and Daniels is al­ly­ing with the city of Toronto to pull off the mas­sive ren­o­va­tion of Re­gent Park, a mix of sub­si­dized and mar­ket-rate rentals and homes for pur­chase. Af­ter al­most 15 years and a more than $1 bil­lion in­vest­ment from Daniels and the city, the 69-acre site barely re­sem­bles the crime­pocked neigh­bor­hood it was. De­crepit apart­ment blocks con­structed in the 1940s and 1950s have been razed and re­placed by mod­ern new build­ings. Once a no-go area for big busi­ness, brands such as Royal Bank of Canada, have moved in.

Daniels worked with Toronto Com­mu­nity Hous­ing to build 3,558 units so far, of which about 30 per cent are con­sid­ered af­ford­able. Al­most 2,000 more units are un­der con­struc­tion. About half the roughly 2,083 peo­ple in so­cial hous­ing have a new home in the devel­op­ment. Oth­ers are wait­ing, have de­ferred or de­cided to move out.

Daniels in­vested its own cap­i­tal along­side the city in the first two phases, shar­ing prof­its gen­er­ated from condo sales. In the third phase, it bought the land from the city to de­velop sev­eral condo build­ings, a se­niors res­i­dence and a rental building. Toronto Com­mu­nity Hous­ing owns the so­cial and af­ford­able rental units.

Daniels is now up against Tridel Builders Inc. and Cap­i­tal De­vel­op­ments on the fi­nal two phases of the project. Other devel­op­ers are also ex­pand­ing fur­ther into af­ford­able hous­ing.

“We built so­cial, af­ford­able hous­ing right be­side mar­ket hous­ing, and we did it be­cause we wanted to demon­strate that peo­ple were still go­ing to buy and our land val­ues were not eroded,” he said.

That bet has paid off. Town­houses that sold for $500,000 when the devel­op­ment first be­gan, have gone for as much as $1.5 mil­lion. Pur­chasers can access var­i­ous gov­ern­ment-backed pro­grams to get a on the first rung of home-own­er­ship and rents in the so­cial-hous­ing unit are geared to income. But they’re close to $2,000 else­where in the devel­op­ment, near­ing the down­town av­er­age, ac­cord­ing to a bro­ker in the area.

The gen­tri­fi­ca­tion is cre­at­ing some ten­sion be­tween ten­ants who have lived in the com­mu­nity their whole lives and own­ers of the shiny new con­do­mini­ums.

“It’s not equal,” said Ken­dell Camp­bell, 29, who’s lived in Re­gent Park since 1993 and now lives in one of the mar­ket-rent apart­ments. He points to the lush green bal­conies of the con­dos versus the sparser ones of the so­cial-hous­ing units.

Co­hen’s fifth it­er­a­tion of a mu­si­cal about the re­vi­tal­iza­tion will ad­dress some of that ten­sion.

“We’re learn­ing as we go,” he said. “We’ve been fig­ur­ing this out day by day.”

Co­hen’s ties to the non-profit sec­tor run strong. Daniels has do­nated land and pro­vided af­ford­able hous­ing to groups such as Habi­tat for Hu­man­ity and Covenant House. It sold units to Peel Liv­ing, re­sult­ing in one of the largest sin­gle non-profit de­vel­op­ments in the coun­try, he said.

Fos­ter­ing com­mu­nity spirit is as im­por­tant as de­liv­er­ing the hous­ing, Co­hen said. When he came across a group of Bangladesh­i women in the neigh­bor­hood who missed gath­er­ing to sew he com­mis­sioned them to make a mas­sive quilt to hang in the lobby of one of the new con­do­mini­ums.

“It’s more than just build­ings,” said Co­hen, chok­ing up as re­mem­bered the smiles on the women’s faces the day it was un­veiled. “This is about em­pow­er­ment and ev­ery sin­gle part of what we are doing there is about cre­at­ing ca­pac­ity in the lo­cal neigh­bor­hood.”

BLOOMBERG PHOTO

Mitchell Co­hen, chief ex­ec­u­tive of­fi­cer of Daniels Corp., chats with a re­porter dur­ing an in­ter­view last month.

CP FILE PHOTO

The Re­gent Park Com­mu­nity Cen­tre in Toronto was func­tion­ing as a round-the-clock warm­ing cen­tre dur­ing a cold spell in early Jan­uary 2018.

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