By Nicole Storeshaw, Director, Government Relations, CHBA
This January, CHBA released its second National Benchmarking Study. The 2022 study examines how local development processes, approvals and charges affect housing affordability and housing supply in major housing markets across Canada.
Altus Group Economic Consulting was retained by CHBA to undertake the study to examine several factors that contribute to housing affordability issues in major markets across Canada. Rankings for each studied municipality are available in the full report found on CHBA’s website.
The study compares approaches that 21 Canadian municipalities have in three key areas that affect the development of new home construction: 1) municipal planning approval processes; 2) municipal charges imposed on new development; and 3) municipal approval timelines. In so doing, it highlights key features that help or hinder the process of bringing new housing to approval and ultimate construction, as well as the cost implications for homebuyers of municipal processes, policies and taxes.
“This report is intended to support the important conversation with all levels of government, but particularly with municipal governments, on the efficient delivery of much needed new housing supply, including the impact that inefficiencies and taxes have on housing affordability, which is already a major challenge across the country,” says CHBA CEO Kevin Lee. “We’ve undertaken this work to showcase where municipal governments have the policies and systems in place to support supply and affordability, and to provide a path forward for improvements where things aren’t working as well.”
The cities of Edmonton, Charlottetown, Calgary and London ranked highest overall in this year’s list, with strong numbers in at least two of the three categories studied. All 10 Greater Toronto and Hamilton and Metro Vancouver municipalities are ranked in the bottom 10. The study also shows significant variations in the approval timelines of municipalities, ranging from three months (Charlottetown) to 32 months (Toronto). Compared to CHBA’s 2020 Municipal Benchmarking Study, municipalities in Ontario saw their timelines worsen, while non-Ontario municipalities saw average timelines improve.
The cost of development charges is a major contributor to the sale price of a home, and the study found the average cost of government charges levied by municipal governments on lowrise new housing development averages almost $62,000 per unit. Toronto is at the high end of that, with government charges amounting to more than $189,000 per unit. The average cost of government charges levied by municipal governments on highrise new housing development averages more than $41,000 per unit. Vancouver is at the high end, with government charges amounting to more than $125,000.
What we learned
The Municipal Benchmarking Study was very useful in identifying factors that municipalities are doing well and areas in which they need improvement. The Home Builder Associations (HBAs) in the cities that were studied also find the study useful in their municipal advocacy efforts. The data in the report often reiterates the challenges builders and developers are encountering when it comes to approvals timelines and planning processes. It has been found that when a municipality does not rank as high as it would like, efforts are made to improve the standings for the next study. Alternatively, when a city does well in the study, it is incentive to work together with the local HBA to ensure it doesn’t slip in the rankings.
Examples of best practices
The 2022 study found that many municipalities have adopted tools and processes that were identified as helping to make the application process easier and more transparent for applicants. Some of these best practices include: Adoption of electronic planning and permitting systems; pairing zoning reforms with “off-the-shelf” pre-approved designs; enhancing transparency to the public on municipal decision-making; reforming provincial planning policies; making municipal decision-making more accountable by creating service standards; and enhancing the availability of planning data at various levels.
The Municipal Benchmarking Study is intended to support the important conversation with all orders of government on a major challenge to housing affordability and the efficient delivery of much needed new housing supply. CHBA has undertaken this work to showcase where municipal governments have the policies and systems in place to support supply and affordability, and to provide a path forward for improvements where things aren’t working as well. The next CHBA Municipal Benchmarking Study is slated for 2024.