development costs and affordability · 6/23/2020 · • one-bedroom: $2,000 / month (-$490/month)...
TRANSCRIPT
Development Costs and Affordability
In Context
WHAT ARE WE LOOKING AT?
CASE STUDIES: Our Approach• 4 different development scenarios based on actual projects in
Toronto• Assumed the rent needed to create a viable project• Explored all potential costs:
• construction costs• land cost (if relevant)• municipal fees and charges
• Identify obvious barriers
Financial barriers to affordable neighbourhood development
WHAT ARE WE LOOKING AT?
a single, detached house• designed for one family• on its own lot
WHAT ARE WE LOOKING AT?
taking a single, detached house• designed for one family• on its own lot
converting it to
three units• exactly the same building• dividing into three units
WHAT ARE WE LOOKING AT?
taking a single, detached house• designed for one family• on its own lot
demolishing it to create
three new units• built form is different than the
surrounding buildings, BUT• consistent with permitted
height, front yard, side-yard and rear-yard setbacks
WHAT ARE WE LOOKING AT?
taking a single, detached house• designed for one family• on its own lot
demolishing it to create
ten new units• built form is different than the
surrounding buildings, BUT• consistent with permitted
height, front yard, side-yard and rear-yard setbacks
WHAT ARE WE LOOKING AT?
taking two single, detached houses• designed for one family• on its own lot
a 28-unit building• built form is different than the
surrounding buildings, BUT• consistent with character of
street and surrounding areaassembling two lots to create
• Based on real-world examples
• Establish an understanding of financial barriers for future discussion and consultation
• See how financing might work with preservation of neighbourhood character and zoning
WHY A CASE STUDY APPROACH?
CASE STUDY #1
CASE STUDY #1
CASE STUDY #1
one house into three units
254 Havelock StreetPARAMETERS
• Existing three-story semi-detached dwelling• R Zone
DEVELOPMENT VISION
+3 months
Submit Building Permit
+3 months
Start Construction
+6 months
Complete Construction
+1 month
Submit PPR
Today
Acquire Property
13 months
1CASE STUDY #1
• Internal reconfiguration to accommodate multiple dwellings
• Triplex with family suite on top two levels• Rental housing• No parking• No Variances or Site Plan Amendment
• Rent required to pocket $1,200/month in income: $1,650 / month (avg)
• Median household income in the neighbourhood:$77,547
• Affordable rent for median income household: $1,940 / month
254 Havelock StreetCASE STUDY #1
RENTAL BREAKDOWN
KEY CONSIDERATIONS
• Municipal fees: $77,842 ($38,921 per new unit)• Rents possible if municipal fees were waived:
$1,550 / month (avg) (-$100/month)
CONSTRUCTION (HARD + SOFT COSTS)
$396,842$260 PSF
CARRYING COSTS(INTEREST)
$6,204$ 4 PSF
14%1%
14%
71%
$365 PSF OVERALL
DEVELOPMENT CHARGES
$77,842$51 PSF
ConstructionDevelopment Charges + HSTLand & Carrying Cost
COST BREAKDOWN
LAND ACQUISITION$76,316
$50 PSF
CASE STUDY #2
CASE STUDY #2
CASE STUDY #2
one house into three new units
+ 4 months
Submit Building Permit
+3 months
Obtain Building Permit
Start Construction
+12-14 months
Complete Construction
+3 months
Submit PPR
Today
Acquire Property
Location Map
• Demolish existing two-story detached dwelling• R Zone
68 Burnaby Blvd
24 months
CASE STUDY #2
• New triplex with family suite on top two levels• Rental housing• No parking• No Variances or Site Plan Amendment required
PARAMETERS
DEVELOPMENT VISION
• Rent required to break even by year three: $3,050 / month
• Median household income in the neighbourhood: $77,547
• Affordable rent for median income household: $1,940 / month
68 Burnaby BlvdCASE STUDY #2
RENTAL BREAKDOWN
KEY CONSIDERATIONS
• Municipal Fees: $115,014 ($57,507 per new unit)• Rents possible if municipal fees were waived:
$2,800 / month (-$250/month)
CONSTRUCTION (HARD + SOFT COSTS)
$1,170,000$390 PSF
CARRYING COSTS(INTEREST)
$50,438$ 17 PSF
8% 4% 4%
84%
$465 PSF OVERALL
LAND ACQUISITION$60,000
$20 PSF
DEVELOPMENT CHARGES$115,014
$38 PSF
ConstructionDevelopment Charges + HSTLand & Carrying Cost
COST BREAKDOWN
CASE STUDY #3
CASE STUDY #3
CASE STUDY #3
one lot into ten new units
May 2020
Submit PPR #2
August 2020
Submit Building Permit
November 2020
Obtain Building Permit
Start Construction
• One 50’ X 150’ lot• Existing single detached dwelling• R Zone
Dec 2019
Submit PPR #1
August 2019
Acquire Property
2165 Gerrard Street EastCASE STUDY #3
• Demolish and sever into two lots• Fourplex & laneway suite on each lot• Rental housing• No parking required• No Variances or Site Plan Amendment Required
PARAMETERS
DEVELOPMENT VISION
September 2021
Complete Construction
(6-12 months)
28 months
• Unit Mix• 8 two-bedroom units• 2 laneway houses
• Rents required for a viable project: $1,960 - $3,300 / month
• Median household income in neighbourhood: $69,026
• Affordable rent for median income household: $1,725 / month
• Municipal fees: $477,462 (avg $47,746 per unit)• Rents possible if municipal fees waived: $1,800 -
$3,000 / month (-$160-300/month)
2165 Gerrard Street EastCASE STUDY #3
RENTAL BREAKDOWN
KEY CONSIDERATIONSCONSTRUCTION
(HARD + SOFT COSTS)$4,762,105
$390 PSF
LAND ACQUISITION$1,260,000
$106 PSF
6%
CARRYING COSTS(INTEREST)
$352,141$ 29 PSF
8%
HST $590,874
$48 PSF
DEVELOPMENT CHARGES$477,462
$39 PSF
5%17%
64%
$610 PSF OVERALLCOST BREAKDOWN
ConstructionDevelopment Charges + HSTLand & Carrying Cost
CASE STUDY #4
CASE STUDY #4
CASE STUDY #4
two lots into a 28-unit building
Feb 2020
Submit SPA + Rezoning
Feb 2021
Submit Building Permit
June 2021
Obtain Building Permit
Start Construction
• Demolish & assemble two lots• 28 unit suites
• 10 one-bedroom units• 18 two-bedroom units
• 20 below-grade parking spaces• Requires Rezoning & Site Plan Approval
Dec 2019
Submit PPR
July 2019
Acquire Property
June 2023
Complete Construction
722-724 Marlee Avenue
48 months
CASE STUDY #4
• Two 50’X150’ adjacent lots• Existing single detached dwelling on each lot• RD Zone
PARAMETERS
DEVELOPMENT VISION
• Unit mix• 10 one-bedroom units• 18 two-bedroom units
• 20 parking spaces• Rents required for a viable project
• one-bedroom: $2,490 / month• two-bedroom: $2,840 / month
• Median household income in neighbourhood: $63,778• Affordable rent for household earning median income:
$1,595 / month
722-724 Marlee AvenueCASE STUDY #4
• Municipal fees $1,215,102 (avg $43,396 per unit)• Rents possible if municipal fees & parking waived
• one-bedroom: $2,000 / month (-$490/month)• two-bedroom: $2,280 / month (-$560/month)
RENTAL BREAKDOWN
KEY CONSIDERATIONS
COST BREAKDOWN
CONSTRUCTION (HARD + SOFT COSTS)
$11,555,000$470 PSF
7%
CARRYING COSTS(INTEREST)
$970,000$40 PSF
7%6%
14%
66%
ConstructionDevelopment Charges + HSTLand & Carrying Cost
$708 PSF OVERALL
DEVELOPMENT CHARGES$1,215,000$49 PSF
HST $1,155,000$47 PSF
LAND ACQUISITION$2,500,000
$102 PSF
INCENTIVES TO FILL THE MISSING MIDDLE
WHAT ARE SOME SOLUTIONS
Considerations• No development charges for new affordable rental• No parkland dedication (or cash-in-lieu)• Pre-fabricated ‘kit-of-parts’ that has been pre-
approved• City loans for new affordable rental• CMHC Insurance for small projects• Support for non-profit land trusts to preserve rental
units and keep rent increases low• No HST for new affordable rental
to financial barriers faced when building affordable units?