Diamonds in the mud

Last week I emailed a few friends about the Toronto Community Housing’s Regent Park “scandal,” as described by the Toronto Sun columnist Sue-Ann Levy. Each responded with exactly the same question: “Who is Sue-Ann Levy?”

So for the (apparently) many who have missed the story, here’s a recap.

After six weeks’ research (including the services of a private investigator) Ms. Levy revealed that City Councillor Pam McConnell purchased a 1200 square foot condominium[1] in her own ward for its full market cost of $416,464. The concern: she (along with pretty much every resident in the Regent Park neighbourhood) had insider knowledge about the plans and participated in decisions leading to the redevelopment’s success.[2]

We also learned that Toronto Community Housing and Daniels Group executives (the developers of Regent Park) voluntarily put up their own money to purchase condo units that pundits thought couldn’t be sold. This was no secret; based on the findings of the private investigator, Levy noted “there was no attempt to cover their tracks.” The good news is that Regent Park is a success, and they will get a return on their investment, just like all the other early buyers. But of course it could have gone the other way, and they would have lost their shirts.[3]

Other columns revealed that Regent Park developer and philanthropist Mitch Cohen, President of the Daniels Group, invests in real estate, has a nice house and has a niece that participated in a publicly-available housing program –not so newsworthy, I would have thought, but I imagine the Sun knows it’s own business.

No need for me to challenge Levy’s conclusions here. That work has already been done by Chris Selley at the National Post, Marcus Gee at the Globe and Daniel Dale and Christopher Hume at the Star. The Daniels Group has prepared a statement. A six-page letter from former Integrity Commissioner David Mullan is in wide circulation. Regent Park tenant Diane MacLean has spoken up on the CBC. Regent Park residents organized a press conference to testify to Regent Park’s success. Finally, the Sun’s Peter Worthington has concluded “there is no suggestion of illegality, just one of appearances” — the “appearances” courtesy of Levy.

But there are diamonds here

I’m razzing Sue-Ann Levy. Yet amidst all the mud she has raised three crucial questions that deserve wide debate:

• Why can’t we have mixed-income buildings – and not just mixed-income neighbourhoods – in Regent Park?
• When, if ever, should tenants been displaced?
• Is redevelopment detrimental to tenants?

On the first question, I am entirely with Ms. Levy.

There is a popular view that people who can afford market rents should not live in social housing. There is an equally common view that well-off buyers will not pay top dollar for condos if there are low-income people living in the building.

The evidence suggests otherwise.

In Toronto alone there are hundreds of successful mixed-income non-profit and co-op housing buildings. We also see successful mixed-income buildings owned by private landlords. Rent supplements or housing allowances create the mix.

In the US there are mixed-income models for high-end rental buildings, condominiums and subdivisions too. For example, New York City’s “80/20 Program” has created 20,000 new rental apartments – all rent controlled, with 20% reserved for people earning less than 50% of the area’s median income. That means a Manhattan high-roller can pay $4,000 a month for an apartment across the hall from a cleaner paying $500.

In Montgomery, Maryland, an inclusionary housing model requires any new development over 20 units (including sub-divisions) to include 12.5 – 15% moderately-priced units. Non-profit organizations can buy these units and rent them at even lower rates to their clients.

The integration in these developments is absolutely seamless. Think of it as an airplane. Some people are paying full fare, some travel on points. You can’t tell the difference by looking, and everyone gets to the same destination.

Making it happen

I don’t blame TCHC for not creating mixed-income buildings from the start. With a project this complex, why fly in the face of conventional wisdom? But now Regent Park is an undisputed success, it might be time to take the mixed-income concept to the next level. What would help?

Money for affordable home ownership. Levy alluded to the $6.5 million Affordable Home Ownership fund. This revolving fund was used in Regent Park to provide a 10% subsidy to buyers earning less than $81,000 per year. If the owner does not sell the apartment for 20 years it is forgiven.  If they sell it is repayable and recycled to provide similar loans for new owners.

Levy complains that the subsidies are not deep enough for Regent Park tenants. Agreed. For that, you need more money or a different strategy. The bad news: Affordable Housing Office’s budget for home ownership programs is $6.6 Million over the next 3 years for the entire city. (Of course, you could create home ownership for families in the $30 – $40,000 per year at no cost to the taxpayer through Homesteading. But that’s another story.)

Housing allowances. TCHC can afford to re-house its tenants because it has rent subsidies to do it. But if other landlords want to house low income people – at Regent Park or elsewhere – that takes money too. The total 3-year Affordable Housing Office city-wide budget for housing allowances? $53.2 Million – enough to subsidize about 3400 tenants until 2015. However, 2,000 are earmarked for tenants losing their allowance in 2013. That’s why we need . . .

Inclusionary housing policies that ensure mixed-income buildings are the norm, whether they are in Regent Park or CityPlace. And finally . . .

An end to some of the silly notions that undermine mixed-income communities. Middle-income people do not “take up space” that would otherwise go to poor people. The reason low-income people do not live in Pam McConnell’s apartment is that they cannot get financing to pay for a $400,000+ home, not because McConnell got there first. Nor are they cheating when they take advantage of publicly funded programs. If that were true, we would have no mixed-income hospitals, schools or subways.

In 1973, the federal government said goodbye to low-income public housing and embraced mixed-income buildings. They were right then. And they are right now.

Next week: displacing tenants