Housing Accelerator update, week 17

Iqaluit and Nunavut, Wall Street Journal article

Previously:

• Federal plan: London, Calgary, GST on new rental housing

• Housing Accelerator update, weeks 2-4: Halifax, Mississauga, Vaughan

• Week 5: Hamilton, Mississauga, Halifax, Metro Vancouver

• Week 6: Quebec, Kitchener, Guelph, Burlington, Ajax, Mississauga

• Week 7: Mississauga, Brampton, Ajax, Moncton, Richmond Hill, Kelowna, Metro Vancouver, Edmonton

• Week 8: Metro Vancouver, Waterloo, Charlottetown, Winnipeg

• Week 9: Kitchener, Quebec

• Week 10: Calgary, Winnipeg, Moncton

• Week 11: Regina, Saskatoon, Winnipeg

• Week 12: Richmond Hill, Toronto, Oakville

• Week 14: Windsor, Toronto, Vancouver

• Week 15: agreements with Mississauga, Burnaby, Winnipeg, and Toronto

Iqaluit and Nunavut

Sean Fraser is federal minister for both housing and infrastructure. Last Thursday, he was in Iqaluit (formerly known as Frobisher Bay), the capital of Nunavut, announcing $194 million in funding for eight infrastructure projects in six Nunavut communities, including water treatment. Jeff Pelletier, Nunatsiaq News.

The plan includes $22.2 million from Ottawa and $7.4 million from the GN to design and build a new water treatment facility in Sanikiluaq, where high sodium levels in the water supply force every home to be equipped with reverse osmosis purification units.

Four other communities — Arctic Bay, Grise Fiord, Pond Inlet and Rankin Inlet — have also been allocated federal and territorial funding to get new water treatment facilities.

The funding from both levels of government ranges from $20 million to $35 million in each hamlet.

Kira Wronska Dorward, Nunavut News

On Friday, Fraser, MP Lori Idlout, and Mayor Solomon Awa announced a Housing Accelerator agreement between the federal government and Iqaluit. The agreement is for $8.9 million, with a target of 160 homes over three years (about 10X as cost-effective as building 18 homes directly for $500K each), 1450 homes over 10 years (about 80X as cost-effective). Iqaluit’s population in 2016 was about 7,700.

Kira Wronska Dorward, Nunavut News:

Fraser spoke of “streamlined processes” in Iqaluit that would remove density limitations in the downtown core, and allow six-storey buildings across the city without a municipal zoning change. The minister pointed out that removing administrative steps currently in place would speed up the process and reduce costs. There will also be further incentives created in the capital for families who cannot afford housing costs currently.

Fraser also announced that the federal government intends to provide $27 million in funding for housing across Nunavut, with a three-year target of 460 homes and a 10-year target of 3,100 homes.

Jeff Pelletier, Nunatsiaq News, quotes Fraser:

“I’m not going to look you in the eye and tell you that because I’ve shown up in Iqaluit, we suddenly will solve all the problems across the entire territory. But this is a very helpful opening to what I hope will become a long and meaningful relationship with the communities that we have the opportunity to connect with.”

The entire Canadian Arctic is huge, but lightly populated. In 2021, the population of Yukon, the Northwest Territories, and Nunavut was about 120,000: about 40,000 each. The supply-chain challenges in getting materials to Iqaluit and elsewhere are immense. So it’s even more important to use those scarce and expensive materials as efficiently as possible.

Wall Street Journal on the Housing Accelerator fund

Paul Vieira, Wall Street Journal: Canada offers cities money to spur home building.

“When it comes to municipal zoning, it should not be illegal to build something other than a single-family home in a given neighborhood,” Fraser said in an interview. “For too long, we accepted that position as normal and acceptable.”

To date, Fraser has clinched deals with 15 municipalities and the province of Quebec, committing $1.90 billion to those jurisdictions. In London, Ontario, Mayor Josh Morgan will take advantage of the program, after winning office in 2022 on a promise to add 50,000 homes over a decade.

“The goal wasn’t necessarily to provide political cover for a local council,” Fraser said, “although some city [lawmakers] have indicated to me that having Ottawa lead the charge and put money on the table changes the political equation.” 

Under Canada’s federal system of government, there are no formal financial ties between federal and municipal authorities. Fraser’s $3 billion fund marks a rare attempt by federal officials to cut deals directly with city halls across Canada.

One of Fraser’s earliest deals, with Calgary, Alberta, valued at $170.6 million, was concluded after the city council, in a drawn-out debate, voted to loosen citywide zoning restrictions, and accelerate the construction of at least 6,800 units in three years. Calgary’s population is about 10% bigger than five years ago, and data indicate a net influx of residents from other parts of Canada—such as the provinces of Ontario and British Columbia—where housing costs are steepest.

Vieira provides some interesting references:

Tu Nguyen, an economist at tax consultancy RSM Canada, said construction approval in Canada “is riddled with red tape,” that leads to “a hammerlock on development.” She cited World Bank research indicating that it takes an average of 249 days in Canada to obtain a construction permit, versus an average 80 days in the U.S. and the U.K.

“We need to reduce the barriers to adding [housing] capacity,” Toni Gravelle, a deputy governor at the Bank of Canada, said in a speech last month. He said absent policy changes such as an easing in zoning restrictions, “we could continue to see upward pressure on the components of inflation related to rent and house prices.”