Interview: BILD Explains Development In The GTA

Do you ever look around the city and think “how could we possibly need all of these cranes and construction sites?” I do. Every. Single. Day. Having lived in Liberty Village (the hub of countless condo projects) for almost a decade, I think about this every time I walk down the street or look out my window. I mean, is all of this development really necessary? Who decides what gets built? And why in my neighbourhood? 

I’ve always had so many questions about how Toronto is taking shape, but never really knew where to get any answers. That is, until now… Drum roll please! There’s a non-profit association called BILD GTA that just launched a public education campaign to help answer many commonly asked questions — like why are property prices rising and why is there so much development in the city? Having worked for the government myself, I know just how complex development is so I’m hoping this interview with Justin Sherwood (SVP of Communications at BILD GTA) helps shed some light on the topic…

15 Questions With BILD GTA – Building Answers

1. Tell me a little bit about BILD — who do you represent and what do you do?

BILD is the Building Industry and Land Development Association. We represent home builders, land developers and professional renovators across the GTA. Essentially the organization has been around in one form or another for almost a hundred years. We are a non-profit industry association with the primary objective of advocacy, but we do spend a lot of time interacting with homeowners and consumers who have questions — that’s really the genesis of the Building Answers campaign.

2. Why did BILD launch this public awareness campaign? 

The current president and CEO, Dave Wilkes, and I noticed the amount of interaction we have with the public is quite high. People were always asking us questions and we always take the time to answer them one-on-one. We found that when we sat down and answered questions openly and factually that we were able to have a dialogue and explain the context around what’s going on a bit better. That really formed the genesis of the campaign. We thought to ourselves: wouldn’t it be great to have a mechanism where we can have a broader dialogue with the public?

We also have a housing shortage in the region. There are 115, 000 people coming into the GTA every year and the population is projected to grow 40% by 2041. That’s about 2.7 million people more than are currently here. The question is, how are we going to house them all? We need about 50,000 houses/year and we’re building between 30-40,000 — that means there’s a shortfall every year. If we’re going to get past that, we all have to work together and the basis of doing this is at least everyone having a common understanding of what is going on. 

3. BILD receives a lot of questions from GTA residents. What are some of the top concerns? 

Affordability is a huge concern (will I ever be able to afford a house?), density (why is the new development so dense?) and we also get a lot of renovation-related questions (how much should a reno cost? where can I find a reputable renovator? etc.)

4. What are some of the biggest misconceptions out there when it comes to development?

One of the most common misconceptions is that the type of buildings we are seeing in our communities are purely at the discretion of the developer. The reality is that development is being driven by provincial government policy and the municipal interpretation of that policy in their plans. In 2006, the provincial government decided they wanted to see development go up and not out — essentially to slow down development in the suburbs, see higher density in the urban core and make better use of the land. They set specific density targets and one of the ways to meet them is by constructing the types of buildings and developments we are seeing today.

5. Everywhere I look I see cranes dotting the skyline! Why are there so many condos and housing developments in the GTA?

Cranes are a part of the solution – they’re not the problem! We have to build to a growing population. Toronto is a world-class city and with that means people want to come and live here and they want to live downtown where all the action is (this applies to all the 40+ other cities and towns in the GTA as well). The builders are responding to demand.

6. New development is so dense. Why are condos built in clusters and not scattered around the city? How is land for housing developments chosen?

At the top you have the provincial legislation which is the Planning Act, Provincial Policy Statement and Growth Plan. Then you have the Official Plan at the municipal level which is essentially a projected map of the city that specifies where you want to have different types of buildings (employment lands, residential etc.) Developers then take those official plans and determine where and how they’re going to build and to what densities.

7. Why are old buildings being torn down for new development? Can’t we preserve some?

All of the cities in the GTA have designations in terms of historically significant buildings and if development is going to occur in these buildings they try to preserve the facade or use the old buildings as a base. There’s very much an effort to preserve the historical features of the city — Liberty Village and Distillery District are great examples.

8. Traffic gridlock is a big problem in the GTA. It doesn’t seem like there are enough roads to serve the communities being built. Won’t building more condos and houses make it worse?

I think as you take a look at the new development real emphasis needs to be placed on making sure that it’s around major transit station areas so that we’re balancing the needs of people who are getting around in cars with other forms of transportation. That is the direction from the city and the province to the developers.

9. Who decides what our neighbourhoods look like? Where retail space, public space & roads are built?

There are four key players: provincial government, municipal government, developers and the public. The public plays a very key role in these decisions and has a chance to voice opinions during consultations when the city’s Official Plan is being developed and when developers propose their projects.

Developers are city builders and are doing an incredible job transforming the GTA. They are very proud of what they do and want the community to be involved so they actively welcome the dialogue and feedback from community members.

10. Why are house and condo prices rising in the GTA? What is being done to make housing more affordable?

First, we need to recognize that the market is out of balance. We have a supply problem that needs to be fixed. We need to match the number of people coming in with the available housing — this will help with the prices.

Another thing I want to point out is that 25% of the cost of a new home is government fees, taxes and charges so governments have a number of levers they can use to help moderate prices. The average profit that a developer is making depends on the type of project, but is somewhere between 7-12%. The government is making two or three times that.

11. How does development benefit our communities?

Three different ways:

1. Meeting housing needs.
2. 25% of the cost of a new home goes to the government and a lot of those charges, fees and taxes go right back to the community. For example, if you buy a one-bedroom condo in Toronto right now, almost $10,000 of that goes directly to the city to support rapid transit. Approximately $1,500 will go to support social housing. Then you have fees that go to fire services, public health, creation and maintenance of parks ($2,200 in fact), police services etc. Virtually every single park that has been built in the GTA in the last 15 years has been funded by development.
3. Jobs – the industry employs 270,000 people (120,000 in new builds and 150,000 in renovations and custom homes). That’s a payroll of $16 Billion. It’s one of the largest employers of the region. And all these people who are employed by the industry go out and support local restaurants and shops. Development and home building is certainly an engine of the economy in the GTA.

12. Why don’t we have more transit, green space and schools in areas that are saturated with condos (like Liberty Village and CityPlace)?  

That’s a great question and one for the city since it’s dictated by their Official Plan. Just from a park perspective, the city has almost $700 million sitting in its parkland reserve funds that has been collected from new development. So new home buyers have essentially paid for these parks, but the city is the one deciding when and where it’s actually provided.

13. Some people believe that developers and builders are making huge financial gains on the backs of buyers/residents. How much are they actually profiting from these projects? 

We’ve answered the question as best as we can on the Building Answers website. It really depends on the type of project, but in order to get financing from a bank they typically have to be making 7-13% profit. What most people don’t know is that it takes 10 years to complete these projects so builders are waiting a decade before they see any return on that investment. It’s a high-risk business with a fairly modest return.

14. If you could tell the GTA residents one thing about the future of development in the city, what would it be?

Years ago they used to say Toronto was a place where the streets rolled up and the town shut down at 10 pm and it’s so not like that anymore. It’s a world class city. Development is going to continue and it’s going to make the region more appealing and more dynamic.

15. I’m about to do some major home renos. Any tips for me?  

I have three tips for you:

1. Spend more time upfront planning your project than anything else and make sure you find a contractor that shares and understands your vision.
2. Interview at least three different contractors, get their references and ask to see their previous work.
3. Put everything in writing and include all the details. Note that any time you change the contract (which is inevitable), it should be done in writing through a change order.

Also check out our RenoMark program. We developed it back in 2001 to identify professional renovators that meet a code of conduct (which includes a certain level of insurance and warranties). There are 200 RenoMark members at BILD and they are the best professional renovators in the GTA.

Insightful right?! I still can’t get over the fact that the GTA population is expected to grow 40% by 2041!! No wonder there’s a housing shortage. Now when I look out my window I know I’ll see things in a different light: these are homes being built for current and new residents. Yes, development can be an inconvenience when it’s in our own neighbourhoods (there’s no denying that), but ultimately it’s necessary if we all want to call this beautiful city home.

A huge thanks to BILD for sponsoring this post so I can share this insightful interview with you guys. As always, any opinions expressed here are my very own. Make sure to visit Building Answers to learn more about development in the GTA!