Housing | Take out the carrot rather than the stick

I recently spoke to you about the new “superpowers” ​​granted to cities by Quebec.

Magog, in Estrie, was the first to use them to authorize the construction of a residential building which risked being blocked by a citizen referendum¹. The measure is controversial, but it has a single objective: to increase the supply of housing, which is insufficient in the province.

Prepare to hear more and more about another tool to accelerate construction starts: incentive zoning. This concept, introduced last year in Quebec, should be taken a step further following a bill just tabled in the National Assembly.

Basically: cities will be authorized by law to “sell” to developers the right to erect buildings higher, or denser, than what their usual zoning allows. In return, builders will have to contribute to a fund to finance social or affordable housing.

This novelty, proposed by the mayor of Longueuil, Catherine Fournier, and welcomed with open arms by Quebec, represents an important development in the current housing crisis.

I met Catherine Fournier for the first time in the winter of 2023, in her office at Longueuil city hall. She presented me with a draft of the new housing strategy for her city of 262,000 inhabitants.

The plan included a range of measures, including this idea of ​​incentive zoning.

What Longueuil is proposing goes against the recent trend observed in Quebec. More and more cities are imposing fees on developers for each new housing built, in order to finance underground infrastructure or social housing.

Many perceive these fees as an obstacle to development, in a context where construction costs have exploded since the pandemic.².

In contrast, the measure suggested by Catherine Fournier will be “optional”.

A developer who has the right to build 10 floors under current zoning, for example, will be able to pay compensation and build 50% higher, or 15 floors. Nothing will force it, but the possibility of creating more apartments – and profits – will encourage many to jump on the train, believes the mayor.

“Allowing incentive zoning provides greater profitability for projects,” she told me in an interview. Even if part (of this profitability) is shared with the City, it is still “free” profit compared to what was initially planned, when the developer acquired his land. »

Longueuil extends a hand to private developers, in short, rather than twisting their arm. She takes out the carrot before the stick.

Mayor Fournier is betting that this measure will give a boost to construction in Longueuil. The target is ambitious: add 30,000 homes, in all price ranges, by 2041.

The idea is not to plant 30-story skyscrapers all over the city, but above all to increase density around public transport routes. In lower density neighborhoods, one or two additional floors could be added thanks to the new rules.

The municipality hopes to raise millions thanks to the new contribution from private developers. All monies collected will be reinvested in a fund intended for community housing.

This fund will mainly be used to purchase buildings already inhabited by low-income tenants. They will then be resold to non-profit organizations (NPOs), in order to “sustain” their affordable rent. Ultimately, Longueuil wishes to increase the portion of “non-speculative market” housing in its territory from 4% to 20%.

A “pragmatic” solution, believes Mayor Fournier, in a context where funds from Quebec and Ottawa intended for housing are not unlimited. “It’s the private sector that contributes, not governments. »

The precise calculation formula for the promoters’ contribution has not yet been determined. But the sums at stake could be considerable: Vancouver raised $92 million in 2022 thanks to similar zoning bonuses, Catherine Fournier pointed out to me.

The Minister of Municipal Affairs, Andrée Laforest, who included the Longueuil proposal in her Bill 57 tabled last week, hopes that several cities in Quebec will take the route of incentive zoning. One way among others to boost the housing supply, she believes.

It’s a safe bet that there will be a ripple effect. At least in the metropolitan area, where dozens of cities compete to attract real estate developers. Because we have seen it recently: formulas that are too restrictive to force the inclusion of social housing, such as the “20-20-20 Regulation” of the City of Montreal, have shown their limits.

Will the Longuilloise method be the key?

1. Read the column ““Superpowers” ​​in cities”

2. Read the article “Multiplex in Terrebonne: the cost of building permits is “exploding””