Why selling off Toronto’s public housing is a bad idea

The Toronto Community Housing scandal has given rise to fears that Rob Ford will impose a U.S.-style rent voucher system Brian Topp

Auditors don’t usually gain celebrity status. But the modern Canadian public sector auditor general is an exception. Sheila Fraser, who helped bring down the federal Liberal government with her report on the sponsorship scandal, may be Canada’s most high-profile auditor general ever. Across the country, her provincial equivalents are beloved by opposition parties, who often team up with them to challenge the government. But here in Toronto, we have something new and possibly unique—a city auditor general, Jeff Griffiths, who for all practical political purposes has been used by Rob Ford to challenge both the public service and the mayor’s de facto opposition on city council.

In February, when Griffiths released his bombshell report detailing problems with sole-source contracting and tendering at Toronto Community Housing, Ford ensured the details were tabloid friendly by spoon-feeding the media a companion report about expense sins: $1,000 in chocolates from Holt Renfrew; $1,925 for a planning retreat at a local spa; $53,500 for a staff Christmas party. The ensuing fallout turned into political theatre when Ford called for the resignation of the board, including new members who weren’t even there during the period audited. He also demanded the resignations of the current and past CEOs, Keiko Nakamura and Derek Ballantyne (by then COO for the city’s arm’s-length real estate development outfit, Build Toronto), both well-respected officials who were given little opportunity to explain or defend themselves. The message was clear: if it happened on your watch, whether you knew about it or not, you’ve gotta go. Then he brought in the retired city councillor Case Ootes—the deputy mayor during the $80-million MFP computer scandal—to clean up the mess.

The scene played out beautifully for Ford, and not just because it was plucked directly from his anti-gravy campaign script. Conveniently, the spending scandal would open the door to talk of privatizing public housing—privatization being Ford’s principle panacea for all that ails the city. He has said that he favours a rent voucher system, whereby low-income tenants are given a subsidy they can use to rent an apartment in a privately owned building of their choosing.

A wholesale privatization of Toronto’s public housing would do nothing but deliver a lot of valuable city land to developers

Ford isn’t inventing the voucher idea. He’s echoing an approach to public housing currently fashionable in the U.S. Over the last 15 years, hundreds of decrepit housing projects in the States have been demolished. In their place, housing authorities have built mixed-use, mixed-income developments, displacing many of the former tenants and handing them vouchers to rent from private landlords. Under this system, families who earn 50 per cent or less of the median income in their neighbourhood are eligible. They’re expected to pay up to 30 per cent of their income on rent and utilities, and the voucher covers the balance, up to a specified local maximum. The end goal—getting people out of public housing and integrated into the broader community—is a good one, and Toronto should consider vouchers as one of many tools available to help low-income families get out of dependency. But the American experience shows that an over-exuberant plunge into a single cure-all is a bad idea.

Private landlords in the U.S. aren’t compelled by law to accept rent vouchers, and many of them don’t. A 2009 federally funded audit conducted by the Fair Housing Action Center in New Orleans found that 82 per cent of landlords surveyed in that city refused tenants with vouchers, or presented insurmountable barriers to their applications. It also noted that nine per cent of landlords who refused a voucher from a black “mystery shopper” accepted it from a white one. Similar problems have been reported in other cities. The conclusion was that landlords are using the vouchers as a handy way to identify and screen out poor people and visible minorities.

(Illustration by Andy Friedman)

Instead of integrating the poor into mixed-income areas, vouchers have had the effect of concentrating them into pockets of sometimes grossly substandard private housing owned by neglectful landlords—the same kind of ghettoization the vouchers were designed to put an end to. Policing abuses would require teams of well trained and managed overseers, but program administrators (like those running the TCH) are the principal targets of populist right-wingers these days—their jobs are the ones pro-privatization types are keen to eliminate.

Which brings us to Ford’s other idea: selling off our public housing stock. Privatization appeals to Ford because it could generate revenues to staunch the massive budget shortfalls city hall will face in 2012—thanks to the tax cuts and freezes he put through in his first act as mayor. Paying for annual tax cuts through the one-time sale of public assets, however, is another doomed strategy. Hundreds of American municipalities that sold off their family silver without fully addressing their underlying fiscal problems are currently weighing dramatic measures to balance their budgets: pension cuts, service cuts, deep layoffs of police, firefighters and other essential city workers. Several of those city governments are in bankruptcy.

A wholesale privatization of Toronto’s public housing would do nothing but deliver a lot of valuable city land to developers, who aren’t likely to build low-density, child-friendly housing for poor and low-income renters. Private developers want a decent return on their investment, which in Toronto means development aimed at a much different demographic.

We can do better than that. Many European countries run cost-effective, decentralized public housing systems—models we can learn from. The Netherlands, for example, discovered long ago that a single centralized agency is unlikely to be a smart, sensitive and nimble landlord. The country decentralized its public housing and distributed management among roughly 430 local, mostly tenant-run public housing associations (toegelaten instellingen, which provide services to some 2.4 million homes), while reserving some functions (like financing, central purchasing and auditing) for a central agency.

A decentralized model makes a lot of sense. Broken windows are more likely to be replaced, floors refinished and heating fixed quickly by people who actually live in the buildings than by a bureaucratic agency based miles away. In Toronto, we have dozens of successful housing co-ops, including one that made the conversion from public housing. In 2003, the Atkinson Housing Co-op (formerly Alexandra Park) near Dundas and Spadina became the first public housing development in Canada to make the switch.

Apart from that prototype, however, Toronto took the opposite approach from the Netherlands, amalgamating several former authorities into a single gigantic public housing agency—one of the biggest landlords of any kind in North America. The agency manages more than 2,200 low-, medium- and high-rise buildings and single-family homes, serving 164,000 tenants throughout the city. Many of the buildings are between 30 and 80 years old, and they’re now crumbling; problems include faulty wiring and plumbing, leaky ceilings, broken doors and windows, and rundown and unsafe playgrounds and communal spaces. The gap between the 2009 budget and the estimated cost of capital repairs was $300 million.

Meanwhile, the value of TCH real estate holdings is estimated at $6 billion. In order to pay for the agency’s growing capital costs, the former CEO, Derek Ballantyne, led the charge on a revitalization strategy that is playing out across several large TCH communities. The most high-profile, of course, is Regent Park—often pointed to as the prime example of a bleak, alienating 1950s-style housing project that concentrates poverty and many of its attendant dysfunctions. The city is demolishing the grimmer buildings in that area and replacing them with a high-density mixed community that blends better public housing with privately financed homes aimed at working- and middle-class residents.

So a relatively innovative housing model is already being tested in Toronto—a public-private hybrid that allows the city to leverage its more valuable holdings. For every rent-geared-to-income unit that is demolished at Regent Park, a more modern and efficient unit will be built, with every displaced tenant guaranteed a right to return. Six years after the relocation process began, the first phase is finally complete; half of the more than 400 households who were displaced are now back. Their neighbours will include the 500-plus condo owners who have already bought—at market price—into the new Regent Park towers and townhomes. If the revitalization plan is successful, it will essentially accomplish the same goal as a rent voucher system—combining rent-geared-to-income and market housing in the same neighbourhood—without all the crippling problems.

Ford is right about one thing: this is a good time to reflect on the state of public housing in Toronto, and to start finding new and creative ways to achieve the kind of goals we should be pursuing in this area—namely less dependence, better integration, safer communities, and some reasonable hope for a better future for both the citizens and the neighbourhoods.