Almost a decade ago, Toronto developer Montcrest Asset Management (then known as NYX) bought and rezoned a corner lot on Bayview Avenue, north of Sheppard Avenue, with the intention of replacing a mid-century bungalow with 11 townhouses, as had become common along that stretch. Montcrest stickhandled the application through an appeal to the Ontario Municipal Board, then sold the site in 2017 to a builder that got tangled up in the city’s site plan approvals process.
Though exceedingly modest for a major arterial, the project stalled and remains unbuilt.
Planner Tim Jessop, Montcrest’s vice-president of development, recalls the reaction of the company’s owners: “They said, ‘We never want to do that again, because it was so painful.’” Instead, Montcrest pursued much larger residential projects as well as several industrial and self-storage ventures. It was all about economies of scale, he explains. “You’re spending a similar amount of time getting the approvals and the similar amount of money doing all the studies and reports for 11 units, versus a significantly bigger scale project.”
Like a growing number of investors, Montcrest – founded in 2012 by private equity investor Yashar Fatehi – is dipping its toes in the water again, with a handful of small-scale purpose-built rental projects that respond directly to looser zoning rules adopted by city council in the past few years as well as relaxed planning regulations enacted by the provincial government. These include “as-of-right” approvals for fourplexes and moves that theoretically enable condo or rental projects of up to 10 units to avoid time-consuming and costly technical studies.
Montcrest, says Mr. Jessop, wants to build up a portfolio of small purpose-built rental projects. “Instead of doing one project with 200 or 300 units, the goal and ambition is to do a similar number of units, but spread out over smaller projects and have this portfolio.” He is cautiously optimistic, but says city planning officials still have considerable discretion to tie up approvals – delays that can make or break the financial case for the type of residential buildings that politicians at all levels, as well as housing advocates, say they want.
The Globe and Mail spoke to three investors looking to take advantage of the reformed planning rules by adding smaller-scale density in neighbourhoods and near transit.
Mini-mid-rise
For the past few years, architect and planner Naama Blonder, founder of Smart Density, has been promoting a concept she called “mini-mid-rise” – basically, four- or five-storey buildings on small lots, with two apartments on each floor, all overlooking a small central courtyard, and served by a compact elevator.
The motivation, she says, was the fact that so few mid-rises were being built – largely, in Ms. Blonder’s diagnosis, because it was so difficult for developers to assemble the land, especially on older main streets lined with small retail lots. “We said, ‘Let’s apply the mid-rise building guidelines on a single property and see how it looks.’”
A rendering of the "ten-plex" by architect and planner Naama Blonder, founder of Smart Density. She calls the concept a 'mini-mid-rise': basically, four- or five-storey buildings on small lots, with two apartments on each floor, all overlooking a small central courtyard, and served by a compact elevator.Smart Density
What finally attracted the first two clients, including Montcrest, was a move by Queen’s Park to eliminate the need for site plan approval on any project with 10 units or fewer. The site plan approvals process requires the developer to conduct and then submit numerous technical studies – on traffic, shadows, infrastructure, et cetera – that are then reviewed and critiqued by numerous city departments before the planning department will issue a building permit.
As she always cautions her clients, the process adds a year.
Another rendering of the 'ten-plex' by architect and planner Naama Blonder.Smart Density
Montcrest, says Mr. Jessop, bought a residential lot on St. Clair Avenue West near the Stockyards with the intention of building one of Ms. Blonder’s 10-unit mini-apartments. The property, he says, has a rear laneway, and is about 25 feet wide, small enough to limit the land costs yet wide enough to accommodate a form that is commonplace in places such as Mexico City or Athens.
Under the new provincial rules, as well as the city’s relaxed bylaws around intensification on major streets, Montcrest should be able to get a building permit, provided it persuades the Committee of Adjustment for one minor variance, to extend the height by a metre above the limit in the zoning bylaw. “That was very appealing to us,” says Mr. Jessop.
There is, however, a wrinkle: the city informed Montcrest of a discretionary policy recommending that developers prepare air quality and sound studies for projects within 300 metres of a rail corridor. Even though their site is separated from the tracks by an existing residential neighbourhood, Montcrest opted to do the studies in the hopes of getting an easy ride through the Committee of Adjustment. “Navigating the approvals process,” as Mr. Jessop says, “is more of an art than a science.”
However, Montcrest’s owners, because of this stipulation, have already ruled out buying other properties near railway corridors, and see their project on St. Clair West as a test case. “If we get refused for the variance, the project can’t financially support an appeal process where we have to hire a lawyer and wait for months to fight it out,” he says. “It’s very delicate.”
A rendering of the six-storey project by Toronto Standard, a firm founded earlier this year by real estate investor Chris Spoke. The 43-unit purpose-built rental building is planned for a lot in the vicinity of Kipling Ave., near the subway station.Toronto Standard
A 21st-century walk-up (with elevators)
Toronto Standard, a firm founded earlier this year by real estate investor Chris Spoke, has begun seeking approvals for a six-storey, 43-unit purpose-built rental building in the vicinity of Kipling Ave., near the subway station. With backing from a private investor, Mr. Spoke’s explicit mission with the company is to take advantage of newly relaxed regulations governing features such as parking and shared amenity spaces in order to build the type of modestly scaled apartments that council late last month approved for Toronto’s major streets.
About a quarter of the units will be two- and three-bedroom apartments, and there will be live-work space on the main floor instead of retail. Mr. Spoke estimates that construction costs will range from $350 to $400 per square foot, slightly less than high-rise rates.
“The plan,” he says, “is long-term ownership and long-term management.” The company has also invested in another property, on Dufferin, with the goal of developing a similar project.
Successive regulatory changes came together to persuade Mr. Spoke’s backers to give him the go ahead.
The city’s design guidelines for mid-rise projects have traditionally required on-site parking, shared amenity spaces such as gyms or party rooms, and a so-called “Type G” loading service entrance capacious enough to allow a standard-sized municipal garbage truck to enter, empty bins, turn around and leave.
On Toronto Standard’s first site, near Kipling Avenue, that loading bay would have taken up half the ground floor, says Mr. Spoke. “It’s a total deal killer at that scale.”
However, last year, the city altered its policies, enabling buildings with 30 to 60 units to have curbside pickup. More recently, council eased requirements for amenity spaces and removed parking minimums, with the result that Toronto Standard’s project won’t include an underground garage, one of the most costly and carbon-intensive features of any multi-unit residential building.
The Major Streets bylaw, which allows buildings with up to six storeys and 60 units on arterial streets that pass through designated neighbourhoods, provided the last piece of the zoning puzzle when it was approved by council last month. While Mr. Spoke anticipates his project will require a few minor variances from the Committee of Adjustment, he’s optimistic about the prospects for getting a thumb’s up.
“We’re generally encouraged by the fact that this policy change happened,” he says. “This is the first policy change that really matters in terms of its potential to deliver a significant amount of housing.”
The home of Alejandro Lopez and Zahra Awang, an 1890 row house in a walkable older neighbourhood near both downtown Hamilton and a new GO station.Alejandro Lopez
Duplexification
Alejandro Lopez and Zahra Awang, an architect and landscape designer respectively, share what has become an increasingly typical housing narrative. They met at U of T, got married and moved to Hamilton in 2014 after being priced out of Toronto’s rental market.
They bought an 1890 row house in a walkable older neighbourhood near both downtown Hamilton and a new GO station that enabled them to keep their jobs in Toronto. When they closed, there were tenants on the second floor, which helped make the ownership math work. It was, says Mr. Lopez, “an illegal duplex.”
The additional space came in doubly handy a few years later when they had their first child. Both Mr. Lopez’s mother and Ms. Awang’s grandmother came to live with them at various points, to help out. “We immediately became a multi-generational household.”
Soon after, the couple became citizen developers. In 2020, they transformed an unfinished basement into a separate flat. At the time, Hamilton officials required them to get 13 minor variances. Mr. Lopez recalls walking around their neighbourhood, counting all the houses with two or three hydro meters and multiple mailboxes. “We told [the Committee of Adjustment] that this was actually in line with what’s going on in the neighbourhood.”
Then, last year, they decided to take the next step and convert the above-ground floors into two separate units – one on the main floor and the other on the second floor and the attic. Mr. Lopez, Ms. Awang and their two children plan to live in that larger space.
Lopez and Awang had earlier created a basement apartment, and now plan to convert the above-ground floors into two separate units: one on the main floor, and the other on the second floor and the attic.Alejandro Lopez
What allowed this next phase is a 2022 provincial Planning Act change that allows three residential units on any residential lot.Alejandro Lopez
Both were well accustomed to living in shared spaces from a young age. Ms. Awang grew up in one of U of T’s graduate student residences, a high-rise on Charles Street West. “There was a lot of community,” she recalls.
What has allowed this next phase is a 2022 provincial Planning Act change that allows three residential units on any residential lot. While Hamilton’s bylaw only permitted a single secondary suite, Mr. Lopez argued at the Committee of Adjustment that the new provincial rules took precedence over Hamilton’s now outdated bylaw.
“I [told] them it would be inappropriate for them not to grant this because their legal role is to uphold the Planning Act,” Mr. Lopez says. Their professional training enabled them to understand the rule change, Ms. Awang says, “We are an architect and a landscape designer. For the average layman, it’s incredibly onerous because they don’t have the experience.”
Had the committee turned them down, they say the additional cost of securing a rezoning in order to split the house into those two above-ground apartments could have run to tens of thousands in fees.
The renovations, set to begin later this fall, will involve adding a second front entrance and a new upstairs kitchen. They’re also adding energy efficiency features, such as heat pumps and insulation in the attic.
“We did this for ourselves, to benefit our family,” adds Ms. Awang, “but we also did it because we’re interested in creating more affordable housing. We’re in a housing crisis right now in the country and probably all over the world. This kind of incremental development is something that is doable right now. It’s manageable and it’s also really livable.”
The new new normal on third-party appeals
In a last-minute change to an omnibus bill that included amendments to the Planning Act, the Ford government earlier this month backed off its earlier tough stance severely limiting so-called “third-party” appeals to planning decisions. For decades, well-heeled residents’ groups could slow down development approvals they didn’t like by dragging both builders and home renovators through costly hearings at the Ontario Municipal Board (later Ontario Land Tribunal).
As part of the government’s bid to streamline housing approvals, it moved to severely limit such appeals. But a last-minute amendment to Bill 185 will allow lands owners to challenge bylaws and official plan changes that affect their own properties – a move that could potentially derail or at least significantly delay the implementation of Toronto council’s recent efforts to permit small-scale apartments on major streets around the city.