London is running short on land in the highly coveted north and west areas of the city, leading builders to go to neighboring Middlesex Center instead – robbing the city of big-bucks revenue, developers say.
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Land available for home construction in those areas of the city has shrunk to a three- to five-year supply and builders are buying in nearby Arva, Komoka, Ilderton and Mt. Brydges to build new homes. And the city coffers end up short-changed.
“The city is falling behind, losing development to surrounding municipalities,” said Sue Wastell, president of Wastell Homes and chair of the London Home Builders’ Association. “These people work in London, use our city services” but the city doesn’t get revenue from building permits or property taxes.
“It’s lost growth for London.”
The London Development Institute is lobbying city hall to move quickly on a lands needs study the city has to carry out before it can increase the amount of land for development in the north and west. City hall plans on launching the study later this year and it may take until 2024 to complete. That’s too long a timeline for builders, said Mike Wallace, the development consortium’s chief executive.
“If we started today, we would be out of land in five years. It’s a concern,” Wallace said. “That’s where the demand is, where services are and that’s where we need to look. We need to get started on this. The city needs to look at where growth occurs.”
Middlesex Center saw the total of building permits issued in 2021 over 2020 rocket by 31 per cent, to 836 from 636. The value of those permits also jumped, to $257 million from $143 million a year earlier, a 79 per cent increase, indicating high -end homes are being built.
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“We have seen quite an increase over the last few years. We have seen developers from London move here and it has been beneficial to us,” said Michael Di Lullo, Middlesex Centre’s top municipal staffer. “We’ve seen growth. The demand’s there.”
While London city hall has only a three- to five-year supply of land in the north and west, it has a supply of more than 20 years to build homes citywide, with much of that availability in the south end.
To add land to the north and west, the urban growth boundary — the area in the city where building is allowed — would have to be adjusted. That means provincial approval, and that takes time and study.
The urban growth boundary is made up of 4,000 acres (1,600 hectares), but the city can take land from another area, such as the southeast, and add it to the supply in the north or west to expand that area without increasing the boundary, said Kevin Edwards, manager of development finance for city hall.
“We can redraw it, we can expand it” with Ontario government approval, he said. “It will ultimately be a political decision.”
A municipality has to have a minimum 15-year and a maximum 25-year supply of land for building. London now has more than a 20-year supply for all types of housing, Edwards said.
“In specific areas, the north and northwest, Riverbend and Hyde Park, there is a three-to five-year supply,” he said. “We have a lot in the southwest, southeast and northeast.”
City hall is aware there’s shrinking land supply in the north and west and that’s prompting development outside the city. It’s looking to tackle the issue, Edwards said. “There’s a concern. It has been flagged. We’re doing a land need review.”
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The review will start by year’s end and be completed in 2023 or early 2024, he said.
City hall does not build to its municipal boundary, only to its urban growth boundary. And within the latter there is an intensification boundary where city hall prefers building to take place to prevent urban sprawl.
“The city knows this has been coming. We know studies have to be done and presented to the province. We’re OK with that, they just have to get started,” Wallace said.
London home builders agree, saying the dwindling land in the north is “critical,” said Jared Zaifman, chief executive of the LHBA. “We’re hearing about it, that there could be a shortage. We have to make sure there’s enough supply. It’s critical.”
Other developers believe city hall is taking “a reasonable approach” in wanting a detailed study of the issue, but they want it to happen faster, said Jim Bujouves, president of Farhi Developments.
“The city has to finish its analysis, but we share the concern. Developers need to make sure there’s available supply.”