Ontario Should Lease Public Land, Not Sell It

Late December 2021, Metrolinx, Ontario’s regional transit agency, sold 1.48 acres of public land in Mississauga to a private condo developer with no conditions to build new affordable housing. The site, which is currently being used as a parking lot, is located next to the Port Credit GO station and the Hurontario light rail transit station, a prime real estate located in one of Ontario’s most sought after housing markets. The decision to sell off this land was profitable for the province, as the sale generated $64.5 million dollars.

The deal will result in much more productive use of the land and will give the province some much-needed revenue, but the practice of selling off valuable public lands to public developers is short-sighted. Instead, the provincial government would be best off inviting both private and non-profit housing developers to bid on long-term lease agreements designed to promote the development of affordable apartment buildings on those sites.

If the government were to lease the land instead of selling it, the land would generate a long-term source of financial returns that can be used in any number of ways. Lease agreements would also lock in consistent revenue for the province without sacrificing the upside that accrues as land becomes more valuable over time. Unlike developers and investors who are strongly incentivized to focus on the short term returns, the provincial government has an obligation to plan for the well-being of their residents for decades and they shouldn’t trade away long-term value for a short-term windfall.

Under a lease agreement where the province retains ownership of public land, the province can also retain more bargaining power when negotiating with developers over form and tenure. Moreover, the leases can include special requirements that reduce ongoing revenues but secure public benefits. For example, the province can put requirements into the lease agreements that force developers to include a certain number of affordable units in new development projects. This would be a big step forward in ensuring the construction of new affordable housing, especially in municipalities that do not have already established a policy of inclusionary zoning.

The provincial government has had success with lease agreements in the past. Back in 2017, under Kathleen Wynne, the Ontario Government reached an agreement with developers to lease a parcel of publicly owned land in the West Don Lands through its Affordable Housing Program. In the lease, the developers agreed that the site would be turned into mixed-income rental homes for nearly 1,450 individuals and families, including retail space and a community hub.

The parcel of land in Mississauga is an example of hundreds of surplus parcels of land that are owned by the province but are left either vacant or underutilized. Metrolinx, like all provincial crown agencies, is bound by the Ontario Realty Directive which states that when publicly owned property is no longer useful to the public body that owns it, the land must be offered first to ministries, provincial agencies, and other recognized entities outside of government like non-profit housing groups before being sold off on the open market.

But in late 2018, Doug Ford and the Conservative Party made changes to streamline the process of selling surplus property including reducing the amount of time each party has to consider whether they want to buy the surplus property down from 180 days to 30 days.

The Ford government said they made these changes to generate revenue for the government and that properties will also be evaluated prior to sale to determine if they could be used for affordable housing.

However, the highly valuable and recently sold property in Mississauga shows that the Ford government has failed to follow through on that promise. The land is in a community with many job opportunities and is very close to a transit hub: a prime location for affordable housing development.

The Ford government’s approach of selling public land is squandering an opportunity to leverage developers into building affordable housing. Surplus publicly owned land presents a much bigger opportunity than just a short-term windfall of revenue for the provincial government; the Ford government should change their approach and look to lease the land with conditions to build affordable housing instead of just selling it to the highest bidder.