The topic of the day, not only in Ontario but across Canada, is affordable housing. It is being discussed by almost all levels of government, including the municipality level where the issue creates first-hand problems for many communities.
In the recent Ontario Construction Newsletter submitted, it was reported that a company, Z Modular, a division of Zekelman Industries, has announced the closure of its factory in Kitchener, citing significant challenges in the Canadian housing market and government overregulation as the primary reason.
The company is a leader in manufacturing modular units off-site that can then be installed fairly quickly to created much-need housing.
“Despite the hard work of our teammates to drive costs down, the Z Modular business in Canada is unsustainable due to high cost of developable land, government overregulation and lack of project financing support,” explains Barry Zekelman, executive chairman and CEO of Zekelman Industries.
The company cited multiple contributing factors leading to the closure, including:
- inefficiency in the permitting and entitlement process that reduces the inventory of land available for housing development and renders land costs too expensive for the development of affordable housing.
- developers must either choose to pay too much for developable land or wait too long to go through permitting and entitlement.
- financing for modular construction in Canada is an inefficient and costly process.
- Under the Rental Construction Financing Initiative, all financing is subject to acceptance by the Canada Mortgage and Housing Corporation (CMHC).
The company has completed projects in Lucan and Woodstock, Ontario, and has built a student residence at St. Clair College in Windsor.
Z Modular will continue operations in the United States, with facilities in Arizona, Texas, and Alabama.
“Inadequate land availability, coupled with protracted approval processes and inflationary government spending, has created an unsustainable environment for affordable housing development,” according to the company. “These business conditions have forced the difficult decision to close our Kitchener facility, resulting in regrettable job losses for our team.”
According to statistics, there are currently 1,000 people waiting for Bruce County affordable housing – 500 of them are in Saugeen Shores. Building rental units is half of the housing equation however, the other half is working to build subsidized units, or subsidize after the fact and having government and financial institutions work in collaboration to solve the problem.
According to a local developer in Bruce County, one of the most difficult problems is the CMHC (government) that continually creates permit obstacles, along with Canada’s major banks that create/refuse mortgages for alternative housing.
It would appear that ‘affordable housing’ whether rental or ownership may be a ‘pie-in-the-sky’ dream for many people.
