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Adopted on the first of April 2021 by the Montreal City Council, the BDM (By-law for a Diverse Metropolis) was presented as a mechanism to allow the city to force private developers to build socialized and/or rent protected housing units. If they refused to do so, they could also contribute to a fund earmarked for social housing. But three years on, the results are largely disappointing.
After 164 agreements signed with private housing developers, only one 86-unit project has been finalized, the developers having chosen to pay minimal sums into the BDM fund. Its value is now estimated at just under $40 million. These sanctions remain minimal and advantageous for the large private real estate groups, who have paid an average of $4,500 per unit since 2021.
For example, it is estimated that the city received only $2.3 million for ‘Le Sherbrooke’, a 515-unit residential building sponsored by Broccolini, which cost over $500 million to build. The average price of an apartment there is close to $1.5 million, suggesting that a profit of over $200 to 250 million on the sale of units is not out of the question.
According to the Société d'habitation du Québec (SHQ), a social housing apartment costs over $450,000 to build. ‘Le Sherbrooke’ would therefore have enabled the construction of only five social housing units, a far cry from the minimum of 20%, in this case around 100 units, that was required of the developer.
By paying the penalty, property tycoon Broccolini may have been able to add between $50 million and $100 million to its revenues.
A not very diverse metropolis
At its adoption, the BDM, commonly referred to as the “20-20-20” law, sees 3 distinct categories of units:
- Social housing units run by non-profits, cooperatives, or state actors independent of the private market;
- affordable housing possibly run by private actors but with a 20 year affordability contract keeping the unit at a certain rental rate;
- and family units with 5 or more rooms with a minimum square footage of around 86 m² or 96 m².
The idea was to quickly add low-cost flat units to Montreal's exploding property market by diverting the force of gentrification. The city intended to squeeze developers out of what it believed were decent compromises, or at least force them to pay a sum to the city to do the work for them.
By and large, developers have chosen to forego this pressure, give a one time payout to the fund and recoup their loses once their lucrative and luxurious housing projects begin to attract renters or buyers in Montreal’s ever inaccessible housing market.
The Promise vs. the Reality
The funds raised by the BDM are earmarked for the purchase of land for the construction of social housing, or for the purchase of private units to convert them into social apartments. However, this measure, like so many others, suffers from the city's slow bureaucracy, and ends up adding only a few rent-stabilized apartments here and there. All this, while entire neighborhoods undergo economic purges of their working-class residents and community members.
The result? Small islands of cooperative and non-profit housing in a sea of bloated, luxurious private units, built on the ashes of former working-class neighborhoods like Saint-Henri and Hochelaga. This is a drop in the ocean for tenants' associations, who are calling for the construction of 50,000 social housing units if the province is to begin tackling the housing crisis.
Following this failure, the city decided last March to increase the penalties, but only after a two-year 'relief' for developers. During this period, the city will reduce the reimbursement price of affordable housing in private development projects by 5%, which could save major housing corporations between $3,000 and $4,000 per unit.
Ultimately, the city's ability to tackle the housing crisis without the help of federal players remains weak and limited. The City of Montreal has used the BDM fund to take boarding houses, some small housing complexes and a few housing units dedicated to elderly tenants off the private market. It has also been used to purchase land and donate it to private non-profit organizations and fledgling cooperatives.
The root of the problem, however, is the city's dependence and subordination to private players. Montréal's current major development projects, such as Bridge-Bonnaventure in the southwest or the Hippodrome, are cruelly dependent on this strategy of pandering to highly financialized, profit-driven property developers, who hold social housing investments hostage if they don't get their way.