Developers say P.E.I. lacks land to build apartments as housing shortage wears on

The building of new apartment complexes on P.E.I. peaked years ago, a factor that has combined with rapid population growth to create a desperate need for more housing.

It is difficult to pinpoint the start of what is generally acknowledged to be a"housing crisis," but those words first started being used in 2018, a year that saw the apartment vacancy rate fall to a record-low 0.3 per cent.

The root of the trouble appears to be rapid population growth paired with an inability of property developers to build new homes fast enough.

In that first year, there is evidence that developers responded quickly to the need for apartments in particular. But while the housing crisis remains, activity has slowed in recent years.

Some have blamed a labour shortage, others difficulty with financing, but Ajay Punnapadam, owner of Confederation Construction, said his primary problem is something else.

"We don't have land," said Punnapadam.

"There are no multi-unit lots available. Getting land that is zoned for multi-units is almost next to impossible. The max that you might get is a triple or fourplex kind of thing, but anything beyond that is very, very difficult."

Housing completions on P.E.I. ramped up after people started talking about a crisis in 2018, but they peaked in 2020. There were 15 per cent fewer completions in 2022, and the difference was particularly marked in apartments, with the number of completions almost halved.

Early signs indicate that 2023 could be even worse, according to reports released this month by Statistics Canada.

The last quarter of 2022 saw big drops in new residential building investment and residential building permit approvals.

Investment fell to $93.3 million, the first time fourth-quarter investment on P.E.I. has been below $100 million since 2018.

Looking back over those five years of building permit data, we find a peak in 2018 when permits were issued for 491 new dwelling units, including 320 apartments. By contrast, in 2022, permits for just 284 dwellings were issued, including only 122 for apartments.

Housing Minister Matthew MacKay said last month that he expects low-interest financing introduced in the fall will encourage a lot more building on the Island this spring.

Punnapadam doesn't see thatpolitical move making much of a difference, though.

If there's no land, what's the use of getting the finance? Developer Ajay Punnapadam

"If there's no land, what's the use of getting the finance?" he said.

"If you don't have land that's zoned for this kind of development, what is the finance going to do? It's not going to help you in any way."

Rezoning troubles

One of Punnapadam's first projects when he founded Confederation Construction in 2019 was a 12-unit apartment building in Belfast, near the Dr. John M. Gillis Memorial Lodge.

The rezoning process took more than nine months, and that kind of difficult and lengthy rezoning process is not uncommon, said Peter Brown of Bayside Group.

"I just refuse to buy a piece of property that needs rezoning because of the NIMBY stuff that happens," said Brown.

"While cities will say, 'Yes, we want growth,' and 'Yes, we want people,' and yes, councillors will say that, the bottom line is when the voters show up en masse to go against something, the politicians usually side with the voters."

Trying something new

The Town of Stratford, the Island's third largest community, is in the midst of a project it hopes will make these hearings go more smoothly.

Stratford is one of six communities across Canada partnering with Canada Mortgage and Housing Corporation on initiatives to attempt to get housing in Canada built more quickly.

Stratford is working on a new approval process that would change the way residents are consulted on rezoning. In the current process, residents are typically presented with a plan that looks like a done deal, as if the developer might break ground on the project the next day.

A new approach would see residents brought into the process much earlier.

"The way the whole process starts is local residents and the developer sit down around a table at a workshop and they have a blank map of the area to be developed, a top map with all the forested areas and contours and everything on it," said Mayor Steve Ogden.

"They ask the local residents to identify areas that they see should be kept and areas that they see as good for development, and get any concerns or fears out in the open so that they can be discussed."

As a project with a federal partnership, the plan is to create a model of a new process that could be used in communities across Canada.

Location, location, location

But Brown sees a further problem. The land that is available for apartment development is in the wrong place.

Ideally, he said, apartments should be close to stores, workplaces and other services.

"If I'm going to build seniors' units, I really want to put them somewhere in proximity to the churches and the banks and the coffee shops," said Brown.

It's just good planning, said Brown. A centrally located apartment building means residents will use their cars less frequently, or perhaps give up owning a car at all. That, in turn, means less traffic, less wear and tear on streets, and less need for more and wider roads. In addition, in a province where transportation is a major source of greenhouse gas emissions, it means less pollution.

But that's not what's happening.

"Over the last 10 years, many of the guys just don't bother going into places where you can get public pushback. They will go out to the 20 acres outside of town and build where it's easy," said Brown.

"It's probably not the best place to be building but it's the easiest."

Cities respond

The City of Summerside believes it has done its part to make land available for high-density residential development.

"Currently there is quite a bit of property that is not only zoned, it is serviced with streets," said Aaron MacDonald, director of technical services for the city.

That includes land along most parts of the waterfront, from east to west, as well as in the downtown core and in the north of the city.

MacDonald expects the currently available land will serve the city's needs for some time. There is a fair bit of interest from developers, he said, and he is expecting a busy year.

In a statement sent to CBC News, Coun. Alanna Jankov, chair of Charlottetown's planning and heritage committee, said that city also believes it has set aside adequate properties for development.

The market decides when conditions are favourable for construction and when to pull back. Charlottetown councillor Alanna Jankov

"The market decides when conditions are favourable for construction and when to pull back," said Jankov.

"We have no data suggesting space is a constraint for planning applications."

Charlottetown is in the early stages of creating a new official plan that will guide the city's future direction for growth, she said.

Radical growth

The province has grown rapidly since a five-year population growth strategy was launched in 2017.

At the time, the population was 150,000. Now, it's more than 172,000. Growth has been double what was planned.

The five-year plan, designed to address the very real problem of an aging population and labour shortages, expired last year, but the P.E.I. government is in the process of developing a new strategy for the coming years.

Making sure there is a place for everyone to live will be a bigger part of planning this time around, the government says, and that will likely mean change for the people who live on the Island now.

Creating high-density housing close to services and workplaces will likely mean replacing some of the low-density housing that exists in those areas. But rezoning some of these areas does not mean evicting homeowners, said Punnapadam.

"The property value is definitely going to go up," he said."It's not a lose situation for anybody. It's definitely a win-win for everybody in the whole gamut of events."

It may seem radical, but so is the growth P.E.I. is currently experiencing, and the status quo is not really an option.

"Nobody wants their lives disrupted. They just want to continue what they were doing yesterday and 10 years ago. However, that is not planning. That is just hindsight," said Brown.

"You can't build communities, build a future, based on that."