The Trap of Unbalanced Growth

By: Jeff McLaren

ABSTRACT:
If we grow unevenly we will aggravate our housing crisis

The worsening affordable housing crisis in Kingston is mainly due to an unbalanced growth rate. The Canadian censuses claimed that Kingston’s population grew by net 8817 people between 2006 and 2016. However the censuses were conducted in the summer when most students are away. Councillors have recently been informed that the growth rate of the student population not covered by the census is just over 7 times the growth rate of the general permanent population. This unbalanced growth has profound implications for our community.

 

Unbalanced growth tends to skew our local economy. Businesses catering to the specialized student market — notably restaurants and bars —crowd out the kinds of goods and services long-term downtown residents need, such as grocery shops and department stores. An unbalanced economy is a precarious economy. When students leave for the summer, some business in areas of high student population close for the summer. See the Whig Standard story ‘Not worth us opening’ Aug 5, 2016 which exemplifies on a small scale the crowding out effect and the market loss that threatens all of Kingston if Kingston continues to experiences unbalanced growth.

 

This unbalanced growth also makes our economy more vulnerable to foreign-exchange shocks. The province limits the number of Canadian students who can be admitted to our colleges and universities, because their tuition fees are subsidized by taxpayers but there is no limit to the number of visa students who pay full cost for their studies. It’s not unrealistic to imagine China recalling its students in retaliation for some real or imagined slight, as Saudi Arabia has already done.

 

There is an unlimited supply of foreign students wanting to study here, and a huge business incentive for some postsecondary institutions to maximize their income by raising enrolment. The only limiting factor is the availability of housing for these students in the community. Transferring the burden of providing that housing to the broader community may be great business planning but it is not serving our community well. This is not just a simple supply-and-demand problem, because any added market supply will simply be taken up by increased enrolment. In other words, simply adding market housing supply will not improve the vacancy rate or the affordability of housing.

 

There are obvious benefits to some — namely the post-secondary institutions, the property developers, the landlords, and various student service providers — but our distorted housing situation is causing great suffering to all those who cannot find affordable accommodation. It is jeopardizing Kingston’s ability to attract the skilled labour class. These are the kinds of people who contribute most to the services and economic development of the city.

 

Consider the young professionals and entrepreneurs who are starting their working lives at the bottom of their pay grade and with debt from their student loans. Housing costs at this point in their lives will be a huge factor in determining where they can choose to live. The more difficult it is for skilled and creative people to arrive here, live here, and thrive here, the more Kingston loses the dynamic potential these people bring. Every young professional or entrepreneur that cannot afford to come here or leaves Kingston because they cannot find affordable housing is an impoverishment of the community as a result of forgone economic development. 

 

In our current conditions, the free market will justifiably chase the largest payout, and right now that is student housing. However, from the perspective of balanced economic growth in Kingston, current conditions represent a free market failure.

 

Ghettoization is a concern for everyone who loves their stable neighbourhood. As unbalanced demand for more student rentals rises, houses in many areas become attractive to rent out. When the trend drives out others types of residents, a mono-culture starts to develop. The effects of this can be seen in the University District, with raucous parties and an increased (and an expensive) police presence. Ghettoization is a cost to everyone in the city – not just the affected districts.

 

Local government must take action to protect the wider economy and the livable character of Kingston’s diverse neighbourhoods. The City should develop an inclusionary zoning bylaw mandating a degree of diversity, to prevent mono-culture and creeping ghettoization. 

 

The City should also facilitate the creation of new co-operative housing that uses surpluses from market rents to support affordable housing on a permanent and sustainable basis. The City could help by providing, on a cost recovery basis, ongoing bureaucratic and logistical support from its existing capacity in a way that lowers the cost of doing business, for social enterprises and thus makes them more sustainable and financially viable. 

 

The City should also reinstate the land bank so we can plan further out in time to deal with the affordable housing crisis and keep a supply of land to provide a stock of affordable housing to future generations of the people who are the main drivers of economic development: the skilled labour class.

 

 

Added on: 2019-01-15 09:21:30