A multimillion-dollar land sale city hall is banking on to help fund Toronto’s largest new co-op development in decades has been delayed in getting across the finish line.
Toronto is now crafting backup plans to ensure the marquee housing project in Scarborough doesn’t get derailed.
The plot of land city hall hopes to sell is near Kennedy GO station, where just last month, officials gathered to mark the groundbreaking of 612 new affordable and market-priced co-op homes.
To help fund the co-op, the city had planned to sell off a portion of its land to a private entity with plans to construct condo units.
But a motion at city council last week by Scarborough Centre Coun. Michael Thompson revealed the sale has not progressed as quickly as hoped, stating that “due to current market conditions,” the intended buyer — CW Kennedy LP — was “not in a position to complete the purchase … in a timely manner.”
While city staff were still trying to reach a deal to make the original plan work, Thompson’s motion said, he called on staff to work on backup plans — including changing the business terms to remove CW Kennedy LP “if negotiations are unsuccessful” and issuing a “provisional funding letter” if required, with the intent of recovering the funds through a future sale.
The goal, Thompson’s motion said, was to make sure construction of the co-op project can advance “uninterrupted.” The motion passed without debate.
CW Kennedy LP is a partnership between private builder Civic Developments and Windmill Development Group, says Civic Developments’ president Matthew Cohen.
In an interview, he remained optimistic about the sale.
“We fully intend to get that across the finish line in the next couple of weeks,” Cohen said, but he understands Thompson’s motion was to give the co-op certainty.
Their plans have been reshaped by the shifting market, Cohen confirmed.
While the private housing was originally planned as condos, it was now “most likely” converting to rental with a degree of affordable units. His hope is their occupancy is six-to-12 months behind the co-op, describing the project as the “opportunity of a lifetime.”
A bigger problem
The problems that have arisen with the Scarborough project are emblematic of a shakeup in affordable housing projects citywide.
Where Toronto has, for years, relied on the private market to get affordable homes built — using profits to subsidize construction — the fall in real estate prices and sales has made that more challenging.
As reported by the Star, Toronto Community Housing Corp. recently decided to forge ahead on a single block of its Lawrence Heights revitalization without a private builder.
“The current market conditions,” chief development officer Yves Cheung wrote in a report, “do not support the traditional revitalization model previously envisioned.”
TCHC has also shifted to a similar block-by-block approach in its Firgrove-Grassways community, after receiving only five expressions of interest in partnership, all with funding shortfalls and none meeting the criteria.
Earlier this year, city hall additionally proposed to whittle down the affordable units in a redevelopment of the former Bay Street bus terminal and offer tens of millions of dollars to the builder of that project as well as another on Merton Street, as the market has shifted and their projected rent revenues dropped.
Tom Clement, executive director of the Co-operative Housing Federation of Toronto — one of several groups involved in the Kennedy development — said as of four years ago, their team expected the land the city planned to sell to be worth around $14 million. That money would go toward the more than $300-million co-op project price-tag, Clement said.
Concern about the land sale being delayed came up over the last few months, he recalled. Clement sees Thompson’s motion to council as getting ahead of a problem that would have reared its head within the next few years.
“Things are moving as fast as they can,” Clement said, “and we don’t have time for any more roadblocks, so the city is finding a way to sort things out.”
Other projects search for solutions
At the same council meeting last week, a separate motion from Toronto-Danforth Coun. Paula Fletcher suggested the city go its own way in developing affordable housing on Broadview Avenue just north of Danforth Avenue, instead of partnering with an adjacent private landowner on a larger build out, as the city has long hoped.
A 2019 staff report outlined plans for an eight-storey condo on the city land and privately owned lot next door with 16 units set aside as affordable housing, but Fletcher told the Star the city has been unable to reach a final agreement with the landowner.
Her motion asked city staff to come back in March with a plan to build solo.
“I’m not shutting the door to any other discussions here,” Fletcher said, “but basically saying, ‘OK, we fooled around for 10 years. Time to fish or cut bait’.”
When reached for comment, the landowner next door confirmed the former plan was derailed and blamed market conditions in the “post-COVID economic environment.”
But the statement, sent by Zack Ross from Cape Group as “co-development partner” with the Broadview Group, suggested a different path ahead, saying it had entered into a sale agreement with a housing non-profit.
“While the transaction remains pending,” Ross wrote, “this organization intends to deliver a fully affordable, non-profit co-operative housing project of approximately 130 units across the combined sites, along with underground parking.” The statement did not identify a specific non-profit group.
The deal is subject to closing but could happen “as early as February 2026,” Ross said.
A problem expected to persist
Mark Richardson, an affordable housing advocate with volunteer group HousingNowTO, expects to see more shakeups to affordable housing plans in 2026 as the private market is expected to remain on wobbly ground.
“The magic trick to all these things is the market rental and market condo helps to subsidize the affordable,” Richardson said in an interview. “If that value changes, you have less money available on the market side of the deal to subsidize the affordable side … We’re going to have to go back, rework our numbers, and many of these things are going to have to be more flexible.”
He wants to see Toronto move as quickly as possible.
“The numbers of people needing affordable housing are growing every year.”
