Gentrification

The brutal economic logic of Ottawa’s Heron Gate evictions

Private profits and city coffers benefit from social cleansing of south Ottawa neighbourhood
Townhouse slated for demolition on Sandalwood Dr. overlooking new Timbercreek apartment construction. Photo by Sam Heaton.

A mass eviction is being carried out in an Ottawa neighbourhood just south of downtown, with no objections from the municipal, provincial and federal governments.

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One hundred and five households in Heron Gate were told they must vacate their residences before Sept. 30 so the company in possession of most of the neighbourhood, Timbercreek Asset Management, can demolish the townhomes and replace them with luxury apartments.

Timbercreek manages more than $7.5-billion worth of assets globally.

The Herongate Tenant Coalition, formed by many of those affected, is fighting the evictions. Multinational law firm Gowling WLG served the coalition with a cease and desist notice on July 9, objecting to the group’s characterization of the evictions — which overwhelmingly affect working-class people of colour — as racist.

In contrast to his approach to Heron Gate, on Aug. 8 Mayor Watson announced decisive action to prevent the cutting of two trees in Ottawa East.

When the evictions were announced, Ottawa Mayor Jim Watson quickly threw up his hands and opined that since the laws governing landlords’ rights and responsibilities are provincial, not municipal, there was nothing he could do.

“At the end of the day, the owners have the right to ask the people to leave with so many months’ notice,” he said, as reported by the CBC.

This much is true. However, landlords also have a responsibility, according to the Residential Tenancies Act, for “providing and maintaining a residential complex, including the rental units in it, in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards.”

Which aspect of the law takes priority depends on the power of the parties involved. In this case, a multi-billion-dollar company is up against community members organized to uphold their rights as defined in the Act. So far, city officials and those dependent on city and developer money have taken the side of the company.

After all, the relationship between City Hall and Timbercreek is a matter of millions of dollars, calling into question Mayor Watson’s disinterested approach. In that regard, the coalition believes Timbercreek and the City of Ottawa have long planned to rid the area of its long-term residents and their homes, to be replaced by more profitable, higher-end rental apartments.

City funneling cash to rich developer

Close links between city governments and property developers are a cliché in Canada’s municipal politics, and in the case of the Heron Gate evictions they are not difficult to find.

In Ottawa, municipal politicians who have benefitted from Timbercreek donations are playing a direct role in facilitating the evictions. Timbercreek was among the largest donors to Ward 18 Councillor Jean Cloutier’s election campaign in 2014, giving the maximum $750. The company also donated $500 to Mayor Watson’s campaign for re-election that year.

One might wonder why this is a problem, except that should Timbercreek renovate the existing units, they would be stuck with the same tenants at the same monthly rate — less bang for their buck.

Cloutier, whose ward includes Heron Gate, co-hosted an event billed as a “community visioning workshop” with Timbercreek on April 7, to discuss the company’s “redevelopment” plans. Referring to the company’s long-term plans for the neighbourhood, Cloutier told Ottawa South News in 2015, “I’m a little bit relieved that it's finally happening and that Timbercreek is investing in our community.”

Meanwhile, Timbercreek has received more than $1.3-million in subsidies from the municipal government since 2012, perversely under the rubric of “Housing and Homelessness Investment Plan (HHIP) - Rent Supplements / Housing Allowances.” Two other companies whose assets were acquired by Timbercreek in recent years — Transglobe and PD Kanco LP — received nearly $400,000 in handouts, subsidizing Timbercreek’s assets to a total of nearly $2-million in seven years.

Another incentive for Timbercreek is Ottawa’s “new multi-residential” property tax class, fixed at 1.06841 per cent, which is lower than the 1.451196 per cent for the existing multi-residential bracket, according to the city’s online property tax estimator.

The tax reduction for new dwellings was adopted by Ottawa City Council in July 2000 after housing developer Claridge Homes asked to be exempt from fees related to construction of a new rental apartment building. In 2003, the mayor at the time, Bob Chiarelli, wondered if this lower tax bracket meant that tenants paying market rents were subsidizing landlords.

Human beings judged as revenue-generating units

There is more to city council’s reluctance to criticize Timbercreek or support residents facing the threat of eviction than campaign donations.

A map of Heron Gate showing current and former evictions by Timbercreek.
Herongate Tenant Coalition

Timbercreek’s previous, smaller wave of evictions gives an idea of how both the developer and the city government stand to gain from the displacement. A block of 80 townhomes demolished in 2016 is being replaced by 348 one-, two-, and three-bedroom apartment rental units offering “resort-style living.” City council granted exemptions to height and parking bylaws for the new units.

At the time of the demolition, company senior vice-president of development Greg Rogers told a real estate news site, “This is a completely different product than what used to exist on this site. If this goes well, we’ll look at other options [for improvement]. At this point, all focus is on these particular buildings.”

While Timbercreek stands to gain from a large increase in the number of tenants and higher rents, the increase in market values on these and surrounding properties will translate into increased property tax revenues for the city.

Valuation for municipal taxation is the responsibility of the province’s Municipal Property Assessment Corporation. Multi-residential properties are evaluated according to the “income approach,” which means “according to their revenue-earning potential.” In the final calculation, property values are defined as the property’s net operating income divided by the capitalization rate (annual rate of return on initial investment).

More than anything, the Timbercreek–City of Ottawa mass eviction project calls into question the efficacy of private, for-profit provision of rental housing.

The destruction of 150 townhomes — 105 occupied, plus 45 that have been kept vacant — in Heron Gate and their replacement by a much larger number of rental units with increased rents will result in a boost in city revenues. And while Timbercreek’s existing row townhouses are evaluated as “multi-residential” properties, the new units will fall under the category of “new multi-residential,” a lower property tax class.

The “Heron Gate Portfolio” purchased by Timbercreek in 2012 and comprised of two high-rise apartment buildings and hundreds of townhouses, including those now facing demolition, shows the sums of money involved.

The property was valued at the time at more than $143-million, which, for tax purposes, would generate approximately $2-million annually for the city under the existing “multi-residential” tax class. The same valuation under the lower, “new multi-residential” bracket would mean an annual savings of approximately $500,000 for the company. In the same scenario, the higher market valuation of the buildings with more numerous rental units slated to replace the existing townhouses will mean more tax revenue overall for the city.

While the money at stake may seem insignificant in the face of Timbercreek’s billions in assets and Ottawa’s $3.4-billion annual budget (and Timbercreek appears to receive much of their property taxes back in the form of subsidies), the intertwining of municipal and corporate money reveals where the local government’s class loyalties lie.

In the brutal economic logic underpinning the Heron Gate mass evictions, human beings, like the housing properties themselves, are evaluated by property owners and their governments as revenue-generating units. The current residents are simply deemed too poor to live so close to downtown (a 10- to 15-minute drive), due to the lower revenue their homes provide in rents and property taxes compared to the prospective development of more numerous dwellings for those who can pay.

It so happens that these residents form one of the most diverse communities in Ottawa. More than 89 per cent are people of colour, according to a coalition census, which also found that nearly half the individuals affected are children.

The Herongate Tenant Coalition conducted a census of residents facing eviction by Timbercreek.

‘End of their building lifecycle’

Timbercreek claims the buildings set for demolition are “no longer viable” and “reaching the end of their building lifecycle.” The coalition argues that this language says little about the physical state of the homes in question and is instead “economic terms.” The company wants to “make more money from the land, plain and simple,” says the coalition.

At the same time, residents point to a pattern over the past decade of systematic neglect of upkeep on the rental properties and other landlord responsibilities under the Residential Tenancies Act. On Aug. 2, while most residents were at work, coalition members and supporters delivered more than 30 work orders for repairs to the townhouses. A previous batch of work orders was delivered in July by the coalition and community allies such as ACORN. Some requests for maintenance have been ignored for over a year, the coalition informed media.

Timbercreek told the Globe and Mail in May that because of the townhouse design, they could not renovate a single unit without revamping all the units in a row.

One might wonder why this is a problem, except that should Timbercreek renovate the existing units, they would be stuck with the same tenants at the same monthly rate — less bang for their buck. According to the Ontario Landlord and Tenant Board, tenants forced to leave a rental property for renovations or repairs have the right to return to the same unit after completion, at the same rental cost.

More than anything, the Timbercreek–City of Ottawa mass eviction project calls into question the efficacy of private, for-profit provision of rental housing. Such an arrangement leaves tenants vulnerable to abuse, displacement, and highway robbery on the basis of nothing more than an economic argument that the bottom line can be increased by doing so.

The coalition says they won’t stand for it. Their demands are for Timbercreek to stop the evictions and renew the rental properties according to the company’s obligations in the law, whether that means restoring the existing townhouses or building replacements.

After delivering the most recent batch of work orders to the company, the coalition announced that they are filing a human rights challenge. George Brown, a lawyer helping the coalition, said, “It’s here where we’ve drawn a line in the sand,” pointing to “the other thousand units that are next in Heron Gate” and to Timbercreek’s purchase of similar properties in Edmonton and Calgary.

Follow and support Heron Gate’s fight at @herongatec

Heron Gate tenants express resistance to being forced out of their homes.
Herongate Tenant Coalition
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