Fundamental to the proposed…

Fundamental to the proposed updating of the PMG (1995 Projection Methodology Guideline) is whether the methodology it represents remains relevant in the current planning environment. While it may at one time have been considered best practice, the methodology inherent in the PMG is no longer valid. The methodology is based on the concept that you can look backwards and extrapolate forward to predict the demand for housing types in the future. While that may have been a legitimate means of determining housing type through the years when the primary consumer of new suburban housing was the baby boom generation, changing lifestyles, economic conditions, planning policy environments, employment opportunities, fiscal challenges and transportation requirements have negated any ability this methodology once had in predicting future choice of housing type.

This issue was addressed in a 2020 paper by Kevin Eby and Virgil Martin - Growth Plan Target-Based Versus Market-Demand Land Needs Assessments - A Review of the Competing Land Needs Assessments Presented at the 2012 Region of Waterloo Official Plan Ontario Municipal Board Phase 1 Hearing - June 2020 (see attached).

The PMG market based forecast by housing type (June 2006 to 2031) presented by the appellant’s land economists at the Region of Waterloo OMB Hearing is contained in Figure 1 of the paper and summarized below. It is important to note that this market demand forecast was prepared in 2012, almost six years AFTER the forecast period began. Already being six years into a 25 year forecast should have helped increase the accuracy of the forecast. It did not.

Appellant’s PMG based Market-Demand Housing Forecast for the Region of Waterloo (June 16, 2006 to 2031):

Single-/Semi Detached 60.9 %
Townhouse 17.9 %
Apartment 21.2 %

As noted in the paper (Figure 5), actual construction in the Region of Waterloo from June 16, 2006 to year end 2019 was:

Single-/Semi Detached 36.4 %
Townhouse 17.8 %
Apartment 45.9 %

As shown in Figures 7 and 8 of the paper, there was never a shortfall in vacant single-detached lots available in the Region of Waterloo. This was not a land shortage driven change. In addition, the first Growth Plan related policies in the Region of Waterloo did not come into force and effect until July 2015 when the Regional Official Plan was approved by the OMB, so it wasn’t a policy driven change either. The PMG market based LNA simply failed to predict the changes occurring in the marketplace.

Using the Growth Plan target based methodology, the Region of Waterloo in its LNA also projected a housing mix from June 16, 2006 to 2031 (see Figure 3 of the paper). It is summarized below. The actual construction by unit type from June 2006 to year end 2019 are provided in brackets for comparison.

Single-/Semi Detached 35.2 % (36.4 %)
Townhouse 17.4 % (17.8 %)
Apartment 47.4 % (45.9 %)

The PMG based market LNA projection of 60.9 percent single-/semi-detached units failed to take into consideration trends that had been on-going for an extended period of time. This trend in the Region of Waterloo began in 1998 (when 78 percent single-detached units were built) and has continued unabated to this day. In 2019 only 15 percent single-/semi-detached units were constructed.

Not since 2008 have at least 60 percent single-/semi-detached units been built in the Region of Waterloo. In no year since 2013 has there been more than 34 percent single-/semi-detached units built. Certainly a far cry from the PMG market based forecast of 60.9 percent.

This trend is not simply a Region of Waterloo trend. In 2009, Hemson’s background report for Halton (Phase 3 – Sustainable Halton report 3.07 - April 13, 2009) utilized a PMG based methodology adjusted to provide for the Growth Plan intensification targets resulting in the following forecast housing mix as being required to meet the Growth Plan policies:

2006‒2016 58.5% singles/semis
28.9% rows
12.7% apartments

2016‒2031 37% singles/semis
30.7% rows
31.4% apartments

The significant change projected in 2016 was triggered by the Growth Plan need for 40 percent annual intensification starting in 2015.

In the 2009 report, Hemson states:

“In comparing to past patterns, the degree of change in housing preferences in Halton required to meet the Growth Plan targets is shown in Table 15. This indicates a very significant change away from singles and semis and a significant change in favour of apartment units, both occurring in the not very distant future.”

“As noted above, this major change in housing preferences represents a significant shift in social and cultural values related to housing. It is unclear how or why this shift would occur in the Halton housing market given that most of the growth in the Region currently is based on family households moving into Halton from Toronto and Peel to occupy ground-related housing. Beyond specifying the outcomes in the Growth Plan, the Province has not yet used any of its policy tools to encourage this major shift in housing preferences. The Region and the local municipalities, while required to plan for this change, are extremely limited in their ability to affect such a change through policy.”

In a February 2021 Land Needs Assessment report for Halton, Hemson states the mix of new housing built from 2011 to 2021 (not just 2016 to 2021) was:

2011‒2021 38.5% singles/ semis
29.1% rows
30.9% apartments
1.5% accessory apartments

Once again, the 2009 PMG market based forecast missed the mark considerably ... and this was AFTER being adjusted to ensure the intensification targets of the Growth Plan could be met. This type of result from PMG market based LNAs appears to have occurred with amazing regularity over the past decade.

But nowhere demonstrates the lack of credibility of the PMG market based methodology more then the TECHNICAL REPORT PREPARED BY HEMSON CONSULTING LTD.
FOR THE MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING
GREATER GOLDEN HORSESHOE: GROWTH FORECASTS TO 2051
August 26, 2020

The appendices of this report provide housing by type projections by decade for the municipalities in the GGH. The Hemson Report uses a market analysis similar to the PMG to determine housing type for the GGH and then distributes it to municipalities. This report projects the following:

GGH - 2011 to 2021 there were 33.4 % single-/semi-detached units constructed
2021 to 2051 there are 44.9 % single-/semi-detached units forecast

GTHA - 2011 to 2021 there were 27.7 % single-/semi-detached units constructed
2021 to 2051 there are 39.5 % single-/semi-detached units forecast

Outer Ring - 2011 to 2021 there were 50.6 % single-/semi-detached units constructed
2021 to 2051 there are 58.0 % single-/semi-detached units forecast

Who would have believed that given all the changing conditions that lead away from construction of more single-/semi-detached dwellings (societal, economic, transportation, affordability, environmental sustainability and planning policy) that the Growth Plan forecast would provide for significantly more singles over the next 30 years in the GGH (44.9 percent) than occurred in the past 10 years (33.4 percent)? This is slightly mind boggling, but this is what a PMG based methodology gave us.

Individual forecasts for single-/semi-detached by municipality are provided in the attached Excel pdf. In all but Northumberland, Kawartha Lakes, Simcoe and the County of Peterborough, the Growth Plan forecast projects a higher percentage of singles/semis in the next 30 years than occurred in the past 10.

For example (looking at even more recent trends):

For Halton, which experienced 38.5 percent single-/semi-detached construction over the past 10 years (34 percent since 2013), Hemson forecasts 51 percent single/semi-detached units from 2021 to 2051.

For Waterloo, which experienced 28 percent single-/semi-detached construction since 2013 and 36 percent since 2006, Hemson forecasts 44 percent single/semi-detached units from 2021 to 2051.

For Durham, which experienced 44 percent single-/semi-detached construction since 2015, Hemson forecasts 56 percent single/semi-detached units from 2021 to 2051.

The wonders of a PMG based methodology.

The PPS and the Growth Plan were both intended to stop sprawl by increasing intensification, creating higher transit supportive densities in greenfield areas and ensuring a broader range of housing is available. A PMG forecast that looks back in some cases 20 or 30 years (in the 2012 Waterloo hearing they went back to 1976) and extrapolates past housing preferences forward undoes much of the positive work that has occurred to reign in sprawl.

Although they are taken from GGH municipalities, the examples in this submission all demonstrate that using a PMG based methodology simply brings forward the problems from the past. It essentially ignores things that have yet to be built into very long term trends.

The 2021 to 2051 time period will also see virtually all of the single detached units currently owned by baby boomers recycling back into the market place. To give you a sense of the magnitude of this impact, in 2011, baby boomers owned 49,500 single-detached units (between 40 and 45 percent of singles and about 26 percent of all residential units) in the Region of Waterloo. The youngest owners of these homes will be 86 years old in 2051.

The PMG methodology skews housing by type forecasts dramatically in favour of single-detached units. This in turn results in significantly more land being brought in to accommodate such units than is actually required.

Albert Einstein once said: "The significant problems we face today can’t be solved at the same level of thinking we were at when we created them.”

Excess expansions resulting from the use of the PMG is part of what got us into this mess in the first place and helped drive changes to the PPS and the creation of the Growth Plan. That we would forget the past and make the same errors again is hard to swallow. If we are to survive climate change and the huge financial stresses on individuals, business, and various levels of government, we need to actually plan in Ontario rather than simply regurgitate the past. Time to retire the PMG once and for all.