The Wrong Way To Solve The Housing Crisis

February 1 1970

The Wrong Way To Solve The Housing Crisis

February 1 1970

A Home Of Your Own A Price You Can Pay A Community Where You Feel You Belong.

Millions of Canadians hunger for all those things. Bramalea, Canada's first “satellite city” looked at first like a magic answer. Has it worked? Maclean's WALTER STEWART says no. The reasons are complex. But many of them add up to this: too much concern for profit, not enough concern for people. The whole Bramalea concept, says Stewart in this blistering report of his month-long investigation, is clearly a perfect example of THE GROCERY-LADEN housewife trudged down Clark Blvd. with the weary doggedness of one who knows she has half a mile to go, heavy burdens to carry, and no help in sight. Behind her, from the collection of four stores and a bank that shows on Bramalea Consolidated’s drawing boards as a multi-tiered City Centre, the wind whipped scudding snow off a landscape of frozen mud, sent it slamming against the walking woman’s legs, beat them bright-red behind her fragile nylons. I fell in beside her, tried to take a bag of groceries from her arms, received a look more cutting than the wind, and asked how she liked living in Bramalea. Not much. The shopping was lousy. She lived a mile from the nearest store, and there was no public transportation, only one ancient bus that circled the city once an hour, sometimes. There were no movies, no theatres, no bars, no hotels, no little shops, no museums, no art galleries, no place to go and nothing to do. They could call it a city, but it wasn’t a city, just an overgrown suburb. What about her husband, did he like it here? Oh, yes, her bloody husband thought it was bloody paradise, but he worked in bloody Toronto, he was never bloody here. Oh. My car was parked nearby and I offered the lady a lift, but she refused brusquely, and tacked off into the snow, trembling with cold and rage.

That was my introduction to Bramalea, Canada’s first satellite city, the answer, perhaps, to this nation’s housing plight. I admit it was not a fair introduction, with the wind and snow and cold, outside a complex that won’t be finished for years. I saw Bramalea in better lights in the month I spent there, saw it as a pleasant-enough sprawl of homes where housing is cheaper than it is in other Toronto suburbs. But the cold housewife’s essential complaint still seems to me a fair one. This satellite city is not a city at all, but a suburb 20,000 strong, a jungle of look-alike houses crowded on to tiny, fiercely expensive lots and set in a landscape that looks as if it had been scraped bare of every living thing, flattened, then sprayed with buildings from some celestial shotgun.

I went to Bramalea because I had been told, in newspapers and magazine articles and in the speeches of housing experts, that this was the way Canadians are to live in the future, not in slummy cities, but in satellite towns built around their own industrial cores. Bramalea, three miles from Toronto International Airport, was the pioneer in this noble breed, a city planned and built to order by a single developer, Bramalea Consolidated Developments Ltd. It blossomed in the alfalfa fields of Chinguacousy Township in the late 1950s, throwing up houses for people to live in, factories for them to work in, stores for them to shop in. Today, Bramalea holds 20,000 people; within five years it will hold nearly 50,000 and, before long, 100,000. The experiment has gone on long enough, has succeeded well enough, both in terms of growth and in the imitations springing up around other Canadian cities, to warrant a close look, to see if this is truly the way in which Canadian housing policy should be developed.

My own conclusion, after a month in Bramalea, is that it is not. To me, Bramalea proves three things, all negative: that the profit hunger of developers is not a sufficient guide for community planning; that housing lots in Canada are expensive not because of some mysterious socio-economic formula, but because of ordinary greed; that if governments really want to bring down housing costs, they must not merely bankroll land speculators, they must get into the land-bank business themselves.

These are abstract judgments perhaps. But in Bramalea — and in the scores of other Bramaleas Canada will see unless we change our thinking about cities and towns and housing — they have a particular meaning to people. Behind every fact and figure in this story, there is a person as real as the angry housewife I met in the snow. And the development of Bramalea, however tangled and legalistic the facts in which it is set. has a bearing on the lives of not thousands but millions of Canadians in the years ahead.

Cyril Clark is the politician who makes a successful real-estate development go, the essential link between the developer and the people, the man who can say yes or no and make it stick. Clark has been saying yes pretty steadily to Bramalea Consolidated Developments since 1956, although the company’s vicepresident. Arthur Armstrong, told me emphatically, “We never got awaywith a goddam thing, never, never, never.”

Clark was the reeve of Chinguacousy Township from 1954 until last summer, when he resigned, ostensibly for health reasons, but really, he told me, “because people were blocking me, blocking things I wanted to do.” He has since taken a position, at $25,000 a year, as consultant to another development company in the township.

He is a tall, stout man, still robust at 70, with a strong, plain face, eyebrows like hedges and the brusque sureness of someone used to having his own way. A lifelong farmer and livestock exporter, he has almost no formal education and, while he reads a little, cannot write anything more than his own name. He likes Cadillacs, crap-shooting and sharp dealing. He was a star witness before the Roach Commission on Crime in Ontario in 1962, when he testified that he was a member of an illegal gambling club, and told Mr. Justice Wilfrid D. Roach, “I don't drink, I don’t play cards, but I like to shoot crap.” He said, “I have always led a clean life,” and burst into tears on the stand. He also said, “I suppose if all this goes in the paper, I may as well hand in my resignation.” But Chinguacousy voters stayed with him, even after he was arrested in 1964 as a found-in at another crap game, in Guelph.

Clark considers himself a progressive man and, when a group of entrepreneurs approached him in 1956 with a proposal to build a city from scratch in the heart of the sparsely populated township, he was ready to listen. He made only one stipulation: that the city, to be called Bramalea (“Brama” after the nearby towns of Brampton and Malton, “lea” after the area’s rolling meadows), must not be a burden on the rural taxpayers. So far, that deal has been kept.

The developers who approached Clark had assembled a block of 4,500 acres of land, buying out 41 farmers, most of it at prices of $1,000 to $1,200 an acre. (The company has since bought more land, sold some, and now holds just about the same acreage it started with.) These original developers — a doctor, three real-estate men, a broker, a business executive — put up very little cash; most of the farms were bought for five percent down. (The farmers were apparently satisfied with their share of the take. Bill Sheard, who helped assemble the land, got $165,000 for his 150 acres — he had paid $40,000 five years earlier — and bought a 400-acre farm nearby with the proceeds.) This 4,500-acre block of land, assembled at a cost of about five million dollars, has rocketed in value with the scramble for housing around Toronto. The Ontario government alone is paying $29.1 million for 840 Bramalea acres, most of it serviced. This does not mean that the original developers were richly rewarded for their vision and daring. They had counted on customers among workers at the Avro Arrow project in Malton; when that was canceled, they ran short of cash and had to bring in outside backers. By the time Bramalea Consolidated hit pay dirt, its original owners had dropped out.

The company’s two key figures today are both Englishmen: Arthur Armstrong, the executive vice-president, a handsome ex-Royal Marine, who looks a little like Mandrake the Magician, and Alan Taylor, the president, a rotund and dignified financier who looks like, well, a rotund and dignified financier. Armstrong shipped out to Canada as a steerage-class passenger in 1948, tried his hand at several jobs, and worked his way into executive ranks with a Toronto export-import firm. In 1961 he was fired — “The guy who ran the place decided he didn’t like me” — and went into the real-estate business. “I made $35,000 in three months and decided this was the way to go.” Then he was hired, through a management-consultant firm, to work in Bramalea as a troubleshooter for a group of English firms that were backing the venture, mainly Eagle Star Insurance Limited, still the largest stockholder, and Close Brothers, a merchant-banking firm. Taylor, a director of Close Brothers, had handled the firm's dealings with Bramalea, and knew something about its money problems. With Armstrong, he was asked to decide whether the project should be wound up or expanded. They opted for expansion through diversification, with a series of sidelines to produce enough capital to keep Bramalea going. Today Bramalea Consolidated operates shopping centres, construction companies, tourist resorts, hotels, even a farm.

Taylor and Armstrong provided the financial savvy to turn a faltering dream into a paying proposition; Cyril Clark provided the political muscle to make it grow. It was Clark who ruled the Chinguacousy Township Council (one of the anomalies of Bramalea is that, with a population of more than 20,000, it still has no government of its own; it is ruled by a seven-man township council, dominated by rural members, who meet in Snelgrove, 12 miles away); it was Clark who powered Bramalea’s applications through Ontario government red tape (a prominent Tory, he is highly regarded at Queen’s Park), and Clark who fought off other jurisdictions, including Toronto and Brampton, who were growing alarmed at the spreading sprawl of Bramalea. He did all this, he told me, not for money, but for the “good of the township,” as a responsible public servant. A stranger coming into Bramalea soon knows he is in a company town. The developer owns a lot of it, and a lot of what he doesn’t own, he controls, and much of what he doesn’t control pays him a percentage to operate. Profit is the key, for, as Arthur Armstrong said in a highly laudatory article in Building Management magazine, “Every decision has been based on economic rather than aesthetic reasons.” Nor were decisions based on the convenience of the residents. Thus, there are only three shopping centres in the development, with 21 stores (the nearby town of Streetsville, population 6,300, has 71 stores). The shopping centres are all owned by Bramalea Consolidated, and most of the lessees pay, on top of their rents, a percentage of gross sales to the developer. Thus, there is only one gas station within Bramalea, although there are two others on the fringes (Streetsville has six). Thus, there is an arena and an active sports program — sports tend to pay for themselves — but literally nothing in the way of cultural activity except a tiny library stashed, with fitting symbolism, in the basement of a bank building.

The development of such a dollar driven community required the consent of the township council. In part, that consent was assured by the leadership of Cyril Clark, whose rule over the council was absolute, and whose background did not incline him to a heavy emphasis on museums and libraries; in part, it was secured by close co-operation between council members and the developer.

That co-operation may have been too close. Two of the council members throughout Bramalea’s crucial years were insurance agents, and both were doing business with Eagle Star Insurance, Bramalea Consolidated’s largest stockholder, at the same time that they were safeguarding the public interest in the community. For Bramalea, they were handling Eagle Star policies for builder’srisk insurance, which covers houses during the construction phase, and is often converted to permanent coverage by the new home-owner. So, every time the council voted for Bramalea expansion, two council members would stand to gain business. One of the agents, Harold Wilson, told me he stopped taking Eagle Star business six years ago because “I didn’t want anyone in a position to tell me what to do,” but the other agent, James Cathcart sees nothing wrong with his dual role. Getting business from the developer in private, and voting on issues crucial to that same developer in public, does not constitute a conflict of interest, he insists. “There would be a conflict only if there was weak morality involved.”

Bramalea maintains an interest not only in those who are on the council, but also in those who aspire to it. Reeve Bob Williams doesn’t even live in Chinguacousy, but operates a veterinary hospital in Bramalea. One reason he entered politics was to protect private property, because he thought the company was not allowing any competition in the area. Early in 1968, shortly after his election to council, he was invited to lunch with senior officers of the company to discuss a proposition: why shouldn’t Bramalea have a children’s zoo, and why shouldn’t Williams run it, and why shouldn’t the company donate the land for it? Williams told me, “I kept hearing phrases like, ‘We have always gotten along well with council members,’ and, ‘The person who runs this zoo could really make some money.’ To my everlasting shame, I took 24 hours to think it over before I turned them down.”

Of all the company-council deals, the most controversial unrolled in May 1967, when the Ontario Housing Corporation was eyeing Bramalea as a site for its Home Ownership Made Easy plan. (Under the plan, the province buys land and leases it or, occasionally, sells it, to home-buyers. This removes the price of the lot from the house mortgage and permits a low down payment.) The OHC offered to buy 1,666 lots in Bramalea for $10.7 million — eight percent of the Bramalea holdings for about twice the entire original investment on 4,500 acres — but the sanction of the council was required to release the lots so building permits could be issued. The Toronto Telegram subsequently claimed that sanction was given in a secret meeting between company officials and the reeve on May 12, 1967. Clark denied that there had been such a secret meeting, but if he is right, a truly remarkable series of coincidences occurred on the Toronto Stock Exchange the next week. Bramalea shares, which had been trading sluggishly on the Toronto Stock Exchange, suddenly took off. The week of May 7, 1,911 shares traded at prices between $8.60 and $9. The week after the meeting that didn’t take place, 24,587 shares traded and the price went to $11.70. The HOME deal was presented to council on May 26.

But the money picked up in that flurry of speculation was chicken feed. The real profits in Bramalea stock have been made from insider trading, much of it by Armstrong and Taylor. Early in their association with the company, the two men were given options to purchase stock — 35.000 shares for Taylor, 17,000 shares for Armstrong—at five dollars a share. Until May 31, 1967, neither had exercised his option; at that time, Armstrong held 101 shares and Taylor only one. Then, with the HOME deal assured, they began to buy. On July 25, Taylor bought 5.000 shares; three days later, when the HOME agreement was signed, each man bought 10,000 shares; five months later, they bought again, Taylor 20,000 shares, Armstrong 7,000, to use up their options (new options were thoughtfully issued in May 1968). Consider only two of those transactions: on October 2, Taylor bought 20,000 shares at five dollars; their market value was $14.25, and his minimum instant profit was $185,000. Two days later, Armstrong bought 7,000 shares, and his minimum profit was $64,750. In fact, both men made much more than that, because they unloaded their stock gradually as the price climbed to more than $38. Between May 1967 and August 1969, through insider trading in stocks and warrants (offers to buy shares at a fixed price at a future date), Taylor cleaned up more than $600,000 and Armstrong more than $550,000.

Such trading is not illegal, but it is well to remember these enormous profits as a guide to what is really in a developer’s mind when he sets out to solve Canada’s housing problems.

The transaction Taylor referred to was a second HOME purchase signed last April, which will more than double the size of Bramalea over the next five years. The Ontario Housing Corporation bought 4,602 lots for town houses, at $4,000 a lot, for a total of $18.4 million. These 4,602 houses will be cramped, 18 to the acre, on land that originally sold for $1,100 an acre. Servicing the lots cost about $1,000 each, so that Bramalea’s investment was about — let’s be generous — $20,000 for every acre of land it sold for $72,000. And that is one reason why housing costs so much.

Until this deal was made, Bramalea Consolidated was required to balance every house brought into the development with industrial assessment. That is the essential purpose of the satellite town: to provide a balanced community, not just a dormitory. For every $57 of residential assessment, Bramalea had to provide $43 worth of industrial assessment, or make up the difference in cash. In 1968, the last full year for which a figure is available, the company paid $225,000 in penalties under the arrangement. But with the second HOME purchase, this provision was scrapped. Bramalea could hardly provide enough industrial assessment to cover 4,602 houses, so the Ontario government struck a bargain with the township to pay it $11 million in cash, for which it was discharged from responsibility not only for the HOME lots, but also for 1,400 single and semi-detached lots the township released at the same time for the developer’s own use.

The sweet aspect of this arrangement, for the company, was that it could use the Ontario government’s $18.4 million to pay off its responsibility, pocket a handsome profit, make a further profit on 1,400 of its own lots (they will sell for more than $10 million) and yet another profit by building and selling all the houses on Bramalea land and half the town houses on OHC land. Bramalea has its own building subsidiary to handle this end. What is more, this huge development will swell the value of more than 4,000 acres of undeveloped land the company is still holding, for yet a fourth profit. (This land is being farmed by another subsidiary, which not only produces income, but keeps assessment at the low, farm level.)

One more point. The $11-million lump sum is designed to cover development costs for the township until 1974, but the company’s responsibility has been lifted forever. What happens if, at the end of 1974, not enough new industry has been brought in to balance the housing, and taxes begin to soar? “God knows,” says Councillor Aldo Ferri. “That’s a good question,” says Reeve Bob Williams.

In short, the HOME deal was profitable for the company, but does it make sense for the taxpayer or the home-buyer? The Ontario taxpayer is shelling out a huge speculative profit for housing lots in a development run by a private entrepreneur. The home-buyer is paying a monthly land lease based on this inflated price, with a profit to the province tacked on top. In the first HOME deal, the OHC bought single lots for $8,000, and sold them for $9,200, or leased them for $43.50 a month (which means that, over a standard 35-year mortgage, the home-owner will pay $18,270 to rent a plot of land he still won’t own).

There should be a better way to make housing cheap, and there is. In Saskatoon, the municipality has for years been buying large tracts of land, which it sells at cost. A serviced single-dwelling lot in Saskatoon costs about $3,500, compared to $9,200 in Bramalea. Ontario has such land tracts. Why doesn’t it use them? Apparently, because it doesn’t want to interfere with private enterprise. When I asked H. W. Suters, managing director of the OHC, how he could justify making a profit on the HOME lots, he told me that, in the first place, the lots were supposed to be leased, not sold (under the new Bramalea deal, no lots will be sold by the OHC), and in the second place, it wouldn’t be fair to undercut the current land market. Apparently it is the studied policy of the OHC not to lower the cost of housing, although I thought that was what the corporation was for. Suters told me that some HOME buyers in Bramalea have already sold at profits of up to $5,000. “If you think we’re profiteers,” he said, “you should see the little guy.” I expect the little guy to be a profiteer; I don't expect the government to be one, or to help one.

Elayne and Edwin Menzies, both 23, live with their two small children in a three-bedroom split-level house on Fallingdale Crescent in Bramalea. They paid $21,695 for the house and lot under the HOME plan — $6,700 for the lot and $14,995 for the house. Their monthly payments, including land mortgage, house mortgage, heat, phone, water, hydro and $4.50 for a TV cable (you can’t put up an aerial in Bramalea) come to $225.85, which is hardly cheap housing, and much more than the $93 a month they paid for a small apartment in Toronto until last July. Despite the cost, they like it in Bramalea. They don’t worry about the lack of amenities and they like the friendly young people who make up most of the population. But most of all, they like Bramalea because their first house is here. It may be like a lot of other houses, small, roughly finished, but it’s their own, something they couldn’t afford in Toronto.

This is the hunger that builds such developments as Bramalea. the hunger for a place of one’s own. That hunger will not go away simply because politicians and planners tell us we should learn to live in apartments. My quarrel with Bramalea is not that it does not meet that hunger, but that it meets it expensively and badly.

Bramalea provides roofs and walls, all right, but it does not provide any of the other things, from decent shopping and transportation to theatres and art galleries, that make a community. “It isn’t a community at all,” says Lloyd Lockhart, who used to edit the Bramalea Guardian before he moved back to Toronto, “it’s just a collection of houses.”

Arthur Armstrong lives in central Toronto. He once lived in a suburb, but he wouldn’t want to do that again His house overlooks a ravine, on a treeshaded lot where he can hear birds and see wild flowers. At the same time, his children can reach the Y, or the art gallery, or the museum, or the downtown stores, in just a few minutes. “The whole family has blossomed since we came to the city,” he told me.

But Armstrong is proud of Bramalea and the role he has played in building it. He thinks it is about the best that can be done for families such as the Menzies. “People have to learn that not everyone can have a house of his own, and not everyone can afford to live in the city,” he says.

I don’t accept that. I don’t accept that the amenities of civilized life, many of them tax-supported, should be available only to the rich and righteous (or, perhaps, shared with the slum dwellers at the city core), and that the rest of the population should be shunted off to barren-lands like Bramalea. With planning and determination, we could build satellite cities that were truly cities, not just profit factories, and we could help to pay for them with some of the profit now flowing into a few pockets. Such new cities would require much more active government participation than we have today. They would require land banks, subsidized mortgages, long-term planning, and the meddling of government in a hundred areas now in the hands of the developer.

For the lesson of Bramalea, surely, is that if the developer is left to his own devices, driven only by the hunger for gain, he will produce an expensive, profitable mess.