The Neoliberal City and the Gentrification of Herongate

Photo: Kieran Delamont

by Doug Yearwood and Tim Kitz

The mass-eviction of Herongate tenants — the largest in Canada — shows just how disastrous the corporate capture of housing can be.

It has almost been one year since former Herongate tenants made a complaint to the Human Right Tribunal of Ontario against the City of Ottawa and Timbercreek Asset Management. The complaint alleges that in 2018 the financial landlord used racially discriminatory practices to evict more than 500 people from their homes, 90 percent of whom were first-generation immigrants and people of colour. It also notes the city was complicit in these evictions.  

Herongate residents took this action after being put on the defensive for the better part of a year. Timbercreek previously issued cease and desist letters to tenants who came together to fight back against the proposed development. Timbercreek also intimidated non-English speaking tenants, and ignored maintenance and work order requests. Some tenants have also had to deal with Timbercreek’s application for an above-guideline rent increase (AGI). 

“Even [Timbercreek’s] visioning sessions are a tactic, because it is creating this illusion that they are involving the community, that they care what the community thinks.”

The reason Timbercreek is displacing residents in this largely racialized community is to make way for an intensification project that could quadruple the neighborhood’s already dense population. Detractors, like the members of Herongate Tenant Coalition (HTC), argue the proposed development hinges on Timbercreek’s plans to build “resort-style apartments” to maximize profit for the multi-billion dollar investment company.

Despite opposition from HTC, criticism from the non-profit Association of Community Organizers for Reform Now (ACORN), and denunciation from the United Nations Special Rapporteur on the Right to Adequate Housing Leilani Farha, both the city and Timbercreek have moved ahead with the project.

So how is it that an asset management corporation like Timbercreek has such asymmetric power over a large group of tenants who actually live in the area? How — in a time where rent prices are increasing by 8.4 percent a month and when the city has declared a housing emergency — is it possible for the city to get on board with a project that necessitated displacement from an already densely populated, working class, and racialized community? 

To answer these questions, there are three essential things to understand. First, over the past 30 or so years, there has been a major shift at the federal and provincial level away from state-funded social housing. Second, like other cities, the City of Ottawa has turned to the  private market development to meet housing needs — which has failed miserably, yet which is covered up by the sunny yet ill-defined language of Official Plan and community improvement initiatives. Third, the tight organization of private interests, when contrasted against the largely unorganized and non-militant approach of renters and working class people, has enabled decades of corporate domination.

A Brief History of Ontario’s Neoliberalism & Market-led Housing Reforms

During market reform in the 1990s, rental housing relations in Canada underwent significant change. This stemmed from a radical reorganization of the dominant political economy paradigms in the 1970s and 1980s and the triumph of neoliberal policies.

Neoliberalism is characterized by deregulation, free trade, and above all “cutting public expenditures, privatizing public assets, and gearing economies toward export production,” according to  Robyn Maynard, author of Policing Black Lives.

The economic tumult of the 1970s — including the oil crisis and widespread stagflation — precipitated a shift in industrial production away from the Global North. Keynesian economists in the postwar period had failed to foresee how full employment and inflation would lead to capital strikes and declining profitability, and they were assailed by free market radicals like Friedrich Hayek, Milton Friedman, and their disciples. Promoted by business and political elites in the United Kingdom and United States in the 1980s, an unabashedly pro-private enterprise ideology emerged as political common sense, which soon trickled down to Canadian politicians and business leaders.

This meant that the welfare capitalism that emerged in the wake of the Great Depression and World War II fell out of favour. Canada’s 1990-1993 recession also provided an impetus for a drastic change in social spending and a shift towards market-oriented ideas. 

In 1993 the federal government introduced austerity spending on social housing. The Canadian Housing and Mortgage Corporation (CMHC), responsible for social housing provisions, capped expenditures at $2 billion and refused to provide funding for new social housing production.

Federal states during this time were also encouraged — in the name of “good governance” — to devolve management responsibility to the regional and local level. This fit well with the post-referendum ethos that existed in Canada at the time. With social housing already capped, the CMHC relegated the management of social housing to provincial and territorial governments in the 1996 federal budget. 

These changes at the federal level were matched provincially by a hard right turn towards neoliberalism in mid-1990s Ontario. On the heels of a recession during the Liberal and NDP’s watch, a hobbled centre-left political paradigm was challenged by a well-funded, hungry, right-wing economic agenda. This was embodied by the populist ‘Common Sense Revolution’ of conservative Mike Harris — Ontario’s answer to Thatcher and Reagan. 

Once in power, Harris’ neoliberalism had a profound impact on housing in the province. In 1996, Harris introduced Bill 69, which repealed the Landlord Tenant Act and the Rent Control Act of 1992. Then the dubiously named Tenant Protection Act of 1997 transferred more power to landlords and developers. Afterwards, the 2000 Social Housing Reform Act eliminated provincial support for social housing provision. 

Harris’ reforms — which involved vacancy decontrol and above-guideline increases to rent – enabled the rise of large, financialized corporate landlords, who could more easily raise rents and prioritizes profits over people.

The City of Ottawa and the Logic of Neoliberalism

While municipal politics are supposed to offer residents a say in how their community develops, the increasing corporate capture of democratic institutions has meant that ordinary people’s voices count for little.

“Even [Timbercreek’s] visioning sessions are a tactic, because it is creating this illusion that they are involving the community, that they care what the community thinks,” Timbercreek tenant and HTC organizer Tammy Mast told The Leveller.

City of Ottawa Councillor Catherine McKenney notes that people are increasingly unwilling to get involved because neighborhood planning initiatives are routinely railroaded by developers. Developers simply apply for variances from zoning and planning guidelines that are developed through painstaking consultation, which council usually grants. 

“If I were a resident, I’m not sure I would get involved. I would see my time as being wasted,” McKenney told The Leveller. “Oftentimes, we build communities for the more affluent.”

Politicians spend a lot of time and energy trying to earn the support of relatively affluent homeowners, which often leaves more marginalized renters behind.

“What [homeowners] want for their neighbourhood, which I understand and appreciate, is not in line with what we want,” said Herongate Tenant Coalition’s Mumina Egal. Egal notes that many homeowners prefer lower property taxes and would like to see their property value appreciate, which necessitates them complying with the new, pro-developer status quo. “It’s almost impossible to meet in the middle,” Egal told The Leveller. 

In comments that cut to the heart of the matter,  sci-fi writer and activist Cory Doctorow said, “We’ve taken a thing that’s a human necessity and elevated it primarily to an asset class. And so it is a vote-getter for politicians to do everything they can to elevate the value of homes.”

“This is the problem with making human necessities into assets,” Doctorow concluded. “If, in the course of a four-year term, a government quadrupled the cost of bread, we would call them a dismal failure. But if they did it for houses, then we say we’ve made the votingest, donatingest people in society four times richer and we celebrate them. And this perverse incentive is tearing apart our cities and our lives.”

This “perverse incentive” to increase property values results in gentrification, where a neighbourhood’s original, poorer population is replaced with a more affluent one. 

One of the main ways municipal politicians and bureaucrats increase property values and drive gentrification is through Business Improvement Areas (BIAs) and Building Better Revitalized Neighborhoods (BBRN) initiatives. BIAs and BBRNs use an optimistic language of improvement, revitalization, and economic development to promote gentrification.

When asked about the effect that city’s current ‘urban renewal’ initiatives will have, Josh Hawley, an organizer with the Herongate Tenant Coalition, is blunt. “Evictions will still continue. Rent will continue to go up.”

Even without the use of a BBRN, the city can simply approve project proposals by landlords and development companies like Timbercreek. Development is supposed to be guided by the city’s Official Plan, which provides a framework for assessing new developments or redevelopments of land, and for planning and approving of public works and infrastructure, and zoning by-laws. The document, created in 2003, also covers planning procedures for new communities and outlines how consultation measures and soliciting opinion from the community should take place.

The plan calls for Ottawa’s communities “to be built on the basics: good housing, employment, ample greenspace, a sense of history, and culture.” It further states that any new developments or intensification projects require “a sensitive approach and respect for a community’s established characteristics.” 

Yet Timbercreek has used a two-pronged approach of demolition-evictions and renovation-evictions to rid themselves of working class tenants, to make way for a premium, resort-style complex. As Timbercreek senior vice-president of development Greg Rogers told the Real Estate News EXchange, “This is a completely different product than what used to exist on this site.”

Of course, Timbercreek claims this transformation adheres to the city’s Official Plan when not talking to industry insiders with ‘hip’ miscapitalizations in their name. Citing Section 2.5.1 of the plan, Timbercreek’s Planning Rationale submitted to the City of Ottawa maintains that their proposed development is sensitive to the existing urban fabric. 

This is a reference to where the Official Plan states that “compatible development means development that, although it is not necessarily the same as or similar to existing buildings in the vicinity, can enhance an established community” and “coexists with existing development without causing undue adverse impact on surrounding properties.” 

It is only through a perverse interpretation of this document that Timbercreek’s development plans can be seen as enhancing an established community. Timbercreek’s actions have caused hundreds of people to lose their homes, damaged kinship networks and community bonds in the neighbourhood, and involved harassment and surveillance by Timbercreek’s management team on community members and organizers. This is the opposite of enhancing an established community.

The Official Plan acknowledges that a shifting global economy, population growth, and affordability are all issues facing the city. In the face of these dynamics, it states that city council has adopted a plan to build a “sustainable, resilient, and liveable city.” It defines a liveable community as having appropriate housing at a price people can afford.

Yet granting for-profit housing a near-monopoly on rental housing has not kept things affordable. The CMHC states that an affordable household is one that pays 30 percent or less of its income towards housing. In Herongate, Stats Canada data shows that more than 50 percent of renting households are paying more than 30 percent a month on shelter costs. 

A recent study by the Canadian Center for Policy Alternatives determined workers living in Herongate’s Alta Vista ward would have to earn $24.95 per hour to afford a two bedroom apartment. Someone would have to work 71 hours per week at the $14 minimum wage to afford that unit.

The city recognizes, in theory, that affordable housing for all residents is a building block for developing a vibrant and sustainable community. Yet because of its neoliberal assumptions, the city apparently cannot see that global asset management firms like Timbercreek have a responsibility to maximize profits for shareholders above and beyond everything else.

This means that Timbercreek practices “unscrupulous demographic engineering in search of profits: replacing poor and vulnerable people with those who possess greater purchasing power,” as UN Special Rapporteur on Adequate Housing Leilani Farha put it.

This is built into what Farha calls the “financialization of housing” performed by international conglomerates like Timbercreek. For Farha, this “corporate capture of housing” is a step beyond gentrification. She sees gentrification as driven by the desires of relatively affluent individuals to live in chic, cheap neighbourhoods — and then their desire to raise property values, once they’ve bought homes and businesses.

The corporate capture of housing, on the other hand, is naked neoliberalism — driven by international commodity markets. “That’s when housing is treated as a commodity — a place to park capital and grow wealth — rather than as a social good and a human right, a place of dignity and respite from the world,” Farha wrote in Huffington Post.

Treating housing as a commodity rather than a right can only deliver profits for corporations, not affordability for people. Yet at this point our federal, provincial, and municipal governments — under the spell of neoliberal ideologies and corporate interests — look to the free market to provide people with housing. Under accepted economic logic, “There is no alternative,” like Margaret Thatcher infamously said. 

The decades-long housing shortage in cities like Ottawa will continue — while politicians spar over whether it constitutes a crisis or an emergency — so long as this paradigm goes unchanged. 

The Organization of Private Interests and Lack of Militant Urban Struggle 

The commodity model of housing goes unchallenged mostly because of the tight organization of private interests. Currently, private interests benefit from think tanks, political connections, and relative economic power — and conspire with one another to influence the political system in ways that benefit them.

Given this confluence of forces and the beleaguered nature of working-class organizations, actors like Timbercreek are able to promote ‘common sense solutions’ when it comes to issues of housing and urban development. When international institutions as influential as the Organization for Economic Co-operation and Development operate from a framework that favours private enterprise over public endeavours, it is difficult for small community organizers to sway public opinion in their favour.

The degree to which this ideology is infused into housing policy is astounding. For instance, despite a decades-long crisis in the making as a result of a shift to privately-owned housing, Canada’s new National Housing Strategy favours private investment and subsidization as a method of building affordable housing for people struggling to make ends meet. 

Powerful groups like the Federation of Rental-Housing Providers of Ontario (FRPO) lobby the province’s Ministry of Housing, calling for an end to ‘barriers’ to building new rental housing — like inclusionary housing. If governments stop requiring developers to include some low-income housing in the buildings, housing overall will become more affordable through the magic of the market, according to their logic. 

Unsurprisingly, Timbercreek’s Chief Financial Officer, Ugo Bizzari, sits on the FRPO’s board of directors.   

The Herongate Tenant Coalition’s ongoing struggle against a multi-billion-dollar corporation like Timbercreek is a definite sign that organizing in community spaces has value. The group has held multiple demonstrations, gathered dozens of unfulfilled maintenance order requests, and played an integral role in launching the human rights case. 

But more has to be done. Without a broader infusion of political consciousness amongst renters and working people, it is a tall order to try and resist these financial behemoths in the long term. Policy reform or fulfillment of maintenance duties, while welcome, can be ignored by a landlord or undone with a pen stroke by a hostile governing authority — as we have seen with both Timbercreek and the Ford government.

Framing housing as a human right — which is recognized by the United Nations and recognized in Canada’s National Housing Strategy — and questioning whether it is moral for someone to profit from another person’s place of survival, is also critical in shifting discourse. It is ultimately fruitless to remain mired in conversations about affordability and revitalization that never move past underlying neoliberal assumptions.