OMG, what have they done to GMIS?

BLOG #538: London’s Growth Management Implementation Strategy came under fire last night by developers who want the city to build more subdivision infrastructure despite weak demand for new houses.

Tuesday, Oct. 18, 2011 – London

City Hall employees exist in a world of weird acronyms.

For example, this week in various city council committee agendas we are dealing with the CCPF (Creative Communities Prosperity Fund); TVDSB (Thames Valley District School Board); LUMCO (the Large Urban Mayors’ Caucus of Ontario) run, one presumes, by Rob Ford; AWAC (Animal Welfare Advisory Committee); LDOA (London Dog Owners’ Association); CSA (Canada Shipping Act); PDFP (Program Delivery and Fiscal Plan); CMHC (Central Mortgage and Housing Corporation); ULC (Underwriters Laboratories of Canada); Feral Cat TNR Program (Trap, Neuter, Return); ADSTV (Addiction Services of Thames Valley); and, of course, the ever present RFP (request for proposal, a fancy way of asking what do you want to do).

Then there is APS, for which the following explanation is offered in a document for an investment in affordable housing: “APS has the meaning given to it in Section 3.1.” Several pages to the right one finds this under Section 3.1: “Subject to Sections 3.4, 3.5, 3.6 and 3.9, upon receipt by the Minister from the Service Manager of a copy of the first page and the signature page of a fully executed agreement of purchase and sale (an APS) . . . etc.”

(Notice in the foregoing the minister is only required to glance at the first and last pages of the agreement before transferring funds to the service manager. If the whole thing is this dense, it’s not hard to imagine why).

Anyway, the acronym which got members of the BNE committee (Built and Natural Environment) and several representatives of the housing industry a tad wound up last night was GMIS. This stands for Growth Management Implementation Strategy and it is a document which provides financial guidance for the city in plotting where to build, or permit the building of, required infrastructure so housing developments can go ahead.

To a rank outsider (such as your scribe) the housing development business appears to be an enormous crap shoot. Vast millions must be invested in water and sewer pipes, storm management ponds, power grids and paved streets, sometimes years before the first house is sold.

And sometimes, just as everything is ready for market, that market goes south in an economic downturn, or peoples’ tastes change, or building costs soar. You as a developer stand to lose serious money.

So one of the things you’d want to do would be to unload some of the risk onto partners with deeper pockets – partners such as the City of London which has pockets as deep as all 360,000 of us stacked one on top of the other. (Although in these times deep should not necessarily be equated with full).

So there’s the rub. The city got caught short a few years ago trying to play banker for the development industry. One consequence was that little rascal with the cute name, GMIS.

Each year the city’s planning and engineering departments provide a GMIS update on what is planned in the way of big infrastructure projects in areas of the city where new homes are being built. Since a lot of this work will be done with borrowed money (deep doesn’t equate to full, remember) the city is incurring debt.

(Accompanying incurred debt, as a rule, is an obligation to pay it back in a timely fashion. There is no acronym for this, although I’ve heard the term “knee cap” used in connection with untimely pay backs).

For 2012 the city plans nine major projects with a total cost of $26.9 million, primarily in the north and northwest.

Several developers showed up last night to complain that was unfair. They had developments in other parts of the city – the southeast primarily – all ready to do if the city would just put the required infrastructure in place.

But here’s the problem. When that expensive pipe goes in the ground it’s there to stay. If you want your money back someone has got to build a bunch of houses, connect them to that pipe and then sell them to some nice family wanting a new home. No sell house, no get money – it’s pretty much that simple.

Right now in one subdivision alone in London there are 700 fully serviced lots that haven’t been sold. So someone’s money – and some of it might be yours – hasn’t been collected yet; might not be for quite a while given the current slowness in the new housing business.

Meantime these builders want the city to pay to create more fully serviced lots.

As former city councillor Sandy Levin observed – he wasn’t even being sarcastic: “Putting in more infrastructure to create more housing doesn’t create more demand.”

Mr. Levin was speaking to the committee as a representative of the Urban League of London, a collection of representatives of the many community associations in the city. The ULL (sorry, couldn’t resist) has for years been warning city council about the dangers of over-extending our infrastructure commitments.

As you might expect, the Urban League and developers aren’t the best of friends although both sides have, over the years, developed a grudging respect which has immeasurably protected city taxpayers.

Nevertheless, given the pro-business slant the BNE committee now has, it recommended city staff give more thought to helping the struggling developers – with your money, of course.

There definitely is an acronym for that: OMG.