City planner David Harrison stands in a field in Dartmouth, Nova Scotia where, if all goes according to plan, over 300 badly needed non-profit housing units will grow over the next 10 years .
Harrison has spent two decades trying to get more developments like this built, but not all of his efforts have been crowned with success. He fears that the supply is far from sufficient.
“We are in a housing crisis here. It is a question of supply and affordability,” he said. “I haven’t heard of a community in the province that doesn’t have a housing problem.”
Hopes for the Dartmouth project are based on a federal program called the National Housing Co-Investment Fund (NHCF), which offers low-cost loans to developers working on affordable housing projects.
Harrison’s job is to help the Dartmouth Project prepare to apply to the NHCF, possibly next year.
But four years after the start of the National Housing Strategy, and with a new federal minister dedicated to housing, nonprofit housing advocates say the NHCF needs a complete overhaul.
The program is the federal government’s flagship affordable housing initiative, with more than $ 13.8 billion in loans to build homes for families forced to choose between rent and groceries. But it’s a treasure some nonprofit builders say they can’t access.
In practice, the NHCF is failing to realize its potential, national housing advocates said in a CBC News survey of access to affordable housing.
“I think it was a bit of a game of poker,” said Steve Pomeroy, housing policy consultant in Ottawa.
The FNCH is administered by the Canada Mortgage and Housing Corporation (CMHC), which is the Crown corporation that administers Canada’s National Housing Strategy. CMHC is responsible for reviewing applications from organizations that wish to use the NHCF to obtain construction loans, but Pomeroy says CMHC’s verification process creates insurmountable hurdles.
“Three or four years later, we have now realized that it is not working very well.”
“We have to get people off the streets”
The NHCF was launched in May 2018 with a goal of building 60,000 new units and renovating 240,000 existing units across Canada over 10 years.
Over 90 percent of NHCF users are nonprofits or lower levels of government, such as municipalities. The program was designed to attract community housing providers, many of whom were initially happy to apply.
When City Councilor Annette Groves speaks to people in her neighborhood in Caledon, Ontario, she hears about the desperate need for housing.
Groves says she was brought to tears recently by a mother who fled an abusive relationship with her children and now faces eviction.
“There just aren’t enough units available, there just aren’t enough units,” she said. “The pandemic has now brought this even further to the fore, that people just cannot afford to live where they live. ”
Groves is a city councilor for the Region of Peel, an area near Toronto that encompasses Mississauga, Caledon and Brampton and is home to 1.5 million people.
As chairman of the Peel Housing Committee, Groves was one of many politicians to an August 2020 announcement when the federal government pledged to lend the municipality $ 276 million under the NHCF.
Peel’s plan is huge: a billion dollar project with 2,240 units across 18 sites.
CMHC, which administered the loan, called it “historic” at the time. It was the “biggest” real estate investment Canada has ever made in Peel.
In order to access this loan, Peel must meet certain conditions, including approximately two-thirds of the cost of the project. If he can’t do it, Peel staff say project must sacrifice 860 of its planned affordable housing.
“We can’t afford to lose… even one,” Groves said. “Losing over 800 units will be devastating for a lot of people. We have to get people off the streets. We have to house them.”
Steve Pomeroy says that in his experience, it’s common for developers of affordable housing to have difficulty meeting these kinds of financial conditions.
When asked about Peel’s situation, CMHC responded in a statement that it was only committing a portion of the costs of a project, but said, “If significant changes were to be made to an FFNC agreement that could impact the financial viability of any project, or the ability to achieve social outcomes, CMHC would work with its partners to explore the options available.
According to the criteria of the NHCF program, at least 30 percent of the units in a given project must cost less than 80 percent of the median market rent.
For a city like Halifax, affordable housing should cost no more than $ 879 per month. For Toronto, they should be less than $ 1,192 per month. Some nonprofits aim a lot less. Peel Region was aiming for $ 750 per month, says Groves.
A key criteria of the program is that the building applicant must have a pool of funds from another level of government, which means that nonprofits must go through a series of funding applications before they can. start the NHCF loan application. In some cases, nonprofit organizations also go to non-government donors.
The project must also meet strict accessibility and energy efficiency requirements. If the project cannot meet all of the targets, it will not be eligible for a CMHC loan.
Pomeroy says CMHC withdrew from the social housing industry in the 1980s, and as a result much of its recent expertise is in commercial lending.
“So you have these… kind of people who fund the bean counters. They are trained to manage risk and they tend to go through a process that basically dots all the I’s and all the Ts, ”he said.
While he acknowledges that there has to be a process to make sure nonprofits are creditworthy, he says many nonprofits don’t have the expertise or the money to navigate. in the complex application. He says the process also requires nonprofits to take on significant costs and risks up front.
“You have to have your building permit in place, which means you have to already have hired an architect, completed the working drawings – significant costs,” Pomeroy said. He also said “[The non-profits] found that CMHC would simply not issue a formal approval and funding agreement until very, very late in the process. ”
In a statement to CBC, CMHC said it has made changes to the NHCF over the past two years, including reducing the time it takes to approve applications by about 50 percent.
But challenges remain for some developers of non-profit housing.
Program under-budgeted for the first 3 years
According to Jeff Morrison, leader of the nonprofit Canadian Housing and Renewal Association, some of its members have stopped bothering to apply to the NHCF.
“There have been successes, but for many other providers, especially the smaller housing providers, the program has been incredibly difficult to navigate, to access,” he said.
This lack of appeal can be reflected in the program’s numbers.
As of March 31 CMHC said funding earmarked for CNSF was $ 13.8 billion. This includes both the cost of loans and the cost of loans.
Also as of March 31, CMHC reported that it had committed only $ 3.6 billion under the NCSF, of which $ 2.3 billion was in repayable loans and about $ 1.3 billion in contributions or forgivable loans.
This translates into 13,800 new units and repairs to 74,600 older units.
CMHC said that number had grown to a commitment of 15,800 new units and repair of more than 90,400 units by the end of June.
He noted that actual spending takes time, “as funds are advanced during construction or repair.”
Repayable loans are not counted as a cost to the Canadian government, since the money must be repaid with interest. The real expense to government is the cost of loans – for example, contributions, grants, or an interest rate differential.
In August, the Parliamentary Budget Office reviewed these costs for the NHCF, and found that the program had under-budgeted during its first three years of existence.
Overall, the PBO concluded that the Co-Investment Fund had spent only half of its budget in the first three years.
CMHC said the response to the housing sector program had “increased dramatically” since the program began, but the agency was unable to provide data on the number of rejected applications.
The state-owned company acknowledged that the PBO report showed construction was taking a long time and that the NHCF “had faced initial challenges”, but added that the program was “on track to spend all of its money. its budget by 2027 “.
In the spring federal budget, the government said it plans to adjust the program by advancing $ 750 million in 2021-2022 and 2022-2023. He also said he would use the NHCF to reallocate $ 250 million to more housing for domestic violence survivors. Both budget amounts had already been announced.
During the last election campaign, the liberals promised to increase the amount of funding for the NHCF an additional $ 2.7 billion.
Jeff Morrison says increased funding is good, but only if there are changes in the way the program is run.
“We hope that CMHC can speed up its approval process so that the money can actually come out,” he said.
“We need that money out there, in the regions, in Halifax, across the country, to build new community housing. Because otherwise, it doesn’t matter.