Four Pillars Community Housing

Redevelopment of properties that require the temporary displacement of tenants presents an ongoing challenge, both financially and in finding suitable homes. In some cases, social housing providers adopt a strategy of keeping units vacant in other properties in preparation for a redevelopment but that can’t address the whole problem and also it is not an ideal solution as it decreases the availability of affordable housing.

Besides non-profit housing providers there are many development companies that have older buildings that could be demolished (but the problem they face is the same re-location problem. Even if the existing tenants can be housed at the same rental rate in a new development where are they to be housed in the interim?

A long-term solution requires a strategy for funding and creating sufficient units to provide the least disruption as possible over extended (redevelopment) periods. We need to build ‘transitional or interim buildings’ to house displaced tenants during this process

To provide the level of affordability required for these transitional units one solution is to secure land at zero cost and to have agreements in place to ensure that affordability is maintained.

In a perfect world existing non-profit housing providers, faith groups, service organizations etc. could earmark a piece of land for this purpose. Municipalities could provide leased land for, say, 60 or more years for free and for developers could guarantee that the displaced tenants could return at affordable rates. (some municipalities already require this).

Although the prospect of building an additional three and a half million homes by 2030 may seem daunting it is doable if we start now. Canada needs to increase its building capacity by 150% over that period. It can be done! The call to action is: better, faster, cheaper! We need to go on building spree and get the job done.

The Way Forward

1. Reduce development and finance costs. Increase and speed up development – this will require both reduced permitting/approval processes and automating production/delivery systems which will include mixed income/mixed use developments that have a sustainable revenue stream. (i.e. hotel rooms, student and workplace housing, short term rentals and executive suite rentals as well as near and full market rentals combined with affordable homeownership and rent to own options).
2. Housing Bonds: Long term, affordable funding – i.e. low interest construction loans and mortgages funded by housing bonds secured by land and property. Today’s mortgage rates are at 6-6.5% and the interest cost per month per unit is over $1000/month on a 600 sq ft unit on a 25-year term. The target is a two percent bond rate and to have a portion of the purchasers donate the interest back and be eligible for a charitable tax credit.
3. Reduce or remove land costs through long-term leases (60-99 yrs), community land trusts, and redevelopment of non-profit lands at increased density and land donations from government, industry and landowners. (i.e. redevelopment of aged out buildings and/or strip malls where the owner donates a portion of the land in exchange for reduced capital gains exposure and more density).
4. Reduced permitting and approval times. In Vancouver it can take 11 months for a single family home permit. Mid-rise construction can take three or more years.
5. Modular/Prefab next generation production and delivery systems.
6. Using SaaS (Software as a Service) to automate many of the time consuming and legal, logistical, financial systems for non-profit housing/Non Market development and simplify and de-risk the process for homeowners and builders wishing to leverage government programs like the Secondary Suite Incentive Program. (i.e. one click access to self-directed RRSP funds to facilitate the sale of housing bonds, pre-approvals and permitting of building systems for both Laneway/Carriage , low and mid-rise projects, bulk purchasing, smart contracts and agreements and pre-sale systems.)

This article came across my desk from the Globe & Mail: “We simply don’t have enough money to solve Canada’s housing crisis”. I couldn’t disagree more. I believe that we do have enough money, however, our reliance on governments to fund this in perpetuity is neither possible nor sustainable.

We need community driven, self-funding, market driven solutions. We do not need more debt. If increased supply and increased government funding were the solutions then we wouldn’t have a housing crisis. 

The cost estimate to solve the housing crisis is on the wrong side of TWO TRILLION dollars. Conventional thinking would naturally come to the conclusion that it is simply not possible. However, there is another way and we hope a better way to approach the affordability and housing crisis and it calls for the mobilization of citizens to make housing a priority and offer solutions to a growing problem.

Today Bonds are a means for government and companies to fund projects and infrastructures and investors receive a financial return. Canadians collectively have over $4T in RRSP accounts. Imagine a rotating war chest of a quarter of a trillion dollars made available for affordable housing from the savings accounts of average Canadians.

Neither government nor the private sector has been able to address the affordability problem. Over the past decade the problem has gone from bad to severe and is now moving beyond critical to untenable. There is a path forward and one that can get us there by 2035. New models are needed: a community driven development model empowering the non-profit housing sector to take up the challenge and deliver affordable housing at scale. There are four ingredients: zero cost land, below market financing, accelerated delivery and long-term sustainable revenue generation.

The affordability crisis is a community problem and requires a community solution. We need to move away from Financialization of housing towards the Communitization of housing – away from speculation and towards community benefit.

Part of the Solution: Redevelop existing non-profit and social housing stock at higher densities. Fund it through below market Affordable Housing Bonds. Increase production capacity through modular and pre-fab manufacturing systems and technologies. Decrease municipal permitting and approval times as well as reduce the DCC and permitting costs. Generate revenue through near market, market rental and CRU deployment for social enterprises.

A community-backed Non-Profit Housing Development Sector can develop mixed use, mixed income buildings that include subsidized housing, rent geared to income (RGI), below and near market rentals, rent to own and affordable home ownership as well as generate ongoing revenue by including social impact rentals (i.e. hotel rooms & suites, student & workplace housing, medical stay units, AirBnB style rentals and short term executive tenancies).

Skwacháys Lodge is an example of how a social enterprise approach can deliver long-term affordability without government subsidy while building community capacity and delivering much needed training, education, skills development and employment opportunities. Importantly, the equity accrues to the non-profit and in some cases the residents.

Together we can begin ‘Building Solutions to the Housing Crisis’.

I had the honour and privilege to be part of the team that developed the Skwacháys Lodge and Gallery and I believe that a four pillars approach will not only solve the housing and affordability crisis but will generate much needed jobs and a significant contribution to Canada’s GDP which in turn will benefit our communities and make Canada a much more livable and happy place to call home.

The critical shortage of affordable rentals and the frightening shortage of hotel rooms in Metro Vancouver can help provide the long-term, sustainable funding solutions required to deliver affordable housing without the need for continued funding.

The Fourth Pillar in the Four Pillars model is Revenue Generation. It is a huge part of the solution that doesn’t require long-term government financing commitments.

Even with zero cost land, below market mortgage rates and expedited delivery systems and permitting it is still virtually impossible to deliver affordability at scale.

A survey conducted by the Haskayne School of Business at the University of Calgary revealed that there is market acceptance for mixed-use, multi-family, mixed-income developments in Metro Vancouver. Two-thirds of respondents were comfortable with new types of developments in their neighbourhood.

One of the best examples of revenue generation is the Skwacháys Lodge & Gallery – an Indigenous social enterprise where 18 hotel rooms and a street level Fair Trade Indigenous Gallery subsidized 24 artist live/work studios.

Other options could include market and near market rentals, workplace and student housing as well as short-term and executive suite rentals. Every site has to be examined to maximize the best revenue generation model.

Additionally the inclusion of CRUs’ (Commercial Retail Units) and office space where appropriate (that could include grocery, health clinic, pharmacy, retail and community office space etc.) can generate revenue that can be translated into more affordable units for Non-Profit Housing Providers.