The research project, Bridging the Gay, by Haskayne School of Business at the University of Calgary revealed that 2/3 of respondents in Metro Vancouver are comfortable with new, mixed use, mixed-income, multi-family developments. Additionally the same research revealed that 60% would take below market interest on investments targeting affordable housing.
A combination of community housing trusts, land trusts, non-profit housing development corporations, social housing providers and workplace housing initiatives will benefit from single source, below market funding and a shared logistical/financial set of tools and procedures to scale approaches to ‘Building Solutions to the Housing Crisis’.
Affordable Rental and Affordable Homeownership
A key principle for affordable housing development is that a primary focus be on affordable rental (as defined by the 30% rule to be deemed affordable) but projects can include deep rental subsidy, near-market, and market rental as well as market sales as part of the mix. A key concept includes affordable homeownership (AHO) achieved through a covenant on the property where if someone purchases a home at a discounted rate (i.e. 35-50% below market) they have to sell it at the same discounted rate.
Secondary Housing Market (Non-Profit Housing Developers)
Private developers generally make between 16-20% on development costs and sometimes +25 %. The market requires a new player, the Non-Profit Housing Developer (NPHD) that will be key in creating a secondary housing market. Besides removing profit from the equation additional cost reductions can be achieved through reduced DCCs/Permit costs, negotiated fee reductions from professionals (architects, engineers) and through contract negotiations with constructors and sub-trades for materials and labour. Marketing costs can be significantly reduced due to the highly attractive nature of affordable housing. Additionally, affordable housing projects are eligible for significant density bonuses that can be translated into more affordable housing.
Land Trusts and Perpetual Covenants
In developments where the land can be brought in at zero costs housing affordability can be dramatically increased. Land trusts and perpetual covenants on deeds will guarantee affordability for future generations. What is needed is a market solution that allows low/mid income earners to enter an overheated market and begin building equity. This is not social housing; this is market housing where the difference between the market price and the discounted price is held by a trust or covenant holder.
Workplace Housing and Co-development
Businesses in Vancouver are having a difficult time attracting and keeping talent. It is simply too expensive to buy or even rent in Metro Vancouver. One solution is for NPHDs to partner with companies whose management and staff are in need of affordable housing. Solutions can include affordable rental and covenanted affordable homeownership.
Another batch of low hanging fruit are older strip malls that could be parlayed into new community developments that not only would revitalize the property but provide opportunities for delivering affordable housing. This is where some innovative tax strategies would come into play to offset capital gains exposure by donating a portion of land to an affordable housing provider.
ADUs, Laneway Homes and Secondary Suites
BC Housing has launched an innovative program ‘Secondary Suites Incentive Program’ that offers homeowners a $40,000 forgivable loan to create a secondary suite or Laneway home on their property in return for a five year commitment to rent it out at (proscribed) affordable rates.
Housing Continuum
Canada’s social housing system is stagnant with hundreds of thousands on waiting lists. Demand far exceeds supply and so when someone is fortunate enough to secure a unit they stay put.
With only 7% of purpose built rentals being affordable for the lowest income earners and 54% of lowest income earners paying more than 30% of their income on rent the only way to address this situation is to build more purpose-built, affordable rental property while creating a means for low and moderate income individuals and families a means to enter the housing (equity) market and build for the future.
Creating movement along the housing continuum is essential and affordable homeownership (AHO) can get things moving for when someone moves from a subsidized unit into an AHO unit that creates space for someone to move up on the waiting list or to move into a subsidized unit from a supportive housing unit which in turn provides a supportive space for someone in transitional/temporary housing or a homeless person.
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Canada is ready for a solution: A recent survey conducted by the Haskayne School of Business at the University of Calgary for Vancouver Native Housing Society 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.