AFFORDABLE OWNERSHIP NEEDS FUNDS: LOANS FOR HOMES

NRU
June 14, 2017
Sarah Niedoba

In a red-hot market, Ontario’s middle-income families are struggling to find housing they can afford. According to a recent report, all levels of government need to provide capital to the non-profit sector to build more affordable ownership housing.

A recently released report by the Canadian Urban Institute—prepared in collaboration with Evergreen, Options for Homes and the GTA Housing Lab— contends that if 5 per cent of middle-income renters in the GTA were able to move into ownership housing, it would open up 10,000 units of affordable rental housing in the GTA market. But to realize this potential government needs to loan NGOs the capital.

“Unlike affordable rental, affordable ownership housing can operate without financial subsidies,” CUI director Jeff Evenson told NRU. “It just requires government to be patient with its money, but it will get it back, years down the road.”

The report recommends that the federal government create a revolving loan fund of $250-million that could provide both short- and long-term capital to nonprofit organizations. Once established, the fund would be replenished by paybacks from the organizations. It also recommends a provincial loan guarantee of $25 milion, from which non-profits could take funds to secure construction financing.

“The key to these organizations scaling up, and providing more opportunities for affordable home ownership, is capital,” says Evenson. “All of the NGOs we consulted for this report have access to their own funds. But they have limited liquidity, and so they need access to funds on a revolving basis in order to expand the amount of development they can do at any one time.”

Access to capital is one of the main concerns of Options for Homes. The non-profit affordable ownership housing provider takes what would typically be the developer’s profit from their units and gives it to middle-income families as a down payment to purchase their units. The families repay the organization when they sell their units.

While Options for Homes has built 2,500 units in the GTA and has another 2,000 units in production, CEO Heather Tremain says more funding is needed.

“I think what we want to see is the government treating NGOs as partners,” Tremain told NRU. “The resources of the government could be leveraged to support a significant delivery of units.”

In addition to its recommendations to the federal government, the report also details changes that could be made by the city of Toronto to support the development of affordable homes. It calls for the city to increase the funds made available to the Home Ownership Assistance Program from its development Charges Reserve Fund from $2-million to $10-million a year. That’s an amount that Toronto affordable housing director Sean Gadon doesn’t think is feasible.

“The real challenge within the affordable housing sector is the need for additional funds,” he told NRU. “We’re having to, as a city, balance the respective needs of affordable rental with the affordable ownership housing... We’re pretty maxed out.”

Evenson disagrees. He says the $10-million the report calls for is in line with the city’s target of funding 400 affordable ownership housing units annually.

“Currently, the fund is capped at $2-million a year, and that would create only 80 units,” Evenson said. “And we’re saying, if you’re serious about 400 units, then the amount should be $10-million a year.”

Gadon does agree that the report’s recommendations serve an important purpose in keeping the need for more affordable housing top of mind both among the public and decision makers.

“It’s important that we make this sector a subject of conversation,” he says. “At the same time, it’s a very challenging environment to develop affordable ownership housing right now, because of the degree of speculation occurring within the housing market generally.”

While Tremain agrees that it’s a difficult time to build affordable housing, she feels confident that her organization and others like it have the capacity to build more units, if only they get the support they need from government.

“We have the capacity,” she says. “What we need now is for government to come to the table, and see us as partners.”