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222 Spadina Avenue, one of the first two Toronto locations under the Rapid Housing Initiative, on Sept. 9, 2021. These sites will provide approximately 334 homes with support services for people in need and will be ready for occupancy later this year.

J.P. MOCZULSKI/The Globe and Mail

Canada’s lack of affordable housing is a problem that has persisted for decades, and one that has worsened during the pandemic as rapid escalations in rent prices and home values have spread beyond Toronto and Vancouver to smaller communities across the country.

Ahead of the Sept. 20 election, the major federal parties have all made multibillion-dollar promises aimed at addressing the issue by building more homes. The Liberals, the NDP and the Conservatives have each pledged to boost Canada’s housing supply to levels not seen in decades, which they say will help bring down housing costs.

The question is: How will any of them do it?

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With the levers of housing-supply power still firmly in the hands of municipal councils, experts say that there is little sign that the actions of the next federal government will have any more impact on housing costs than those of the governments of the past.

But one wouldn’t know it from the campaign platforms.

Supply promises by party

Total homes to be created, by type and time, according

to party platform

=100,000 houses

NDP (new or repaired over four years)

1.7 million

Liberals (new or repaired over four years)

1.4 million

Conservatives (new over three years)

1 million

Green (Build or acquire over 10 years)

350,000

frances bula and john sopinski/THE GLOBE AND MAIL

SOURCE: party platforms

Supply promises by party

Total homes to be created, by type and time, according to party platform

NDP (new or repaired over four years)

1.7 million

Liberals (new or repaired over four years)

1.4 million

Conservatives (new over three years)

1 million

Green (Build or acquire over 10 years)

=100,000 houses

350,000

frances bula and john sopinski/THE GLOBE AND MAIL

SOURCE: party platforms

Supply promises by party

Total homes to be created, by type and time, according to party platform

NDP (new or repaired over four years)

1.7 million

Liberals (new or repaired over four years)

1.4 million

Conservatives (new over three years)

1 million

Green (Build or acquire over 10 years)

=100,000 houses

350,000

frances bula and john sopinski/THE GLOBE AND MAIL

SOURCE: party platforms

The Conservatives have promised one million new homes within three years. That could mean anywhere from 30,000 to 130,000 additional homes a year, on top of those that would have been built without federal intervention. (The precise number of additional homes would depend on the party’s underlying assumptions about how many homes are built in Canada in a normal year. It has not made those assumptions public.)

The NDP has said it will “build, renovate and preserve” 1.7 million homes within four years. Among those would be the first of 500,000 new and “affordable” homes the party says it would cause to be built within 10 years. That would mean an extra 50,000 homes a year, above Canada’s existing rate of construction.

Campaign promises on housing could provide little relief on affordability, experts say

The Liberals, meanwhile, have promised to “build, preserve or repair” 1.4 million homes over four years. The party says this would mean an additional 30,000 new builds each year, on top of the 275,000 homes it estimates would be built annually without federal help.

This isn’t the first time the Liberal Party has pledged action on housing supply. In 2017, the Liberal government announced its National Housing Strategy, which promised 160,000 new homes within 10 years.

In theory, there should have been 64,000 new homes built after four years of the housing strategy, but the available statistics suggest that only about half that many were actually created.

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A progress report from Canada Mortgage and Housing Corporation (CMHC) identifies 32,300 apartments and other homes as being “built or under construction” as of March, 2021, out of a total of about 69,000 for which federal financial commitments had been made.

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MUNICIPAL QUAGMIRE

One of the reasons federal efforts to build homes and increase housing affordability have fallen short of their goals, experts say, is that national policy is often at the mercy of local governments.

City councils throughout Canada are on the front lines of land-use approvals. They control complex zoning and permitting processes. And they answer to local residents, who frequently oppose development at planning meetings.

Without local co-operation, housing can be difficult – if not impossible – to build.

The Liberal campaign platform notes this tension. “A key barrier which slows down the pace of new home-building stems from complex, backlogged and under-resourced municipal zoning and permitting,” it says.

Mike Moffatt, an economist and a senior director of the Smart Prosperity Institute, said difficulties with municipal approvals have the potential to stymie future national housing strategies, no matter which party wins the election.

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“Over all, the supply targets are going to be very hard to hit,” he said. “You can put funding towards the promise, but can you get shovels in the ground?”

The gap between population growth and the number of new homes needed to absorb new residents can’t be reduced only with promises of federal money, he added. “None of it addresses the core barrier, which is municipal approvals.”

Housing projects that are eligible for federal support frequently can’t access it until they receive local buy-in. That’s because the funding is often provided in the form of loans to housing developers, and those loans are conditional on municipal approvals.

Almost a third of the $70-billion in spending that the Liberals promised as part of their National Housing Strategy has gone to the Rental Construction Financing Initiative, a program administered by CMHC. Established in 2017, the RCFI provides builders with low-cost loans for the first 10 years of mortgages, with up to 50-year amortization periods.

These federal loans are intended to encourage the construction of affordable rental housing. Securing one can save a developer millions of dollars, compared with the cost of a mortgage from a conventional lender.

But the CMHC program only provides loans to developers who have already obtained zoning approvals and building permits. Getting to that stage of the development process can take two to five years. As a result, RCFI projects can take considerable time to complete.

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Of the 17 rental projects for which CMHC announced construction loans in 2019, 11 are completed. The other six are still under construction, according to their websites.

Those that are still being built include the Terraces of Princess Gardens in Toronto, for which CMHC announced an $89-million loan for 259 apartments, and Block 8 of the city’s West Don Lands, for which a developer received a $357-million loan for 761 apartments.

Also yet to be completed are a handful of smaller projects in British Columbia, including a 24-apartment complex in Whistler that received a $7.3-million loan and a 188-unit project in Surrey that received $45-million.

A different federal program, the Rapid Housing Initiative, provides an example of a way federal funding can produce affordable housing almost instantly: by bypassing local planning approvals and developers entirely.

The initiative, introduced in October, 2020, and then expanded in early 2021, provided $2.5-billion directly to cities, for them to spend on buying or building apartments for low-income people. The federal government supplied the money on the condition that the housing units be ready for occupants within one year. Many cities used the funding to purchase small hotels or create temporary modular housing, in order to provide adequate living space for newly unsheltered people during the pandemic.

Lisa Helps, mayor of Victoria, B.C., where several homeless encampments sprang up in city parks after the start of the pandemic, called the Rapid Housing Initiative “really brilliant.”

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“We’ve been able to begin to move the needle,” she said.

Of the 4,700 apartments to which commitments have been made through the program, a May progress report from CMHC noted that 4,600 were under way. Construction on the rest had not yet begun.

The program has been a source of controversy in several communities, where residents have complained about the sudden presence of low-income housing near their homes.

None of the federal political parties have promised to continue the Rapid Housing Initiative after its second round of funding concludes in March, 2022.

877 Yonge Street, one of the first two Toronto locations under the Rapid Housing Initiative, Sept. 9, 2021.

J.P. MOCZULSKI/The Globe and Mail

A QUESTION OF AFFORDABILITY

There is another reason housing experts say federal funding has not produced the promised impact on housing affordability: The federal government has changed its definition of the word “affordable.”

For decades, Canadian government programs defined “affordable housing” as dwelling units that could be rented more cheaply than average market rates. But the RCFI has a different way of assessing affordability.

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A project financed through the RCFI is considered affordable if at least 20 per cent of its residential units rent for less than 30 per cent of the median income of families in the surrounding area. Also, the project’s total rental income must be at least 10 per cent below market rate.

This formula has led to some apartments renting for lower than market rates. But in many cases the rental costs are still higher than local averages.

According to an analysis of data from 2019, performed by housing researcher Steve Pomeroy, the CMHC formula would make it possible for an apartment priced at 130 per cent of the local average rent in the Vancouver area to be considered affordable. In other parts of Canada, the comparison between local average rents and what CHMC considers affordable is even less favourable. In the St. John’s area, for instance, according to Mr. Pomeroy’s analysis, a CMHC-funded unit could rent for 260 per cent of the local average and still qualify as affordable under the program.

At Portside, an apartment building in Summerside, Prince Edward Island, for which Arsenault Properties received a $17-million loan from CMHC to help lower the cost of 70 units, the current advertised rents range from $995 to $1,385. The average rent as of January, 2021, in Summerside, according to CMHC statistics, was $847.

Mr. Pomeroy has noted that the federal government’s reliance on loans to stimulate rental construction is doing little to provide apartments at below-average rental rates, which is usually the goal of affordable-housing programs. The National Housing Strategy “is incapable of achieving deeply affordable rents,” he wrote in an August report, “because those low rents can’t support the associated loan payments.”

Mr. Pomeroy said in an interview that the most effective housing-affordability money the federal government distributes comes through its “housing benefit” program, launched in 2020, which gives subsidies directly to people who are paying rents that are unaffordable relative to their incomes. The government has allocated $2-billion to that program, and provinces are required to provide matching funds in order to participate.

CMHC’s 2021 housing progress report said provinces have so far committed to supporting more than 28,000 households through the program.

But the need for such subsidies could be much greater. According to Statistics Canada, more than 1.6 million Canadian households were in “core housing need” as of 2018, meaning they were living in inadequate or unaffordable housing and unable to pay for alternatives.

Only the NDP has promised to provide more subsidies for renters. The party has pledged payments of up to $5,000 a year, but has not provided further details.

The Patricia Hotel on East Hastings Street in Vancouver on Sept. 9, 2021. The hotel is now run as supportive housing with 195 units.

Rafal Gerszak/The Globe and Mail

LOOKING FOR PROGRESS

In a report issued only a few days before the election call in August, the Parliamentary Budget Officer noted that housing stress is increasing. Without additional government spending, the report said, 1.8 million Canadians will be in core housing need by 2025.

As of October, 2020, according to the report, the federal government had distributed less than half of the money allocated for the RCFI and another key housing initiative, the National Housing Co-Investment Fund. (The report did not account for the 150 separate housing announcements made by the Liberal government between the beginning of 2021 and the Friday before the election was called.)

With all three major federal parties promising to create significantly more housing, Dr. Moffatt and other housing experts say they are still waiting to see details on how those targets will be achieved.

A spokesperson for the Conservatives said the party will release more details on its housing plans during the campaign.

NDP Leader Jagmeet Singh, at a housing-related news conference at the start of the campaign, was similarly short on specifics. He said his party would achieve its housing goals because it will make housing a priority and apply its will to the problem.

But Dr. Moffatt said will is not enough.

“Most of the barriers are not federal, so it doesn’t matter whether Jagmeet has the will,” he said.

He noted that there is now, at least, an acknowledgment from the parties that part of the solution involves pushing municipalities to do more.

The Conservatives, in an approach that surprised some because of its pro-density implications, have said they would tie public-transit funding to city action on approving new developments. The NDP have added the same mechanism to their list of promises.

The Liberal platform includes a new $4-billion Housing Accelerator Fund, which would provide cities with money to help them increase their supplies of housing beyond historical averages.

Despite the obstacles to creating housing supply with federal funding, the parties’ promises are encouraging to those in the housing world.

“This is the first election in memory where housing may be a ballot question,” said Tim Richter, chief executive of the Canadian Alliance to End Homelessness, which has banded together with other organizations to advocate for housing during the election. “All the parties are appearing to say the federal government has a critical leadership role. All those parties are reflecting the anxieties Canadians are feeling.”

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