Vancouver municipal affairs reporter Frances Bula has spent much of her time this year chronicling the significant bureaucratic hurdles in the way of addressing the city’s housing crisis. She has written extensively on the permitting logjams with the City of Vancouver, a morass that has turned thousands of promised units into vaporware.
Today, she turns her attention on the Canada Mortgage and Housing Corporation and its role in stymieing a small, non-profit builder – exactly the kind of developer that is well-placed to meet crucial affordable housing needs.
The Anhart Community Housing Society spent years jumping through municipal, provincial and federal hoops to secure the financing for the construction of 70 new low-cost apartments in the Downtown Eastside. In total, the project was to cost $20-million. Last year, the small, non-profit builder got conditional approval on the $14-million loan, which was to have been provided through a federal program called the Rental Construction Financing Initiative. But in April, CMHC added a new condition: The non-profit had to put up 100-per-cent collateral by July 30.
When Anhart wasn’t able to do so, the federal Crown corporation didn’t provide the loan. That meant the $2.74-million in financing from BC Housing also unraveled. The remaining $3-million was money Anhart put up. On Thursday, after months with no progress toward a financial solution, Anhart placed the project on indefinite hold.
Housing observers say non-profit housing groups trying to provide true low-cost apartments are largely being shut out of Ottawa’s Rental Construction Financing Initiative – a program that accounts for more than a third of all federal housing money promised by the Liberals since they were first elected. Meanwhile, private, for-profit developers are getting tens of millions from the program for units that are much more expensive.
“It’s a missed opportunity for people in that neighbourhood we are trying to help,” said Keith Wiebe, Anhart’s co-founder, who convened a community meeting Wednesday to develop strategies to save the project.
Through the Rental Construction Financing Initiative, CMHC lends money on a 10-year term, with up to a 50-year amortization period, at low rates. Mr. Wiebe said it would cost Anhart $2-million extra to build its Main Street project with conventional bank financing.
In a statement, CMHC said that it does not discuss details of negotiations with housing program applicants until there are signed agreements.
Critics say the Rental Construction Financing Initiative has been successful at adding rental supply, but not at providing affordable housing. “It’s just a very perverse system,” said Steve Pomeroy, a housing researcher and analyst of federal housing programs.
He said the problem with the initiative is that the vast majority of its loans go to private developers, who are not building apartments that are anywhere near affordable, even though creating affordable rental housing is supposedly a key objective of the program.
The private developers are qualifying for the money because, unlike small non-profits, they are able to offer security for their loans using their other holdings, Mr. Pomeroy said.
And they easily meet the program’s affordability requirements because, according to an analysis Mr. Pomeroy did for the Centre for Urban Research and Education, CMHC officials are using a very different definition of affordability from what had previously been the standard.
Other affordable-rental programs require that rents in new, government-supported buildings be at or below the median rent in the local market. But the Rental Construction Financing Initiative defines affordable rent as being no more than 30 per cent of median household income. That number is typically much higher than median rent.
As a result, affordable rents under the Rental Construction Financing Initiative can be almost twice as much as they are under the other definition.
In Mr. Pomeroy’s analysis, rents for projects supported by CMHC in the Vancouver area could have gone as high as $2,150, in 2017 dollars, even though average local rents at that time were only $1,650.
In its statement, CMHC said that $9.7-billion has been committed through the Rental Construction Financing Initiative toward 29,700 residential units and that $550-million of that amount went to non-profits.
However, little has come to B.C. non-profits, so far.
CMHC has made a series of announcements about hundreds of millions of dollars in construction financing to private companies in the past month: $109-million to Concert Properties for a tower in Coquitlam, $349-milion to Wesgroup Properties for three rental towers in southeast Vancouver, $48.6-million to Woodbridge Homes in Port Moody, and $88-million for a project that the Musqueam Band is building with Polygon Homes on the University of British Columbia endowment lands.
Mr. Wiebe, the Anhart co-founder, is not sure what will happen next with his Main Street project. He is hoping Anhart can find a new financing partner, or another housing group to take over the project. Anhart may have to sell the land.
Plans to buy another piece of property are on hold, he said, as long as there are no guarantees that Anhart will be able to get federal help in the future.
This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.