More homes for the flock
Vancouver's Oakridge Lutheran teams up with unique non-profit developer to create affordable housing
Churches and non-profit groups that try to take advantage of their land to build needed low-cost housing in the region are often stuck with an imperfect solution.
They have to go to a private developer, who typically agrees to build a limited number of units that can be rented for below-market rates. But most of the future project is dedicated to condos whose prices are well out of the range of the people they'd like to help and the churches loses its control of the land.
But the members of Vancouver's Oakridge Lutheran church found another solution: working with the non-profit company Catalyst Community Developments and its president, Robert Brown.
The company and Mr. Brown are the only ones doing this work in the region.
The partnership with Catalyst will allow the church to build 46 apartments on its land in the pricey Oakridge area, right across the street from the Canada Line station and mall, with rents Vancouver hasn't seen in a while: less than $1,000 a month for a studio apartment, around $1,400 for a two-bedroom. All of the apartments will be below-market rentals.
In a city where the rent for one-bedroom apartments coming onto the market has hit $2,000 a month and where the city has pegged $1,600 a month as the allowable amount for an "affordable" studio in projects where developers are given incentives to build rental, the prices at Oakridge Lutheran's project are a stunning contrast.
"It feels so good. It's a miracle," says Hannelore Gerlach, the 82-year-old president of the church's board, who has helped drive approval for the project, which started construction last month, from Oakridge Lutheran's dwindling congregation.
When she first started looking at the potential for development 15 years ago, "the only model was to partner with a market developer."
That wasn't appealing. "Whatever I looked at, the church ended up with very little. We wouldn't have a chance to control any of this building."
By the time the church went through a few convoluted legalities – a court case that would overturn a restrictive covenant allowing only another church on the land; and a rezoning – there was another choice: Catalyst.
Mr. Brown has worked as a private developer with a company called Chesterman Properties. He formed Catalyst in 2013 because he wanted to do something more than just oversee developments for money. It partly was connected to his own childhood. "I grew up in Glasgow. You can't grow up there and not realize there's poverty."
And he wanted to do something different for Vancouver.
"I've been involved in market development but I asked, 'Can I do what I love to do but do it in a way that makes a contribution to the community I live in.'"
He's a rare breed in Vancouver. Those in the development business or who watch it closely say that anyone who has the smarts to do housing projects can make a huge amount of money doing that for private companies. It's hard to find people willing to give up that kind of money.
"We want to see more of this and we want to see more folks get behind this model," says Kira Gerwing, manager of community investment at Vancity Credit Union.
The credit union, along with B.C. Non-Profit Housing Association, is very enthusiastic about the concept of partnering with a non-profit developer, because it creates more units that are more affordable than partnerships with market developers.
"The advantage here is that values are aligned between the two parties from the outset. And since it's mission driven-rather than margin-driven, profits are put back into the affordability," Ms. Gerwing says.
And that's critical with the kind of housing crisis Vancouver is experiencing, she says. "If you rely on the market to solve this, they're won't when the real-estate market is this strong."
A more typical kind of arrangement in Vancouver is like the one that First Baptist Church came to with Westbank Development. It is building 311 high-end condos on the church's land near Burrard and Nelson and just 61 units that will rent for below-market rates. (The church is also getting money for other facilities and for seismic upgrading.)
The province's non-profit housing association is also enthusiastic about the new option that a company like Catalyst provides.
"The unique thing about Catalyst is they tapped into an issue we need to address – the capacity issue," says Jill Atkey, the director of research at the association.
Subsidized housing used to be built under the direction of federal or provincial governments. Non-profits mostly just ran the projects once they were built.
But as senior governments withdrew from housing, it put pressure on non-profits to think and act more like developers and try to maximize the housing on their land. Some, especially larger ones, are making the transition. Others are not.
"The understanding of how to take existing equity and turn that into a project is not here for everyone," Ms. Atkey says. "A company like Catalyst understands how to leverage that equity."
Having a partner on board is also critical for a lot of non-profits and churches, because they are charities and the Canada Revenue Agency restricts how much risk a charity can take on. If there's a partner to take on the risk, that makes projects go ahead more easily.
At the moment, Catalyst is working with three churches and two housing societies, in places ranging from Langley to Penticton to Burnaby. It is also working with a builder on two City of Vancouver sites that have been provided for free for low-cost housing.
For Oakridge Lutheran, Catalyst is providing $1.5-million of the financing for the $29-million, eight-storey project. The church will retain majority ownership – a rare outcome in deals with private developers – and will co-manage the rentals with Catalyst.
The partners anticipate that, as the mortgage gets paid down, rents can be reduced.
Mr. Brown says that people are often sceptical that housing at a reasonable cost can be built in Vancouver.
But, he says, between the higher rents people are willing to pay and the higher value of the land in the city, there's more ability to make below-market rents work.
"I tell them it's actually easier to do it in Vancouver than Langley."