In the face of criticism, Ottawa will reform affordable housing programs worth billions

The federal government is making changes to two of its biggest housing programs in hopes it will speed up the construction and repair of badly needed affordable rental housing.

Last year, a CBC News investigation found that many of the “affordable” housing projects under one of these programs had priced rents above the area average. And critics have called for an overhaul of the other multibillion-dollar flagship initiative.

Now, housing advocates who have criticized both programs in the past are taking a wait-and-see approach to the changes.

“I think they’re hearing from the public that the general public is very concerned, very upset about the lack of affordable housing across the country, no matter where you are, no matter where you are on the housing spectrum,” said Jeff Morrison, executive director of the nonprofit Canadian Housing and Renewal Association.

The 2022 federal budget announced changes to the rental construction financing initiative and the National Housing Co-Investment Fund programs, which together account for more than half of the National Housing Strategy funds. $72 billion.

Jeff Morrison is Executive Director of the Canadian Housing and Renewal Association. (Submitted by the Canadian Housing and Renewal Association)

The Rental Construction Finance Initiative, which provides low-cost construction loans to eligible projects, has been widely criticized for using a definition of affordability based on area median incomes.

This ended up creating many rental units at prices higher than the average rents in the area. Some units cost $1,500 a month or more, including in an apartment building in Moncton, New Brunswick, a city where average rents last year were just $800.

The budget announced an “intention to reform” the program, including a goal to have “at least 40% of the units it supports offer rent at or below 80% of the average market rent in their local community” .

Housing Minister Ahmed Hussen declined interview requests.

Asked in an unrelated announcement in St. John’s last week what the government was trying to achieve with the reform, Hussen said “these are some changes to make the program even more affordable.”

Newfoundland and Labrador Premier Andrew Furey, left, sits alongside federal Housing Minister Ahmed Hussen during a funding announcement at Gathering Place in St. John’s on Friday. (Paul Pickett/CBC)

National housing consultant Steve Pomeroy of the Canadian Housing Evidence Collaborative said the adjustment is more in line with other affordable housing programs offered by Canada Mortgage and Housing Corporation.

He thinks the government may be trying to cut the program altogether or change its focus from developers to nonprofits. He said the rental building initiative was needed when it was originally conceived, but “times have changed”.

Pomeroy said that before 2015, few developers were building much-needed rental housing. According to his analysis, housing starts took off thereafter, but only about 5% used the rental construction initiative.

“So if 95% of rental developers who are massively increasing their level of participation didn’t need it, okay, why do we still need the program?” he said. “It was a good time to rethink and reset.”

Steve Pomeroy is a housing policy consultant in Ottawa and a senior researcher at Carleton University’s Center for Urban Research and Education. (Radio Canada)

The federal budget also announced changes to the National Housing Co-Investment Fund, a $13.8 billion program for construction loans to primarily nonprofit and municipal organizations trying to build affordable housing. .

The program has been criticized for being too difficult to access and too slow to distribute funds, and the The parliamentary budget office identified him as having spent only half of his budget in his first three years.

The budget promises to make the fund “more flexible and easier to access, including with more generous contributions and faster approvals.” It also pledged to spend all remaining funds by 2025-2026 to accelerate the creation of up to 4,300 new units.

“We can deploy those dollars, get them out faster,” Hussen said when asked about the changes to the fund.

Morrison, of the Canadian Housing and Renewal Association, said Ottawa hasn’t been able to do that so far, but his group is cautiously optimistic

The federal government’s 2022 budget has been widely dubbed the “housing budget.” (Katherine Holland/CBC)

“I think time will tell if the announced budget will match expectations in terms of increased accessibility, faster deployment of real funds,” Morrison said.

Morrison said he thought there was still a lot to do.

At the end of 2021, CMHC reported it had committed loans for 22,300 new affordable homes under the rental construction initiative and 12,700 new affordable homes under the national housing co-investment fund. The units are in various stages of planning or construction.

Renters need more options

Meanwhile, renters say there is an urgent need for more affordable options.

Cameron Towner, 22, recently decided to move from an old apartment he shares with three other people to a better quality apartment in Halifax.

After months of research, he was able to sign a sublease. It will cost him less: he now pays $650 a month for a room in a four-person apartment, and soon he will pay $600 a month for a room in a three-person apartment.

Cameron Towner is a tenant in Halifax. During his search for a new apartment, he and his roommates outbid one unit and a second unit went to someone in greater housing need. (David Laughlin/CBC)

But during Towner’s search for a new place, he lost a potential apartment after someone else outbid him. Another apartment was given to someone in dire need. He faces a 1% vacancy rate in Halifax.

“Rent prices for the quality of homes I was seeing weren’t what I knew,” he said.

Towner is a recent college graduate and holds a number of jobs, including gig work. He doesn’t feel like he has much job security, and he’s discouraged by the price of rent, which eats up half his income.

“It’s really hard to plan for the future,” he said. “But also, where am I going to live when I don’t even know where my next paycheck is coming from.”