To get the national housing strategy right, we need to repair the housing we have, increase the supply, and get smarter about how we make it affordable.
The federal government’s anticipated national housing strategy could launch a long-term transformation of Canada’s housing system. Or it could go down as one of the most painfully squandered opportunities in years.
That’s a lot of pressure for any government and, as municipal leaders, we do recognize the positive steps this government has already taken. After years of neglect, any national housing strategy would mark a turnaround. Budget 2017 even committed $15 billion over 11 years to carry it out. Ottawa is clearly responding to recommendations from the Federation of Canadian Municipalities and from our Big City Mayors’ Caucus.
But if we have reason for optimism, we also know that good intentions aren’t good enough. So much comes down to the concrete design of the strategy the government is finalizing now.
As housing becomes less affordable at every income level in our cities and communities, local leaders are on the front lines. And while we’re pressing forward with local solutions, it’s important to recognize this crisis is national in scale.
A million and a half Canadian families can’t get decent housing they can afford. One in five renters spends more than half their income on housing. As market rents balloon in cities with anemic vacancy rates, so do waiting lists for subsidized social and affordable housing, where little new supply has come online in 20 years.
Some 235,000 Canadians will experience homelessness this year. Many more who live in social housing are afraid of losing it, and many Canadians live in units that are crumbling, because the federal agreements that developed social housing did not adequately support long-term repair needs. Homes are already being shuttered as unsafe, and more will close if there’s no systematic, nation-wide solution to the repair deficit.
The endemic shortage of affordable housing is throttling Canada’s economic potential. Big cities and smaller communities are working hard to attract newcomers and talented workers to sustain vibrant neighbourhoods and support the growing needs of an aging population. But we need better solutions for workers and creative professionals who can’t find housing — or who are battling exhaustion and family strain because the affordable home they did find is on the other side of an epic commute.
We can bemoan the years of political decisions that brought us to this point, or we can seize the opportunity to build from here. This is our chance to launch a long-term transformation of Canada’s housing system. That’s the stated aim of the federal government: transformation through innovation. But getting there will require a housing strategy that squeezes every ounce of potential from finite new investment.
Fixing existing social housing homes
The first job is to repair and renew Canada’s 600,000 existing social housing homes.
These homes are a lifeline for seniors, newcomers, Indigenous families, people with disabilities and other vulnerable Canadians. And the network is failing, as homes are closed because housing providers can’t afford essential repairs. The average annual capital repair deficit for all of these homes exceeds $1.3 billion.
The social housing Canada built between the 1950s and 1990s is a precious asset. Repairing, renewing and retrofitting these homes would be the smartest next step to securing tomorrow’s housing supply. This will also empower hundreds of existing social housing providers to lead the transformation this government envisions. With shored-up assets as leverage, and new investment, they’ll finally be in a position to redevelop their properties, add units, and start building new affordable homes.
Funding for new construction
To unlock the potential to grow the social and affordable housing supply, the housing strategy must deliver significant grant funding for new construction.
The scale of investment matters, and so does the design. Construction should generally favour mixed-income models in the nonprofit sector, including co-ops, with some portion of units affordable to the lowest-income households. Mixed-income housing doesn’t always make sense; for instance, it might not in some forms of supportive housing. But where it does, mixed-income housing fosters social inclusion and offers nonprofit providers a path to financial viability.
To support construction at the scale Canada needs, the federal government will need to become exceptionally resourceful about supporting new investment with existing tools.
Supplementing construction grants with access to federal financing and unused federal lands could move projects from concept to viability. New Green Infrastructure Fund dollars could support new housing that’s designed to a high efficiency standard, lowering operating costs. Federally supported child care facilities could co-locate in a redeveloped social housing project to make it accessible to low-income parents.
All of this will need to be driven by the housing project proponents themselves. So, we have proposed that Ottawa create a “single window” access point, where federal officials would help proponents tap into the fullest range of tools to bring housing projects to life.
Municipal contributions are critical. Many local governments are already providing land to encourage affordable housing developments. Others are exempting fees and expediting permits. Local governments understand local needs, and we’re using tools like land use planning to link housing into plans for transit, modern amenities and sustainable growth. This is what local innovation looks like, and the national housing strategy should harness local expertise by having local governments play a meaningful role in project design and selection.
Keeping rents affordable
The national housing strategy needs a smart approach to keeping rents affordable for low-income households, immediately and in the long-term.
In the past, funding for social housing was often paid to housing providers as a package — for construction as well as for operating costs to subsidize rents. This left many providers completely dependent on government funding, without assets or revenues as leverage to finance repairs, redevelopment or innovation.
To resolve this funding conundrum, we should start by separating support for construction from support for affordability. Nonprofit housing providers should be supported to develop new housing that they can offer at break-even rents. Where mixed-income housing is appropriate, some units can modestly subsidize the lower-cost units. We would still need to further reduce rents for the lowest-income households, but this affordability challenge is something to tackle separately — and we can do that in three ways.
First, to mitigate the immediate crisis, as social housing operating agreements expire, disappearing rent subsidies must be replaced seamlessly. Otherwise, people will face unreasonable rent spikes or eviction notices. Ottawa has said it will reinvest expiring funds, and it makes sense to continue sending dollars to housing providers at the outset. However, mayors and housing advocates have proposed transitioning over time to providing a housing benefit directly to low-income households.
Next, a direct housing benefit would help low-income households afford to enter and stay in new nonprofit housing. This approach would free housing providers to focus on operating break-even projects, while offering low-income households more freedom to choose among housing options as the supply grows. This would encourage housing providers to focus on operating break-even projects, while also offering low-income households more freedom to choose among housing options as the supply grows.
Finally, in urgent circumstances that choice should extend to private market rentals. For example, a family fleeing domestic violence should not have to wait for a scarce nonprofit unit if low-cost market rentals are available now.
From a policy standpoint, the path for the national housing strategy seems clear: Fix today’s social and affordable housing, leveraging that asset as the foundation to increase the supply, and get smarter about how we make that housing affordable.
In short, focus on the basics to kick-start long-term transformation. But for a federal government that is focused (to its credit) on an innovation agenda, investing heavily in the “basics” might seem like a challenging choice to make.
It shouldn’t. We municipalities need our federal partners to be innovation leaders. Retooling the Canada Mortgage and Housing Corporation to shepherd the national housing strategy, after 20 years of focusing on mortgage insurance, will require bold leadership. Innovation should also include modernizing programs like the Homelessness Partnering Strategy, a federal government−community partnership that has produced results.
But the real challenge for the federal government now is to foster local innovation. Given a chance at viability, local housing providers could be tremendously resourceful. Given a central role in project selection, local governments would ensure every dollar of investment supports local housing solutions that strengthen our communities.
The government needs to get this right. And getting it right means resisting the temptation to approach innovation as the stuff of “new and shiny.” The job of repairing this country’s social housing stock will never meet that bar. But getting this job done is how we’ll start securing tomorrow’s housing supply, and thereby enable future innovation. We absolutely need new ideas in the national housing strategy, but only if they support getting the basics right.
A good example is our Big City Mayors’ Caucus’ proposal for a direct housing benefit. This is an innovative idea that’s straightforward to communicate, and that would immediately provide money to low-income families. That would help. But it won’t help enough if the affordable housing supply still isn’t there. It will help even less if, as an unintended consequence, it pushes market rents up. And it will hurt if it becomes a pretext to shortchange basic repair and construction needs. Succumbing to the temptation to overinvest in a direct housing benefit, as a “quick fix,” would be a grave error if it comes at the expense of work required on other fronts.
Over the last two years the federal government has engaged with cities and communities in unprecedented ways. We have seen the government take our advice, and we have heard our recommendations reflected in its language. Now, as the national housing strategy takes final shape, we are determined to see them get it right.
If they do, they could achieve something no federal government has done in a generation. They could offer real hope. Hope that all of our kids will be able to find a decent and affordable home, which is the foundation they need to be able to reach their potential — as workers and entrepreneurs, as families, and as community members in the fullest sense.
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