A Modernized Affordable Housing Sector: How do we get there?

Cahdco is kicking off a lunch-and-learn series in the office, to explore various research topics related to the affordable housing sector, to broaden our collective knowledge and spur new ideas. Each member of our team is leading the research for one item/topic, and then presenting and facilitating a discussion via a lunch-and-learn with the rest of our team. We are also inviting our CCOC colleagues to join the lunch-n-learn discussions!

Written by Cynthia Jacques

June 17, 2019

The research that I undertook for the lunch-and-learn series is a review of Steve Pomeroy’s December 2017 discussion paper: “Envisioning a Modernized Social and Affordable Housing Sector in Canada”.

Steve Pomeroy, of Focus Consulting Inc., is an independent policy-research consultant. Steve holds a masters degree in Urban Planning and has over 32 years of experience in policy research, strategic analysis, program implementation and market research. The substantive focus of much of his work has been housing and urban research. He has worked in the municipal level as an urban planner, in the non-profit sector in co-operative housing development, and has held a variety of positions with Canada Mortgage and Housing Corporation.

The discussion paper was prepared prior to the implementation of the National Housing Strategy (NHS) and new programs, as part of the consultation process for the development of the NHS itself. The consultation process spurred a dialogue about the need to modernize, reinvent or transform the affordable housing sector. Steve noted that in order to understand how the sector requires transformation, and what the outcome of a reformed sector might look like, we need to also look at the characteristics, challenges and opportunities of the sector today and historically.

We invited Steve to join in for the lunch-and-learn session and participate in an engaging discussion about the future of the affordable housing sector. Below is a summary of the key discussion paper take-aways.

The discussion paper is broken down into three sections: a review of the characteristics that define the sector today, examples of social housing transformation from around the globe, and a discussion of next steps and incentives for a sustainable future for the sector.

The affordable housing sector today, and historically, is defined by the following characteristics:

  • A mix of public and community organizations
  • Subsidy dependence, with sub-optimal rent structures
  • Insufficient reserves, due to an “income-assistance” subsidy structure rather than an asset management focus
  • Expertise in social service and support, but lacking business skills
  • Provinces and territories bearing subsidy expenditures (pre-National Housing Strategy)

Uncoordinated & fragmented development on a project-by-project basis, primarily by small housing providers

Steve optimistically notes that “it is not all bad news”! The end of federal operating agreements bring opportunities for creativity and innovation for some housing providers. Some examples include:

  • Re-investment of previously restricted funds to capital repairs and/or new development
  • Strategic asset rationalization, where weaker properties are sold off to fund new/re-development projects
  • Entrepreneurship, whereby some housing providers (for example, CCOC and Cahdco) are creating a saleable service to share their competencies and expertise to assist other groups

So what does a modernized sector look like, and how do we get there?

In the discussion paper, Steve sets out a vision for what the outcome of an affordable housing sector might look like.

To achieve this vision, the paper outlines six key changes that are required to modernize the affordable housing sector:

  • Rent restructuring: Setting a realistic benchmark operating rent (below full market rent, but sufficient to cover operating expenses and fund reserves), and the implementation of a person-based subsidy approach with a new Portable Housing Benefit.
  • New Institutional Structures: Introduce a “Canadian Housing Finance Authority” as a non-profit, stand-alone financing intermediary to negotiate and secure financing for housing providers, potentially on an aggregated basis, while educating both lender and borrowers. An example of this is the recently created Housing Investment Corporation (Hi-C). Also, introducing “Asset Renewal Intermediaries” to provide technical assistance and mentorship for smaller providers to assist with assessing replacement needs, developing capital investment plans and securing financing.
  • New Framework of Social Entrepreneurship: A shift from “no profit” to “profit for purpose”, whereby housing providers generate revenue (i.e., through mixed-income developments) and leverage assets to optimize social outcomes through a performance-based system of risk management.
  • Responsiveness to Resident Needs: Improved tenant service through on-site building services, tenant satisfaction surveys, a Portable Housing benefit to enable mobility of housing options, and minimizing concentrations of vulnerability.
  • Sector Consolidation: Scale matters for efficiency, professional expertise and capacity, staffing, procurement, etc. Consolidation can be achieve through two approaches: formal mergers and associated group structures. Project Development Funding can be redirected to finance aggregation/consolidation. Criteria around scale and capacity for access to funding can be used as an incentive for smaller groups to join forces.
  • Renewal Leadership: The discussion paper recommends a high-level sector task force to lead the renewal, and to foster collaboration to implement reforms and new activities. The task force would include representatives from the provinces and territories, CMHC, and housing providers, guided by a change management consultant.

The future of the affordable housing sector has the potential to be vibrant, resilient, investible and sustainable. We need to focus on scale and harness our business expertise to build capacity and leverage our resources. Government has a critical role to play as well, in terms of implementing a Portable Housing Benefit, and participating in the renewal discussions and actions. Together we can get there!

Source:

Discussion Paper: Envisioning a Modernized Social and Affordable Housing Sector in Canada by Steve Pomeroy, December 2017.

Cynthia Jacques

Cynthia Jacques

Project Manager

June 17, 2019