The Community Housing Transformation Centre (CHTC) noted research from Steve Pomeroy that found from 2011 to 2016 approximately 322,600 affordable units disappeared in Canada while only 20,000 new affordable homes were built. Development cannot close this gap due to timeliness and cost. Instead, acquisition could be a more appropriate strategy. We can’t build affordable housing at the rate we’re losing it, but maybe organizations can acquire the buildings and keep rent at affordable rates.
Société locative d’investissement et de développement social (SOLIDES) in Châteauguay, Québec is a non-profit housing organization whose mission is to purchase existing buildings where low- and moderate-income households current reside to protect tenants from the market and avoid gentrification. SOLIDES own more than 40 buildings on 18 sites with 546 units.
SOLIDES has been able to purchase buildings through a few different models of development and financing. For its first two projects, it purchased financing at 100% of the cost because the municipality provided a guarantee. This didn’t cost the city anything. However, SOLIDES is paying the market price for this model, which is a large debt. Today, it uses equity from its original projects (some of which were new development through the AccèsLogis Québec program) with bank financing to purchase buildings.
SOLIDES has been scaling up in this way continuously. It purchases about 3-4 buildings per year, representing at least 5% of their total stock. It is the largest landlord in Châteauguay. As a private non-profit, it is able to be flexible and use bank financing to purchase buildings quickly. The support from municipal programs provides stability.
CHTC outlined three types of acquisition funds that are available in Quebec outside of government programs:
- Transitional Acquisition
- Short-term, 1st rank loan. It acts as bridge funding provided to secure the sale. It can be for up to 95% of the price of the project for up to 24 months. This has been used for nearly 20 years and 3,000 units have been created.
- Support Market Acquisition and Operation
- Long-term, 2nd rank loan. The municipality will guarantee a loan to act as the down deposit for a mortgage. The loan can be up to 45% of the project cost to be paid back over 15 years. This has been used for nearly 20 years and 1,500 units have been created.
- Complete Market Acquisition and Operation
- 100% financing via two loans: both a long-term 2nd rank mortgage used as a down deposit (25% of the price) and a 1st rank mortgage (15 years amortization over 40 years) (75% of the price). This is a new program that has not begun yet.