Mixed Model Development: Taking a Closer Look at For-Profit-Government Partnerships

Written by Ellen McGowan

October 19, 2021

Mixed model development is highly complex and there are a range of factors related to financing, development, and operations that need to be considered before undertaking this approach.

Mixed model developments (or mixed housing) comprise differing levels of affordability, with some units at market rate and others available to low-income households at below market rate. CCOC develops and operates mixed affordable rental housing for people of different income levels, family sizes, and abilities.

In August 2020, Housing Partnership Canada (HPC) published a study (Canadian Mixed Model Development: A Comparative Analysis of Ten Sites) that explores how various forms of mixed model development can be achieved and sustained.

The study looks at ten mixed model developments across British Columbia, Alberta, and Ontario. Each project pursued a specific partnership type:

  • 6 sites had partnerships between non-profit housing providers and government entities (“non-profit-government”)
  • 2 sites had partnerships between for-profit housing developers and government entities (“for-profit-government”)
  • 2 sites had partnerships between charitable housing providers and government entities (“charitable-government”).

This blog post will focus on the two sites that had for-profit-government partnerships, commonly known as public-private partnerships. The first is Cedar Place in Vancouver (Figure 1). The second is Allenbury Gardens in Toronto (Figure 2). These cases offer insights into the different uses and arrangements of public-private partnerships during mixed model development.

Figure 1. Allenbury Gardens in North York, Toronto

Allenbury Gardens, Toronto

The redevelopment of Allenbury Gardens began in 2017 and is expected to finish in 2023. Once complete, Allenbury Gardens will have 1,013 (88%) market condominium units and 133 (12%) rent-geared-to-income (RGI) rental replacement units.

Allenbury Gardens is being redeveloped through a public-private partnership between the Toronto Community Housing Corporation (TCHC) and the FRAM Building Group, a for-profit developer and builder. TCHC is primarily responsible for the replacement of RGI units and FRAM Building Group is responsible for the development of the market condominium units. TCHC was able to fund the replacement of RGI units using proceeds from the sale of TCHC land and the sale of market condominium units on site.

A unique component of Allenbury Gardens is the governance of shared space. The partnership agreement between TCHC and FRAM Building Group included a formal shared space agreement, which considers how common spaces and amenities could be designed and used to foster inclusiveness. The rules and expectations for these shared spaces were developed by tenants—both owners and renters—to support a more integrated community.

Figure 2. Cedar Place in Burnaby, Vancouver

Cedar Place, Vancouver

Cedar Place is the affordable component of a large master plan that has not yet been fully built out. Once complete, the master plan will comprise 6,181 units and will be one of the largest mixed model developments in Canada. The unit breakdown is: 6,000 (97%) for-sale market units and 181 (3%) affordable rental units.

Cedar Place was redeveloped through a public-private partnership between BC Housing and Ledingham McAllister, a for-profit real estate developer. The project has two phases. In the first phase, BC Housing signed an agreement with Ledingham McAllister to replace an existing 90-unit affordable family housing development. The replacement building, located directly across the street from the original development, was completed in 2019. The second phase of the project involves the addition of a new 91-unit affordable housing development for seniors. Phase two construction is underway and is expected to finish later this year. Once complete, Cedar Place will have 181 affordable housing units.

The redevelopment of Cedar Place is unique for a few reasons. First, the project was financed through a land exchange with Ledingham McAllister for the development of the market component of the master plan. BC Housing owns and operates the site, while Ledingham McAllister provided development support and will be the primary developer of the remaining market units. Second, BC Housing was able to manage the financing from the provincial and federal governments. There is no mortgage for Cedar Place as BC Housing is supporting the affordability component with rents that cover operating costs.

Wrap Up

These two cases illustrate the following:

  • the location of the site must be desirable for the private developer to sell/rent units at a market rate
  • the scale of both developments is large (1,000 to 6,000 units)
  • the focus was on replacement of the affordable housing units, not to create additional stock (although Phase II of Cedar Place will add units)
  • either sale or contribution of land made the developments financially feasible

Public-private partnerships offer opportunities when developing affordable housing by involving a private entity. However, government, non-profit and charitable organizations should consider all aspects of partnerships before venturing into an agreement with a private developer. The study recommends:

  • Partnerships that share and manage risk
  • Partnering with entities that have skills that compliment your own organization’s strengths
  • Outlining the decision-making powers at the outset (e.g. Allenbury Gardens demonstrates a cooperative decision-making partnership).

If thought through at the beginning, there are many opportunities to be capitalized on when partnering with private developers to build affordable housing.

Ellen McGowan

Development Project Coordinator

October 19, 2021