Funding and Financing Affordable Housing
Hello, everyone! Mozhgan here, and today I am diving into a topic that many of us find both fascinating and crucial: money, specifically funding and financing for affordable housing projects. As my colleague Em mentioned in our previous blog, funding for affordable housing typically falls into two main categories: pre-development and construction funding. Each of these categories encompasses a variety of programs that offer grants, repayable loans, or a hybrid of both.
The Challenges of Securing Funds
One of the significant hurdles in affordable housing development is the timing and availability of funds. Often, when you need funding for pre-development activities, it might not be readily accessible. This challenge necessitates exploring alternative financing options, such as equity contributions, bridge loans, and lines of credit, to keep the project moving forward.
“Optimizing Timing and Communication in Construction: Unlocking Funding Access”
Moving on to the construction phase, it is crucial to ensure that all stakeholders such as clients, funders, consultants, construction managers, and others, maintain effective communication. This coordination is essential to secure the necessary funding and financing at the right time. Let’s explore this process in more detail with a real-life example.
Case Study: 44 Eccles Street Supportive Housing
One of our recent projects, a four-storey, 46-unit supportive housing building at 44 Eccles Street, provides a perfect illustration. This development, aimed at offering transitional housing for women, involved renovating the space into 46 apartments, 15% of which feature barrier-compliant washrooms. Shared amenities include on-site services and counseling, laundry, community space, and outdoor areas.
The Draw Process in Action
For this project, securing monthly draws during construction was essential to ensure ongoing cash flow.
Draws allow access to secured funding sources to pay for incurred costs as construction progresses. Some common funding sources that require formal draw requests include:
- CMHC Affordable Housing (Co-Investment) Fund grants and financing
- Rapid Housing Initiative funding (National/Municipal)
For the 44 Eccles Street project, we utilized Rapid Housing Initiative funding.
Draws can only commence once a formal funding contribution agreement is in place, which may or may not occur before construction begins. Typically, draws happen on an as-needed basis, often monthly. In some programs, like Action Ottawa, payments are milestone-based, reducing the frequency of draw requests.
Who Are the Stakeholders in the Draw Process?
As I mentioned earlier, effective communication among all stakeholders is crucial for success. But why is this so important? Simply put, it is because timely payments are essential for everyone involved. The draw process resembles teamwork. For instance, in Eccles, the team participating in the process demonstrated this principle perfectly. The team included:
- Funder/Lender: The City of Ottawa Housing Branch
- Owner: Cornerstone Housing for Women
- Project Monitor: AMS Quantity Surveyors, who verify project costs and monitor progress
- Construction Manager: McDonald Brothers Construction
- Architect: CSV Architect
- Project Manager: Cahdco
Implementing Project Management Tools
Now that you know your team, it is time to utilize some project management tools to keep everything on track. It is important to ensure that everyone knows their responsibilities and deadlines. That is why we introduced draw schedules, which is the first step in any drawing process.
For our example project here, Cahdco sent out these schedules to the construction manager, architect, project monitor, and owner, outlining due dates and responsibilities for each group. The schedule works backward from the draw date, ensuring everyone knows their deadlines and tasks.
Conclusion
The funding and financing process for affordable housing projects is complex but manageable with effective communication and coordination among all stakeholders. The draw process, while may seem intricate, is crucial for maintaining cash flow and project momentum.