THE AFFORDABLE HOUSING CONUNDRUM
It may be called `affordable' but projects are expensive and challenging to build
Why can't Ottawa build more affordable housing?
It's an urgent question. Ottawa currently has about 22,500 community housing units. That sounds like a lot, but at least 12,000 households are on the city's centralized waiting list for social housing.
There is some hope on the horizon. In its latest budget, the City of Ottawa committed $33.5 million to improving access to housing and helping people keep their existing homes. And in February 2024, the federal government announced funding of over $176.3 million to Ottawa under the Housing Accelerator Fund.
Those announcements are encouraging, but the problem is still immense. “Even if you take all of that money, it's going to be a drop in the bucket,” says Graeme Hussey, president of Cahdco. His Ottawa-based organization provides project management consulting services and advice to faith groups and other non-profit housing developers.
The numbers are stark. Ottawa is aiming to build 5,000 affordable housing units between 2021 and 2030, but in the last three years, only 466 have been completed. The city's auditor general recently estimated the city would need to invest $188.4 million and drum up $376.7 million in federal and provincial funding to reach its 5,000-unit goal.
Like for-profit developers, affordable housing proponents have to acquire land, create designs, get approvals, raise capital, and cope with inflation, high interest rates and construction labour shortages. Of all of these challenges, capital is the biggest, says Hussey. “The shortfall is not a lack of land or capacity. It's a lack of money.”
He estimates that most affordable housing projects draw on five to 10 sources of funding, including government loans and grants, bank loans, and charitable fundraising.
The Haven, a 98-unit affordable housing development in Barrhaven that opened in 2017, provides an example of the patchwork of funding required. The city provided the land. Federal, provincial and municipal governments provided $10 million in grants. The project's builder, Ottawa's Multifaith Housing Initiative (MHI), raised $1.2 million and funded the rest of the $19.3-million construction costs with a long-term mortgage.
Those numbers are high enough, but current conditions are worse.
“In 2022, we hit an absolute hyperinflationary market in construction, with materials and labour,” says Suzanne Le, MHI'S executive director. “The cost of building today is ... about triple what it was when we developed The Haven.”
Her organization is working on two new affordable housing projects. Furthest ahead is Dream Lebreton, MHI'S partnership with the Dream development group. The two-tower project on Lebreton Flats will include about 600 units. MHI will own and operate 133 of them as affordable housing, while Dream will offer another 117 as moderately affordable units. The rest will be offered at market rates. Le is hopeful that construction will begin this year.
MHI is also working on The Anchor, a proposed development on an Anglican church property at Merivale Road and Rossland Avenue. If approved, it would have about 75 affordable housing units, along with a gathering space, a shared garden and a redeveloped church.
For MHI, housing is just the first step toward a larger goal. “Our goal is about building community. Housing is the means to the end. The end is the community,” Le says. MHI projects feature shared spaces for activities such as barbecues and movie nights, which are often open to people from outside the development as a way to build bridges.
MHI strives to build attractive places where people are proud to live, and The Haven won a design award from the Greater Ottawa Home Builders' Association. “Our communities need to be as beautiful as the communities around us, so that we're accepted and welcomed,” says Le. “We should never be apologizing going into a community.”
So if we want more Havens — attractive, affordable housing that is integrated into the wider community — how can we do it? Cahdco's Hussey, who has worked with MHI on several projects, offers inspiration from other jurisdictions.
He cites Vienna, which began building social housing a century ago. Today, the city government owns roughly 220,000 rental units, and about a quarter of the city's population lives in them. The city is planning to build 5,500 more units by 2025.
Few Ontario cities would have the resources for that kind of commitment. However, in every jurisdiction except Ontario, the provincial or territorial government is responsible for affordable housing, so that level of investment might be possible elsewhere in Canada.
Hussey also points to Finland, where a credit institution provides government-guaranteed loans with terms of up to 41 years to affordable housing builders. That helps reduce their construction and operations risks.
In conversations with Ottawa affordable housing advocates and builders, the word “risk” comes up a lot. Hussey says that when he's dealing with an organization new to the field, one of the first things he asks them is about their appetite for uncertainty.
Le agrees. “Housing is the long game, and it's not for the weak of heart.”