Co-operative Housing Association
of Eastern Ontario

Co-ops and Housing Issues in the News!

An affordable rental program now under consideration by the federal government would give developers thousands of dollars in grants to encourage construction of rental housing in cities with razor-thin vacancy rates such as Ottawa.

The proposal, tentatively set at $15,000 per unit and set to go before cabinet in the near future is part of the Liberals' Red Book campaign promise to spend $680 million on affordable housing over the next four years.

It's the first federal move to help cities with low vacancy rates.

In Ottawa, where the 0.2-per-cent vacancy rate is the lowest in the country, employed people are living in shelters for lack of anywhere to go, and the wait for subsidized housing is up to eight years—and rents are on the rise.

But the move is already under fire from municipal politicians who fear the program will allow developers to take their $15,000 per unit and build luxury apartments out of reach of those who truly need help.

"It's not going to address the affordable housing crisis because it's not going to be affordable," said Jack Layton, a Toronto city councillor who is first vice-president of the Federation of Canadian Municipalities and also the author of Homelessness: The making and unmaking of a crisis.

A government source confirmed the program has been drawn up, although it assumes equal contributions from provincial governments.

The goal of the plan, designed so that the units are cheaper to build, therefore cheaper once they're listed on the open market, is to create up to 120,000 new housing units.

Without provincial help, the federal government would only be able to create about half that many.

Some aspects of the program, however, are still hazy: the exact amount and form of the subsidy could still change, and it's not yet clear what conditions, if any, developers will have to meet to qualify for the money.

The federation, which represents most municipal governments in Canada, wants subsidies of $50,000 per unit.

It would prefer the subsidies be handed out through a national foundation and system of trust funds, with guarantees that what gets built will be affordable for those on tight budgets. Mr. Layton said while he's pleased the federal government is taking notice of the problem, its efforts may be in vain if it doesn't produce significantly lower rents.

He estimated that a $15,000 subsidy would create an apartment renting for about $150 lower than market price, while the $50,000 subsidy would create a $500 difference—enough to make a significant difference for low-income families.

The federation's goal is to produce 20,000 new units annually that are affordable for the 800,000 Canadian families who now spend more than 50 per cent of their income on shelter. If necessary, Mr. Layton said he'd prefer to see larger subsidies for a smaller number of apartments.

The proposal is being watched carefully in Ottawa, where politicians have warned that federal initiatives on homelessness are not addressing the real crisis, which is a shortage of affordable housing.

"What this will do is basically give developers grants to build high-end rental buildings," said Kanata Councillor Alex Munter, who chairs the city's Health, Recreation and Social Services Committee.

"It is not a good use of tax dollars to be providing luxury accommodation," he said. "I am delighted that the government is prepared to do something about housing," Mr. Munter added.

"Cities across Canada have been saying to the federal government that it is urgent that the federal government deal with the crisis."

"It would be a pity if that kind of money, which could make a real difference, just turns into a bonanza for developers."