Good morning, committee members.
We will begin the 24th meeting of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.
Today's meeting is again taking place in a hybrid format. Witnesses and some members of the committee are appearing virtually.
I would ask those who are appearing virtually to speak slowly for the benefit of the interpreters who are providing interpretation services for this meeting. If at any time there is a disruption in interpretation, please notify me, and I will suspend while we get it clarified.
I also remind members attending in person to respect the health protocols that have been established by the House of Commons committee on proceedings.
I would also ask all members of the committee to address their comments through me, the chair, by using the “raise hand” icon if you are appearing virtually and want to get my attention. For those in the room, simply raise your hand.
We will begin today's meeting by hearing from three witnesses on the housing accelerator fund study that we began on Thursday, February 3.
To each witness appearing, you have five minutes to give your presentation, and I would ask you to stay within the five-minute period.
From Blue Door Support Services, we have Michael Braithwaite, chief executive officer. From Société d'habitation populaire de l'Est de Montréal, we have Jean-Pierre Racette, manager; and from the Neighbourhood Land Trust, we have Joshua Barndt, executive director.
I will begin by calling on Mr. Braithwaite for a five minute opening statement.
Thank you very much. It is a pleasure to be here to speak about this very important study.
My name is Michael Braithwaite, I am the CEO of Blue Door. Blue Door is an organization in York Region. The population of York Region is about 1.1 million people, and on any given night, about 1,500 people are experiencing homelessness.
Blue Door has been around for about 40 years, and for the first 35 years we were focused on reacting, in a sense, just with emergency housing or shelter. We are the largest emergency housing provider for men, families and youth in York Region.
Over the last five years, we've pivoted a little bit to not only providing emergency housing but of course also looking at short-term and long-term affordable housing with wraparound supports. We have a housing-first approach with rent geared to income, along with those wraparound supports.
We've created a lot of housing through innovative thinking, and as everyone here is aware, it's a tough time. We're in a bit of a housing crisis, especially for our most vulnerable. We've done that through innovative thinking and leveraging private donor funds to create sustainable, affordable rental housing for seniors, families and 2SLGBTQ+ youth.
We've repurposed vacant and broken down housing with Parks Canada. They have 44 vacant homes in Rouge National Urban Park. We took one of those homes. We used our construction social enterprise to rebuild it, and it is now a duplex that will have truly affordable rents for the next 30 years, so it has a purpose as well.
Blue Door has used funds from Reaching Home and private foundations to purchase a fourplex—
I first want to thank you for giving us the opportunity to share our viewpoint with you on the issue of housing acceleration in Canada. I'll discuss this issue from an angle that will undoubtedly be a bit different from the other witnesses.
Like all of you, we feel it's important to quickly and considerably increase the supply of housing, particularly in large urban centres, which are experiencing a long-term housing shortage, particularly affordable and social housing.
That shortage destabilizes economic development. Among other things, it reduces the supply of housing for low- or moderate-income workers, who need to move further from their place of work, thus increasing travel time and greenhouse gas emissions. It also has devastating effects on the most vulnerable households, more and more of whom will end up in the street due to a lack of housing. In addition, those households are made up not just of people with mental health or addiction problems. Large urban centres will be required to manage social crises related to structural homelessness.
I note that our organization works in Montreal. Since our analysis was conducted based on urban centres, it would probably differ slightly for less populated areas.
Building numerous affordable and social housing units is a key objective. Many stakeholders will tell you various ways of addressing this complex problem, based on their perspectives and their interests. For my part, I'd like to draw the attention of the members of this committee to another issue of common interest that we feel is overlooked and that, in our opinion, is a blind spot in the current process of accelerating housing construction. Construction must certainly be accelerated, but the sustainability of new housing must also be ensured. In addition, the opportunity must be taken to structure the affordable housing sector in Canada so it's more efficient and more financially self-sufficient. Following are some issues related to the sustainability and structuring of the sector.
Once the 100,000 new housing units are built, a substantial number of which must be affordable enough to meet the most pressing needs, they must remain affordable, their quality must be maintained and they must be well managed. However, experience over the last 40 years shows that the issue of sustainability is far from being considered. Indeed, the basic assumption is that, if the funding needed to carry out a housing project is secured, the housing development will magically be well managed over the long term, which will ensure its sustainability and affordability.
Why then, you would ask, must we worry about long-term management of affordable housing stock? There are various reasons, which I'll list.
First, real estate management is very complex, particularly in a large urban centre where social dynamics can become extremely difficult and complex.
Second, managing complexity requires expertise and specialized skills. Those skills require high salaries and organizations with teams that are able to retain that competency. Also, paying those salaries, especially in large urban centres like Montreal, Toronto and Vancouver, requires large social enterprises that can assume the inherent costs of that competency. All this is even more true in the context of a major labour shortage, which requires significant salary adjustments to deal with competition from all the other companies that are also looking for skilled labour.
Finally, I must note that it's the large competent companies that will find it easiest to innovate and adapt their activities to housing needs and the evolution of our environment, which is transforming faster and faster. A case study of about 15 non-profit housing organizations in Canada, conducted in 2015 by Housing Partnership Canada, highlighted the major challenges that await the sector in terms of organizational capacity, sustainability and innovation.
We therefore have a unique opportunity to structure the affordable housing sector in Canada over the long term and promote the development of independent financial capacity by channelling responsible funding and government funding toward solid organizations. In large urban centres in Canada, there are somewhat larger organizations that focus on development. However, to be competent, have the ability to take on a considerable number of new housing units and attract responsible funding, they must absolutely be much larger. Economic analyses refer to a threshold of approximately 2,500 housing units for an organization to be competent and viable.
We want to highlight to the members of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities that this a unique collective opportunity to make the affordable housing sector in Canada's large urban centres stronger and more independent. This can be done while pursuing the objective of building 100,000 housing units.
I note that small urban centres also have challenges. It's not a matter of pitting small urban centres against large urban centres, as they complement each other. That said, the problems in large urban centres are extremely pressing.
With that in mind, and given that we have five minutes, we're making the following recommendations.
As part of the accelerated construction of these 100,000 housing units, particularly in large urban centres, where a large number of those units will be built, we recommend that priority be given to organizations that already have a large number of housing units and the expertise to foster the sustainability and affordability of those new units.
We also recommend encouraging closer ties or integration among these large social enterprises in order to accelerate their development and to bring them closer to the organizational threshold capable of supporting sustainable expertise.
With that sector consolidation in mind, including by consolidating the strongest actors, funds for organizational development must be provided to support this transition.
In that way, the strongest organizations with very large real estate stocks could be more qualified for more independent funding in the area of responsible funding. I am thinking of labour-sponsored funds, charitable foundations and pension funds.
In closing, I'd like to tell you about us. The Société d'habitation populaire de l'Est de Montréal, often called SHAPEM, is a social enterprise founded 34 years ago, in 1988. We are responsible for a housing stock of approximately 1,750 units in about 100 buildings, 1,000 of which are owned and 750 that are managed for non-profit organizations.
Of those 1,000 units that are owned, approximately 40% were built without assistance from government programs, through patient venture capital providers, such as the Fonds de solidarité FTQ, the Lucie and André Chagnon Foundation or religious communities.
Hello, honourable members. Thank you for having me here today. My name is Joshua Barndt, and I'm honoured to present on behalf of the Neighbourhood Land Trust.
I am coming to you here today from the neighbourhood of Parkdale in Toronto. The Land Trust owns 85 buildings, with 205 units of affordable rental housing. Our primary strategy for producing affordable housing has been to acquire existing rental housing and convert that housing to permanently affordable rental housing.
Over the past years, our organization and others have struggled to access funding through the national housing strategy to support this work.
I would like to speak to you today about the crisis of increasing unaffordability of rental housing stocks, and how we believe the accelerator fund could respond to this. In order to contextualize our recommendations, I'd like to share the housing affordability challenges that residents in our community are experiencing.
First, in south Parkdale 11,000 households are tenants. This represents 87% of residents. As Toronto experiences a housing affordability crisis, a large majority of local residents experienced a crush of market-driven rent increases, evictions and displacements. In 2021, our organization undertook a neighbourhood-wide research study, looking at the changes in affordability of the rental apartment building sub market, consisting of 68 private rental towers with a total of 6,060 units. Our research documented a troubling trend of consolidation of ownership of this housing stock by financialized landlords, with 71% of units currently owned by large corporate landlords and REITS.
Among many extractive business strategies, the acquisition of low-end market rental housing and the subsequent rent increases of asking rents in these buildings is integral to the financialized landlords' business strategies. This is translated into the prevalence of aggressive above-guideline rent increases and eviction applications. The advertised rents in south Parkdale increased dramatically from 2015 to 2018 by 36%.
In 2018, none of the large landlords offered units for less than $1,400, a rent level 40% higher than the CMHC average rents for the area. These dramatic rent increases and eviction threats have destabilized the everyday life of tenants, 50% of whom live below the poverty line, the majority of whom are BIPOC residents and immigrants. Above 50% of our survey respondents, tenants living in these buildings, now live in severely unaffordable housing by spending more than 50% of their income on rent. In addition, tenants have faced increased financial burden with 40% disclosing an inability to pay for medicines and food that they require.
What is a tangible solution to secure and maintain the affordability of rental housing stocks? Through jurisdictional research and consultation with tenants, community organizations, housing experts and municipal government officials, we've identified that the most effective means of preserving and producing as well as maintaining the affordability of rental housing stocks is the acquisition of private rental housing by the public or non-profit organizations, and the conversion of these properties to permanently affordable rental housing.
It is important to note that the acquisition of rental housing was a key strategy utilized to produce co-op housing from the 1970s to 1990s. Unfortunately, the national housing strategy has failed to support the acquisition of rental housing, the most rapid and cost-effective means of securing permanently affordable housing.
A national acquisition finance stream is direly needed as part of the housing accelerator fund. Countless advocates have already proposed such a program. FCM's 2020 white paper coined “COVID-19 and housing: Critical need, urgent opportunity” proposed, as one of two goals, to acquire and protect modest-rent market housing. FCM specifically identified that the federal government has an opportunity to empower community housing providers and their municipal partners to purchase existing, relatively affordable private rental housing at a much lower cost than building new affordable housing. While this goal has not yet been realized, it's not too late to act.
Why is an acquisition program a really good idea? Given today's high land cost and construction costs, preserving the existing supply of affordable rental units is faster and more economical than building new affordable units. Acquisition projects are an economically efficient way to secure the supply of rental housing, costing 30% to 60% less than new construction projects. Lower cost, of course, means more units are produced through public investment. Because the buildings in question are already integrated into the neighbourhood fabric, preserving rental housing supports government policy objectives of maintaining the stable and well-served mixed income neighbourhoods while reducing neighbourhood disruption caused by new construction. Acquisitions also curb the flow of vulnerable tenants into homelessness. For existing tenants, their housing becomes secure and remains affordable. In addition, as units are made available and turn over, acquisitions accelerate access to affordable housing for those on affordable housing waiting lists and in shelters.
I am almost done, so thank you for your time.
What is needed for an acquisition program to work through the accelerator fund? Canada needs a funding program that is a hybrid of the CMHC co-investment fund and the rapid housing initiative. This program must include, one, low-interest financing similar to the NHS co-investment program and, two, capital grant or forgivable loan funding similar to RHI. However, where RHI projects in Toronto required $350,000 to $600,000 per unit to produce, an acquisition project would require one-third of that, at $100,000 to $250,000 per unit.
Number three is that funds need to flow rapidly as acquisition projects move at the pace of the market. The City of Toronto has exemplified a means for governments to disburse funds rapidly for acquisition through a new multi-unit acquisition program that they called MURA. The NHS should consider a similar program design or simply provide the funds to municipalities to disburse locally and rapidly. I think this committee could consider providing those funds directly to municipalities and encouraging municipalities to produce programs similar to that of the City of Toronto.
In conclusion, the Neighbourhood Land Trust seeks to advise the committee that the most effective means for the federal government to accelerate the availability of affordably housing is to support public and/or non-profit acquisition of rental housing properties through a federal acquisition program funded through the accelerator fund.
Thank you so much for your time, and good luck on this very important task.
Currently we depend on two streams of funding for the acquisition of rental housing. One is municipal grants. One initial project was undertaken through section 37, which was funding received by the municipality through development bonusing. Now the City of Toronto has created the MURA program, which provides access to grant funding from the city, so we apply to that program now through a formal application.
In addition, last year in the absence of either a municipal, provincial or federal program, we raised investment from nine foundations—impact investors—who provided us short-term financing to acquire a building and get it off the market to ensure that we could preserve that affordable rental. Nonetheless, that impact investment really provides gap financing, not long-term funding or financing, so we need a government solution—a government program—to provide that support.
The other thing I'll say is that we did seek to put projects together through the RHI program and we had three unsuccessful applications partially due to the fact that RHI excluded the acquisition of rental housing unless that rental housing was fully vacant or dilapidated, which in our mind was really an ineffective qualification because in fact we want to buy the better buildings—the buildings that are tenantable, that are in good condition and that can provide good housing.
One of the things we hear a lot from naysayers of acquisition programs is that we need to produce housing that is vacant so that we can move people out of shelter into that home. What we find is that, because of the natural turnover in rental housing, we actually have access to a lot of housing. So in the time it would take to build a building—two to three years—we can actually have enough vacancy to produce that flow and bring people into housing at a rate similar to that for new construction projects. In fact, because those buildings are non-profit owned and linked to access plans from the City of Toronto's affordable housing wait-list, we provide ongoing access to housing, moving forward, as well for those in need.
That's an incredible question. It's very important.
I can tell you that we had a building that we were seeking funding for from the City of Toronto, and we had a business plan to acquire that building. About six weeks ago, we required $4 million in capital funding to make that project work—it was a 36-unit building—and we could finance the rest.
Just in the last six weeks, rates have increased so significantly, and the 10-year terms offered by banks have escalated by about 2 percentage points by now. While the government's rates have increased only a little bit, the 10-year terms that banks are offering have escalated by about 2 percentage points. That meant that our capital requirement for investment, grant funding, increased by over $1.4 million to $5.4 million. The interest rate escalation is significantly impairing our ability to finance these projects, and it translates to a higher need for capital funding.
On the one side, while interest rates are higher, we're going to need more capital grant funding. In addition, non profits continue to need access to low-interest financing through CMHC. That is going to continue to be extremely important to assist with our work.
Thank you also for that question.
We do not build new housing; we acquire existing buildings. We benefit from the fact that those buildings exist already, so our projects are not slowed down by supply chain issues. We can acquire those buildings today. Of course, once you own a building, especially a building that might be a little bit older, there's a need to renovate those buildings, to improve them and repair them over time.
Of course, we are experiencing some cost escalation due to supply chain needs and labour shortages. The benefit of having a tenantable building on day one is that you can plan for those repairs over time. In many cases, especially when we're purchasing better buildings, we can provide affordable housing to those who need it while we experience those delays in securing the labour and getting the additional funding and financing to afford the repairs.
We're finding that we can continue to provide the benefits to the city and to residents of Toronto, even with these shortages. Of course, they can slow our work down a bit, but in an acquisition context, they have less impact than they would with new construction projects, which are experiencing huge cost escalations and huge delays.
My question will be for Mr. Jean-Pierre Racette.
Thank you, Mr. Racette, for your presentation today. Indeed, we see a lot of gentrification because rents are becoming more and more expensive and people are living further and further away, and that can have an impact on climate change.
I'd like to come back in particular to the issue of funding. You talked a bit about it at the end, but you ran out of time. Today's study is about how we can ensure that the housing accelerator fund will in fact support the rapid creation of housing units.
Do you believe that a fund like the one that was created to quickly address the COVID‑19 pandemic could more quickly distribute funds to current projects?
Could you talk to us about the context surrounding funding? How can we better support you?
I must tell you that you only have one minute to answer, as I'm sharing my speaking time with my colleague, Mr. Collins. I know you well, so don't go on too long.
Voices: Ha, ha!
Thank you so much for the question.
Our organization has been working to acquire rental buildings for many years. Prior to partnering with the City of Toronto, we experienced 17 failed acquisitions due to the fact that there weren't appropriate programs to support our work.
The MURA program came out of collaboration between the City of Toronto and non-profits such as ours, which saw the acquisition of rental housing as important. There was a pilot program in 2019, which is evaluated, and our organization accessed funds through that pilot program.
That pilot program was successful, and the city now has matured that pilot program into an ongoing program. What it provides is a two-stage RFP process. There is a two-stage review process. The first stage is a pre-review of the organization, so ensuring that the organization is financially sound, that it has an appropriate strategy and operating and acquisition experience. Then that organization can be pre-approved to go out into the market and bid on buildings for a pre-approved amount of funding per unit.
That enables the organization to provide an offer on a building, knowing that it has access to funding quickly. Once that organization finds that building and puts the business plan together, undertakes a due diligence, they send out a package to the city. The city commits to reviewing and approving or denying that fund on an accelerated basis—I think it's 30 days.
That allows an organization to go and compete effectively in the private market and actually participate respectfully in the private market. Non-profits often have to pull together a lot of different complicated funding and financing to make a project work, and they're convincing a private owner to be part of that deal. When we go with what we need, it means that we're respecting the way the market works and we're working well with the private sector to transition that housing to a long-term ownership with affordable rents built in. This program is great in that way.
It also provides a few additional pieces of funding that are key to making this work. It provides deposit funding so—
We need to understand that the situation is complex. In the last two projects we carried out, we were dealing with heritage issues. They were heritage buildings, magnificent buildings with land. However, we needed a year and a half to two years for the entire process. There are limits, regulatory procedures, that can't be avoided.
Funds must be available quickly to get the buildings off the market. It's essential to pre-allocate funding. For us, things don't work in the way described by Mr. Barndt. We operate more with funds other than municipal funds, initially, and then we turn to the city.
We must also talk about organizational capacity. Building 100,000 housing units in three years is no small task. I put a lot of emphasis on organizational capacity. Everyone involved with non-profit organizations will reach essentially the same conclusion: long-term funding and community support are needed. Organizational capacity, competence, is essential.
I'm not entirely answering your question, but these points need to be raised. As I said, it's no small task. Construction time frames must also be considered. Existing buildings can be purchased, but since more and more people need housing, construction must also be considered. If all existing properties are eliminated, the middle class will not be able to find housing.
The City of Toronto this year has put $20 million into the MURA fund. If we assume that the top amount allowed per unit, $200,000, is provided for those projects, that would produce 100 units. If the City of Toronto, for example, received $200 million or more from the federal government, we could exponentially increase the number of units that could be produced.
I think quick funding of municipal programs, where those municipal programs exist, would create a quick impact. You're correct to say that, as we are seeing escalation in interest rates, the sooner we act, the better. In addition, I think as we continue to see both the pressure of COVID and the economic pressure on vulnerable people as well as on rents, we could see an escalation of the homelessness crisis. Therefore, the faster we act, I think the more likely we can sort of curb that increase in the homelessness crisis and ensure that people are in secure housing.
I think, of course, that putting out money soon would be very beneficial.
Then, as was said earlier, I think it also would be important to sustain it for some period so that projects could come together over time. Projects aren't always possible today. Sometimes in two months, three months or a year, additional or alternate projects, great projects, can come forward.
Having a program with sustained funding that allows proposals together over multiple years would be beneficial.
First, the strategy is to get as many units off the market as possible over the short term. To do that, funds are needed.
Second, we can wait for two, three or four years. We've acquired buildings in the past, and it took 20 years to make them into subsidized housing.
Funding must be available to get through the transition period, which can be quite long. Right now, in Montreal, it's mostly affordable housing units, for which the rent is lower, that we want to take off the market—I will use Mr. Barndt's logic—and they will sell at a price that will significantly raise market rents. Currently, low-rent housing units are being acquired by people who find a way to evict residents and raise the rents by $200, $300, $400 or $500 per month. The problem is that, if they're on the market—because they are on the market in these cases—funding must be negotiated and maintained to make up the difference in rent, which will not be enough to cover operating costs, as though they were on the market. For instance, suppose rent is $500 more per month, $200 or $300 is needed per month to cover that difference in costs. Prices in Toronto, Montreal and Vancouver aren't the same, but the logic is the same.
As for our rents, an affordable three-and-a-half room apartment costs $700 or $800 per month. However, if the building is put up for sale, that unit will then rent for $1,200. The financing package and analysis will require an increase in funding to get through that period. Over the long term, it will become advantageous. When our buildings are taken off the market—we do it often—the funding is not proportional to the costs.
Thank you so much for the question.
I absolutely agree that municipalities, in being local, have an understanding of the local needs and have collaborations with the partners that they need to work with for success so they can target programs to needs. So, absolutely, providing funding to the municipalities is very import, but, when doing that, it's extremely important that CMHC or the federal government not put strings on the use of those funds or limits on the use of those funds that restrict the kinds of strategies that municipalities want to have but have not been able to have through CMHC funding and financing.
We need to allow the flexibility so cities can decide whether an acquisition of rental housing program is an important strategy. That's what we want to use here. RHI didn't do that. It came with very strict restrictions on the types of projects that were eligible. It limited municipalities, at least in Toronto here, to having the type of strategy it felt was needed.
In fact, we were working with the municipality prior to RHI to secure a building that the city believed would be a great RHI program. We got an agreement of purchase and sale, but then, when the guidelines were announced, we lost that project.
Please don't tie the hands of municipalities by restricting the use too much. It's important to have some form of restrictions to ensure the funds are used well, but respect the municipalities or the experts with regard to what's needed for their residents.
Thank you so much.
Good afternoon, Mr. Chair, vice-chairs and members of the committee. Thank you very much for having me today and giving the City of Montréal the opportunity to take part in this discussion as part of your study on the housing accelerator fund.
First, the City of Montréal wants to acknowledge the housing investments announced by the Government of Canada in its latest budget, as well as all the investments in recent years through the national housing strategy. We recognize the importance of housing and the existence of a real crisis in housing. The Government of Canada deserves credit for these investments, which will clearly help to achieve concrete results. We therefore applaud the desire to create the housing accelerator fund, a measure that adds to other recent federal initiatives.
Before discussing our expectations for this new fund, I'd like to take a few moments to present the projects under way in Montreal. In Montreal, we've had record years in terms of building construction and the addition of units, and we've seen a real estate boom in recent years. Despite everything, we're seeing an explosion in property and rent prices. In Montreal, we're getting close to an overheated market. The problem is in part due to the basic supply, but to adequately address the current housing crisis, targeted action must be taken now in the area of off-market social and affordable housing construction.
The City of Montréal has shown that it can quickly adopt the tools needed to do so, and one of the solutions it has already put in place is an inclusion strategy, which recently evolved into a by-law for a diverse metropolis. That by-law sets out the terms for inclusion of affordable social and family housing in private residential projects.
Over the last year, a right of first refusal has been added for social housing and housing in general, which has allowed the city to act in terms of property by acquiring lands and buildings. These tools are at the heart of an ambitious strategy, with the city's partners, of accelerating the preservation and construction of 60,000 affordable housing units over the next 10 years, not to mention the construction of 2,000 social housing units per year. In terms of acceleration, the city did not wait to act, because it has needs. We set ambitious targets, and the city developed mechanisms for achieving them and enhancing its tool box.
The metropolis of Quebec also has private and community partners who have projects ready to launch but who cannot do so due to inadequate funding. With our local partners, the city needs help from the various levels of government in relation to four elements.
First, stable, predictable and recurring funding must be disbursed quickly and directly to cities to fund affordable off-market projects. Financial resources must be focused on the construction of housing.
Second, flexibility is needed in the use of the funds, because the city knows the needs, knows how to propose solutions, knows local actors and is trying to work with them. As we saw with the rapid housing initiative, it worked well.
Third, a coordinated and efficient approach is needed, because the increased number of programs, terms and criteria hinder the acceleration of the completion of projects. Federal programs must be consistent and must actually meet local needs, not to mention that they must absolutely align with provincial and municipal programs.
Fourth, an approach is needed that takes into consideration the unique features and challenges of large urban centres, to make it possible to limit urban sprawl, to increase the density of land in a smart way, to innovate and to optimize the use of existing infrastructure.
The City of Montréal reiterates that municipalities are best suited to find opportunities and meet local needs. We have the flexibility needed to take action, and we can create partnerships with the private sector and communities to accelerate development. We have proven this, and we continue to want to prove it with the necessary financial support.
I also note that the problem of acceleration is not really linked to municipal by-law barriers like zoning or the issuing of permits. The problem is related more to the exponential increase in land value, the increase in construction costs, the labour shortage and the cost of construction materials. In short, the cost of development is increasing, and is hindering affordable and social housing projects. In this respect, the housing accelerator fund is a unique opportunity for the federal government to concretely and quickly support cities, which are on the front lines fighting the housing crisis.
We therefore invite you to continue working with large cities in Canada and to accelerate the preservation and construction of affordable and social housing.
I'll conclude by very briefly noting the federal lands initiative. Access to surplus public buildings is certainly useful.
Good afternoon, members of the committee. I am indeed honoured to be here speaking on behalf of our community, and I will, of course, limit my comments to the Saint John perspective.
When it comes to affordable housing, the city of Saint John is in crisis. We estimate that in 2021, home ownership was not achievable by 60% of the households in Saint John, and approximately 40% of our very large rental household community did not have access to affordable housing. We know that affordability issues continue to have a severe impact on the quality of life of our citizens and that the crisis will worsen without intervention. We also believe that there are many more living very close to the line, if you will, and with housing costs on a dramatic upward curve, there is no doubt that our needs for affordable housing will increase significantly in the years to come.
Please allow me to offer a few quick themes.
First, as you develop this program, it is, in our opinion, important that the funding be provided directly to the municipalities without any requirement to pass through the province or to having matching dollars. The need is too great to slow the process down or to leave money on the table because provincial matching dollars or support are not potentially achieved in a timely manner. It is, after all, the municipalities that best understand their local situations and how to solve them.
My next point is on eligibility criteria, which we urge you to make as broad as possible. Every municipality is different and has different needs, so one size does not fit all. Also, as we develop our plans, we are trying to be bold and innovative. Restrictive criteria would limit the creative solutions. Funding should cater to the entire range of possibilities, including the staffing or horsepower for the development thereof.
The program should recognize that smaller cities like Saint John need to take a balanced approach that aligns with innovative urban plans that do not place unnecessary burdens on the private sector to build the much-needed supply and that keep us nimble and quick through the approval processes. At the same time, we need to ensure that the core housing needs of our most marginalized citizens are met by addressing the entire housing continuum and not just affordable housing.
We would also recommend streamlining funding applications. While we recognize the need for oversight, and we do have a small professional planning team who are able to pursue opportunities, approvals must be quick and easy to achieve. I think we would all agree that the hard work should be in the creation of the solutions and not in the completion of funding forms.
In closing, I will leave you with a few more statistics.
Saint John is now experiencing rents that are comparable with those in mid-sized cities, yet the average family income in Saint John is approximately, and only, about $66,000 per year before tax. The story is much more compelling, because it's also a tale of haves and have-nots. Over 30% of our renter households make less than $35,000 a year, and some make much less.
Using a standard definition of affordable housing, which is 30% of total family income, we estimate that our greatest need is for units in the $500 to $800 per month range. I would suggest to you that it does not matter how innovative we may be, developers cannot produce these units for that cost per door. We simply do not enjoy the economy of scale that larger cities may have and use to drive down construction prices. We need significant direct funding assistance and special programs, and the time for them is now.
I am joined here today by our commissioner of growth and community services, Jacqueline Hamilton, and between her, the mayor and me, we would be pleased to answer any questions you may have.
I'm here speaking as the mayor of the Town of Newmarket—we're about 90,000 people—and as a member of York Regional Council. That's about 1.2 million people.
I'm also here as the chair of Housing York. Housing York is our regionally owned housing corporation and is responsible for providing housing for residents with low and moderate incomes.
We have about 43 community housing providers that we work with in York Region. We manage and maintain just over 2,700 homes in 36 properties across all nine cities, towns and townships, and we're providing subsidized and market rental options for more than another 4,500 residents. Our properties are very well maintained, and we're financially sustainable in each property.
York Region residents, like residents across the greater Toronto area and other parts of the country, have seen unprecedented affordable housing challenges. Ownership affordability is out of reach for most households.
This is a very important piece here. Recent analysis has shown that in 2021 less than 1% of the new ownership supply—and we're talking about supply a lot today—was affordable to households with incomes at or below the sixth income decile. That means 60% could afford only 1% of what was built, and that's for those who earned $132,000 a year or less. They could not afford anything but that 1%. Ninety-nine per cent was out of their reach.
We also have a rental housing challenge in York Region, a massive one. As the 2016 census found, we have low supply. York had the lowest proportion of rentals in the GTA, and we have an affordability challenge, with 52% of renters spending more than 30% of their income on housing. We have seen growth in the purpose-built rental market, but only 275 units were constructed in 2021 for a population of 1.2 million.
We also have a historic deficit of community housing, limiting our ability to provide homes for people living on low incomes. Compared to other large municipalities in Ontario, we have the lowest proportion of historical community housing supply. We have a 15,000-household wait-list. That wait can be up to 11 years on average. We're able to offer subsidies to about 350 applicants per year, but the wait-list grows by about 760 applicants per year.
To respond to these issues, York Region Council declared a housing crisis in 2021 and initiated a housing affordability task force to identify solutions. Like most municipalities, we're doing our part, including increasing the community housing supply by more than 1,200 units since 2006.
We've funded 66% of the capital costs for new supply from the municipal tax base, with the federal and provincial governments funding the remainder. We're providing grants to offset development charges for not-for-profit housing developments, and we're setting ambitious goals to double the supply of community housing developments through Housing York's strategic plan.
We're accessing available federal programs, including the co-investment fund, where we've had some success, and the rapid housing initiative, where our application unfortunately was turned down twice due to program demand—again, 1.2 million people and two applications turned down.
We've introduced a regional development charge deferral program for market rental housing developers to add to the purpose-built rental supply, which is working somewhat, and we're creating a community housing development master plan to establish a development pipeline to increase Housing York and non-profit housing supply.
Those are just a few examples of what we're doing. We know that it takes an all-of-government approach, and we know that there isn't just one solution, of course.
We were encouraged to see the 2022 federal budget focus on housing affordability, including commitments to restructure the rental construction financing initiative to require deeper levels of affordability and updating the co-investment fund to provide an increased share of grant funding over loans.
The success of these programs in York Region has been limited. They require proponents to access funding on a project-by-project basis, making it difficult to plan for the long term. We also continue to receive cost-shared funding from the federal and Ontario governments, but it's a fraction of what is needed to address our housing priorities and is expected to decline in the coming years.
We were also encouraged to see that the budget committed to a $4-billion housing accelerator fund with the goal of 100,000 new homes across Canada by 2025. We're increasingly hearing that more supply is needed to address affordability and ensure we can accommodate our growing population.
As you consider the design of this program, there are some key principles to keep in mind, please.
The complexity of the issue and the wide-ranging needs of Canadians make it critical for the federal government to be clear in identifying the issue the accelerator is trying to solve. What type of housing will the program accelerate and how will that be accomplished? We need to accelerate the right type of supply. This includes affordable and family-sized housing.
One lesson learned to date since the launch of the national housing strategy is that government investments should be targeted based on needs. In York Region, while we've added supply to meet growth targets, prices have continued to escalate, suggesting that demand factors also pose an issue. We are required by the Planning Act of Ontario to have a three-to-seven year supply. We have a 4.5-year supply.
These homes are not affordable, and the problem will worsen as construction and labour costs continue to escalate. We've also found in the region's monitoring that new homes that meet the provincial definition of affordability tend to be one-bedroom investor condos. Housing options for families, including for first-time homebuyers, are increasingly limited. Actions that focus on increasing supply without affordability requirements miss addressing demand factors, including the impact that speculation has on the market.
Through the accelerator, the federal government should incentivize the supply we need most—ownership and rental housing in particular for low- and moderate-income households. This can be achieved by attaching affordability requirements and size standards to the funding. The accelerator could require municipalities to adopt inclusionary zoning policies, which are often the only tool available to require developers to build affordable supply.
If the government is providing per-door funding through the accelerator, allowing municipalities to use the funds to ensure inclusionary zoning can provide deeper affordability and sufficiently sized homes for families. The program won't be successful if it secures only small one-bedroom units.
Second, a Canada-wide housing accelerator needs to be flexible. While the 2022 budget spoke to up-front funding for investments in municipal planning approvals, many municipalities experiencing growth pressures, such as York Region and several of its local municipalities, have already updated their technology and business processes. The Province of Ontario has also offered financial support for similar initiatives.
The accelerator needs to be flexible enough to support municipalities that have already made these improvements to allow us to use the funding for other supply-related alternatives. These could include tools like funding to offer fee waivers or rebates for development charges, permit fees, HST, land transfer taxes, funding for pre-development work and capital gains, etc. A one-size-fits-all approach will not work.
Thank you to the witnesses for attending today and to all of those who are participating in this study. I've listened quite intently through the various presentations over the past couple of weeks.
I want to take a little bit of a different approach to the questions today, because many of the presentations are quite similar. Almost all ask for more money. Almost all cite issues with money getting to where it needs to go. Most cite bureaucratic hiccups along the way. I believe that the rental market and the purchase market are very much tied. If rents are high, then that impacts the price of a home.
I know that as Conservatives at this table we're probably in the minority. In fact I'd say we're probably the only party that sits at this table that doesn't believe that government is the answer to everything. In fact, I believe many of the issues that we find ourselves in today are due to government getting itself in the middle of where it shouldn't be.
The one issue I want to throw out here today, which I haven't heard anybody talk about—I don't think I've heard one single presentation mention it—is the issue of rent controls. I don't know which provinces have rent controls and which ones don't. I do know that Ontario does, because they apply to the apartment I rent in Ottawa as a member of Parliament. I know that in Alberta, for example, we've always resisted the idea of rent controls, and I don't think our housing problem in Alberta is anywhere near as dire as what has been presented from other parts of the country.
I'd like to hear a little bit more about what each one of the presenters thinks about rent controls and what impact rent controls have on the housing market in their particular province. I'll start with the Mayor of Newmarket.
Go ahead, please.
Thank you to our witnesses this afternoon, especially the ones from my riding of Saint John.
As a member of Parliament in this riding, certainly one of the most frustrating things I've seen and dealt with are the lack of affordable housing units and the crisis that we're in with respect to affordable housing. I'm certainly pleased to hear our mayor and you, Mr. Collin, recognize that it is an emergency.
We've also heard consistently through the testimony so far that we need to get money in the hands of municipalities and cut through the red tape. Again, we've heard and we've learned who knows better how to invest that money and who should have their own strategies to deal with their own unique situations. Obviously further to that, we certainly know that not all municipalities are the same. They have different needs.
My first question is to Ms. Hamilton or Mr. Collin.
Share with the committee how that money could best be used. I won't lead you, but could it be invested in land or administration, what have you?
Thank you very much for allowing me to address this issue. I ran out of time.
What I said is that the initiative makes a lot of sense and is very good. However, there is a lot of obscurity surrounding the program. It's very hard to get information about it. We're in the city of Montreal, which is a large Canadian city, and we're unable to get the location or type of lands available, or find out whether they're contaminated or what the terms of acquisition are. It's not possible.
According to the website we're referred to, there's unfortunately no land. It's indicated that there's none. However, there certainly should be some. It's very difficult.
As well, the government should also ensure that the lands managed by the Canada Lands Company are available for the creation of social, community and affordable housing. That's currently the case in Montreal with the Peel Basin. The City of Montréal has established an entire plan for that area of Cité-du-Havre. Unfortunately, the land is not designated as a priority for the construction of social and community housing.
One of the first very important contributions of land that could be made would be those lands held by the Canada Lands Company. The City of Montréal could then house thousands of Montrealers.
I totally agree. I think we need the right mix of the two.
The city is already in construction mode, in terms of its by-laws and new programs and in terms of the rapid housing initiative—the RHI—the AccèsLogis Québec program and the AccèsLogis Montréal program, among others.
The construction pipeline needs to be fed. What can be done right away, given that the construction of new housing units can take time, is to socialize housing, in other words, remove housing units from the market logic and purchase and renovate them. The City of Montréal believes in that. As well, line 3, the innovation line—a program for social, community and affordable housing—has already been funded. Funding has been provided to organizations that purchase real estate complexes, that can renovate them, within a certain amount of time, and that ensure that the affordability is sustainable.
Of the 60,000 housing units that the City of Montréal wants to offer over the next 10 years, a significant proportion will be social housing. It must be possible to acquire and maintain affordable housing, so housing that is not expensive.
Thank you, Madame Martinez Ferrada.
Thank you to all of the witnesses for appearing today and for providing the valuable testimony that you have during your time in this meeting. You can see that an hour is a short period of time for this very important topic.
Before the committee adjourns, I would ask for a few minutes on committee business to consider a request that this committee has received from FINA.
The witnesses may leave.
Committee members, could give me your indulgence for five minutes?
On Thursday, FINA, the finance committee, adopted a motion inviting HUMA to consider the subject matter of part 5, divisions 26, 27, 29 and 32, of Bill . This would have to be done by Friday of next week, if we are going to consider it.
The finance committee will still review the sections of the bill in clause-by-clause, amend it where they choose and approve it. HUMA is being asked to review it and provide recommendations, if we so choose. Having said that, if we're going to do it, we would possibly have to sit during the constituency week.
I'm at the direction of the committee members. The finance committee will still review it.
Madame Chabot has her hand up, and next is Madam Kusie.
We have Madame Chabot.
I agree with my colleague from the Bloc that this is relevant to our committee, but I think the time frame is very unfair. Two weeks is not a lot of time, really, for this, and for the weight of the issues that we're considering.
I'm seeing nodding in response to that point.
With regard to EI and EI benefits, as my colleague pointed out, they're amending the Canada Labour Code. These are significant things. As well, I'm sure it's very important to Ms. Zarrillo, as the EI appeal board is something that will allow those whose claims are denied to have their opportunity to say....
This is significant. I think it merits not only our rescheduling of the meeting on Thursday to evaluate this, but also two meetings next week. I think three would be the bare minimum that we could do to provide justice to this issue. I also think, when we're dealing with such sweeping, impactful legislation, that the ministers have to be accountable. In my opinion, that includes Labour, Finance and ESDC.
Mr. Chair, I really don't want to waste a lot of time going back and forth. I think Madam Martinez Ferrada is always pretty clear in her mind about what her team has been informed of and what they're willing to do. I'm asking for three meetings.
I'm seeing agreement here. I can't tell from Madam Zarrillo on the screen.... Then, as I said, those three ministers....
Could Madam Martinez Ferrada respond as to what the government had in mind? If they put this time frame in front of us, then I'm sure they have an idea as to what they're willing to do. Then, I guess, we'll leave it to the decision of the committee to decide if they find acceptable what the government suggests, which I hope will be what I've suggested and what this merits, especially given the time frame.
Thank you, Chair.