Canadian Funding Corp Reviews CMHC Affordable Housing Reports

Canada Mortgage and Housing Corporation (CMHC) launched its new National Seniors’ Housing Survey today. The survey, conducted in all provinces, collected information on vacancy rates and rents in seniors’ residences with services not offered in traditional rental structures.

“Vacancy rates and rent levels in the seniors’ housing market reflect a different market makeup than the traditional rental market,” said Bob Dugan, Chief Economist for CMHC. “The demand for seniors’ housing is expected to increase as the baby boom generation ages. The anticipation of this eventual increase in demand, has spurred the construction of seniors’ units ahead of actual demand. This, in turn, has led to an average vacancy rate of 9.2 percent in seniors’ residences that tends to be higher than in the traditional rental market.”

The national vacancy rate applies to standard spaces, which are defined as:

* private units such as a bachelor, one-bedroom or two-bedroom apartment occupied by a single individual or a couple; one unit is considered as one standard space;
* semi-private units; one unit is considered as two standard spaces;
* ward units; one unit is considered as three standard spaces or more;

The vacancy rate is calculated for all standard spaces regardless of whether the occupant participates in a meal plan or requires medical services. The vacancy rate covers only spaces that accommodate residents who receive less than 1.5 hours of care per day.

Vacancy rates varied considerably across the country, from a low of 3.4 per cent in Saskatchewan to a high of 18.9 per cent in Newfoundland and Labrador. The vacancy rate in Ontario (13.3 per cent) was above the national figure, while the rates in British Columbia (7.5 per cent) and Quebec (7.9 per cent) were below average.

Average monthly rents in the seniors’ market are higher than traditional market rents, reflecting the additional services and amenities that residents of these structures receive. The average rent for bachelor/private units where meals are included was $1,774 per month. Average rents ranged from a high of $2,519 per month in Ontario to a low of $1,271 in Quebec. Differences in average rents reflect, in part, the varying prevalence of services and amenities in each province.

As Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes — homes that will continue to create vibrant and healthy communities and cities across the country.

Information on this release:

Andrea Scott
CMHC
Media Relations
Tel.: 613-748-4075
ascott@cmhc-schl.gc.ca

Backgrounder

* CMHC conducted its first National Seniors’ Housing Survey in February and March 2009. Previously, CMHC had regional seniors’ reports in B.C., Ontario and Quebec, which were published annually.
* The new national survey was conducted in all 10 provinces and in all centres regardless of size, which had a residence meeting the eligibility criteria.
* The survey targeted private and non-profit residences where the majority of residents were 65 years of age or older and had access to additional services not offered in traditional rental structures. To be eligible for the survey, a residence must provide an on-site meal plan or on-site medical services. Virtually all residences surveyed provided an on-site meal plan. Other amenities and services that were popular in some of the residences included on-site medical services (57.8 per cent), transportation services (44.2 per cent) and 24 hour call-bell service (92.0 per cent). Note that the survey excluded nursing homes and long-term care facilities.
* Across Canada, some 43 per cent of standard spaces in the seniors’ housing market rented for less than $1,500 and 22.0 per cent of spaces rented for $2,500 or more per month.
* Some 176,845 seniors lived in the 2,464 residences surveyed, capturing 8.2 per cent of the Canadian population at, or above, the age of 75.

http://www.cmhc.ca/en/corp/nero/nere/2009/2009-06-22-0815.cfm
reviewed by Moishe Alexander, CFC CEO

The Canadian Funding Corporation recently learned about a new development foundation in Saskatoon, that assists and supports families who wish to purchase a home, but do not have access to traditional forms of financing. Other objectives include the creation of accessible and affordable housing.

The Affordable New Home Development Foundation is a registered non-profit organization created in 1999 to educate and support families and individuals who want to buy their first home but, for various reasons, cannot access the traditional marketplace.

The Foundation works closely with the homebuilding industry, the financial community, governments and the community to design, finance and build homes that are affordable and to develop alternative forms of homeownership.

The Foundation works with individuals and families whose annual household incomes are $52,000 or less. Families and individuals in this income range often pay rents approximately the same as monthly principal and interest payments; however, because of real or perceived barriers, they are not able to purchase a home through the normal channels. The Foundation works with them to help overcome these barriers, leading to the purchase of a new home.

The Canadian Funding Corporation stated that all new homes are built by builder members of the Saskatoon & Region Home Builders’ Association and are backed by new home warranties to offer the maximum in quality construction and consumer protection.

The origin of the Affordable New Home Development Foundation was the Solutions for Economic Home Ownership (SEHO) initiative, lead by Keith Hanson of the Sun Ridge Group. SEHO won an honourable mention in the finance and tenure category of CMHC’s 2000 Housing Awards.

The Foundation Board of Directors includes Keith Hanson, executive director and directors Don Junor, Karen E. Walsh, Marilyn Boechler and Mona Nasser The Affordable Housing Solution Projects

The Foundation’s first project—led by SEHO in1999—is Borden Crescent in, which helped five families become homeowners. Since then, more than 250 families have been able to buy new homes in various neighbourhoods throughout Saskatoon.

The Gropper Crescent Project was a 50-unit project built by North Ridge Development. It was mostly single unit dwellings, with a few semi-detached dwellings. All units were condominium ownership and each unit was from 74 to 83 m2 (800 to 900 sq. ft.) with full basements. Lots were about 232 m2 (2,500 sq. ft.) Down payment assistance of $3,000 was provided through the Foundation from the City of Saskatoon.

Elm Park Terrace is an 11-unit condominium project built by Ehrenburg Homes. To help owners manage operating costs, energy efficiency is a high priority in these homes. Features include high-quality energy-efficient windows, high-efficiency furnaces and wastewater heat recovery in some units.

CMHC provided Seed Funding to help cover the costs associated with preliminary planning.

Hunter Crossing, built by North Ridge Developments, is a 40-unit condominium project that includes 11 accessible–affordable housing units. North Ridge consulted with the Canadian Paraplegic Association to ensure the proper design of the accessible units.

Low- and modest-income households purchasing homes in the projects had access to forgivable equity loans funded by all three levels of government under the Centenary Affordable Housing Program (CAHP)—Homeownership Option.

CAHP is funded under the Canada–Saskatchewan Affordable Housing Agreement, which emphasizes the creation of affordable housing, enables eligible low- to moderate-income households to become homeowners. The CAHP Homeownership Option provides forgivable equity loans of up to $19,500 to households with gross household income of less than $44,500.

Since the construction of the projects described above, the CAHP Homeownership Option has been renamed the HomeFirst Homeownership Program and the forgivable equity loan amount is $20,000 with a qualifying annual gross household income of up to $52,000.

Moishe Alexander, founder and CEO of CFC mentioned that many additional new units (townhouses, detached, semi-detached, apartment) were built by a variety of builders throughout Saskatoon neighbourhoods.

The purchasers of some of these units received financial assistance under the CAHP program.

CMHC news release:
http://www.cmhc.ca/en/corp/nero/nere/2006/2006-11-17-1200.cfm

According to the Canadian Funding Corp, St. Clare’s Multifaith Housing Society is a private, non-profit organization that uses private sector business strategies to achieve its social goal of providing safe, affordable housing in Toronto’s downtown and helping the homeless stabilize their lives, find work and participate in the community.

St. Clare’s also provides support through its partnerships with other agencies to provide a range of services to homeless people to help them integrate into the community.

The Affordable Housing Solution

An example of St. Clare’s use of private sector business strategies is the way it has leveraged funds. Phase 1 of 25 Leonard is 51 units of transitional housing. For Phase 2—another 26 units—St. Clare’s re-financed Phase 1, which contributed $1.6 million to Phase 2. St. Clare’s subsequently re-financed this loan in 2007 to leverage $500,000 in equity for the Society’s next project—190 units under development in Toronto. Each time the Society re-financed, it was able to reduce its mortgage payment as a result of obtaining lower interest rates.

St. Clare’s first success was in 2001, when it bought a former medical office building at 25 Leonard Ave., next to the Kensington Market area in downtown Toronto.

St. Clare’s converted the four-storey, 2,601 m2 (28,000 sq. ft.) building into 51 units of transitional housing for homeless people. A typical unit is 30 m2 (330 sq. ft.) and has a private bathroom and a kitchenette.The building already had an elevator and was wheelchair-accessible.

The Canadian Funding Corporation noted that at a cost of less than $95,000 per unit, 25 Leonard is one of the most cost-effective transitional housing projects developed in Toronto.

Because the building was a medical office, rooms already had sinks and running water, which cut construction costs.

To finance 25 Leonard, the key first step was securing a $50,000 line of credit from a credit union. After the property was acquired and a clear goal established, it was possible for St. Clare’s to pursue other funding sources.

St. Clare’s is a registered charity, and it raised $235,000, mostly from foundations, to help make 25 Leonard a reality.

Funding was secured from a variety of sources, including $2.5 million from the federal government’s Supporting Community Partnerships Initiative (SCPI), $395,000 in grants and waived fees from the City of Toronto, an Ontario sales tax rebate of $102,000 and GST rebates.

In addition to the sales tax rebate, the Government of Ontario offered a rent supplement which allowed the project to charge the $115 Ontario Works single-shelter rate.

Building on the success of 25 Leonard Avenue, in 2006 St. Clare’s added another 26 affordable housing units at the same site. Instead of buying another property in downtown Toronto, St. Clare’s found a solution on its own roof at 25 Leonard and embarked on Phase 2 of the project, adding a fifth and a sixth floor, with 26 self-contained bachelor apartments.

The new, factory-made units were added using an innovative construction technique that involved stacking 26 prefabricated bachelor units on the roof of the four-storey building.

The self-contained units each have their own bathroom and kitchenette.

Each unit is 19 m2 (212 sq. ft.).

These units offer a permanent housing solution to people who can live independently, but were homeless or living in shelters because they could not secure affordable housing.

The new units are organized around an exterior, landscaped courtyard on the roof, allowing natural light and fresh air into the units, as well as providing a shared outdoor garden area.

Rent for 20 of the units is established at the shelter component of the social assistance allowance and rent for six of the units is geared-to-income, through an internal subsidy.

Total cost of construction for Phase 2 of 25 Leonard was $3,124,725. CMHC and the government of Ontario covered 35 per cent of the construction costs through the Affordable Housing Initiative.

Human Resources and Social Development Canada provided a predevelopment loan through its Supporting Communities Partnership Initiative, and the City of Toronto contributed a low-interest loan and waived development fees.

Phase 2 of 25 Leonard Street and Levitt Goodman Architects Ltd. won a CMHC Housing Award in 2006 for the intensification and modular construction of 25 Leonard Street, which shows that manufactured housing is an elegant, simple and cost-effective way of creating affordable housing.