Status quo ‘doesn’t work,’ Hamilton non-profit housing providers say

City councillors plan to discuss a $4-million-a-year fund to boost the development of non-profit housing in Hamilton amid a deepening affordability crisis.

But city officials and non-profit providers alike acknowledge that's just a drop in the bucket compared to what's needed to shore up steadily eroding affordable stock.

That $4 million a year will help support projects, Michelle Baird, the city's housing director, told councillors recently.

However, it certainly doesn't address the need for affordable housing overall."

Consideration of the proposed fund, which council has kicked to budget talks, comes during mounting fiscal challenges on the housing file.

With housing costs marching relentlessly upward, more and more people are pushed to desperation, including homelessness.

Despite the worsening situation, funding from senior levels of government is declining, leaving the city to rely on local taxpayers to triage the hefty file, officials say.

It's a question of where do we find the resources and how do we step into a leadership gap and how do we balance all of the trade-offs," Angie Burden, general manager of healthy and safe communities, which handles housing, told council.

The pursuit of a dedicated affordable housing fund follows non-profits' pleas this past summer for a reliable, nimble and sustainable source for their projects.

Their request coincides with mounting frustration in landing financial support from a flagship Canada Mortgage and Housing Corporation (CMHC) co-investment program that demands municipal skin in the game before the national agency disperses federal dollars.

The municipal support up front is really key for partnership," Graham Cubitt, director of projects and development with Indwell, a non-profit that builds deeply affordable and supportive housing, told The Spectator.

Indwell is part of a coalition of non-profits that aspires to build 3,000 affordable units in three years. Coalition members say they could launch 21 projects with 1,585 units between them by 2025. That carries an overall budget of $738 million.

With the status quo" scenario, the city covers about nine per cent of that, while the provincial and federal governments chip in one per cent each. The providers themselves would contribute 89 per cent through equity and loans, according to a presentation by the coalition.

And what we're saying is that doesn't work. This is why we can't do anything on our own," Cubitt said.

A better funding model, however, would rely less on federal loans and lean more heavily on direct government grants (to cover about a third of projects) with the proponent and city as partner handling the rest, he suggested.

Hamilton is Home members are forging ahead with ambitious plans, despite the uncertainty of government funding, rising interest rates and spiking inflation.

A 266-unit project at 60 Caledon Ave. near Upper James and Mohawk on the Mountain is proceeding nicely" in terms of development and design work, says Lori-Anne Gagne, chief executive officer of Victoria Park Community Homes.

Construction is expected to start in June, said Gagne, whose project partner is Hamilton East Kiwanis Non-Profit Homes.

That said, the finances still don't work well since CMHC has scaled back, so we are desperately looking at ways to reduce costs and considering multiple types of pro formas trying to make the project viable financially."

As it stands, the city is falling short of its goal of creating 350 affordable units per year, achieving a little more than 50 annually.

The cost to build affordable housing has spiked from $250,000 per door in 2018 to $550,000, Burden noted. We're looking at a cost over the next 10 years of $500 million (to) $600 million to preserve what we have."

At the same time, Hamilton is losing affordable units at a faster clip. For every one unit that we build new, we lose four units of existing community housing stock."

Housing providers' mortgage-tied agreements with government to provide affordable units are sunsetting, including 2,000 expected to expire this year, Burden noted. The city hopes to preserve these affordable units through incentives.

Meanwhile, rents in the private market are increasingly out of reach. A new CMHC report found that only 12 per cent of vacant apartments in Hamilton are affordable to renters who earn $46,000 a year. In December, the average one-bedroom apartment in the city went for $1,764, Rentals.ca reported.

Nearly 6,000 households are on Hamilton's wait list for subsidized units while, as of early January, roughly 1,600 people had experienced homelessness in the previous 90 days.

There's no quick and easy fix, suggests Jim Dunn, a McMaster University expert who studies, housing, health and neighbourhoods. But I think there's lots of things that could be done that would make a difference."

The city has tapped Dunn and housing expert Steve Pomeroy to help draft an overall housing road map" to be presented to council this spring.

Ultimately, what's required is a transformation of the nonmarket housing sector" to grab a greater share of the overall stock, Dunn said.

Building more affordable housing is key, but retention of modestly priced stock is also crucial, Dunn said.

New construction is a drop in the bucket compared to what we're actually losing in affordable housing on the flip side."

On that front, the city could find ways to help non-profits acquire lower-rent buildings that might otherwise be snatched up by large corporate entities to evict tenants, renovate units and jack rents, Dunn noted.

It also makes sense to support residents who might stay in their units if they could afford to pay higher rates, rather than losing the stock of modest rentals forever."

Wrap-around services to help those with complex needs, such as mental illness and addiction, stay housed is another piece of the puzzle that can alleviate pressure elsewhere, such as overburdened emergency shelters.

The city doesn't have to take on all the remedies in the eventual road map, but it can facilitate them and lead the way, Dunn says.

He recognizes municipalities just don't have the breadth of tax base" to effectively tackle the massive housing file in the absence of provincial involvement.

This year, Hamilton's preliminary investment in housing is pegged at $84.9 million, according to a recent budget presentation: the city covers the lion's share, the federal contribution is $21 million and province $2.7 million.

The Ministry of Municipal Affairs and Housing, however, offered a different take on funds, pointing to the more than $52 million the city has been allocated through various programs in 2022-23.

But roughly $15.5 million of that total is a federal contribution, Brian McMullen, the city's director of financial planning, administration and policy, told The Spectator.

The ministry also noted the city received $58.8 million through the province's pandemic-response Social Services Relief Fund.

That's over three calendar years, McMullen clarified, noting the city has no word yet from the province about whether the fund will continue in 2023 despite unprecedented demand for supports for homelessness and affordable housing."

Meanwhile, councillors suggest provincial downloading coupled with a potential 14.5 per cent hike to Burden's department - which oversees a range of services including paramedics, public health and recreation - makes for a political balancing act.

I've already heard mumblings that this is a tax-and-spend council," said Coun. John-Paul Danko, who was reelected to a second term this past fall.

For this budget, I know people see - our taxpayers see - the need in the community. They understand the drastic situations that our residents find themselves in."

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com