3H Properties is a relatively new and inexperienced developer with a presence in BC and Ontario. They are focusing on building new and preserving existing affordable housing through acquisition, with supposedly no displacement of existing tenants. In a webinar on preservation of existing affordable housing units, 3H Properties Founder Alfredo Hermano noted that 64,000 affordable units are lost every year in Canada, with 20,000 of those in Ontario. Taking into account the number of units CMHC is planning to build through the National Housing Strategy, we are losing four units for every affordable one we’re building.
Iman Novin (Principal, Novin Development) discussed the preservation of affordable units in the US using a tax exemption reducing their property taxes to 1% in the State of California. He noted that the two tax credits for new construction are quite competitive–both programs are oversubscribed, and there is less for renovation/rehabilitation projects of unsubsidized housing units. His firm works with local non-profits to buy this housing and work with residents on a 10-year plan for how the property might transition to a tax-credit building in the future or whether there are other strategies to maintain the affordable units (e.g. partnering with mission-aligned developers and sponsors to compete with for-profit buyers). He noted that that there are a range of housing types that are currently affordable: in the Bay Area, over half of renters living in unsubsidized affordable units live in buildings with fewer than 9 units. Some municipalities are partnering to buy up these properties to maintain workforce housing for people at 80% of the Area Median Income. But what is to ensure that those developers, sponsors and partners (other than non-profit housing organizations) will keep the properties affordable in the future?
Patricia Roset-Zuppa (Vice President, Policy Development, CMHC), who used to work in the US and has spent over ten years at CMHC, noted that housing affordability issues have persisted in Canada and that a toolkit approach is needed to ensure supply is adequate and that units are affordable. CMHC’s focus is on new construction, with a smaller focus on renovation and rehabilitation and even less on the existing social housing stock (while their mortgages are still in place). Supply side programs are there to develop new housing, with Rental Construction Financing available for private sector developers–this program is changing now to reflect the need for more affordable units as it has primarily resulted in private market-rate units. However, she did acknowledge that CMHC is still not doing enough to build and preserve affordable housing–for example they’re trying to improve the National Co-Investment Fund and application process to make it more viable for non-profits and co-ops, and a new co-op housing program is being developed with the Co-operative Housing Federation.