What is Affordable? 30 per cent of gross household income is generally considered affordable. However, affordability criteria typically differs by program and funding authority. CANADA MORTGAGE AND HOUSING CORPORATION4
Affordability Criteria – Two examples CANADA MORTGAGE AND HOUSING CORPORATION5 Example 1 Canada-Ontario Affordable Housing Agreement (MMAH as IAH) 80 percent of CMHC average market rents Below average resale price Example 2 CMHC Seed and Proposal Development Funds Program 80 th rent percentile Below average resale price
CANADA MORTGAGE AND HOUSING CORPORATION6 Who creates affordable housing? Community leaders including non- profit service organizations and housing providers, churches, private sector developers, and municipalities. Each partnership brings value to the deal, such as business knowledge, financial resources or regulatory flexibility.
What approaches work? Municipal Tools Used In Canada CANADA MORTGAGE AND HOUSING CORPORATION Acquiring and renovating building Expedited approval process Parkland dedication fees Affordable housing strategy Grants and loans Public–private Partnerships Allowing infill Housing agreements for new development Redeveloping/convertin g non-residential buildings/sites Comprehensive development zoning Housing fund Resale price restrictions Designing flexible Housing Housing organization Retaining affordable housing Donating land or facilities Inclusionary zoning Secondary and garden suites Encouraging building energy efficient housing Intensification Using development levies Encouraging smaller units Land banking Waiving or reducing property taxes
CANADA MORTGAGE AND HOUSING CORPORATION8 Ideas that have worked There are many approaches to creating affordable housing. Benevolent financing & funding Donate money Lend money Property Sell property, with conditions Lease property Donate property Developers Acquire and rehabilitate Build new housing
Programs Available 1. Seed Funding 2. Proposal Development Funds (PDF) CANADA MORTGAGE AND HOUSING CORPORATION9
10 CMHCs Seed Funding program offers financial assistance to housing proponents who are in the early stages of developing an affordable housing project. 1. Seed Funding Up to $10,000 in the form of a grant Up to $10,000 in the form of an interest-free loan
Seed Funding 11 What Types of Housing Projects are Eligible? Housing project must be affordable Housing Project must be located in Canada No restrictions on: Building form Tenure type Future residents of the housing project Type of housing proponent organization
Seed Funding rental housing project in which units will have rents within CMHCs Affordability Criteria homeowner project - the units must be modest and the purchase prices must be below the market for units of similar type, size and number of bedrooms in the subject housing market and neighbourhood CANADA MORTGAGE AND HOUSING CORPORATION12 What is Affordable?
Seed Funding CANADA MORTGAGE AND HOUSING CORPORATION13 Who is Eligible? Not-for-profit organization Housing co-operative First Nations Private entrepreneur Group of individuals who may or may not intend to become incorporated Municipalities
Seed Funding Housing market studies to evaluate need and demand for the proposed project Development of a business plan Exploration of funding sources or options Evaluation of procurement options Preliminary financial viability analysis Environmental site assessment Preliminary design of the housing project Incorporation of a not-for-profit organization CANADA MORTGAGE AND HOUSING CORPORATION14 What activities are eligible?
Seed Funding CANADA MORTGAGE AND HOUSING CORPORATION15 What Expenses are not Eligible? Not related to the development of the housing project Expenses carried out prior to CMHCs written approval of Seed Funding Expenses related to hard project costs, example - lot servicing, construction, renovation, and so on Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental Retainer fees paid to consultants or any other professionals for work to be completed in the future
Seed Funding CANADA MORTGAGE AND HOUSING CORPORATION16 Conditions of the Funding 1. Must enter into a Contribution Agreement with CMHC 2. Must provide a need and demand study satisfactory to CMHC and an acceptable business plan before further funds will be advanced 3. Funds will be transferred only for eligible expenses confirmed with invoices or receipts 4. Eligible activities are expected to be completed within 12 months of the date of the Contribution Agreement. A longer period may be negotiated.
17 CMHCs PDF program provides interest-free loans to facilitate the development of affordable housing. 2. Proposal Development Funding - Up to $100,000, determined by CMHC - Depending on the size and complexity of the proposed housing project and how much development work needs to be done. ** Not available for housing proposals whose viability or level of affordability depends upon approval for a Provincial or Territorial program funded under the Affordable Housing Agreement
Proposal Development Funding Must have at least five (5) housing units If rental – majority of rents must be below market rent limits established by CMHC for units of similar type, size and number of bedrooms in the subject housing market If home ownership – the sale price must be below the market value for similar housing in the neighbourhood Units – whether rental or homeowner – must be modest in size and design There must be a demonstrated need for the proposed project CANADA MORTGAGE AND HOUSING CORPORATION18 Eligible criteria
Proposal Development Funding CANADA MORTGAGE AND HOUSING CORPORATION19 Who is Eligible? Not-for-profit organization Housing co-operative First Nations Private entrepreneur Any other housing proponents who can demonstrate their ability to produce a viable affordable housing project which meets CMHCs criteria
Proposal Development Funding Soil load-bearing tests Environmental site assessments Project drawings and specifications Professional fees Cost estimates Management plan Option to purchase Development permits Contract document Application fees CANADA MORTGAGE AND HOUSING CORPORATION20 What activities are eligible?
Proposal Development Funding CANADA MORTGAGE AND HOUSING CORPORATION21 What Expenses are not Eligible? Not related to the development of the housing project Expenses carried out prior to CMHCs written approval Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental Retainer fees paid to consultants or any other professionals for work to be completed in the future
Proposal Development Funding CANADA MORTGAGE AND HOUSING CORPORATION22 Conditions of the Funding 1. Must enter into a Contribution Agreement with CMHC 2. Must provide a comprehensive description of the project proposal, along with a need and demand study and a preliminary viability analysis and business plan 3. Funds will be transferred only for eligible expenses confirmed with invoices or receipts
Proposal Development Funding CANADA MORTGAGE AND HOUSING CORPORATION23 Loan Repayment Requirements To be repaid out of the projects capital financing, normally from the first advance of the mortgage loan Only the principal amount is repaid If project is successful in producing an affordable housing project, it may be eligible for a portion of the loan to be forgiven If project is successful but unable to produce affordable housing units, the full amount is repayable, without interest