Solving the affordable housing gap is a complex challenge. The problem is big, and it will take time to deliver new units. So, when the federal government recently announced an investment in five housing projects to deliver over 5,300 homes in Ottawa, it seemed like good progress. However, a closer look at the numbers reveals a less impressive story.
The press release highlighted a $13.3 million investment to help repair “3,722 new units,” meaning over 70 per cent of the units in this initiative are existing ones being renovated. Ontario’s existing social housing stock has been poorly managed and underfunded, and while it’s crucial to make this housing supply habitable, referring to these units as “new” is, at best, misleading.
As part of this recently announced initiative, the government is allocating $224 million through the Apartment Construction Loan Program (ACLP) to fund the construction of 542 new units. These are genuinely new units, but don’t expect to see any new supply for 3 to 5 years.
A 2021 land purchase deal between the federal government and the City of Ottawa offers another example. At the time, the federal government valued the parcel at 1010 Sommerset—the site of a warehouse demolished in 2015 and later declared surplus land—at $25 million. The City of Ottawa received a $14 million discount by agreeing to the federal government’s policy priorities, which included meeting environmental sustainability requirements, taking responsibility for any environmental clean-up, and addressing reconciliation by involving the Algonquins of Ontario in various aspects of the project. This left a price tag of $11 million.
To secure CMHC’s participation, the City of Ottawa committed to building 300 residential units by 2038, with half of them designated as affordable. In return, CMHC provided $8.58 million in the form of a “forgivable mortgage.” The city intends to deliver a detailed project plan and funding strategy no later than 2027. Assuming costs are aligned with similar units being built, the City will need to raise around $123 million for this project.
While the mortgage is being funded through the government’s federal land initiative, it’s a stretch to classify this as a new project. In reality, it suggests the government has struggled to make significant progress in utilizing federal lands, so it is resorting to recycling a four-year-old initiative as “new” funding. Another surprise is how 300 units ballooned to 1,156; perhaps the additional 856 units exist only on paper.
Building affordable housing takes time. It will be a monumental challenge to come anywhere close to meeting CMHC’s target of 3.5 million of additional units by 2030. However, when the federal government makes announcements like this, it creates a credibility gap that is hard to close.
Independent Opinion
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