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The Housing Again Bulletin, sponsored by Raising the Roof as a partner in Housing Again.

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A monthly electronic bulletin highlighting what people are doing to put housing back on the public agenda across Canada and around the world, sponsored by Raising the Roof as part of the Housing Again partnership.

News for October, 2003

Affordable Housing in Canada: In Search of a New Paradigm - New Report from TD Economics


In a comprehensive report released today, TD Economics calls on policy makers across the country to develop a new approach to addressing the problem of affordable housing “…one that situates the problem in a larger economic and social context.”

Entitled Affordable Housing in Canada: In Search of a New Paradigm and available online at, the study represents the fourth in a series of TD Economics reports that address the challenges facing Canada’s urban areas.

These studies were undertaken on the heels of a number of speeches in 2001 and 2002 by A. Charles Baillie, past TD Bank Financial Group Chairman of the Board, who focused on the goal of raising Canada’s standard of living above U.S. levels within 15 years. Living standards in Canada, as measured by GDP per capita, still stand about 15 per cent below the U.S. average.

Affordable housing is not just a social and health issue Affordable housing is frequently viewed as a social and health issue, but the fact of the matter is that it runs deeper than that. “Working to find solutions to this problem is also smart economic policy,” said Don Drummond, Senior Vice President and Chief Economist, TD Bank Financial Group.

“An inadequate housing supply can be a roadblock to business investment and growth, and influences a potential immigrant’s decision on whether or not to locate in Canada.” As such, Drummond added, “Addressing this serious situation ties in well with the goal of raising the standard of living for all Canadians.” At last count, some 1.7 million households in Canada, or about one in five, could not find adequate and suitable housing without spending 30 per cent or more of their pre-tax income.

Affordability improved of late, but only modestly Recently, the news emanating on the affordable housing front has provided a dose of encouragement, notably the spike in the average rental market vacancy rate in 2002, on the back of the recent surge in residential building activity. But, Drummond argued, “We should be very cautious about proclaiming a turning point in the crisis of affordable housing.” He points to the fact that the recent lackening in rental-market conditions in Canada has been largely at the higher-end of the rent range, not at the lower end where affordability problems are most pronounced. Moreover, the proportion of households with affordability problems, while improving in the second half of the 1990s, remains well above where it stood in 1990.

Not just a big city problem One striking finding in the TD Economics study is that shortages of affordable housing are not strictly a phenomenon affecting large urban centres. “Large cities such as Toronto and Vancouver are home to some of the highest overall costs of rental accommodation of Canada’s major urban markets, but two medium-sized cities, Halifax and Regina, rank first and third in terms of the share of renter households suffering from an affordability problem.” Moreover, average shelter-cost ratios for renter households in nonmetropolitan areas are virtually on par with those in metropolitan areas.

Crunch happening on two fronts While Drummond acknowledges that the lack of new supply of rental accommodations, particularly at the lower end of the rent range, is at the heart of the housing problem, he believes an even larger contributor is that there are too many Canadian households with low incomes. “In virtually every region of the country, gains of lower income families have paled in comparison to those recorded at the average and higher ends.” He notes that for some specific groups, such as new immigrant families, poverty rates continued to worsen during the boom-times of the late 1990s.

The ultimate solution

In its report, TD Economics lays out a new paradigm for finding solutions to the affordable housing problem. Whereas most approaches undertaken in recent years have focused on the supply side of the equation, TD Economics’ ultimate solution is grounded in raising market incomes. “Maintaining a strong and stable economic environment, combined with measures to knock down barriers for low-income households to improving their income prospects, should be at the top of governments’ priority list.”

Among the recommendations in the study, TD Economics points to the need to ramp up efforts to lower high-school drop-out rates, which are astonishingly high in Canada for a developed country, and to improving immigration settlement services. The Bank also recommends adjusting the design of federal and provincial benefit and tax systems to make work pay and to help low-income earners save for retirement.

Interim complementary actions also needed

Drummond acknowledges that working to lift market incomes at the low end will take time. Accordingly, he points to the need to take interim measures targeted at lowerincome families. “Income support, both shelter-specific and more general, are an efficient way to target assistance to those most in need,” Drummond said.

However, he adds that in an environment of tight supply, income subsidies for rents can lead to the benefits flowing up to the landlord, highlighting the need to complement them with measures to boost supply. In the study, TD Economics argues that recommendations put forward to spur private rental investment in recent years have been largely on the tax side, many of which do not appear to be very effective in improving the situation for affordable housing. “There is no compelling reason to think that these tax breaks would work more effectively than direct capital grants targeted at affordable

On the supply front, in addition to the tax recommendations, much of the emphasis has been on boosting affordable housing availability through producing new rental stock.

Drummond said, “In many cases, it is more economical to target public resources on preserving and rehabilitating the existing stock.”

Remove market imperfections

Drummond also underscores the importance of eliminating various market imperfections that have impeded the creation of affordable housing. These imperfections include everything from higher municipal property taxes on multiple-unit residential dwellings than on single-detached, to rent controls, to a lack of available land in reasonable-cost locations. Furthermore, development codes often prevent the construction of lower-cost housing. “Fostering the building of more modest housing stock, such as single-room occupancy units, can play a key role in assisting very low-income individuals and people transitioning out of the shelter system,” Drummond said.

For more information, please contact:

Don Drummond Derek Burleton
Senior Vice President and Chief Economist Senior Economist, Canadian Industries & Provinces
TD Economics TD Economics
416-982-2556 416-982-2514

Gillian Manning
U.S. and International Economist
TD Economics

(Marc Lévesque, Vice-président adjoint et économiste principal, sera disponible pour des
commentaires en français, 416-982-2557.)

This report, “Affordable Housing in Canada: In Search of a New Paradigm,” (including charts) is available in PDF format on TD Economics’ Home Page at:

‘The Road Ahead’ from Eves-- pretty narrow if you’re on the waiting lists for affordable housing


Toronto) The Conservative Party of Ontario announced today that if re-elected they would pass legislation allowing homeowners to deduct $5,000 of their mortgage interest payments from their taxable income, resulting in up to $500 in savings for homeowners. There were, however, no incentives for affordable rental housing.

“To say the least it’s confusing,” said Robin Campbell, Executive Director of the Ontario Non-Profit Housing Association (ONPHA). “The government has always looked for market solutions. The rental housing market is practically on life support, while the home ownership market is breaking records! Why on earth would you put huge amounts of taxpayer’s money into giving existing homeowners a break?”

In the 1970s, rental housing production averaged about 37,000 units a year. In the last few years it has averaged well under 5,000 units. Currently, there are over 160,000 households on Ontario’s waiting list for subsidized housing. CMHC says we should be producing 14,000 rental units a year just to keep up.

The government’s own figures show that, for an average priced home, lower interest rates have reduced monthly carrying costs by 25% from 1990 to 2002. Meanwhile, average rents in Ontario rose at more than twice the rate of inflation between 1999 and 2002.

The government has already spent over $150 million rebating the land transfer tax to first-time homebuyers since 1996. This is far more than has gone to affordable rental housing, which the government believes is not being developed because of regulatory and tax problems in the marketplace. And the federal Affordable Rental Housing program has been stalled for two years, partly because Ontario is making cash-starved municipalities put up over $180 million to match the federal commitment, while it offers only $20 million of matching money.

If re-elected the government also will enact powers to allow homeless people to be forcibly taken off the streets.

“Of course people shouldn’t be dying on our streets,” said Campbell today. “But take them where? They will end up in shelters or hospitals that cost the taxpayers far more than supportive affordable housing. Where is the ‘common sense’ in that?”

For more information

Homelessness saps $68 million from London, Ontario every year, study says


NORMAN DE BONO, Free Press Business Reporter 2003-05-17

Emma Zhao will carry the memory of London's homeless with her the rest of her life.

At 28, an MBA fresh in hand, there is every reason to believe she will be successful in business.

But wherever she works she will turn her attention to the homeless and work on their behalf, she said.

Now, she is calling on London's business community to do the same -- that it must wake up to the problem of homelessness, which steals $68 million a year from this city in lost economic development and costs to its justice and health-care communities and a much higher toll in human lives, she said.

"It is shocking. Homelessness is a serious issue and if we don't take care of it, it will be a bigger problem in the future," said Zhao. "Business could and should be a part of the solution. They can make a contribution."

Zhao was part of a five-member research team at the Richard Ivey School of Business at the University of Western Ontario that gauged the economic impact of London's homeless problem for a report for the Salvation Army.

"I still think about it a lot," she said of the research which took her into shelters, speaking with the homeless and front-line workers.

"It is very painful," said Zhao. "I agree business people should care about the bottom line, but at the same time, they have the power to do something for society."

Homelessness can negatively impact a community's image so it hampers the quality of workforce it attracts, lowers property values and adds greatly to the tax burden.

"It has a big economic impact, a big impact on business," she said. "Ultimately it will effect taxes and business has to bear those costs."

But the good news, detailed in great length by the Ivey study, is social action is not just good public relations for business but improves profitability.

"Research demonstrates that business involvement not only improves business's ability to meet existing objectives -- generating black ink on the bottom line, but it also leverages business performance in strategically important areas," states the report.

The business community can ease the financial burdens of poverty, as well as elevate its community status and better its working relationship with government, by taking on homelessness as an image, the report states. In fighting the problem, financial contributions from the business community are critical, but it must also use its considerable clout to rally government action and apply pressure to others in the business community, said Zhao.

Ivey students are required as part of their second-year studies to complete a field research project in groups of of four to six students and find a "real world client," to study, said Rowland Fleming, who teaches business strategies at Ivey and headed the project. The students invested 75 hours of time over a three-to-four-month period on the 55-page report for the Salvation Army.

"It's an amazing report," said Fleming, former chief executive of the Toronto Stock Exchange. "Working with them, it was extraordinary to watch how they researched the societal costs of homelessness."

The report should be required reading for all business leaders as well as politicians at all three levels of government, he added.

The Salvation Army and business school began work on the project last year, with a focus on how the Salvation Army can rally business support to combat the problem and help build a new shelter.

"I was not sure at the time they would turn it into a sufficiently challenging project for course requirements," said Fleming. "But I was blown away by the degree and depth of research and the inescapable conclusion they reached that business is not an island; a healthy society, a healthy community, makes for prosperous business."

Fleming agreed with Zhao that while business must make financial contributions, it also has a role to play in lobbying different levels of government and other businesses for action. Homelessness can also become a workplace issue, much like the United Way, Corporate Challenge and Christmas food and toy drives.

"Businesses need to adopt this as a cause. Organizations, large and small, should become charged with raising money through a variety of ways and offering human capital," said Fleming.

In working with Ivey students on the report, the Salvation Army was looking for a way to quantify the impact of homelessness on the community and the study gives them that, said Capt. Neil Lewis of the Salvation Army.

"We wanted to know how best to get across to the public, business and government the value in taking care of the homeless.

The study indicates there is a high cost in health care, the justice system and the value of human life is diminished, he said.

The report quotes a study by Peat Marwick that concluded people avoid city centres as a result of homelessness and an average Canadian mid-sized city, such as London, will lose $24 million and 219 jobs in retail income, $24 million and 442 jobs in leisure income and up to $20 million in losses through theft in the retail sector -- a total of up to $68 million.

As for the homeless problem, in London, shelters serve 4,000 individuals a year, including 625 children.

"Hopefully, business recognize the real need and will help to influence government and policy to help take care of the problem and support us financially," said Lewis.

"They need to take a public role in advocating for homelessness, not just as a business issue but also as a social issue."

More than 15 per cent of London households are considered low income, compared with a provincial average of 13.1 per cent.

London's poverty rate is 24.3 per cent for children from birth to 14 years old, compared to 13 per cent nationally.

The fastest-growing group of homeless in London are families with children. In 1997, 127 families with 236 children used hostels and last year that toll stood at 196 families and 345 children, states the report.

The report also argues that being a business with a social conscience pays off.

It quotes a study that followed 25 companies that manage relationships with various stakeholders, including the community, and they outperformed the S&P 500 by more than double over the last 15 years and total shareholder return was 43 per cent, compared to 10 per cent for the S&P 500.

"Addressing social challenges can help businesses improve their financial bottom line," states the report.

Community involvement helps boost a company's "intangible assets" in which one-quarter of the world's total financial wealth is tied up.

The report goes on to detail that community involvement benefits human resources by bettering staff morale and job satisfaction, allowing a firm to hire better employees and give current employees new skills on the job.

The One Percent Solution: What is it? What will it do?


Commitment of Funding is the First Step

The One Percent Solution was launched in 1998 by the Toronto Disaster Relief Committee. It is based on the finding of Prof. David Hulchanski of the University of Toronto that, in the mid-1990s, federal, provincial, territorial and municipal governments spent about one percent of their budgets on housing. Since then, there have been additional cuts. The One Percent Solution calls on governments to double their commitment to housing programs by restoring and renewing housing spending. A multi-year commitment is required. We have three recommendations:

funding of $2 billion federally, and another $2 billion among provinces and territories.

restoring and renewing national, provincial and territorial programs aimed at resolving the housing crisis and homelessness disaster.

extension of federal homelessness strategy (Supporting Community Partnerships Initiative) with immediate funding for new and expanded shelter and services across the country.

Five Components of New National Housing Program

The National Housing and Homelessness Network recommends five components:

supply (new social housing supply),

affordability (rent supplements for low-income households in new and existing social units),

supports (additional supportive housing units),

rehabilitation (acquisition and conversion of substandard units to social housing), and

emergency relief (double annual spending on services and shelter for the homeless).

We do not support tax-based measures or grants to private developers or landlords. The history of these programs (ARP, CRSP, Renterprise) is that new units are generally not targeted to low and moderate-income households and many were quickly flipped into condominium (MURBs). Numerous studies, including those funded by CMHC, show that:

community-based social housing is cost-effective when compared to private subsidies,

social housing offers the greatest economic and social benefits, and

it offers affordable rents to the households that need it the most.

There is broad agreement about the key elements of a new national housing program. For instance, the Federation of Canadian Municipalities has the following recommendations:

20,000 units of new housing and 10,000 units of rehabilitated housing,

$300 million to ramp up the Affordable Housing Framework Agreement

$150 million for homelessness initiatives

$500 million over five years for a new Community RRAP (housing rehabilitation) fund

The FCM believes rent supplements are the responsibility of provinces and territories.

The FCM is also proposing that the federal government provide $10 million over five years to fund a Centre for Community Social Development, which would have the goal of “promoting integrated community solutions involving housing, homelessness, recreation and learning facilities and facilities for substance abuse, harm reduction and health promotion”. The proposed centre would be administered by the FCM with a multi-stakeholder board of directors.

Policy Formation, Program Design is the Next Step

The National Housing and Homelessness Network and our partners across the country are continuing to work on refining the specific elements of the One Percent Solution, program design details and costs.

Community-based groups that provide housing and services for the homeless, those at risk of homelessness and low-income tenants (such as the partners in the National Housing and Homelessness Network) should be part of the policy formation and program design process.

The federal government and a growing number of provinces recognize the important role that non-government organizations play in the life of our nation. Such initiatives as the Accord between the Government of Canada and the Voluntary Sector and, in particular, the draft Code of Good Practice titled “Working Together on Policy Development” (which was released in May of 2002) stress the importance of such “positive outcomes” as:

“co-operation between the Government of Canada and the voluntary sector in policy development;”

“the voluntary sector’s involvement and input at the early stages of policy development and throughout the process;”

“mechanisms to hear and incorporate the issues and concerns of the diverse voluntary sector, including harder-to-reach groups;”

“information made more readily available and accessible; and”

“better understanding of one another’s broad policy objectives and the role that each can play in furthering these objectives.”

Provinces Haven't Lived Up to Housing Agreement

In November of 2001, the federal government joined with the provinces and territories in signing the Affordable Housing Framework Agreement. Under this agreement, the federal government has promised to pay $680 million over five years for new affordable housing. The provinces and territories agreed to provide matching funding. The new deal was a welcome development, especially after years of funding cuts at the federal level and in almost every province except for Quebec. But there are several major problems with the roll-out of this agreement:

while the Affordable Housing Framework Agreement calls on the funds to be targeted to low and moderate-income renter households, a number of provinces are using CMHC average rents to define affordable rents.

a number of provinces, especially British Columbia, Alberta and Ontario, have taken advantage of loopholes in the framework agreement and refused to provide provincial matching dollars.

provincial spending estimates show that six of the ten provinces cut housing spending in 2002-2003, according to their provincial estimates, which means that the new federal money is simply replacing provincial dollars, leading to no net gain in new housing.

Average Rents Are Not Affordable Rents

The chart below shows average rents in Toronto, Vancouver and Ontario, along with the affordable rent based on the median income of renter households in those areas. Only in Montreal is the affordable rent of $490 per month close to the average rent of $529.

In Vancouver, the median renter household income is $21,897. That means that half the 390,000 renter households in that city can afford to pay $547 or less each month. The average rent for a two-bedroom apartment in Vancouver is $919. In Toronto, the median income is $27,039. Half the 780,000 renter households in that city can afford a monthly rent of $676, yet the average rent for a two-bedroom apartment is $1,027. While the numbers are different in other parts of the country, the pattern is much the same. Low, moderate and middle-income renter households saw their household income fall by 3% (adjusted for inflation) from 1984 to 1999 and have faced rapidly increasing average rents in recent years. Current average rents do not reflect the amount tenants can afford to pay, but are squeezing a growing number into desperate conditions.

All of which is respectfully submitted by,

Michael Shapcott, on behalf of the National Housing and Homelessness Network

Snapshot from B.C. - Province Shuts Down Housing Program

The following was prepared by Linda Mix, chair of the B.C. Housing and Homelessness Network, a partner of the National Housing and Homelessness Network:

After the bilateral agreement between the federal government and the province of BC was signed, the provincial government cancelled the Homes BC program. Homes BC produced 5,000 affordable housing units between 1994 and 2001. In cancelling Homes BC, 1,700 units approved for development in the previous funding year by the former government were shelved as well. Homes BC was replaced with a new program: Supported Living BC.

This shift in delivery is complicated as it means closing about 3,000 nursing home beds and replacing them with 3,500 “supported/assisted living units” targeted to frail elderly that can live independently. This has created a domino effect in the housing and health sectors. The closure of long-term care facilities and the move into assisted living or supported living comes with no protections under the Residential Tenancy Act or the Community Care Facilities Act, which protects nursing home residents. If no supportive unit is available the patient is given a rent supplement for private facilities.

It also means the closure of some non-profit units for seniors living independently and receiving subsidy for their housing. This is a serious hardship for many seniors as they are displaced from their homes if they do not qualify for assisted living and no alternate subsidized unit is found.

The new program is slow to get off the ground. It is a controversial move to shift seniors from their nursing home to tiny apartments with minimum supports. This new program pits the needs of low-income singles and families, independent seniors, people with disabilities against the needs of others. A coalition of housing providers and advocates, seniors groups and health care providers have joined forces to work to reverse this ill-conceived decision.

Meanwhile, the wait list for existing BC Housing units built under the old program continues to grow. Approximately 1,000 units allocated for development by the previous government, including Woodward’s project in Vancouver, have been cancelled.

The province resurrected 697 units from the 1,700 cancelled last October using ARP funds. These projects all come with substantial equity or major partners. The funding formulas are complex and we do not have the details on all of them. The province is taking credit for new housing under development that was previously allocated, even units that don’t receive any provincial housing dollars. For example the 41 self-contained units for homeless at risk at the Pennsylvania Hotel operated by the Portland Hotel Society in partnership with the City of Vancouver, Coastal Health Authority and SCPI.

Most of the 697 remaining units are for seniors, with some family, First Nations housing and homeless at risk.


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