Instead of putting money away in distant funds, Victoria Steele has bought into a campaign that’s closer to home: a $25 million bond to preserve affordable housing in Ottawa.
Ottawa Community Land Trust (OCLT) and Centretown Citizens Corporation (CCOC) launched the Housing Forever Bond campaign on Sept. 17, inviting everyday residents and organizations to invest directly into preserving affordable homes.
Working in the arts and culture sector means Steele has watched people struggle to meet basic shelter costs firsthand.
“As someone who cares for the community, I see this as a complete win-win. And as an investor, I still get something back,” the management consultant and part-time business professor said.
“It’s so tangible, I mean you see the direct impact, it’s nothing short of brilliant.”
In an environment where Steele said so many consumers are hearing “buy local” and “shop local”, this campaign allows communities to invest in themselves.
Unlike traditional donations, community bonds let people lend money to non-profits and earn it back with modest interest. As a business professor, Steele said this model is a smart shift for the non-profit sector because it provides enough money to help secure additional loans.
Community bonds and community investing for social housing is probably the idea I’ve been the most excited about in 20 years of working in this sector.
Sarah Button, executive director of the Centretown Citizens Corporation
Instead of going to governments, OCLT and CCOC are asking residents and local organizations to lend them money for three, five or seven years. The funds will be used to buy existing properties or land. Once the projects are up and running, they’ll pay back the loan with interest as a “thank you,” said Sarah Button, executive director at CCOC.
“It’s an aggregator and an accelerator of local money,” Button said. “Instead of stashing your money with a big bank savings account, you’re placing money temporarily with a community organization who is going to do good in your community.”
The bonds help bridge the gap between how much an idea costs to get a project going and when it can access government funding.
“It can cost close to a million dollars to get a project from an idea to shovels in the ground,” Button said. The closer the project is to fruition, the closer they are to government funding, she explained. Once government funding comes through, non-profits can repay investors or, for longer-term bonds, reinvest in new projects.
Community bonds pool investor dollars together to help turn existing rental properties into affordable housing. OCLT hopes to use the campaign to acquire 200 units. The CCOC wants to build 400 by purchasing land or developing vacant sites they already own.
In doing so, “we have a better chance at keeping homes affordable forever,” said Mike Bulthuis, executive director at OCLT. Ultimately, he said, it allows the organizations to reach more people in the community.
OCLT is a non-profit that has owned two buildings since 2017. The CCOC is a 50-year-old non-profit and is one of Canada’s largest non-profit landlords with 1,700 apartments across 50 properties in the city. Button said this collaboration helps them avoid duplicating their efforts.
“Community bonds and community investing for social housing is probably the idea I’ve been the most excited about in 20 years of working in this sector,” Button said.
Heather Hachigian, an associate professor at Royal Roads University, said “social financing,” or pooling investor money to fund a range of activities, often makes it hard to keep funding in the community. Community bonds still fit this category, she said, but they “are a viable instrument to raise capital from the community and keep that capital circulating within the community.”
“Everybody knows we’re in a housing crisis, but not everybody has the means to help solve it,” Button said, adding that they have investment options for individuals and for organizations. These options range from $1,000 over three years to $50,000 over seven years, each with interest from two to four per cent. One can be used to invest in personal RRSP/TFSA savings.
Housing crisis in Ottawa
Over the last decade, the city has lost nearly 30,000 units renting for under $1,000, according to the OCLT. Instead, rents have skyrocketed. One-bedroom units now average $1,997 per month, higher than the national average of around $1,800.
The 51 non-profits dedicated to housing and 22,000 community-owned units across Ottawa have not been enough to keep pace with demand. Nearly 10,000 households are on the list for social housing and they can face five-year wait times.
The Ontario Chamber of Commerce says the province needs almost two million more units on top of what is already built to restore housing affordability. It’s an issue that they think requires an “all-hands-on deck approach” from the private, public and non-profit sectors.
“I don’t think any of us in land trusts launch a campaign like this to let governments off the hook,” Bulthuis said. Even in the wake of the federal announcement of the Build Canada Homes initiative, there will always be community projects that don’t fit the mould of government funding, he continued. “There is always more we can do.”
Social financing is becoming more important as public funding is spread across a range of social issues, Hachigian said. Community bonds, as a model of social finance, are “more flexible for non-profits and really allows them to engage in more innovative projects than traditional grants.”
“Providing somebody a home isn’t something most can do on their own,” Bulthuis said. This campaign model gives “a pathway for folks to be a part of the solution.”
