By Brock Weir
Low-income families may be able to buy affordable housing directly from the city if Mayor Larry O’Brien’s ideas are adopted, but housing experts say his proposal for the city to guarantee loans could pose a stumbling block.
O’Brien briefly outlined his idea on CBC Radio in early January. He said he would like to see the city transfer its excess land into a new housing corporation within the city’s limits to develop affordable housing.
O’Brien also called on the city to help low-income families buy these homes directly by securing and guaranteeing loans from major banks.
While O’Brien told the CBC that this plan would start “taking the pressure off of public housing needs,” Somerset Coun. Diane Holmes says this might not be the case. Holmes says there are about 11,000 people on the waiting list for public housing, but these loans would be of little help.
“People on our waiting lists can’t afford to buy [a house] no matter how many loans you give them,” she says. “They can’t afford to rent in the private market, much less buy. For some low-income families, helping on the first purchase would be very useful but it would not get any people off our waiting list.”
Judi Weedmark, a broker with Crescent Mortgage Corp. and formerly a branch manager with the CIBC for 17 years, says she doesn’t see how banks can do any more to approve loans for low-income families.
“To me, the banks have already done as much as they can feasibly do on this and the governments have done everything, and the CMHC [Canada Mortgage and Housing Corp.] has stepped up to the plate…they’ve stretched everything as far as they possibly can,” she says.
Weedmark says one solution to help more low-income families qualify for loans is for the city to guarantee bank payments in case of default. Holmes says this is the only solution.
“The city has to be on the hook,” says Holmes. “The city would have to be signing. If there was any problem the bank would ensure the city would be there to pick up any default.”
But Roger Greenberg, president of Minto Developments, an Ottawa company that has been pushing for pilot projects to look at different options for public housing, says he has misgivings about O’Brien’s idea.
“I think that would be a horrific cost for the city but I haven’t explored it,” he says. “My sense would think that it’s a very expensive solution.”
Russell Mawby, director of the city’s housing department, has also expressed concern over plans for guaranteed loans and mortgages by the city. Mawby says there are already a number of organizations both in the community and across the country such as Habitat for Humanity and CMHC to help with financing.
“Why do we want to get into [CMHC’s] business?” he asks. “The mayor’s interest is great, but he may not be familiar with the models already in place. We don’t need to copy their models.”
Mike Patton, O’Brien’s communications director, said the mayor would like to wait until all housing options are explored before commenting further on his idea.
Greenberg says O’Brien’s suggestion surprised him because he “has historically been in favour of small government.”
He says he would like to see O’Brien outline what he wants to achieve with his new ideas for public housing, outline the resources the city would want to devote to it, and then open the planning up for competition.
“I don’t think it’s particularly relevant who builds it as long as the opportunity is given as widely as possible to anyone interested in it,” he says. “Let’s get the most efficient solution to whatever the city is trying to achieve.”
O’Brien’s proposal is similar to the mandate of Canada Lands Company, a Crown corporation, which buys surplus land from federal departments.
Canada Lands is currently developing the former CFB Rockcliffe into a development of both traditional, and affordable and subsidized housing units.
Gordon McIvor, Canada Lands’ vice-president of Public and Government Affairs says that while Canada Lands has already spoken to the city about these kinds of housing several times, they are still going through the public consultation process on how many affordable and subsidized units are needed.
Catherine Boucher, executive director of Centretown Citizens Corporation, a non-profit, privately run organization that provides affordable housing to tenants, says a city owned development company could help relieve some expenses faced by non-profit groups in developing building sites.
But if the city just wants to be a development company and have a mortgage program, it would have minimum long-term impact on the housing crunch, she says.
Boucher questions the long-term affordability of these houses if they are bought from the city. She says it is important to ask if these homes would be affordable long term or only to the first buyer.
Holmes says she would also like to see the ownership of the housing largely retained by the city.
“If there is public investment in the housing, then they should remain in public ownership,” she says. “If it is just us negotiating a lower mortgage for someone through a bank and there is no real public investment then that’s fine.”