Businesses unite for affordable housing fund

By Natalie Johnson

A combination of community-minded local businesses could soon establish a fund that would support affordable housing in Ottawa and serve as a model for the rest of Canada.

The Ottawa Community Loan Fund is negotiating a deal with the Public Service Alliance of Canada – one in which the union would invest in a new project designed to help lower-income families afford homes, says OCLF president George Brown.

The scheme originated when his organization, which finances local entrepreneurs, volunteered to raise the capital needed for the construction of non-profit facilities in Ottawa, says Brown. The Centretown Citizens Ottawa Corporation had identified a need for such a fund, and the OCLF already had the infrastructure and community connections necessary to seek support, he says.

The group is now working with the Carleton Centre for Community Innovation, which studies social solutions to economic development. The project’s goal is to obtain its investments from labour union pension funds.

Such funds are ideal sources of income because they are ever-increasing pools of capital, says Tessa Hebb, director of the centre’s capital strategies program. Aside from financial profit for the unions, she says, pension fund investments can accrue benefits to the community.

Hebb, who has studied pension fund investment in the United States, says this source of income has been largely untapped in Canada.

Part of the difficulty, says Edward Jackson, the centre’s chair, is that trust law and other regulations govern where the money can be invested.

“The contrast is that you have an organization that has access to capital but not so many ways of making that capital available to community leads,” says Jackson. “You want to protect pensions, so you don’t want to put them into risky projects.”

But the affordable housing plan, he says, carries less risk because the investments are in hard assets – the buildings. Moreover, he says, the project’s professional design and the number of groups involved render the venture more secure.

If PSAC agrees to invest, he adds, it would use certificates of deposit to transfer the money – up to $2 million – to OCLF’s credit union partner, Alterna Savings.

“That gives the pension fund a fairly conservative investment vehicle that they then earn some interest on,” says Jackson.

According to Brown, the present bond rate of three per cent would likely apply.

The certificate of deposit mechanism, discovered by Hebb, means that PSAC would have a legal way to contribute to the community.

The union has always been interested in helping, but was always restricted from doing so, says Jackson. The realization that there was a secure and legal means to invest in the housing project, he says, means things are looking up.

“Too much pension fund money goes into blue chip stocks and outside the community, which is not a terrible thing,” he says. “But it’s not actually benefiting the people who live here.”

The money would go directly to the community, says Brown, through a series of projects that the OCLF would manage. His organization would liaise with housing developers, retain consultants and allocate the money.

“We see ourselves a ‘fund’ of funds,’ ” he describes.

It’s a project, says Brown, that is absolutely necessary in Ottawa. Over 10,000 people in the city are on the waiting list for affordable housing, he adds.

Centretown is especially in demand because it offers proximity to employment and commercial areas, adds Dennis Carr, development coordinator for Centretown Citizens Ottawa Corporation.

Overall, the affordable housing need exists locally because of rising home costs, says Russell Mawby, the City of Ottawa’s housing director. Ottawa is one of the most expensive Canadian cities in terms of the housing cost-income ratio, he says, and as many as 40 per cent of local families are experiencing difficulty finding dwellings they can afford.

Nonetheless, he says, the OCLF’s plan would help compensate for the facilities the city lacks the money to construct.

If a deal is reached, says Jackson, the fund could be launched by this summer. If established, he adds, the pension element would make the project one of the first of its kind in Canada.

For that reason, he says, the players hope to inspire other cities.

“If it works, it’s going to be a model for the country,” he says. “Ottawa would be seen as a place of innovation in affordable