St. Clare Multifaith Housing Society
25 Leonard Avenue Project
Toronto, Ontario
The experiment was a monumental failure. For the past decade the federal government has not been involved in building social housing and five years ago, the Province of Ontario pulled out as well. The naive hope was that the market would provide low cost housing. As Toronto's tent city has proven, that didn't happen. Governments knew there was a low probability of success. Housing is expensive to build and the rents that a private developer must charge to make a profit are beyond the means of many people on fixed incomes. Now, reluctantly the federal government has realized that its participation is required if social housing construction is to resume.
This support is taking a different form than it did in the eighties when the federal government used mortgage guarantees to finance social housing. These guarantees were thirty-five year commitments and the federal government had little control over the financial operation of the housing co-op. The federal government's new initiative, called SCPI Supporting Communities Partnership Initiatives is designed to give community groups equity (an up-front grant) that should allow them to go to a conventional financier for a first mortgage. The theory is that the first mortgage payments should be covered by the housing project's rents. Community groups are finding conventional lenders interested in providing mortgages, however there is a gap between what they are willing to lend, the government grant and the total project cost.
This leaves community groups looking for second mortgage financing which can be very expensive. This was exactly the situation that the St. Clare Multifaith Housing Society found as it was trying to get the 25 Leonard Avenue Project off the ground.
25 Leonard Avenue is a four-story building close to Toronto Western Hospital that was used for doctors offices. St. Clare's plan was to convert the doctors offices into small apartment units. 50 of these units could be converted at a reasonable cost as each of the offices had running water. The units would be for transitional housing which allows the homeless a stable place to stay but is not meant to be permanent housing. St. Clare's would also make various social services available to help the residents re-enter society. The residents would only pay their housing allowance as rent.
The total project cost is $4.6 million. The federal government (in partnership with the City of Toronto) gave St. Clare's $2.5 million. St. Clare fundraised another $100k which meant that $2 million was required to complete the project. A conventional first mortgage was secured for $1.7 million and CAIC was asked to supply the final $300k. Because CAIC had good security (the project is valued at $3.1 m) we were able to offer a reasonable rate of interest (9%). One that St. Clare's could afford. Construction will begin this month and the facility should be ready for occupancy before the fall.
During the first five years of the project, St. Clare's will be eligible for a rent supplement from the province. This rent supplement will be used to pay down the two mortgages. At the end of the five-year period, the shelter allowance paid by the tenants should be sufficient to cover the buildings operating costs and the remainder of the mortgage.
Through SCPI, the federal government hopes to limit its financial commitment to a one-time grant. This will give community groups sufficient resources to finance social housing projects through conventional means. This new model of social housing's a partnership between the federal government, municipalities, community groups and conventional lenders should lead to a demand for CAIC's resources as a second mortgage lender in the future.
Website: www.stclares.ca
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