1. housing first report – Permanent affordability RAPPORT SUR LA POLITIQUE DE PRIORITÉ AU LOGEMENT – ABORDABILITÉ
PERMANENTE |
COMMITTEE
RECOMMENDATION
That Council receive this report for information.
RECOMMENDATION DU COMITÉ
Que le Conseil municipal prenne connaissance du présent rapport.
DOCUMENTATION
1.
Deputy
City Manager, Community and Protective Services report dated 30 June 2005
(ACS2005-CPS-HOU-0007).
2. Extract of Draft
Minutes, 7 July 2005. (To be issued separately prior to the Council Meeting)
Report to/Rapport au :
Health,
Recreation and Social Services Committee
Comité de la santé, des loisirs et des services sociaux
30 June 2005 / le 30 juin 2005
Submitted by/Soumis par : Steve Kanellakos, Deputy City Manager/Directeur municipal
adjoint,
Community and Protective
Services/Services communautaires et de protection
Contact
Person/Personne ressource : Russell Mawby, Director, Housing Branch
Housing/Logement
(613) 580-2424 x 44162,
russell.mawby@ottawa.ca
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SUBJECT: |
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OBJET : |
RAPPORT SUR LA POLITIQUE DE PRIORITÉ AU LOGEMENT –
ABORDABILITÉ PERMANENTE |
REPORT RECOMMENDATION
That the Health, Recreation and Social Services Committee and Council receive this report for information.
RECOMMANDATION DU
RAPPORT
Que le Comité de la
santé, des loisirs et des services sociaux et le Conseil prennent connaissance
du présent rapport.
EXECUTIVE SUMMARY
On May 5, 2005, the Health, Recreation and Social Services Committee referred the Housing First Policy report to staff and requested that staff report back with clarification on the issue of “permanent affordability”. Specifically, the question was raised as to whether the proposed Housing First policy should ensure that any affordable housing built on land sold by the City for residential development remain “permanently affordable” to lower-income residents. This information report responds to direction from HRSS.
RÉSUMÉ
Le 5 mai 2005, le Comité de la santé, des
loisirs et des services sociaux a renvoyé le Rapport sur la politique de
priorité au logement au personnel en lui demandant de clarifier le point sur
l’« abordabilité permanente ».
Concrètement, les membres du Comité se demandent si la politique
proposée ne devrait pas préciser que les logements à prix abordables construits
sur des terrains vendus par la Ville à des fins d’aménagement résidentiel
doivent demeurer « en permanence » abordables aux résidents à faible
revenu. Ce rapport est préparé à titre indicatif à la demande du Comité.
This report provides a discussion of the need for both market and non-market affordable housing solutions, the principles behind controlling affordability, and the role that City-owned land plays in meeting those needs via the proposed Housing First policy.
There are many jurisdictions that employ mechanisms to ensure the development of affordable housing in the market. In general, these are one form or another of “inclusionary zoning”, which means policies to require the inclusion of a minimum amount of affordable housing in new development. Unlike most cities in the United States, Ontario cities do not have the legislated authority to require affordable housing via the development approvals process. However, as the landowner and vendor, the City has the ability to attach provisions or requirements to the sale of City land.
The Housing First Policy was developed per Council’s direction to ensure a priority for affordable housing on City owned land. The policy ensures that adequate City land is set aside for to meet the anticipated program needs of the City’s affordable housing program, and ensures, at a minimum, that any sale of surplus land to the market for residential development outside of any such program meets Official Plan affordable housing targets.
The Housing First Policy was designed to encompass a variety of strategies to create an adequate supply of affordable housing. These strategies include market housing, non-market housing (such as non-profits and co-ops) and subsidized market housing (market housing with limited public subsidy to achieve a level of market affordability). These strategies require differing levels and kinds of public investment.
The level of public investment, from limited incentives to significant subsidies will result in a variety of solutions, which range from initial affordability, to long-term affordability, to permanent affordability. Any investments made outside of the Action Ottawa or similar program will be considered on a case-by-case basis. Investments, incentives or other considerations are not automatic simply because a project meets specific criteria or guidelines. All project specific by-laws will specify exactly the amounts, terms and conditions of any investments made by Council.
Although permanent affordability is encouraged, given the range of development solutions that may be developed on a case-by-case basis, staff does not recommend adding a blanket requirement for permanent affordability in the Housing First Policy. Permanent affordability implies the housing developed will be non-market housing, and would also require some mechanism, such as a land trust or land bank to implement. It also implies a future commitment to a significant level of public investment to build the housing. The Housing First Policy does not preclude Council from making permanent affordability a requirement on any given property, whether by allocating that property to Action Ottawa or attaching specific conditions to the sale into the market. Staff are also preparing a report on the role that a land trust might play in the Ottawa context as a means of ensuring permanent affordability for social, non-profit and other kinds of housing beyond the terms of any operating agreement.
Market Housing
Market housing is housing that is available in the open market at affordable prices. There is strong public policy rationale for stimulating the market to produce affordable housing as a means to ensure an adequate and on-going supply of lower cost housing in all neighbourhoods and promote asset-building among lower income households. Market affordable housing, particularly ownership housing, enables lower income households to participate in the wealth creation that home ownership represents in the Canadian system.
The City’s Official Plan policies aim to stimulate the development of market housing that is affordable to lower or moderate-income households. The policy intent is to encourage a range of housing options (size, form, price) in all areas of the City, with or without public investment such as development incentives or subsidies.
Market Housing does not provide any assurance of permanent affordability, although the built form, which may be modest in comparison to higher priced units will likely remain relatively more affordable over time. It will also help ensure a range of housing choice over time. The Official Plan seeks to ensure that at least 25% of all new housing is affordable to defined income levels.
Non-market housing is affordable because of restrictions on resale or rent. Residency is determined by program rules related to defined need and other criteria. Non-market supply is where there are controls on the affordability of the housing that are linked to significant public investments such as capital, land and development incentives. Non-market housing can be private, non-profit or co-op, and can be ownership or rental. Regardless of tenure, access to the housing is controlled and the price and availability of the housing is restricted (for example by putting limits on resale or limiting rental to qualifying households).
The City’s Action Ottawa program is an example of a non-market program that provides direct subsidization of rental housing to achieve low-income affordability over the long term, typically 50 years or more. Part of that subsidization may include City land provided at a nominal cost ($1.00), to the developer. Access to Action Ottawa funded housing is generally restricted to targeted household incomes, rents are capped at specified levels, and projects are expected to remain affordable for a defined period of time.
A hybrid of market and non-market models, subsidized market housing is housing that receives limited public or private subsidy, often in the form of repayable loans, or reduced or deferred development fees and charges. These subsidies have the aim of in effect providing an entry into the housing market for targeted lower-income households, and as such generally allow future sale or transfer of the property at market prices. These kinds of programs usually have mechanisms to prevent “windfall” profit taking by requiring that the residents live there for a defined period of time before selling and/or pay back penalties for selling or transferring the property to non-qualifying households in that time period.
The project being proposed for 138 Somerset Street is an example of a subsidized market solution where the City is deferring the payment of development charges for up to 20 years, the value of which is matched by the developer to achieve an affordable sale price. If the unit is sold to a non-qualifying household within a 20-year time frame, the owner is required to refund the value of the development charge (DC) relief plus interest to the City. This is not permanent affordability, but is intended to stimulate entry into the market, with minimal and repayable public investment.
Staff recommends that a blanket requirement for permanent affordability not be imposed via the Housing First policy. Staff also recommends that any parcel of City land that is not appropriate for specific programs such as Action Ottawa, and is to be sold for residential development, be assessed on a case-by-case basis to determine if and how to implement affordability controls. The Policy requires that 25% of any housing developed on City land sold for residential development meet the Official Plan affordability targets and encourages 10% of that target to meet the Action Ottawa targets.
The proposed Housing First policy ensures that sufficient land or proceeds from the sale of land is available to achieve at a minimum 200 of the Action Ottawa annual target of 500 units per year. These units will be for all intents and purposes “permanently affordable.” The cost implications are cited in the report.
There are both direct and indirect costs incurred to the City and housing provider that need to be considered to achieve permanent affordability. Where permanent affordability is desired outside of Action Ottawa, mechanisms need to be established to take the land and housing out of the market and to ensure that it remains available only to targeted populations.
If there is to be permanent controls on the land, then the land is essentially taken out of the market and the value reduced to zero. This implies a cost to offset the foregone market value of the land, and the costs to do this for land outside Action Ottawa have not been calculated. There is also a cost to the City for monitoring the terms and conditions of individual agreements for the life of those agreements, and potential costs to implement a land trust or other mechanism which may be required to achieve permanent affordability.