The Barriers to Build Social Housing

In the late 90’s, a Lower Mainland resident making just above minimum wage could feasibly take on a mortgage for a new home. That idea is absurd at today's current market rates. It’s obviously no secret that housing prices have gone bonkers and the market is unsustainable, but as one of the leading developers of townhomes in the Lower Mainland, we at ENM feel a particular obligation to help meet the huge need for more affordable housing.

Our project manager Daniel Greenhalgh has recently spearheaded a partnership with Habitat for Humanity to build homes for low-income people in the Lower Mainland. This process has exposed Dan to the giant web of challenges in getting these kinds of projects done. One of the most surprising challenges they’ve faced, however, has been the lack of political will in the neighborhood, better expressed as the NIMBY plague. NIMBY, or Not In My Backyard, is someone who objects to certain changes in their neighbourhood that they see as detrimental.

Dan recently visited some community meetings on the proposed projects and noticed some disturbing perspectives. “There’s just a big education gap when it comes to the perception of affordable housing developments. No, we’re not going to bus in the denizens of the downtown eastside to your cul de sacs. These units will be purchased by people making about $20-$25/hour, working their tails off to establish some financial stability.”

Dan points out that home ownership has always been the biggest mover of social equity, the biggest factor in getting unstuck from a cycle of poverty, and that’s exactly what these projects are designed to do. He says the benefits to the community that welcomes these projects are numerous and obvious, and it’s frustrating for developers and non-profit organizations to have to fight these kinds of barriers on top of everything else.

The key to solving the housing crisis is capital funding, but there is a lack of it. A recent survey funded by BC Housing found that the number one obstacle to meeting the need for more affordable housing is an absence of financing models for developers.

When ENM gets a loan from a bank for any kind of project, we’re required to show that we’ll make at least an 18% profit. If we don’t, we’ll never get bank financing again. Right now, there’s no private model for receiving funding that doesn’t require a market return. Currently, there’s no model for private developers like ENM to take a loss, to be charitable in these kinds of projects, that won’t hurt our business. Our company’s only option for pursuing affordable housing projects on our own initiative is to seek out funding from BC Housing. There is a reluctance for this agency to work with for-profit developers for fear of being taken advantage of. It’s clear that there needs to be a separate process and set of requirements for funding affordable housing projects.

In the recently released NDP Budget, Finance Minister Carole James has pledged more than $7 billion to build 114,000 new affordable homes over the next ten years. As a private developer, we’re keen on helping the government meet this goal. With the myriad of new taxes in the budget, which some say will do the opposite of making homes more affordable, ENM is committed to helping all three levels of government form new models of financing and development that will make it possible for us to take on affordable housing projects in the Lower Mainland. There are costs that can be waived, applications that can be fast-tracked, requirements that can be relaxed that will help create a structure for all of us to address what has become a clear crisis of housing affordability.

The mindset has to change for everybody, at every level – the government, the non-profit organizations, and the private sector – for there to be a realistic model for developers like us to be able to contribute to solving the crisis.

In the next few posts, we’ll try to address what we feel are the responsibilities of each of these sectors to confront this issue.