A Clean, Well-Lighted Place: The Role of Non-Profit Housing Organizations

The "good old days" of plentiful, cheap housing are long gone-that's if they ever really existed-and most likely they'll never return. Two factors in particular have affected the housing market. Since the 1980s, incomes have not kept pace with rising real estate and housing costs. The federal government, once a strong proponent of social housing, withdrew its capital support in 1994. But the reality is that there is a shortage of low-cost housing. Imagine you are one of the 153,700 British Columbians whose annual household income is below $20,000. Or imagine that you are a member of one of the 176,000 households in BC on social assistance. You may be a senior on a fixed income, a low-income single, a member of a low-income family, or one of the many women-in-transition who lack safe and secure accommodation. Where do you go for help with housing?

Fortunately, non-profit organization has been trying to fill the gap left by changes in federal government policies. In this province BC Housing has played an important role in affordable housing since 1994. Last year, for example, there were 1288 non-market unit starts-BC Housing was responsible for 600 and CMHC provided mortgage insurance for 688. The two agencies were jointly involved in 30 housing projects.

BC's two largest urban centres are also active in non-market housing. By the end of 1997, the City of Vancouver's Housing Centre was managing 335 completed and occupied non-market housing projects with 18,708 units. A further 15 projects had been either approved or were under construction. The Capital Region District Housing Corporation manages 39 housing complexes for families and seniors in the CDR for a total of 1,142 rental units.

However, the number of British Columbians who are looking for low-cost housing far exceeds the supply. And as media reports suggest, as a society we are greatly concerned about the lack of affordable housing for many groups: seniors, low-income families and singles, women-in-transition, youth at risk, and the homeless. If we as a Foundation have learned anything in the last ten years, it's that communities have to look to themselves to find lasting solutions to housing. And this is where non-profit organizations can continue to play a major role. In our experience, NPOs have shown that they have the creativity and determination to finance and develop a variety of housing types.

The Foundation, too, has defined a role for itself. Under our theme of Housing and Finance, 21 percent of the $16.9 million made in grants since 1987 has gone to housing and housing-related issues. That translates into $3,548,592, of which 2,773,000 went to capital projects and $775,592 to research on housing. But grantmaking is only part of what we do. We also disseminate information about housing and help to develop models of non-market housing that can be followed by other communities. In fact, we've learned to be involved at any stage of a project. Certainly, we can provide capital funding, but we also support feasibility studies and help to generate development plans. Consequently, the Real Estate Foundation can be one of the most important partners on any given project, even if it is not necessarily the largest funder.

What, then, do we look for in applications from non-profit housing societies? The short answer is that we favour a spirit of entreprenuership, contributions by other partners, and exceptionally strong community involvement. Specifically, we want to see any or all of the following:

These are some of the key components in a successful application. Perhaps the best way to understand their importance to us is to look at a few projects we've supported. While different in scope, all have one thing in common: they build equity and capacity through innovative approaches to affordable housing. The NPOs responsible for these initiatives consider this type of non-market housing to be an investment; therefore, they look for a rate of return that will sustain future development.

Seniors are a growing group with varying housing needs. Some seniors require easy access to care as well as housing; others want to live in apartments that allow them to remain independent. The Abbeyfield Houses of Vernon Society was established to provide a "home within a home" for elderly people who are in relatively good health but who may experience loneliness and insecurity. An Abbeyfield House offers a boarding home-style environment for those single seniors who want companionship, but who wish to remain independent.

In response to our challenge, the Society may establish a sinking fund to create a pool of equity to be used for future capital projects, a resourceful idea in our view. The fund will hold money in trust for the purposes consistent with the Society's constitution. The fund will be built up through "retained earnings" realized from monthly rents paid by the Abbeyfield residents. Money from donations and bequests may also be deposited in the sinking fund. And the Foundation may make future grants to help build up the fund.

A sinking fund is one creative way to make affordable housing possible. The Dr. R.E.M. Lee Foundation, which is associated with the Mills Memorial Hospital in Terrace, BC, has found another: life lease purchases. A life lease involves a lump sum payment to a co-op or non-profit housing society plus monthly fees and, in some cases, an initial membership fee. The buyer occupies a dwelling unit for life. The life lease is registered against the property title, which is held by the society.

The Lee Foundation intends to build 41 units of supportive seniors' housing on a site to which it owns clear title. Residents of these units will have access to personal services offered by the Terrace Regional Health Care Society on a fee-for-service basis. Seniors who purchase units will do so on a life lease basis. When they sell or die, they or their estate will receive the equity at par. Any gain will remain with the Lee Foundation. While the life lease idea does not provide low cost housing in and of itself, it is an attractive alternative for "house rich but cash poor" seniors.

In addition to the life lease concept, other factors also influenced our decision to make a grant of $75,000 to the Lee Foundation. A firm of architects donated time. Three financial institutions offered financing at lower than market rates and waived administration fees. The City of Terrace agreed to supply equipment for site preparation and utility connections. A few of the units will be rented to low-income seniors, thanks to a loan guarantee provided by BC Housing.

Abbeyfield Houses of Vernon Society and the Dr. R.E.M. Lee Foundation have found workable solutions to low-cost housing. The former meets the needs of seniors who want comfort, safety, and independence; the latter provides security to the frail elderly in our society.

The need for non-market housing, however, extends to other groups in BC such as low-income singles. Victoria's Cool Aid Society has undertaken a new project: 45 units of housing for low-income singles in that city's downtown.

Several features made their application attractive to us. First, Cool Aid demonstrated its development expertise through previous housing development including the Pandora Street project--32 apartments for chronically homeless adults and eight rental apartments for young people. Second, the City of Victoria donated the land for the new building. Third, the Rising Tide Development Corporation, an affiliate of Pacific Coast Savings, agreed to a first mortgage at a 5% percent nominal interest rate.

The Foundation provided two levels of support: The Governors approved a second mortgage of $300,000 at a nominal rate of 6 percent amortized over six years with repayment commencing one year after advancement of the mortgage funds. Because the Society has previously demonstrated its financial and development ability, the Governors also approved a grant of $45,000 to write down the interest rate. Payment of this grant in full and in advance reduces the effective interest rate to less than one percent. A significant advantage of such financing is that lower mortgage payments have less impact on the Society's cash flow. There are no penalties for early or lump sum payments.

Projects such as this one can make a real difference in the availability of housing for low-income singles. But there are also thousands of low-income families in this province who may never have the chance to own a home; consequently, they will never enjoy the security that comes with equity. Again, NPOs have a role to play here.

The newly established Habitat for Humanity Boundary Society (HHBS) is a an affiliate of Habitat for Humanity Canada, a non-profit ecumenical Christian housing ministry whose purpose is to help low income families buy homes and build equity. Key to its work is the idea of "sweat equity." The family concerned begins to build equity in their home by contributing their labour. The community also contributes labour as well as materials and donations. The idea hearkens back to the days of "barn raising" when a community would pull together to help a neighbour. In short, Habitat promotes self-reliance and does not look to government for funding.

Habitat's McLeod Family House in Grand Forks is a good example of this approach. The McLeod family contributed their labour as did the community, which also donated materials and held fund raising events. The City of Grand Forks donated the lot. The completed house and lot have an estimated value of $110,000. HHBS holds no-interest first and second mortgages. Should the owner decide to sell before the mortgages have been paid out, the Society has 60 days to exercise its option to purchase at a price not to exceed the original amount of the mortgage. The Foundation was a minor funder in this project, since by definition it is a community-driven effort. Our role was to reinforce the efforts of the community

Seniors, low-income singles, and families-these three groups will continue to rely on innovative NPOs to develop affordable accommodation in future years. A fourth group-women-in-transition and youth-at-risk-also require comfortable, safe accommodation. They, too, can benefit from the efforts of forward-thinking non-profits that develop transition houses and safe houses for youth. Since 1987, we've funded 16 such shelters. Here again, as in applications to develop other types non-market housing, we favour those that build equity and capacity for the future.

The Elizabeth Fry Society's Columbia House in New Westminster can serve as a model of a non-profit that is entrepreneurial in its approach to developing transition housing. Through careful financial management in the past, the Society now owns a four-story building in New Westminster. The first floor is rented commercial space. The second floor--funded in part by us--offers second-stage housing to female ex-offenders and their children. The third floor is a half way house for woman parolees. Administration offices and rental meeting space occupy the top floor. By combining commercial space with non-profit transition housing, the Society is building equity it can use to develop more such housing or to stabilize its cash flow so it can offer more programming.

Taken together these housing projects reflect the kind of entrepreneurial thinking that is taking place in NPOs throughout BC. But what of the future? Will NPOs have a role to play in tomorrow's non-market housing? Future demand for this type of housing is unknown. Experts predict a 2 percent per annum population growth in BC's urban centres. How will this affect traditional and non-market housing? If we experience a sustained period of economic growth that forces real estate and housing cost up again, what will be the effect on low income consumers? No one knows for certain.

If past experience is any indicator, however, then BC Housing will be active in most of the non-market development throughout BC. Various NPOs like the ones we've profiled as well new ones yet to be born, will also contribute, and the Real Estate Foundation will continue to support them. Although we don't know how our grantmaking might change over the next few years, we do know that we will remain open and flexible in our support of non-market housing initiatives.