Red flags

What some folks appear to be missing from the Prince Edward County Affordable Housing Corporation (Housing Corp) story is that failing to properly create and manage affordable housing threatens to jeopardize progress for a long, long time.

Done badly—and managed badly—an eight-unit apartment block will become a massive and expensive headache this municipality can ill afford. It will be particularly bad for those who need affordable housing.

Done poorly, it risks raising a giant Do Not Go Here sign on Disraeli Street. It will discourage investment. It will dampen inspiration and ambition. For a long time. It will set the goal of municipally driven affordable housing back decades. There is a cost to doing this badly—even if the goal is worthy.

The Housing Corp board has raced through a series of bright red flags— choosing to ignore the risks piling up in their wake. Why would County taxpayers believe it will be different if it invests further in this project?

The Housing Corp has no experience in building anything, let alone a multi-million-dollar structure. Yet, it has sole-sourced construction to an Ottawa based builder. (Was there no local builder able to construct it?)

The Housing Corp has no experience managing rental stock—vetting tenants, collecting rents, evicting non-payers or navigating the Landlord and Tenant Board. Who will manage maintenance and repairs? Will this fall on municipal staff? Operating a rental building, even an eight-unit apartment block, requires a set of skills and expertise that the Housing Corp board doesn’t have.

Other levels of government have declined to invest in this project. Twice. Pools of money exist at the federal and provincial levels to fund this type of project—yet the Housing Corp has been unsuccessful in attracting this funding.

The folks who adjudicate such applications are seasoned professionals. They rely on expertise and market insight to assess the viability of development plans. Their mandate is to build affordable housing and to flow money into community projects to get it done. Yet they have twice declined to put their public capital into this project.

Then there is the 50-year mortgage. The standard length of a home or commercial mortgage is 20, 25, or 30 years. A 50-year mortgage is extremely rare—only offered in unusual circumstances. It is only possible because it is backed by property taxpayers who support the County’s credit.

It is also really, really expensive. According to the Housing Corp board chair’s April 23 presentation to Council, the Housing Corp mortgage will cost $9,541 per month for 600 months. Assuming interest rates remain unchanged for several generations, it adds up to a total cost of $5.7 million for a $2.2 million loan. The gobsmacking cost alone ought to have put the brakes on this plan.

Then there are the warnings from the County’s senior leadership. The finance director wants to be helpful, but the Housing Corp already owes $700,000. He is responsible for a County that will spend $110 million this year. He can’t afford to forgive loans or extend further credit. The County Chief Administrative Officer is on the record as stating that, in his view, the project doesn’t work without external funding, i.e., provincial or federal agencies.

While it intends to build an eight-unit apartment block, only three units will be available at affordable rates under the current plan. The remainder will be priced according to market rents.

The Housing Corp board has churned through members since it was formed in 2018. Currently, five of the nine directors are sitting council members. They may mean well. But it isn’t enough.

This community needs affordable housing. On this point, there is no debate. It is the easy bit. But need and execution are vastly different things. Wanting something badly doesn’t entitle you to it—no matter how much you wish it so. It can close your eyes to the risks.

Some council/board members argue that if the County fronts it a few hundred thousand dollars, and; if it is constructed; and if it provides homes to three worthy tenants, and; if they pay the rent, they will have proved the funding agencies were wrong to turn them down. That, if it all works out, perhaps federal and provincial funding taps will flow. It is a lot of wishful thinking.

The Housing Corp board is scanning the horizon for a villain in their story—something to explain eight years of fruitless existence.

‘Council discontinued funding’. ‘Other governments wouldn’t invest’. ‘The County finance director refused to convert debt to equity’.

Somewhere along the way, the Housing Corp board lost sight of the folks they were supposed to serve— the folks who actually need affordable housing. They became infatuated with a builder and the idea of an apartment block in Picton. The building became the thing.

Just getting the eight-unit apartment block out of the ground has become the goal. It is how success will be measured. Ribbons cut. Banners unfurled.

What the Housing Corp board seems to miss is the very real risk that it doesn’t work—the significance of the trail of red flags in their rear-view mirror—the cost of doing it badly.

Our community will be richer and more productive when affordable housing is done well and managed well. We are, sadly, a long way from that.

rick@wellingtontimes.ca