Using government funding wisely?

On occasion we see government releases or news articles about CMHC and municipal support for affordable housing. It is encouraging for us who have spent decades in the trenches (centuries if you add up the experience of everyone on the Trillium Housing Non Profit board - sorry guys...) to see that the federal government's allocations are being put to use.

But once you get past the headlines, the information provided is frustratingly non-transparent and dig deeper depressingly ineffective. Take a look at the article attached about funding for 10 "affordable" units in Hamilton. In this case the article states that "The affordable units in the seven-storey building are to be 125 per cent of the area’s average market rent (AMR), which is about $1,300, according to the CMHC". I'm not sure who decided that 125% of AMR is affordable but so be it.

https://www.stcatharinesstandard.ca/news-story/9939366-mixed-income-housing-westdale-rental-project-to-receive-city-incentives/

To get these 10 units of so-called affordable housing, the for-profit developer will get a $34,000 break from the City. That sounds reasonable to me. But where things go off the rails is when you see that to provide those 10 units (where they will collect $1300 a month in revenue), the private developer will get $5.68 MILLION in funding from CMHC - that works out to $568,000 per unit. Make sense to you?

Now I understand that CMHC is mainly an insurance company to protect bank mortgage assets. CMHC has pushed out competition to become a quasi-monopoly backed by a Federal government guarantee. Staff are mostly underwriters/bureaucrats who focus on risk mitigation. That works for protecting bank assets and the federal guarantee. It does not work when it comes to getting the most out of program delivery to support housing affordability.

Non-profit housing providers have demonstrated for decades that they are the most efficient delivery agents and deliver by far the most housing affordability impact. This is documented - take a look at the CHRA website. Non-profits are focused on helping people to be housed and they DO NOT build up massive balance sheets by taking big profits from housing development - that is what the private developers do. The article mentions two excellent non-profits in Hamilton.

So Non-profits are unfairly excluded from CMHC funding with their unrelenting focus on risk reduction. CMHC has misaligned their mandate as issued under the National Housing Strategy (which says nary a word about program delivery following the absolute lowest risk path at the cost of housing affordability impact) and results in billions of dollars being siphoned to finance large for-profit corporations that deliver - like in this Hamilton example (10 units at 125% of average market rent (affordable?) after an investment of $5.68 MILLION) a negligible amount of housing affordability (but probably big profits).

The federal Government has made a fantastic commitment by funding billions for housing affordability. If the goal is to deliver housing affordability to Canadian families who need support - the non-profit sector would be a much better delivery partner to get the job done.