Affordable Housing

In the Spring of 2021, Mainstay Housing and Houselink Community Homes merged to form Houselink & Mainstay. Together this new organization is the largest supportive housing and non-profit housing provider in Canada. They have a portfolio of about 60 buildings across the City of Toronto, and manage another 300 units through partnerships with private landlords. They also provide support services, beyond housing, to more than 900 individuals.

“This merger really made sense for a number of reasons,” explains Gautam Mukherjee, Houselink & Mainstay Executive Director, “for one, it meant that we could leverage a larger balance sheet to fund new developments.” The organization’s strategic plan has a strong focus on accessibility and scale with the development of purpose built, mixed-income housing. 

“About half our portfolio are rooming houses, with people sharing bathrooms and kitchens, and we know that for some populations of people receiving our support services, it’s just not the right housing setting,” says Gautam. Part of the organization’s strategy is to raise capital through the sale of these rooming houses, in order to fund new builds that better fit their clients needs.

“We are actively in the land market, and had an offer signed back recently – I think this could be a great demonstration project for community investment,” says Gautam. He explains that underwriting has become very challenging in recent months, with interest rates and building costs up. “What originally looked like $6.5 million needed in owner equity could now be upwards of $20 million and we will have a gap to fill,” he explains. 

The organization recently incorporated a non-profit subsidiary to take on the development on behalf of Houselink & Mainstay. This subsidiary has a clear mandate for the development of mixed income housing. The parent organization will then deploy rent supplements to ensure that a percentage of the units are supportive, and provide support services to tenants. 

The conversation shifts away from Houselink & Mainstay for a moment as Gautam gives the Tapestry team a quick 101 on the affordable housing policy framework in Ontario. He explains that the model has shifted over the years away from supportive housing grant funding to the provision of rent supplements. In the case of the Ontario Ministry of Health, they are providing rent subsidies directly to community agencies, who then decide how to use them. “In some cases an agency will lease one unit, or a few units, and in others they might lease an entire building.” 

“Essentially, we are a conduit for providing equity, in the form of rent subsidies,” explains Gautam, “and most of these subsidies end up in the hands of private landlords – so we are really just transferring equity to them.”

When Houselink & Mainstay sell their rooming houses their operating funding will convert to rent supplements, which they will be allowed to transfer to other properties.  “These rent subsidies cover 100% of average market rent (AMR) and we intend to redeploy them into our own newly built units.” 

Gautam is of the opinion that things can only get better from here. “We haven’t seen indications of increasing grant amounts to offset rate increases, or make stress tests easier. And there is no provincial participation, so that can only improve.” Gautam believes we may also see the City of Toronto wave development charges for non-profit projects where a certain proportion of units are affordable. 

“I think the land economics are the same for everybody – private or non-profit,” says Gautam, “and if we want to compete, we need to get into the land market and be willing to take some risks.” He’s of the view that if these projects, in the worst case, can work as market developments, then non-profits should be initiating projects. “We need to give the government projects to invest into because they’re not coming to the table proactively.” 

Gautam sees the benefits of allowing community members to invest in these projects too. “Getting community buy-in for what we are doing is very appealing, and there’s obviously the need to bring in new capital.” Gautam also shares that their Board has been considering different ways to grow the community profile of the organization.

“When we do talk publicly about what we are doing, we are getting traction. But historically, we haven’t used that momentum for fundraising, and we don’t have a way to do what you are doing,” says Gautam with a smile, “of course, that’s why you are doing it!” 

“I’ve long been supportive of community funding for housing development  – I think it’s brilliant!” Gautam wraps up, “we just need to know what to do and where to go.” 

About this Blog Series

In October 2021, Tapestry was selected to take part in a Canadian Mortgage and Housing Corporation (CMHC) program called the Housing Supply Challenge. This innovative competition encourages residents, interested parties, and experts from across the country to propose creative solutions to housing. The goal: to help meet Canada’s pressing need for safe and affordable homes by breaking down barriers to the creation of new supply.

Tapestry participated in Round 2 of the program, Getting Started, which seeks to find solutions to pre-development challenges, such as community resistance and obtaining financing. The program granted incubation funding to the 29 organizations selected to allow them to further develop and test their solution proposals.

Through six months of research and consultation, we had the opportunity to speak with over 40 interested parties in the affordable housing sector, from housing providers, to development consultants, to funders and lenders. Each and every individual and organization consulted helped to co-design our solution proposal.

The “Financing Affordable Housing with the Power of Community” blog series shares the lessons learnt and stories heard from some of the amazing organizations that we have partnered with.

Michael Stanley, Executive Director of Community Involvement Legacy Homes, was sitting in his MBA Finance class at Cape Breton University when he first learned about Community Bonds. “I thought to myself, wow, this is amazing and why am I only learning about it now?!’’ Michael tells us enthusiastically as we meet them for the first time over a Zoom call. 

Community Involvement Legacy Homes (CILH) was founded in 2007 and currently owns and operates nine single-family homes for adults with intellectual disabilities. Michael shares that they have been quietly operating in the community for many years but they are looking to rise to the occasion, and be an active partner in expanding affordable living options for all people, but in particular community members with intellectual disabilities. “We want a deeper tie and to share our history with the community. We are envisioning a community imagined, community-driven, and community-owned initiative for people to live well in our neighbourhood,” he shared.

CILH has a new project in the works to build and operate an affordable co-housing development in the Leeds and Grenville region. The project will be a three-way partnership with a nearby township that will provide the parcel of land, and a developer of prefabricated cabins.

“We need to think about the price of the unit, the rent for the tenants, but also about the carrying costs to the tenant and to us as the property manager,” says Michael. “These cabins are amazing because they are extremely energy efficient, low maintenance and even come equipped with rooftop solar installations.” The organization has also been in conversations with a local renewable energy co-operative to expand the solar energy production possible on the site.  

Financially, the organization is in a very stable position. With all nine properties nearing the end of their mortgage terms, there is sizable equity that can be leveraged for future projects. Despite having carried debt on multiple properties for many years, Michael shares that the Board of Directors still has trepidations about taking on the risk and opportunity of such an investment. “I think it all comes down to this being very new, and it seems sort of out of left field when compared to our current model.” 

“There are some areas where we would definitely need help,” shares Michael, “I think particularly on the marketing and community outreach piece, we would need more support.” Michael is the only paid employee of the organization and only works part-time.

We concluded our call on a high note. Michael shared his excitement for doing something new and innovative, and for the potential to introduce the concept of community financing to the Leeds Grenville region. “I think we have the perfect storm here,” says Michael with a smile, “Coming out of COVID, I think we all have a new and deeper appreciation for community. I love the community bond model because it allows us to take direct action rather than wait for the big powers that be to decide if our community deserves funding.”

About this Blog Series

In October 2021, Tapestry was selected to take part in a Canadian Mortgage and Housing Corporation (CMHC) program called the Housing Supply Challenge. This innovative competition encourages residents, interested parties, and experts from across the country to propose creative solutions to housing. The goal: to help meet Canada’s pressing need for safe and affordable homes by breaking down barriers to the creation of new supply.

Tapestry participated in Round 2 of the program, Getting Started, which seeks to find solutions to pre-development challenges, such as community resistance and obtaining financing. The program granted incubation funding to the 29 organizations selected to allow them to further develop and test their solution proposals. 

Through six months of research and consultation, we had the opportunity to speak with over 40 interested parties in the affordable housing sector, from housing providers, to development consultants, to funders and lenders. Each and every individual and organization consulted helped to co-design our solution proposal. 

The “Financing Affordable Housing with the Power of Community” blog series shares the lessons learnt and stories heard from some of the amazing organizations that we have partnered with.

In October 2021, Tapestry was selected to take part in a Canadian Mortgage and Housing Corporation (CMHC) program called the Housing Supply Challenge. This innovative competition encourages residents, interested parties, and experts from across the country to propose creative solutions to housing. The goal: to help meet Canada’s pressing need for safe and affordable homes by breaking down barriers to the creation of new supply.

Tapestry participated in Round 2 of the program, Getting Started, which seeks to find solutions to pre-development challenges, such as community resistance and obtaining financing. The program granted incubation funding to the 29 organizations selected to allow them to further develop and test their solution proposals. 

Through six months of research and consultation, we had the opportunity to speak with over 40 interested parties in the affordable housing sector, from housing providers, to development consultants, to funders and lenders. Each and every individual and organization consulted helped to co-design our solution proposal. 

In this blog series, “Financing Affordable Housing with the Power of Community”, we will be sharing the lessons learnt and stories heard from some of the amazing organizations that we have partnered with, including Kensington Market Community Land Trust, featured in this article.

Kensington Market is under tremendous economic and development pressure.

Renters are being pushed out of their homes, food sellers are losing their stores and diversity and affordability – the very soul of the Market – are under threat. The Kensington Market Community Land Trust (KMCLT) is a grassroots organization actively addressing this crisis. The land trust acquires and provides management of land, in perpetuity, removing properties from the pressures of the commercial real estate market.

We had the pleasure of sitting down with Chiyi Tam, the Executive Director of KMCLT, to learn more about the land trust’s goals and plans for acquiring properties. We got right into it when Chiyi began telling us the story of how KMCLT came to own their first property last year – with only a $75 balance in their bank account at the time and a $6.25 million ticket price on the building. 

“It was truly amazing,” Chiyi shared, “as the story often does, it began with community organizing.” In 2018, tenants living in 54-56 Kensington, a 12-unit residential building, were unfairly threatened with illegal eviction. “It was very clear that the landlord’s intention was to convert the units into short-term rentals, and the only way to prevent this was to keep those tenants in place.” 

The community activated quickly, and with the support of individual neighbours, the Friends of Kensington Market and Kensington-Bellwoods Community Legal Services, all tenants resisted the eviction attempt and remained in their units.

Two years later, the building came up for sale. With leadership from City Councilor Mike Layton, The City of Toronto stepped in with a $3 million forgivable loan, recognizing that if this building was purchased privately it would mean losing affordable housing units; and a down payment was made possible through a neighbour in the market that personally put up $300,000. 

To complete the financing puzzle, KMCLT worked with a number of financial institutions, including Vancity Community Investment Bank, which Chiyi says played a critical role in mentoring them through the process, and Alterna, who came through with the mortgage. They also received a very last-minute 0% vendor take-back (VTB) mortgage for $250,000 to cover the remaining capital costs. “I was concerned about repaying the VTB through fundraising, but within a week of the news getting out, we had collected $12,000 in donations,” shared Chiyi. 

With their first project under their belt, Chiyi shares that they are ready to take on a second project. “Neighbours and community members have been mapping property ownership and building types in our area, helping us identify acquisition targets and buildings at risk of private redevelopment. That’s our shopping list.” Chiyi shares with a smile. 

Chiyi believes Community Bonds could be an important piece of their financing for acquiring new properties, or potentially developing a new mixed-use, mixed-income build in the pipeline. It is clear that what KMCLT is doing is resonating and there is widespread community support, not just in Kensington Market among residents and businesses, but across the entire city. “Everyone benefits from this amazing place and wants to maintain its eclectic, inclusive soul.”

Chiyi shared that there was much discussion among their Board about the direction of their future financing. “They understood the different risks and costs associated with pursuing a traditional charitable approach and taking on investment. I think this comes down to our overall financial literacy as an organization, and our core values about how we are held accountable by our members, donors, and investors.”

A key takeaway from our conversation is the power of connecting with like-minded organizations to learn through their experiences. Chiyi highlighted that the mentorship they received from the Parkdale Neighbourhood Land Trust in acquiring their first property was invaluable. “It was like group therapy for the anxiety of going through a commercial acquisition project,” says Chiyi with a sigh of relief that that chapter has closed. “I don’t think we could have done it without that direct transfer of knowledge and support.”

Chiyi hopes to be able to work with Tapestry and pilot the Community Bond model for other land trusts to be able to replicate in the future.

*Please note the ’Financing affordable housing with the power of community’ project received Incubation Funding under the Housing Supply Challenge – Getting Started Round, however, the views expressed are the personal views of the author and CMHC accepts no responsibility for them.

**Photos provided courtesy of Kensington Market Community Land Trust www.kmclt.ca