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What is a community land trust? Learn about the movement preserving affordable housing and community spaces

Par Affordable Housing, Education

Canada’s housing crisis is reaching a boiling point. We hear about the causes all the time: gentrification, renovictions, real estate bubbles, and more. 

But what about the solutions? One solution with a long history in North America is gaining steam — community land trusts. There are now more than 40 of them across Canada working to keep neighbourhoods diverse, affordable, and vibrant. 

Ready to learn more about this growing movement? Here’s a primer. 

First things first: what is a community land trust? 

In the broadest sense, community land trusts are non-profit organizations that own land and make decisions for what happens on that land at the direction of their members, typically residents of the area. Together, members decide what their community needs and use the land they own to address those needs. 

For example, if the neighbourhood needs more affordable housing, they could lease some of their land to a co-op or non-profit housing provider. If they’d like to encourage arts and culture, they could develop studio spaces or performing venues. And much more! 

How do members make decisions?

Community land trusts run like democracies. Members of a land trust elect a board who makes the decisions. A common governance structure is the tripartite model, where one third of the board needs to be made up of residents inside the land trust’s properties, a third made up of members from the surrounding community, and a third made up of government officials, housing experts and other stakeholders.

Getting this balance of power right is key, because it ensures the community land trust doesn’t only act in the interests of any one stakeholder group. This isn’t a glorified NIMBY group, in other words.

Is there a community land trust near me?

There just might be! There are more than 40 community land trusts across Canada. Find a directory here.

Check out this video for the story of the Kensington Market Community Land Trust, the group working to preserve affordability in one of Toronto’s rapidly gentrifying neighbourhoods. Plus, more on the community land trust movement across North America. 

How do community land trusts get the money to buy land?

Community land trusts don’t always start with a lot of money, but they do have lots of community support — and that’s why many of these groups choose to raise capital by mobilizing their communities. To do this, many issue community bonds, a type of investment opportunity that allows residents and supporters to invest directly in a community land trust’s projects.

Back up, what are community bonds? 

We’re so glad you asked! Community bonds are a social finance tool that can be used by charities, non-profits and co-operatives to finance socially and environmentally impactful projects. Similar in many ways to a traditional bond, they are an interest-bearing loan from an investor, which has a set rate of return and a fixed term. In other words, they function like an I.O.U: community land trusts, in this case, ‘sell’ a bond to an investor, then pay that money back after an agreed-upon amount of time (usually a few years) and with predetermined interest. 

Why community bonds over other financing options for community land trusts?

Community land trusts benefit from a diversity of financing options, but many are exploring community bonds because with this model, they can get the financing they need on their own terms. They don’t have to wait for a government grant or the bank’s approval for a loan — they can launch a community bond campaign when they want to, how they want to. This offers flexibility, which is especially important to land trusts since they often have to spring into action when a piece of property is for sale. Some community land trusts choose to run community bond campaigns to buy specific properties, while others like the Ottawa Community Land Trust are choosing to raise money for a fund they can pull from when properties come onto the market.

Another big reason? Community bonds align with these groups’ ethos of true community economic development (not gentrification). Returns don’t go to big banks or major investors; they go to everyday people living in the neighbourhood, frequenting public spaces, and supporting local businesses. In this way, community land trusts are able to funnel money back into their local economies, fuelling thriving communities from every angle. Learn about all the benefits of community bonds here.

Are you running a community land trust (or thinking of starting one up) and looking for financing? Get in touch with our team — we’d love hear about your project and explore whether community bonds are a good fit. 

Iffy about investing your foundation’s assets in REITs during a housing crisis? Switch to community bonds

Par Affordable Housing, Education

A recent report by SHARE, a non-profit shareholder advocacy organization, revealed some unsettling information about residential real estate investment trusts, known as REITs. 

These trusts, which own and often operate profit-driven residential real estate (i.e. apartment buildings), could be contributing to the country’s housing crisis. But investors don’t have enough information to know one way or another, the report found.

The data they were able to gather from Canada’s six largest REITs, though, suggests these trusts’ investment strategies could be pricing people out of housing. New tenants in turned over units paid an average of 13 per cent higher rent in properties managed by the four REITs that provided this data. Tenants moving into newly renovated units paid a whopping 29 per cent more on average than previous tenants (in properties managed by two REITs who shared this data). 

The report also found investors are getting little to no information from REITs about eviction rates, property maintenance, and other factors around securing people’s human right to decent housing.

Are foundations and REITs values-aligned?

In a recent Future of Good story, Gabe Oatley reported that while “Canadian foundations and charities aren’t required to disclose their investments…interviews with experts suggest residential REIT holdings are common.”

Meanwhile, Canada’s philanthropic foundations are under increasing scrutiny to ensure their investments align with their missions and beliefs. The troubling practices revealed by the SHARE report have sparked debates over the role of REITs in exacerbating housing affordability challenges and contributing to the erosion of tenants’ rights — and therefore, foundations’ complicity.

All of this raises a fundamental question: If foundations divest from REITs, where should they channel their investments?

Community bond campaigns: a community-led, ethical way to invest in housing

Community bond campaigns present a compelling solution for foundations seeking ethical and impactful investment options. (New to the world of community bonds? Learn about the model here.

By creating a dedicated portfolio for community investment through community bonds, foundations could actively address affordable housing challenges while fostering community development at the same time. Community bonds are issued by affordable housing providers (you can read about six of them operating across the country here), bought by retail or institutional investors, and repaid with interest rates and timelines set by issuers. This gives community groups who want to address the housing crisis a flexible way to raise the capital they need, while offering returns directly to their community members. And at Tapestry, we work with these groups to make sure there’s a solid plan to generate revenue and repay investors before launching.

Here are four big reasons they’re a values-aligned investment for foundations: 

Community bonds are transparent 

Community bond issuers consistently report on progress to investors throughout their projects, allowing investors to clearly see where their money is going, and make sure they’re invested in truly ethical, affordable housing. This transparency fosters trust between foundations, issuers, and communities, ensuring that funds are making a dent in the housing crisis.

They’re direct 

Investing in community bonds directly supports community-driven and community-focused initiatives that prioritize long-term and sustainable affordability in communities. Through community bonds, foundations can invest directly in grassroots groups with firsthand knowledge of their communities’ housing struggles and effective solutions. 

They facilitate community engagement 

One of the biggest advantages of community bonds is the opportunity for foundations to engage directly with communities at the forefront of the housing crisis. This engagement isn’t just financial — it’s about creating connections, understanding needs, and fostering genuine impact. Foundations can play a pivotal role not only as investors but as catalysts for positive change within communities.

You can help catalyze a community investment movement

At Tapestry, we envision a future where retail investors can put their money into bettering their communities, and the returns from those investments then contribute to the community’s overall economic development. If you believe in this future, too, an investment from your foundation could help build excitement and confidence in community bonds. It’s an invaluable contribution to the individual community bond campaign you invest in, and to the movement toward ethical investment in Canada.

In a landscape where foundations are increasingly called on to uphold ethical responsibilities, the choice of investment vehicles carries immense weight. Transitioning from REITs to community bond investments offers foundations an opportunity to stand as beacons of truly ethical investment — and make a real impact on the housing crisis affecting the daily lives of so many across Canada.

Meet three community bond buyers — here’s why they invested

Par Affordable Housing, Education

Investors are an essential piece of the community bond puzzle. But who are they? What’s important to them? What do they value? What do they need to know about you and your project to make the decision to invest?

The answers to these questions are unique to each organisation and project — and Tapestry clients find those answers through stage two of our process working together — but to give you a glimpse into the minds and motivations of community bond supporters, we sat down with three different investors and asked an important question: Why did you buy? 

Here’s what they told us. 

The community development organisation looking to publicly support affordable housing

When Haliburton County, Ont.-based affordable housing provider Places for People launched a community bond raise earlier this summer, one of the very first investors snapped up $50,000 worth of bonds — a pretty significant chunk of the $850,000 goal. That investor was the Haliburton County Development Corporation (HCDC), and executive director Patti Tallman says it was HCDC’s longtime faith in Places for People’s work that made investing a no-brainer. “Knowing the affiliation with Tapestry…we felt very comfortable in that investment,” Patti adds. 

After working with Places for People for many years — HCDC has loaned the organization money in the past for its affordable housing work — Patti says the community bond campaign was a welcome opportunity to publicly support Places for People’s work. “We wanted to be able to show that HCDC is a huge supporter of the concept of what Places for People is and what they do,” says Patti. “To be able to help launch the program right from the get go, it’s maybe going to [encourage] more people to think, Yeah, I can make an investment here.”

HCDC typically invests in businesses in Haliburton, so an investment in a non-profit is “unique and different” from their other work, Patti says. It was a new concept for others, too: Patti says in some of the local media coverage, reporters called the investment a donation, which is not the case. All community bond investors receive their principal investment back, with interest.

The interest HCDC earns from their investment will go back into its programs supporting economic development in the county, like its Local Initiatives Program — the only program of its kind hosted by a community development corporation — which provides non-repayable grants to nonprofits contributing to Haliburton County’s resiliency and vibrancy. Community bonds are meant to build community wealth, and HCDC’s relationship with Places for People is a great example. 

The individual investor who believes in helping her neighbours out

After Deb Alore retired from her job in public health, she began to get more involved in community advocacy in Kamloops, B.C., which she’s called home since 1987. When she started going to general meetings and potlucks hosted by the Kamloops Food Policy Council, she met Lindsay Harris, the council’s food policy implementation lead. She’d also heard of Myles Pruden’s work in the community on net-zero, affordable housing construction.

So when Lindsay and Myles came together to start another organisation, Propolis Housing Cooperative, to build new affordable housing in the community, Deb took note. And when Propolis launched a community bond raise, she was in. “I respect them very much. I think those folks have done great things with other projects,” Deb says. “I just wanted to be a part of something positive and solution-based. And given that I felt the people involved were really reputable, I just thought, I can’t not support this. I need to do this.

As a longtime Kamloops resident, Deb can see firsthand how challenging the housing market is. “We’ve had our share of financial challenges too, but I’ve never felt like I was in danger of losing my shelter because of the cost,” she says. As someone with the means to help her Kamloops neighbours, Deb feels a responsibility to do so. 

Deb invested in the Worker Bee bond, a minimum $1,000 bond with 2.5 per cent interest paid at the end of a three-year term. This is the first community bond Deb has invested in, but she doesn’t think it will be the last. One factor that limited the size of her investment this time around, though, was that it couldn’t be held in an RRSP (some community bonds can be held in RRSPs and TFSAs, but for Propolis’s first raise, their bonds are not eligible). “I’m retired and a lot of my savings are in RRSPs,” she says. “I had to [use] non registered money that I didn’t need for other things.” 

But Deb says she’s not overly concerned with the returns. “For me,” she says, “the investment piece of it was just sort of incidental. It was all about being a part of something positive, a positive change. The fact that I may earn a little bit of interest by loaning the Propolis group a bit of money over the next three years, that’s a bonus. But that is certainly not what drove me to be involved.”

The foundation with a national scope and a commitment to impact investment

Toronto-based Inspirit Foundation has invested in a number of community bond campaigns, among them SolarShare, a cooperative that owns 52 commercial-scale solar power projects across Ontario.

Jory says Inspirit is attracted to the “clean and simple” nature of community bonds: investors buy a bond, and their principal investment is repaid with interest after a predetermined term, usually a few years. “Comparing that to private equity deals, comparing that to social impact bonds, it’s just simpler. I think that’s certainly an advantage of it,” Jory says. 

Inspirit isn’t necessarily deterred by more complicated investments — Jory looks for good investments in solid ideas and projects, and focuses less on the format, he says. But Inspirit does tend to invest in projects and organisations with measurable or tangible outcomes. “Most of the stuff that we look at is pretty concrete, and we were able to see or even interact with end users,” he says.

Part of why Jory is a connoisseur of impact investment formats is Inspirit’s commitment to a 100 per cent impact investment portfolio — whereas some foundations make more traditional investments without ESG considerations in order to earn returns for their granting programs. “Since Inspirit exists to create a more inclusive and pluralist society, our investments need to generate returns that transcend financial outcomes for our foundation and maximize stakeholder value,” reads Inspirit’s investment policy statement.

Jory predicts Inspirit will continue to invest in community bonds, and that he’ll have more and more to choose from. “I get the sense that more and more nonprofits are looking at the model and wondering if it’s workable [for them].”

Building affordable housing in the UK with Charity Bonds

Par Affordable Housing, Learning from Abroad

Since 2010, housing prices in Canada have skyrocketed by 105% and incomes have not increased proportionately. A recent report by Canada Mortgage and Housing Corporation has stated that the scale of the housing challenge is so large that governments cannot solve the problem on their own. An estimated 3.5 million new housing units are needed to achieve affordability by 2030, and this will require innovative financing and collaboration among all types of housing providers – be they non-profit, for-profit, or co-operative. 

Many places in the UK are facing a similar challenge, where housing demand is outstripping supply. Recently, I had the opportunity to visit Hightown Housing, a charitable housing association in the United Kingdom that supports people who cannot afford to buy or rent a home at market price. I sat down with David Skinner, Director of Financial Services, and Neil Wray, Head of Treasury, to unpack the importance of Hightown’s work and learn how community investment has helped them to achieve greater impact. Our conversation follows below.

Q: How does Hightown develop affordable housing units? 

A: There are two main streams through which Hightown develops affordable housing units. The first is through a planning agreement called Section 106. Through this agreement, when a developer acquires land, they have to designate a portion of the properties for social housing. Then housing associations, like Hightown, bid to purchase those properties. This has accounted for two-thirds of all of Hightown’s developments in the last year.

In other cases, Hightown will buy land, design the property, and contract a builder to construct them. This method allows for more direct control. We also offer care and supportive housing units uniquely designed for vulnerable populations such as homeless people, young people, mothers and young children, and people with learning disabilities. 

Q: Hightown manages over 8,000 homes. How are these affordable homes financed? 

A: Hightown uses a mixture of financing. Most of it is debt financing – so things like bank loans and loans from the capital markets. We are increasingly acquiring capital from institutional investors such as insurance companies and pension funds. We also use grants from the government and we reinvest any surplus Hightown makes back into the organization. We have also issued two retail charity bonds

Q: How are charity bonds used to finance the affordable housing units? 

A: We’ve issued charity bonds twice now. Individuals wanted to invest in their local housing and we were looking for unsecured financing without having to rely on the bank. Charity bonds enabled us to finance the development of affordable housing units as they were being developed. We did not have to wait until the assets were completed to finance the build. Charity bonds also raised publicity for us and our work. 

In terms of the actual process, we established our financing need, worked with financial consultants, and engaged in lots of community consultations with potential investors. We then issued the bonds through the Retail Charity Bond plc. on the London Stock Exchange and our bond campaign was oversubscribed. Our first charity bond campaign in 2015 raised £27M within a few days. In 2017, we raised £31.5M in a similar time frame. Charity bonds were the perfect tool for us at that time.  

For those interested, here were the terms of each campaign:

2015  2017
  • £27M raise 
  • 4.4% APR, paid semi-annually 
  • Maturity in 10 years 
  • £31.5M raise 
  • 4% APR, paid semi-annually 
  • Maturity in 10 years 
  • Min investment = £500, invest in multiples of £100 after that 

Q: Are there any current developments that Hightown is working on?

A: Yes! Hightown is always working on new projects. We currently have over 40 active projects. One of our largest projects is on a site that used to be an industrial space with warehouses and car lots. We are spending £38M to develop 158 units. This is a combination of flats and houses that will be social housing, affordable rent housing, and shared ownership properties. 

Q: What is the difference between social housing, affordable rent housing, and shared ownership properties? 

A: Social housing is rented at around 60% of the market rent. Affordable rent housing is rented at 80% of the market rent. Shared ownership properties are intended to encourage individuals to climb the housing ladder. Individuals are able to own a portion of the house and rent the remainder. For example, someone may afford to own 60% of a house so they decide to put a down payment on that and get a mortgage. The remaining 40% of the house is still owned by Hightown, so individuals are responsible to pay rent to Hightown for that portion of the house. Ideally, individuals increase their percentage of ownership of the home until they own 100% of it and buy it out from Hightown. 

Q: What impact does Hightown have on its residents and the community? 

A: Hightown’s impact is difficult to quantify. But here are some key figures from our social impact report:

  • 40% of general needs properties were let to homeless households in 2020/21 
  • 80 people moved from temporary homelessness services to stable housing 
  • 776 service users were supported to live with independence 
  • 40 unaccompanied asylum seeking minors were given accommodation and support 
  • Properties improved their energy efficiency rating from C to A/B through retrofits
  • Households saved an average of £247 on fuel savings 
  • Only 1.75 tonnes of CO2 equivalent was emitted per home compared to the sector average of 2.53 tonnes 

Q: What advice do you have for other housing organizations looking to replicate your model? 

A: Go for it! We are all in this sector to solve the housing crisis so we need to develop strategies to do that. For Hightown, that means maximizing development opportunities and maintaining high quality accommodations. Different organizations face different challenges. It’s important not to be complacent and to continue overcoming challenges to achieve our shared bottom line – solving the housing crisis. 

 

About this Blog Series

Hi, my name is Jasleen Bahia, and I was once an Intern at Tapestry Community Capital. I am now completing my degree in business with a focus on social finance, and I’m currently doing a semester abroad in Europe. While here, I am Tapestry’s Ambassador to the UK. This blog series documents my adventure abroad learning about the social finance ecosystem in the UK and connecting it to our growing community investment marketplace in Canada. I am eager to find out what we can learn, replicate and share!

Financing Affordable Housing: Ottawa Community Land Trust

Par Affordable Housing

“I often have people come up to us and say, I love what you’re doing, can I give you a few thousand out of my RRSPs to invest,” says Ray Sullivan, Executive Director of the Ottawa Community Land Trust (OCLT). The problem for most non-profit affordable housing organizations, he says, is that they don’t currently have a pathway to allow their supporters to do this. We sat down with Ray, and Ottawa Community Land Trust Board Members, Lisa Ker and Glenn Grignonn to explore how Community Bonds might create a new avenue to engage their community while also unlocking much needed capital.

The Ottawa Community Land Trust was established in 2021 with the mission to preserve, maintain and support the creation of diverse and affordable housing in the Ottawa region. Their business model is straightforward – acquire properties that have existing affordable market rents, remove them from the private market, protect existing tenants, and then lease the properties out to local non-profits and co-operatives to manage.

ACORN Canada’s report on the housing crisis in Ottawa is dire. Market rents rose by 26% between 2005 and 2015, while median income only increased by 4%, and supply is not nearly high enough to meet demand. To add to the difficulties, the vast majority of affordable housing providers in Ottawa, and Ontario at large are small housing providers, operating less than a hundred units, meaning it is very difficult for them to achieve economies of scale and compete with the private market. “Of the roughly 750 members of the Ontario Non-profit Housing Association, 700 of them operate less than 100 units of housing,” shares Glenn. 

OCLT is particularly interested in acquiring small to mid-sized apartment buildings. “If they were bought by a commercial investment group, they would solely be interested in their return on investment and aggressively try to turn those units over and raise rents to increase the cash flow from the property,” says Ray. 

Most of the properties they are looking at will be eligible for traditional debt financing for 60% to 70% of the total property value, and OCLT is currently collaborating with the Ottawa Community Foundation to develop impact investment tools to cover the remaining gap. “If we were to rely on government sources, it would take over a year to secure the funds, and we would lose the properties,” says Ray, “we need to be able to mobilize quickly.” 

Ray, Lisa and Glenn all share the opinion that these are not “fundraisable” projects. “People who want to make significant contributions and gifts to organizations and causes get excited about being part of a construction project where you can generate a lot of buzz,” says Lisa, speaking from years of experience leading fundraising initiatives. “It seems that acquisition of existing affordable housing doesn’t have quite the same appeal. This is a big problem because every year, Canada is losing 64,000 units of affordable housing – and 20,000 are in Ontario alone. That means for every one unit built, four are lost. 

Ray shares that he would like to see the impact investment capital developed with the Ottawa Community Foundation become a revolving fund to help them acquire multiple buildings and protect as many units as possible. After acquiring the building, OCLT would repay the initial impact investors with funds raised by issuing Community Bonds. The idea is beneficial in a number of ways, first being that the initial capital would then be available for future acquisitions, and second, it would reduce the risk to community investors because the acquisition would already be complete. “These buildings are already rented out and have a consistent revenue stream, so we feel confident,” says Ray. 

The team also sees the potential to use community bond funds for renovations on the buildings. “There is boundless potential for improvements in energy efficiency in affordable housing,” says Lisa. The team agrees this is an area that really needs more attention, but expertise is scarce. “I think there’s a lack of capacity in the sector,” says Glenn, referring to both energy efficiency retrofits and Community Bonds, “and when people don’t understand it, they don’t want to do it.”

Lisa Ker was formerly the Executive Director of Ottawa Salus, a supportive housing provider. “We never sufficiently ventured into the world of social finance,” she shares, “we didn’t have the tools, resources and education to understand how to mobilize that type of capital.” 

“Like many things in the sector, once you get the momentum going, then people want to get on board,” says Glenn. The team seems excited to plough the way in terms of Community Investment. 

We wrap up the session with everyone being excited about the potential of Community Bonds. “The way you have brought this down to the community level and made it accessible to smaller and medium-sized housing providers – well- that’s just pretty cool,” says Ray. 

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.

Financing Affordable Housing: Propolis Cooperative Housing Society

Par Affordable Housing

Propolis is a non-profit co-operative based in Kamloops, B.C. that is creating a community of environmentally conscious individuals, brought together by a shared vision of affordable and sustainable housing.

We had the pleasure of meeting Lindsay Harris, the co-founder and president of the Propolis Cooperative Housing Society, and learning more about their ambitions for the co-ops’ first project. Lindsay, who works with Kamloops Food Policy Council, has long had a focus on community economic development. “I have always taken a systems approach to food insecurity, and for me, that also encompasses housing,” she shares. 

Propolis has partnered with local Kamloops resident, Miles Pruden, who owns a sustainable real estate development company, to bring the project to life. Miles’ company, Nexbuild Construction, built what has been dubbed as Kamloops’ most sustainable multi-family home (which can be viewed below). With Miles’ expertise, the co-op hopes to construct housing that is not only better for the environment but also reduces ongoing energy and maintenance expenses for tenants. 

Lindsay got in touch with Tapestry Community Capital because she sees Community Bonds as a flexible tool that could work in tandem with financing that they are hoping to secure from the Canadian Housing and Mortgage Corporation (CMHC). Over the last year, Lindsay has conducted her own research on the community financing landscape in British Columbia, making use of a BC-based toolkit for starting a community investment cooperative. “I wear a lot of hats and have many projects on the go, and I decided I ultimately didn’t have the capacity to also start up a community investment co-operative, and that’s why I was so excited to learn that Tapestry already has the needed infrastructure in place to raise community investment.”

“One of the things that has become very evident from our conversations with our network and with the community is that there are a number of people that are very interested in substantively supporting this work but we need a platform for them to be able to invest,” Lindsay shares. Lindsay came prepared with a list of questions about Community Bonds, all of which are very familiar to the Tapestry Team. 

 

Are we better to have a smaller group of high-net-worth investors, or a wider group of community members contributing smaller investments?

This is a common question, and the simple answer is – it depends. Community bonds offer an incredible pathway to engage your community and create lasting relationships. On the flip side, we understand that organizations need capital to bring their projects to life. “We think there can be a happy medium and that’s why we often design a Community Bond campaign with multiple investment options,” shares Ryan Collins-Swartz, Tapestry’s Co-Executive Director.  “For example, there may be one bond that offers a lower entry point and perhaps a shorter duration, and this would allow for more widespread engagement, and then another that might have a higher entry point, longer duration and slightly higher interest rate that is better suited to higher net worth individuals.”

 

Is it possible for institutions to invest in Community Bonds, such as foundations?

“Definitely!” shares Ryan. “We see huge interest from foundations because many have earmarked specific funds for impact investment, and they are always on the lookout for investable projects with social and environmental impact. We have also seen companies, both big and small, being very interested in investing.”

 

How are interest rates set?

This is a key step in the Tapestry process. We want to make sure that Community Bond issuers are going to the market with an investment opportunity that fits their financial needs, but also an offering that is exciting and attractive to their community. “It’s a multi-step process, but financial modelling of an organization’s financial capacity and projects, along with community consultations, is really key,” shares Ryan. 

 

Can community bonds offer patient capital?

“The beautiful thing about Community Bonds is that they put the control in the hands of the issuer. If you wanted to issue a bond with a 15-year term, we could certainly explore your community’s appetite to make a longer-term investment,” says Ryan. 

 

Lindsay shared that prior to meeting Tapestry they had a perception that raising community investment was a complex process, and they had felt fearful to take it on alone. “Kamloops is an incredibly community-minded place, and I have no doubt that there would be widespread support and involvement in a campaign like this.”

The Co-op is currently looking at properties for their first project and are advocating to the City of Kamloops to sell a piece of city-owned property. Lindsay shares that this has been a slow process, but that moving on private properties comes with its own set of challenges. “We are definitely facing hurdles in terms of being able to move quickly on a property – we are hoping Community Bonds can be part of the solution.”

Financing Affordable Housing: Mainstay Housing

Par 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.

Tapestry receives CMHC support to mobilize investment in affordable housing

Par Affordable Housing, News

Tapestry Community Capital has been selected as a winner of the Canadian Housing and Mortgage Corporation (CMHC) Housing Supply Challenge to scale up community investment in the affordable housing sector. 

“We are incredibly excited to have the support of CMHC,” says Ryan Collins-Swartz, Co-Executive Director of Tapestry. “With this funding, we will help affordable housing providers to tap into a new source of capital, enable more projects to get off the ground, and increase the supply of affordable housing in Canada.”  

Community bonds are a social finance tool used by nonprofits, charities and co-ops to finance capital projects with impact. Similar to traditional bonds, they are interest bearing loans. The key difference – they provide investors with both a financial and social return. 

While unlocking private capital, community bonds also build a powerful sense of community ownership. Residents, local businesses, and institutions alike can all invest to improve their community, while earning a fair return. Organizations such as Brique par Brique in Montreal, QC and The Mount in Peterborough, ON have successfully utilized community bonds to finance the construction of affordable housing. 

“We have witnessed the power of community bonds to garner community support for projects,” says Mary Warner, Co-Executive Director at Tapestry. “When someone becomes an investor, they are not only becoming financially invested but also emotionally invested in the outcome of the project. For a sector that is often afflicted by NIMBYism, this support is critical.” 

Tapestry is working with multiple partners to support program implementation. Key to the solution are a series of demonstration projects that will utilize and showcase the community bond model. Cumulatively, these projects will leverage $40 million in community investment, financing over 2000 affordable housing units. 

“We are thrilled to be partnering with Tapestry to build a long term, sustainable, and value aligned funding source for our organizations to acquire and preserve affordable housing,” says Chiyi Tam, Executive Director of the Kensington Market Community Land Trust. “We are eager to forge a path forward, demonstrate the community bond model, and support other like minded organizations to follow in our footsteps.” 

The solution also focuses on increasing the participation of retail and institutional investors in affordable housing. By raising awareness among investors and streamlining the process to invest in community bonds, Tapestry will grow the community investment marketplace tenfold. 

“We know there is very strong interest among investors to support affordable housing projects and Tapestry is creating the pathway to make that a reality across communities” says Mritunjay (MJ) Sinha, Tapestry Board Member and responsible and impact investment advisor. 

The program launched in early October and will run until March 2024. For more information about the upcoming events and support for community financing, sign up to The Thread newsletter here.


Photo credit: Cathy Crowe

About Tapestry Community Capital

Tapestry Community Capital is Canada’s leading non-profit service provider for community bonds. For the last decade, Tapestry has been supporting social purpose organizations across Canada to assess, structure, and manage community investments. Tapestry has supported in raising over $100 million from over 4,000 community investors.

For media inquiries, please contact Stephanie Pinnington at Stephanie@tapestrycapital.ca.

About the Housing Supply Challenge 

The Housing Supply Challenge is an innovative competition that encourages interested parties from across the country to propose creative solutions to Canada’s housing crisis. 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 29 organizations to allow them to further develop and test their solution proposal. After six months of research and consultation, Tapestry submitted a final solution funding proposal – “Financing Affordable Housing with the Power of Community”. Tapestry is one of 14 organizations selected for funding and will share a pool of $38 million to implement their solutions. 

Financing Affordable Housing: Community Involvement Legacy Homes

Par Affordable Housing

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.

Financing Affordable Housing: Kensington Market Community Land Trust 

Par Affordable Housing

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

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