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A Foothold for Affordable Housing Brownfields at the Juncture of Prevailing Development Trends
July, 2008
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PROGRAM MAKES DENT IN LONG WAITING LISTS
The Canada-Ontario Affordable Housing Program is a commitment to provide affordable housing for 20,000 Ontario households through construction of supportive, rental and ownership housing. The federal and Ontario government have each pledged $301 million, while municipal governments across the province are contributing a further $132 million in land, fee exemptions, property tax reduction/rebates and direct funding.
As of June 2008, Ontario's Ministry of Municipal Affairs and Housing reports that about 11,500 units are built, under construction or in the planning approvals stage. This comprises 9,371 rental and supportive housing units, 1,222 ownership units and 909 units in the separate Northern Housing program.
The program provides capital grants of up to $70,000 per unit. Both private and non-profit developers are eligible to receive funding, but applications to the program must be made in association with a municipal affordable/subsidized housing provider.
Rents are to be set at levels no greater than 80% of average market rent for the area as determined by Canada Mortgage and Housing Corporation (CMHC), but housing providers have flexibility to provide deeper rent subsidies. "We try to increase the level of affordability as much as possible," says Saide Sayah, a Housing Developer with the City of Ottawa.
In many scenarios, tenants will be drawn from municipal social housing waiting lists where they are generally ranked according to need. Some private developers will select their own tenants, albeit likely with input from social housing waiting lists.
The brownfield initiative offers no extra capital funding. Rather, it gives municipalities a bonus allocation of affordable units in addition to what they've been allocated under the general Affordable Housing Program. "We found we were able to get some quite solid candidates with this amount of funding," reports Patrick Roulstone, a Facilitator with the Community Partnerships and Projects Branch in the Ministry of Municipal Affairs and Housing.
Participating municipalities are also ensuring that new affordable housing projects complement their own social, economic and environmental strategies. In Ottawa, for example, energy efficiency and environmental sustainability were important criteria in assessing submissions to the City's request for proposals (RFP) for affordable housing on a brownfield site that had formerly housed military barracks.
"We received proposals from a number of organizations, both private sector and non-profit, and it was really in their interest to give us a green building design," Sayah recounts. "They [the winning proponents] came in with a green building design and, as we have refined the design, it has become more green."
Waterloo Regional Council adopted affordable housing targets in 2001, in the absence of any federal or provincial funding at the time. "Our Regional Council kicked in $10 million to get it rolling," says Jeffrey Schumacher, Supervisor of Housing Supply Initiatives for Waterloo Region.
An original goal for 1,000 new affordable housing units by 2005 was subsequently revised upward to 1,500 units by 2008, and Schumacher credits the Canada-Ontario Housing Program for a lot of the recent progress.
"We're currently at about 1,400 units. Some of them are built and occupied, others are under construction and some are in the final planning stages," he says. "We still have a waiting list for affordable housing in the Region, which generally is about 3,000 to 3,500 households."
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By Barbara Carss
Capital grants coupled with municipal incentives provide the basis for new affordable housing projects on remediated brownfield sites in six Ontario cities. Development proponents have received funding through a special initiative under the Canada-Ontario Affordable Housing Program.
In some cities, the projects are part of an envisioned transformation of extensive tracts of former industrial land. In other cities the new housing is slated for infill sites within commercial areas or residential neighborhoods. All the projects are located in municipalities that have adopted community improvement plans (CIPs) to promote brownfield rehabilitation and redevelopment.
"We saw the project as an opportunity to undertake three of the biggest things that are happening in development and urban planning in Ontario today - those being the redevelopment of brownfields, intensification and public/private partnerships," says Tim Kenny, one of the developers behind a 40+-unit townhouse complex on a former wood waste dump in
St. Catharines. "We had planned to do a residential subdivision on the site, but the incentives that were offered enabled us to make a business case to build affordable rental apartments."
Grants are the same as for any other project funded through the Affordable Housing Program - a maximum of $70,000 per unit - but provincial officials were curious how those funds could dovetail with other strategies Ontario's Planning Act enables. Municipalities with CIPs are allowed to offer grants and loans to the private sector, and several Ontario municipalities now provide tax increment equivalent grants (TIEG) - an incentive based on the additional property tax revenue that an improved property generates - and permit fee and development charge exemptions for developers/investors who redevelop a brownfield site.
Affordable units approved for funding through the brownfield initiative are a bonus allocation in addition to a municipality's allotment of units under the general Affordable Housing Program.
"The initiative was really an exploratory exercise to see what kind of brownfield projects we could get," says Patrick Roulstone, a Facilitator with the Community Partnerships and Projects Branch in the Ministry of Municipal Affairs and Housing. "They had to be in a brownfield redevelopment area specified in a brownfield CIP. Another criteria for assessing applications was the degree to which the project supported smart growth principles."
Strategists see opportunities to complement Ontario's Places to Grow Act, which calls for intensification within existing built-up areas to make best possible use of infrastructure and reduce the cost and environmental impact of expansion out into the suburbs and farther outlying areas. Abandoned, derelict properties scattered throughout the urban fabric and/or obsolete industrial lands, which tend to be centrally located in older cities, have been identified as prime redevelopment sites.
Central locations also make sense for affordable housing since residents with low incomes typically need access to public transit or services and amenities they can easily reach on foot. However, escalating land values in city cores have made this an ever-costlier prospect for developers. "Conceptually, the brownfield initiative has been very, very strongly supported because it is a way for us to get affordable housing back into the downtown core," Roulstone adds.
The initiative, which was announced in the fall of 2006 by the then Minister of Municipal Affairs and Housing, John Gerretsen, covers a relatively small fraction of the 20,000 affordable units the Affordable Housing Program targets. Funding has been allocated for eight projects encompassing 535 units in Brantford, Cambridge, Cornwall, Ottawa, St. Catharines and Woodstock. Most of the proponents are aiming to have the projects, which range in size from 30 to 180 units, constructed and occupied by the end of 2009.
INFILL SCENARIOS
A 247-unit complex on a former military barracks site in Ottawa's Centretown neighbourhood is the largest of the brownfield projects. The developer, Centretown Citizens Ottawa Corporation (CCOC) has a 34-year history as a non-profit housing provider and currently manages more than 1,300 units in 48 buildings.
CCOC was the successful proponent in the City of Ottawa's request for proposals (RFP) for the site -1.4 acres located just north of Ottawa's elevated cross-city expressway, the Queensway, at the intersection of two major commercial streets: Metcalfe and Catherine. This proposal then became one of Ottawa's applications for funding from the Affordable Housing Program.
The project will be built in two phases, beginning with 160 units in two 7-storey and 4-storey apartment buildings. Phase two encompasses 18 stacked townhouses and a 69-unit, six-storey apartment building.
All buildings are designed to achieve a minimum of LEED (Leadership in Energy and Environmental Design) Silver status. A $7-million capital allocation from the Affordable Housing Program provides $70,000 per unit for 100 units designated for low-income tenants who will pay rents below the market average, while the remaining units will be rented at market rates.
"We really try to mix the units in a project of this size," explains Saide Sayah, a Housing Developer with the City of Ottawa. The location in a popular neighbourhood and the project's sustainable design and energy-efficient features are expected to attract market renters, while subsidized renters will come from the City's waiting list, which currently numbers about 9,370 households.
The City of Ottawa is contributing approximately $3.5 million to the project, which will help cover site cleanup and extra capital costs related to green building features. It has also transferred the land to CCOC for $1 and waived the development charges.
Although Ottawa's brownfield CIP provides for tax increment based incentives to help reimburse developers for remediation costs, the City has opted to just pay the tab upfront. "In this particular case, the City is providing up to $300,000 for the remediation," Sayah notes.
Heartwood Place, a non-profit developer based in Waterloo Region, has also taken on a high profile infill project on the former site of the Cambridge Reporter building and printing plant in the community of Galt's traditional downtown. "It's across the street from the GRT [Grand River Transit, providing public transit in the cities of Kitchener, Waterloo and Cambridge] Cambridge bus terminal and close to amenities so it's a good location for affordable housing," says Jeffrey Schumacher, Supervisor of Housing Supply Initiatives in Waterloo Region.
The Affordable Housing Program has provided about $4.6 million toward the $10.6-million cost for the 7-storey, 66-unit building. Heartwood Place has set a goal to raise a further $1.8 million through a fundraising campaign with the remainder coming from mortgage financing. The City of Cambridge's incentive programs are expected to reduce development costs by a further $300,000.
LAND USE TRANSFORMATION STRATEGIES
Plans for affordable rental housing on a 2.5-acre site in a once flourishing manufacturing district in St. Catharines fit into a broader redevelopment scheme. "In 2004, the City of St. Catharines and the Region of Niagara came up with a plan to look at the transformation of a corridor of land along an old railway corridor," reports Paul Chapman, Director of
Planning Services for the City of St. Catharines. "This is one component of a number of projects that are underway, some of which are on brownfields, some of which aren't, basically to transform the area from industrial to residential."
Two Niagara-based companies - Capital Pines Development and Associated Brownfields Inc - have joined forces to remediate and build affordable housing on the site immediately adjacent to the former Domtar paper mill, which was shut down in the fall of 2002. The townhouse style development will include 40 to 50 one- and two-bedroom units facing onto Oakdale Avenue, the major commercial street stretching along the corridor slated for redevelopment.
"It will have a nice street appeal and the parking will be at the back," says Tim Kenny, President of Capital Pines Development. Meanwhile, other spinoff environmental and aesthetic benefits are already showing up in parks throughout the city.
"Our site contained a lot of wood waste where they dumped wood chips from the paper mill next to it. 133 truckloads of woodchips were removed and recycled during the cleanup, and this was utilized for mulch for flower beds," Kenny says.
Site cleanup costs will be partially reimbursed through St. Catharines' and Niagara Region's brownfield incentive programs. Developers/property owners are rebated a sliding portion of the tax increment - which is the increased property tax attributable to improvements - over a 10-year period. Currently, St. Catharines provides a rebate of up to 50% of remediation costs, but City Council is considering increasing that cap to 80%. The City and Region also waive development charges and permit fees for brownfield redevelopment projects.
"We received funding [from the Canada-Ontario Affordable Housing Program] of around $68,000 per unit, but because of our remediation costs and other costs associated with it, our average unit cost is probably in the range of $95,000," Kenny estimates. Nevertheless, the developers still expect reasonable returns, even with below-market rents set at $500 per month for one-bedroom and $750 per month for two-bedroom units.
Niagara Region and local municipalities within Niagara have been some of the earliest adopters of smart growth principles and brownfield incentives, ahead of provincial legislation such as the Places to Grow Act and recent Planning Act amendments that allow upper tier municipalities to enact community improvement plans. The Region also has a specially designated Smart Growth Expeditor to help steer prospective developers through financial, legal and development approval procedures.
"A lot of municipalities have incentives, but a commitment to work in partnerships with developers is equally important. What they look for is certainty of process," asserts Mark Brickell, Vice President, Smart Growth & Partnerships, with the Niagara Economic Development Corporation.
Brownfield redevelopment makes particular sense in a city like St. Catharines, which is surrounded by Lake Ontario, the Welland Canal, the unique agricultural lands of the Niagara fruit belt, and the municipal boundary of the City of Thorold. "We've got very little greenfield land," Chapman observes.
Though Brantford is not closed in to the same extent, local officials in that city hope to capitalize on strategically located abandoned industrial lands such as the 52-acre Greenwich-Mohawk area, where a 32-unit affordable housing project is planned. "It's within the built-up area of the city so it makes sense to develop it," says Rick Farrell, Director of Housing for the City of Brantford.
However, the project, which received $2.24 million from the Canada-Ontario Affordable Housing Program, is unlikely to be realized for at least a few more years given the complicated environmental issues to be addressed and the magnitude of the planned redevelopment. A preliminary design concept envisions a residential/commercial node, incorporating parks and making new use of two designated heritage buildings dating back to the farm equipment companies that occupied the site at the turn of the 20th century.
"The affordable housing project that we are going to put on it is quite miniscule compared to the size of the brownfield," Farrell notes.
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