Creating and maintaining affordable housing in Ottawa

The erosion of existing housing stock is a critical issue for housing affordability. Affordable rental housing in the private market can disappear due to rising rents or intensification and existing properties being demolished. Non-profit housing providers can also struggle to compete with private investors to purchase affordable housing units when they come to market. This undermines efforts to address housing affordability and end homelessness.

This demonstration will showcase a revolving loan fund to help community land trusts (CLTs) acquire and preserve existing affordable rental stock. It will solidify the recently incorporated Ottawa Community Land Trust (OCLT) through a partnership with Ottawa Community Foundation (OCF). Together, they will demonstrate how this fund can help preserve existing affordable rental housing and expand the community-based housing sector.

Project scope and expected outcomes

Giving non-profit housing providers a tool to help them acquire affordable properties

The loss of affordable housing units can occur because of intensification and the destruction of older, modest rental properties. It can also result from aggressive rent inflation, which moves modestly priced units to unaffordable rent levels. Non-profit housing providers need a tool that helps them acquire modest rental properties, so they are not removed from existing stock.

This project will demonstrate a revolving loan fund to help CLTs expand their asset base. CLTs are non-profit corporations created to acquire and hold land for a community. The land is perpetually held in trust to help provide access for community use, such as affordable housing. CLTs are membership-based organizations, governed by an elected board of directors, and often made of community members and non-profit organizations.

The proposed revolving loan fund will fill a significant void in the current affordable housing system in Ottawa. A revolving loan fund is a financing measure that is self-replenishing. It can also react quickly to allow non-profits to make competitive bids in the marketplace. It then uses interest and principal payments on old loans to issue new ones.

Creating a revolving loan fund for purchasing existing affordable rental housing

With support from the National Housing Strategy (NHS) Demonstrations Initiative, the project will solidify the recently incorporated OCLT. In collaboration with OCF, OCLT will then create the proposed revolving loan fund and attract investment for it. This will enable the partners to begin purchasing existing affordable rental housing.

OCLT will act as the administrator of the property portfolio. It will facilitate property management of the acquired properties, but it will not create an internal property management division. Instead, it will use its existing relationships with smaller local non-profit providers to arrange property management and support services, where appropriate. OCLT will also conduct the necessary due diligence for purchasing the properties.

This model offers several benefits. Preserving existing affordable rental housing stock helps maintain housing affordability, preventing vulnerable populations from being displaced by intensification or rental increases. It also offers a new funding method for non-profit housing providers, instead of relying exclusively on federal/provincial programs to fund new development.

Smaller non-profit providers will also benefit from the chance to provide property management on a fee-for-service basis. They will expand their revenues, and it will help them build their skills and expand their capacity, further strengthening the sector.

Developing policy and practice to support community land trust solutions for affordable housing

OCLT will formalize its relationships with OCF during the demonstration project and put the acquisition fund into operation. The partners will work to attract investment for the fund, including from philanthropists. They will also collaborate with the City of Ottawa about the possibility of the City being an investor. Criteria and policies related to the property acquisition process will be validated.

After investment has been obtained and framework has been created, the project will begin identifying properties to acquire. It aims to complete 6 to 8 transactions during the first two years of the demonstration. The project team will also develop guidelines and practices to support future property acquisitions. Finally, an independent evaluation will be conducted to help ensure best outcomes for replicating the model.

Helping to strengthen non-profit ownership and community stewardship of Canada’s housing system

While the project will be demonstrated locally in Ottawa, its model will have national potential. A revolving loan fund established in other jurisdictions would help other non-profit organizations purchase affordable housing properties. This will help strengthen non-profit ownership and community stewardship of Canada’s rental housing stock.

Over the short term, the project will increase OCLT capacity and expand its membership base. It will also introduce the practice of non-profit community providers acquiring and preserving existing affordable rental assets.

Over the longer term, the project’s approach will help preserve existing affordable housing stock, in Ottawa and potentially across Canada. This will offset eroding housing affordability and preserve—or even expand—existing affordable housing stock. The structure of the revolving loan fund will also help improve relationships and communications with government partners and key stakeholders.