The Vancouver City Savings Credit Union (Vancity) Model

The Vancity model provides low-cost capital to affordable rental projects. The model works by vetting affordable housing projects from the pre-construction stage. It helps by:

• providing additional opportunities for donor advised funds
• ensuring sufficient funding through the riskier stages of affordable housing projects

CMHC’s contribution for this initiative is a $6 million interest-free loan.

Project scope and expected outcomes

How the Vancity model works

The ultimate goal of the Vancity model program is to provide the funding necessary to create more than 2500 affordable rental units. They provide low-cost loans through Pre-Construction Equity Loan Fund (PCEL) to affordable rental housing. The loans cover the projects spanning the pre-construction and construction stages.

Typically, it works like this:

• the Vancity model provides of up to $300K (or more, with up to $450K where appropriate)
• the loan has a 2% simple interest for entities engaged in affordable housing development
• entities have up to 5 years to repay the loan

BC Housing is a frequent partner and provides additional grants and subsidies for projects that offer:

• 20% shelter rate units
• 50% rent geared to income housing limits
• 30% affordable units

Eligible costs include pre-construction and construction costs. Projects that are funded meet the Innovation Fund criteria regarding affordability, accessibility and energy efficiency.

Designed to ensure completion of affordable rental units

The PCEL fund has the following targets:

• At least 900 affordable rental-housing units are to be completed by December 31, 2021
• At least 1,700 affordable rental-housing units are to be completed by December 31, 2023
• construction of all 2,500 affordable rental-housing units to be completed by December 31, 2025

Each loan made by the PCEL is conditional upon CMHC’s satisfactory review of the following:

• Project verification confirmation completed by Vancity
• Recipient acknowledgement
• Evidence that the PCEL Fund has independently received an amount equal to the tranche requested from CMHC

To date, the PCEL has provided over $15M in loans to over 30 projects across BC and in Hamilton, Ontario, to support the creation of 2580+ affordable rental housing units.

Innovation Fund Criteria

Each Rental Housing Project must:

• create affordable housing units and maintain such units as affordable (as prescribed by the municipality or Province in which the Rental Housing Project is located. Where no such standard exists, rents shall be maintained at least 10% below average market rent for applicable location) in perpetuity
• include a minimum of 10% of all units that meet accessibility requirements
• be situated such that adequate access to public transit is available
• achieve a minimum of 10% decrease in energy intensity and greenhouse gas emission relative to similar projects constructed to the applicable building code requirement as demonstrated by an energy and greenhouse gas analysis prepared by a qualified consultant and submitted by the Recipient
• remain viable and sustainable without ongoing government subsidy

Non-profit organizations often face challenges acquiring capital to take on predevelopment and preconstruction expenses for affordable housing projects. By providing low-cost financing that allows projects to move forward, this innovation enables and accelerates the creation of affordable housing.