Keeping the Sunalta Lodging House Above Water

When floods hit the Sunalta Lodging House in 2013, it forced the owner of the building, HomeSpace, to undertake extensive renovations. With support from the National Housing Co-Investment Fund and the City of Calgary, the renovations made the building better suited to formerly homeless people. And, when the pandemic hit in 2020, a flexible approach allowed HomeSpace not only to accommodate the previous Sunalta residents but also to keep homeless people safe during the lockdowns.

Project scope and expected outcomes

As of 2021, the 3 and a half-storey, 33-unit Sunalta Lodging House in Calgary looks good as new – and is soon expected to welcome a new group of residents. From appearances alone, it’s hard to believe that it took a devastating flood, extensive renovations and a pandemic to get to this point.

The Sunalta building is owned by HomeSpace, a real-estate development and management company that provides safe, appropriate and affordable housing for vulnerable Calgarians.

Calgary grapples with homelessness and a flood

With a population of about 1.3 million, Calgary is a hub for the Canadian oil and gas industry – and its fortunes tend to rise and fall with the industry’s. Bad times create unemployment, while good times create demand for housing; both put pressure on those facing homelessness.

The City of Calgary has taken this issue seriously, launching an aggressive plan to end homelessness in 2008. However, according to Calgary’s Mayor Naheed Nenshi, 3,000 Calgarians were still experiencing homelessness in 2021. Matt Vermunt, Director of New Development at HomeSpace, adds that “There’s a big shortage of affordable housing in Calgary – about half the proportion of Vancouver, Montréal, or Toronto. There’s a lot of ground for us to make up.”

In the summer of 2013, though, ground was in short supply, as heavy rainfall caused intense flooding in Alberta, with states of emergency declared from Red Deer to the US border. The floods hit the Sunalta building, which was built in the 1970s, and which HomeSpace had bought in 2009 to house formerly homeless people in a transitional program, with supports.

The floods knocked out the lower floor, and exposed some other problems with the building, forcing HomeSpace to relocate 7 of the tenants to other properties it owned. And floods can bring other issues, as HomeSpace’s Finance Director, Karen Chen, points out: “Our insurance had already gone up by $200,000 for our overall portfolio. We’re affordable housing, but we are also a responsible landlord. So, we charge low rent, but still had to do renovations.” Those combined pressures put a tight squeeze on HomeSpace’s finances.

Gathering support

HomeSpace was already considering the Sunalta building a candidate for renovation, but the flood made the need clear. Fortunately, HomeSpace already had a good working relationship with CMHC and the City of Calgary, having drawn on support from both to buy the Sunalta building in the first place, and to build and renovate its growing portfolio across the city.

In 2019, HomeSpace applied for funding under the National Housing Co-Investment Fund. The project received $295,000 in financing through the renewal stream of the Fund. The City of Calgary also provided $20,000, along with some waivers on development charges. Because the project was part of the City’s Housing Incentive Program, the City was also able to expedite approvals. The total budget for the renovation was $1.16 million. The trade partner that worked on the building-envelope replacement, Westcor Construction, also gave HomeSpace breaks on the cost of materials, while several other suppliers provided discounts on services and materials.

The renovation goes ahead

The renovation itself was not merely a matter of making the lower floor safe again – it was also an opportunity to make the building more suitable to its residents’ needs, while making it more efficient. Starting in October 2019, the renovation involved reinforcing the structure and a full building-envelope replacement, including the roof, windows and doors. Renovations inside included upgrading insulation and the mechanical and electrical systems.

To meet funding requirements, says Matt, “we had to hit certain performance targets for energy efficiency, and that meant big upgrades to the systems – from super-high-efficiency boilers, upgraded pumps and so on. We upped our specs across the board.”

Karen notes that this not only made the building more comfortable, but also less expensive to run. “Energy efficiency is very pricey up front, but worth it over 10 years or more. Meanwhile, our utility bills are much lower than before the renovation and lower than for our other buildings.”

HomeSpace also opted to knock out the walls between 2 units, creating a multipurpose room that tenants can use as a common space, or an agency can use for programming – whether it’s yoga, a computer lab, or counselling – adding flexibility for the changing needs of the tenants.

Meanwhile, the residents could not stay in the building during the renovation, but HomeSpace took advantage of its housing portfolio and its partnerships to accommodate everyone. “Our clients understood the need to do this work and so did the agency we were partnered with,” says Matt. HomeSpace had recently completed another 30-unit building, partnering with Jayman Built, in Calgary’s Bowness community. This arrangement allowed the Sunalta residents, along with Alpha House – the agency that provided supports at Sunalta before the renovation – into a new, purpose-built building. It also freed up the Sunalta building for renovations. “This building was about the same size and had the space for our tenants, and they were happy to transfer over, along with our staff,” says Matt. “It worked out magically.”

Challenges met and overcome

Several challenges arose during the planning and renovation, but HomeSpace was able to overcome them.

Firstly, there were some concerns that the flood had damaged the structural integrity of the concrete columns supporting the building. “This was solved by having an engineer in to assess the building, as part of our due diligence,” says Matt. “It came out fine.”

There were also concerns that the renovation might jeopardize HomeSpace’s original agreement with the City of Calgary, which had contributed $1.21 million for the original purchase in 2009, on the condition that the Sunalta building be dedicated to affordable housing for 25 years. In fact, the City got a better deal than this because of the renovation, says Matt: “With the CMHC funding, we signed on for another 20-year term, so our commitment to affordable housing is now even longer. The City was pretty happy with that.”

The renovation ended in March 2020, on time and within budget. With the previous residents resettled, HomeSpace’s plan was to find a partner with an agency. This agency would provide permanent supportive housing to a disadvantaged or at-risk group in the renovated Sunalta building.

As Matt puts it, “We’re a real-estate development and management company and we’re good at developing properties for affordable housing – but we’re not specialized in providing support services to residents. So, we partner with 20-odd agencies over our 30 properties.” The aim was to put out a request for proposals and get a service provider that specialized in supporting a group that needs affordable housing. As Karen says, “We aim to house people in groups that CMHC has identified as priorities for their need for affordable housing: women facing violence, single mothers, Indigenous peoples, and so on.”

At the time, though, another challenge was looming: the COVID-19 pandemic. The Calgary Homeless Foundation identified the now-vacant Sunalta building as a good place to keep homeless people safe during the lockdowns, and HomeSpace agreed. However, this posed an administrative hurdle, as federal funding depended on creating permanent supportive housing – and this was clearly a temporary plan. CMHC agreed with the idea, as the need was both acute and clear, and made an exemption until the pandemic lockdowns are over. “Renovation is always a tremendous amount of work,” says Matt, “and helping the pandemic response was especially nice, because it’s so gratifying to see that work being put to immediate use.” Alpha House returned to the Sunalta building to help the new temporary residents.

Looking ahead

Once the pandemic is over, the new residents will have not only a new home, but also access to a vibrant neighbourhood with shopping, community parks, and light-rail transit within a few blocks. “That’s very important, because most of our clients don’t have cars, so they need public transit,” says Karen.

Karen and Matt emphasize the need to get in touch with CMHC early in the process. As Karen puts it, this helps to determine whether a project will qualify for the National Housing Co-Investment Fund. It can also determine what information is needed to identify costs and energy savings. Matt concurs, noting that earlier involvement makes for smoother planning and budgeting – and more certainty.

He also says that this is just another step toward achieving HomeSpace’s mission. “We have a strong growth mandate, because there’s such a shortage of affordable housing in Calgary. We’re very busy on new construction, and acquisition of more properties.”