A PRIMER ON AFFORDABLE HOUSING AND
HOMELESSNESSBy: Nick Falvo
Presentation to United Church Women
Location: Barrhaven United Church
Ottawa, Ontario
February 17, 2014
Overview
• Government support for housing
• Social assistance
• Social housing
• Homelessness
• “Housing First”
• Summary
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A Well-Kept Secret
Direct Spending and Tax ExpendituresAverage subsidy per household
Average pre-tax household income
(2008)
Homeowners $2,600 $93KPrivate Renters $400 $46K
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Ex’s of Support to Ontario Homeowners
Type of Support Annual Amount
Non-Taxation of Imputed Net Rent
$2.9 B
Non-Taxation of Capital Gains on Principal Residences
$1.9B
Exemption of Imputed Rents from GST
$1.2B
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Imputed Rent• When a landlord rents a unit to a tenant, the landlord is
taxed on that rental income.
• When a landlord (effectively) rents to her/himself, that (imputed) rental income “is not taxed under the income tax regime” the way “net rental income” would be taxed if they rented to another person.
• It’s not actual rental income. Hence the term “imputed rent.”
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Capital Gains on Principal Residences
“Capital gains realized on the sale of a principal residence are non-taxable under the income tax regime in Canada. In comparison, 50% of capital gains from other investments (e.g., equities) realized in a year are taxed at income tax rates.”
— Frank Clayton
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The Economics of Newly-Built Housing
New Housing in Toronto
New one- or two-bedroom apt $1,500
Household Salary Needed $60,000
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SA Shelter Allowance, Ottawa
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SA Shelter Allowance, Ottawa (cont’d)
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Social Housing
• Social housing generally refers to housing for low-income households that benefits from substantial funding from senior levels of government.
• Usually, social housing is owned and operated by a not-for-profit entity.
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Social Housing (cont’d)• A crucial point about ‘social housing’ is that a significant
proportion of tenants who live there pay reduced rent. This is usually referred to as Rent Geared to Income (RGI).
• Though the precise rent scale varies across Canada and across programs (and years), tenants in RGI units typically pay between 25% and 30% of their before-tax monthly income.
• The highest amount of rent a tenant would be charged in social housing would be ‘break even rent’—that is, the actual market rent that would be charged on the private market. This happens in private non-profit and co-op housing (with tenants who are ‘middle-income’). These would not be RGI units.
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Rent Levels in Social Housing Compared
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Who Has Social Housing?
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Ottawa’s Waiting List
City of Ottawa’s Centralized Waiting List, 2012Household Type # of Households Median Wait Time
(in Years)
Families (with children)
3,665 3.1
Single Adults 3,543 5.4
Seniors 1,965 3.2
2 Adults 522 3.6
3+ Adults 150 2.9
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Tenants
• 1/3 of social housing tenants in Ontario are seniors. Most prefer all-seniors buildings, and non-profit housing authorities find them to be very good tenants.
• 10% of Ontario’s stock of social housing is “supportive housing.”
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Inadequate Housing, Children in Care
“Two studies have been done in Toronto looking at the role of housing with respect to children in care. Results of both studies indicate that the state of the family’s housing was a factor in one in five cases in which a child was temporarily admitted into care. Results from the Toronto research also indicate that, in one in 10 cases, housing status delayed the return home of a child from care.”
— Falvo, 2012
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Developing
Social Housing
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Social Housing in Toronto: Basic Math
• $200K to build new unit of social housing (including cost of land). Amount gets paid over 30 years
• $300/month (from tenant) to cover operating deficit.
• After 30 years, major repairs necessary.
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Social Housing in OttawaCost of Building a Large One-Bedroom Apartment
(or Small Two-Bedroom Apartment)
Construction $200/ft2
Soft Costs i.e. architect, legal fees, other professionals
An additional 10%-17%
Land Sometimes free
TOTAL $200,000
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Social Housing in Ottawa (cont’d)
• It might cost less than half of that to acquire an already-existing unit (from a private landlord, for example).
• But such a unit likely would not last as long as a newly-built one.
• And for some types of supportive housing (i.e. for persons with physical disabilities), housing must be purpose-built.
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Land• Centretown Citizens Ottawa Corporation (CCOC)
provides social housing in Ottawa. CCOC often pays full market value of the land for their units.
• CCOC cannot afford to buy land in downtown Ottawa at market rates and build new. But they can afford to acquire already-existing units downtown.
• For example, when carrying out new construction, CCOC could not afford to pay the full cost of land in the Market, Centretown, Hintonburg or the main streets of Little Italy or Chinatown.
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Land (cont’d)
• Sometimes the City of Ottawa (or another level of government) donates the land.
• Other times, a level of government will offer CCOC a long-term lease for one dollar (or for $30,000 or $40,000 a year).
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Land (cont’d)• Government funding cycles make it challenging for non-
profit housing providers to ‘jump on’ good land opportunities.
• City of Ottawa might issue an RFP in July and then announce results in November.
• But there might be a great deal on land in June; and owner of the land will not wait. Seller wants to close in three months.
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New Social Housing in
Ottawa
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Examples of AHI Projects in OttawaProvider Address # of Units Year Completed
Ottawa Salus 930-934 Gladstone 19 2002
Ottawa Community Housing
380 Somerset W (Hartman’s)
60 2005
Multifaith Housing Initiative
138 Somerset 10 2007
CCOC 424 Metcalfe (Beaver Barracks – Phase I)
160 2010
Shepherds of Good Hope
1053-1057 Merivale (“The Oaks”)
55 2011
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Beaver Barracks
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Beaver Barracks (cont’d)
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Beaver Barracks (cont’d)
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Shepherds of Good Hope (“The Oaks”)
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Ex’s of New AHI Coop Units in Ottawa Provider Address # of Units Completed
Blue Heron Co-operative Homes
750 March Road 83 2006
McLean Cooperative Homes
155-343 Parkin Circle 63 2008
Eastern Ontario Christian Seniors Co-op
220 Viewmount Crescent
69 2012
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Blue Heron Housing Co-operative
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MacLean Co-operative Homes
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Eastern Ontario Christian Seniors Co-op
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But Where Does This Leave Us?
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Canada Compared
Rates of Social Renting
Country %
Netherlands 34
Sweden 32
France 19
England 18
Canada 5
United States 3
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Rental Housing Production
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Homelessness
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Causes
Traditionally, two schools of thought:
1. Individual risk factors
2. Socioeconomic factors affecting entire jurisdictions
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Causes (cont’d)
Ex’s of Individual Risk Factors:
• Mental health diagnosis
• Heavy use of drugs or alcohol
• Lack of education/skills
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Causes (cont’d)
Examples of Socioeconomic Factors Affecting Entire Jurisdictions
• High unemployment rate
• Lack of affordable housing
• Inadequate social assistance benefits
• Reductions in psychiatric beds
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Causes (cont’d)
Since early 1990s: convergence of opinions
1. Structural factors matter
2. Those most at risk tend to have individual risk factors
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Impact on Health
“Homeless people in their forties and fifties often develop health disabilities that are more commonly seen only in people who are decades older.”
—Dr. Stephen Hwang
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Impact on Health (cont’d)• Homeless people more likely to have:
29X Hep C
20X Epilepsy
5X Heart Disease
4X Cancer
2X Diabetes
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Mental Health
• Depression 17% (8% in pop)
• Anxiety 11% (1%)
• Bipolar 8% (1%)
• Schizophrenia 5% (1%)
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Social Costs (cont’d)• 2000 article in JAMA reported on death rates among homeless men in Toronto:
→The mean age of death was 46 years.
→The mortality rate for homeless male youth 8X rate of of their non-homeless counterparts.
→Homeless men 9X more likely to be murdered than their housed counterparts.
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Social Costs (cont’d)• 1998 Toronto study
→ Over half of all female street youth become pregnant.
→300 babies are born to homeless women each year in Toronto
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Violence• More than 1/3 of homeless persons report being physically assaulted or beaten up in previous year
• Stranger 56%
• Acquaintance 38%
• Police 35%
• Another shelter resident 27%
• Partner or spouse 21%
• Shelter staff 15%
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Sexual Violence
• 1 in 5 homeless women report being sexually assaulted or raped in previous year.
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“Housing First”
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Throne Speech, 2013
• “Our Government will…[b]uild on the successful Housing First approach and its renewed Homelessness Partnering Strategy to help house vulnerable Canadians…”
— Throne Speech (Canada), Oct. 2013
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Housing First
My Definition (for the purpose of today’s class)
Providing a homeless person with immediate access to permanent housing.
The alternative to Housing First: the “treatment first” approach (also known as the “continuum of care” approach)—i.e. fix person’s behaviour (i.e. addictions, mental health, etc.) before giving them permanent housing.
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Housing First
Homeless
Shelter placement
Transitional housing
Permanent housing
Based on slide from S.Tsemberis
Treatment FirstClient must demonstrate readiness for each step
No requirement for readiness to move directly to permanent housing
Difference between HF and Treatment First
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At Home/Chez Soi Study
• 5-city, random control study
• $110 million
• Results expected imminently
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Summary• Senior levels of government in Canada provide various
forms of support for housing, including for homeowners.
• Social assistance (i.e. ‘welfare’) provides assistance to many low-income Canadians, but, for the most part, not enough for appropriate private-rental accommodation.
• Fewer than half of very low-income Canadians are fortunate enough to live in “social housing” (which involves subsidized rent levels).
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Summary (cont’d)• Indeed, there are lengthy waiting lists for social housing
all across Canada.
• The percentage of Canadian households who live in social housing is considerably lower than the OECD average.
• Canada’s rate of ‘social renting’ is 5%. In The Netherlands, the rate is 34%. In Sweden, it’s 32%.
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Summary (cont’d)
• People who are homeless (i.e. sleeping in emergency shelters or outside) experience certain health problems at much higher rates than the general population.
• They also die much more quickly.
• They are also considerably more likely to be assaulted (both physically and sexually).
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Summary (cont’d)• Over the past decade, it has become quite trendy for
senior levels of government in Canada to claim that they believe in the Housing First principle.
• In other words, they state that they hold the philosophical view that homeless persons should be given immediate access to affordable housing.
• Note: This is not the same thing as agreeing to provide sufficient funding for every homeless person to live in affordable housing.
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Summary (cont’d)• Results of the At Home/Chez Soi study will be released
later this year.
• Some people believe that these results will make it more palatable for senior levels of government to provide more resources so that homeless persons can be provided with more affordable housing.
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Thank You
Nick Falvo
PhD Candidate (Public Policy)
Carleton University
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