creating affordable housing: seed funding / pdf funding

Creating Affordable Housing:SEED Funding / PDF Funding

Overview

What is affordable housing?

Who creates it? What approaches

work? What programs are

available?

CANADA MORTGAGE AND HOUSING CORPORATION 2

CANADA MORTGAGE AND HOUSING CORPORATION

The Community Housing Continuum

Emergency

Shelters

Transitional

Housing

Social Housin

g

Affordable Rental

Housing

AffordableHome

Ownership

RentalHousin

g

HomeOwnership

Government Subsidized Housing Non-Market Housing Market housing

What is Affordable Housing?

What is Affordable?

30 per cent of gross household income is generally considered “affordable”.

However, affordability criteria typically differs by program and funding authority.


Affordability Criteria – Two examples


Example 1Canada-Ontario Affordable Housing Agreement (MMAH as IAH)

•80 percent of CMHC average market rents

•Below average resale price

Example 2CMHC Seed and Proposal Development Funds Program

•80th rent percentile

•Below average resale price


Who creates affordable housing?

• Community leaders including non- profit service organizations and housing providers, churches, private sector developers, and municipalities.

• Each partnership brings value to the deal, such as business knowledge, financial resources or regulatory flexibility.

What approaches work? Municipal Tools Used In

Canada

CANADA MORTGAGE AND HOUSING CORPORATION

Acquiring andrenovating building

Expedited approval process

Parkland dedication fees

Affordable housing strategy Grants and loans Public–private

Partnerships

Allowing infillHousing agreements

fornew development

Redeveloping/converting

non-residentialbuildings/sites

Comprehensivedevelopment zoning Housing fund Resale price

restrictions

Designing flexibleHousing Housing organization Retaining affordable

housing

Donating landor facilities Inclusionary zoning Secondary and

garden suites

Encouraging buildingenergy efficient

housingIntensification Using development

levies

Encouragingsmaller units Land banking Waiving or reducing

property taxes


Ideas that have worked

There are many approaches to creating affordable housing.

• Benevolent financing & funding• Donate money• Lend money

• Property • Sell property, with conditions• Lease property• Donate property

• Developers • Acquire and rehabilitate• Build new housing

Programs Available

1. Seed Funding2. Proposal Development Funds

(PDF)



CMHC’s Seed Funding program offers financial assistance to housing proponents who are in the early stages of developing an affordable housing project.

1. Seed Funding

Up to $10,000 in the form of a grant

Up to $10,000 in the form of an interest-free loan

Seed Funding

11

What Types of Housing Projects are Eligible?

Housing project must be affordable

Housing Project must be located in Canada

No restrictions on:

Building formTenure typeFuture residents of the

housing projectType of housing proponent

organization

Seed Funding

rental housing project in which units will have rents within CMHC’s Affordability Criteria

homeowner project - the units must be modest and the purchase prices must be below the market for units of similar type, size and number of bedrooms in the subject housing market and neighbourhood


What is Affordable?

Seed Funding


Who is Eligible?

• Not-for-profit organization

• Housing co-operative

• First Nations

• Private entrepreneur

• Group of individuals who may or may not intend to become incorporated

• Municipalities

Seed Funding

Housing market studies to evaluate need and demand for the proposed project

Development of a business plan Exploration of funding sources or options Evaluation of procurement options Preliminary financial viability analysis Environmental site assessment Preliminary design of the housing project Incorporation of a not-for-profit organization


What activities are eligible?

Seed Funding


What Expenses are not Eligible? Not related to the development of the

housing project

Expenses carried out prior to CMHC’s written approval of Seed Funding

Expenses related to “hard” project costs, example - lot servicing, construction, renovation, and so on

Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental

Retainer fees paid to consultants or any other professionals for work to be completed in the future

Seed Funding


Conditions of the Funding

1. Must enter into a Contribution Agreement with CMHC

2. Must provide a need and demand study satisfactory to CMHC and an acceptable business plan before further funds will be advanced

3. Funds will be transferred only for eligible expenses confirmed with invoices or receipts

4. Eligible activities are expected to be completed within 12 months of the date of the Contribution Agreement. A longer period may be negotiated.

17

CMHC’s PDF program providesinterest-free loans to facilitate the development of affordable housing.

2. Proposal Development Funding

- Up to $100,000, determined by CMHC

- Depending on the size and complexity of the proposed housing project and how much development work needs to be done.

** Not available for housing proposals whose viability or level of affordability depends upon approval for a Provincial or Territorial program funded under the Affordable Housing Agreement

Proposal Development Funding

Must have at least five (5) housing units If rental – majority of rents must be below market

rent limits established by CMHC for units of similar type, size and number of bedrooms in the subject housing market

If home ownership – the sale price must be below the market value for similar housing in the neighbourhood

Units – whether rental or homeowner – must be modest in size and design

There must be a demonstrated need for the proposed project


Eligible criteria



Who is Eligible?

Not-for-profit organization

Housing co-operative

First Nations

Private entrepreneur

Any other housing proponents who can demonstrate their ability to produce a viable affordable housing project which meets CMHC’s criteria


Soil load-bearing tests Environmental site

assessments Project drawings and

specifications Professional fees Cost estimates Management plan Option to purchase Development permits Contract document Application fees


What activities are eligible?



What Expenses are not Eligible?

Not related to the development of the housing project

Expenses carried out prior to CMHC’s written approval

Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental

Retainer fees paid to consultants or any other professionals for work to be completed in the future



Conditions of the Funding

1. Must enter into a Contribution Agreement with CMHC

2. Must provide a comprehensive description of the project proposal, along with a need and demand study and a preliminary viability analysis and business plan

3. Funds will be transferred only for eligible expenses confirmed with invoices or receipts



Loan Repayment Requirements

To be repaid out of the project’s capital financing, normally from the first advance of the mortgage loan

Only the principal amount is repaid

If project is successful in producing an affordable housing project, it may be eligible for a portion of the loan to be forgiven

If project is successful but unable to produce affordable housing units, the full amount is repayable, without interest

www.cmhc.ca/affordablehousing

Harmony House

Locked up suites

www.cmhc.ca


Jeff KolibashCorporate RepresentativeNorthern [email protected]

http://www.cmhc.ca/

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