“Whether rural or smaller communities have any access to [the fund] is … going to be an issue.”Shirley Bond
B.C. launched a much-anticipated fund designed to protect rental buildings last week, but whether small community groups outside of the province’s urban centres can access the money remains a question of concern.
The $500 million Rental Protection Fund, a key pillar of Premier David Eby’s housing strategy, went live with the goal of partnering with non-profit, Indigenous and community organizations to buy at-risk apartment buildings from investors.
“This initiative, with half a billion dollars of provincial government money, is supporting the ability to go out and buy those older buildings, to make sure that the tenants in them are protected,” said Eby.
“If there’s an opportunity for development to build a new building on that site, those tenants will be protected through that process by a not-for-profit housing provider that owns the site and is redeveloping it, so that we can make sure that we’re not seeing increases in homelessness as a result of loss of this vital rental housing.”
If the fund is successful, it should preserve low rents and prevent critical low-income housing stock from being replaced with new condos. Eby said it’s especially important to help “older low rise buildings that were built in the 70s under federal government programs that no longer exist, as they tend to have people in them who have lived there for 20 or 30 years and who are very vulnerable if they close that housing.”
Still, it’s not clear whether the new program is up to the task.
‘Questionable’ criteria cuts out some non-profits
The Rental Protection Fund unveiled its policies, including a three-stage process that requires non-profits to apply to pre-qualify.
Not every local non-profit, charity, housing co-op or Indigenous housing provider is eligible. They “must have experience of managing non-profit housing projects under an existing housing portfolio” and “must demonstrate capacity to expand its operations to include the properties proposed for acquisition,” according to the application criteria.
That effectively cuts out some non-profits, especially in smaller B.C. communities where an organization might already do good work helping vulnerable populations but there are limited opportunities to manage or own housing projects in a rural or remote area.
Prince George-Valemount MLA Shirley Bond said the criteria is “questionable” in the type of groups that will be able to meet the new threshold to work with the fund.
“When you look at the three-stage application process, do smaller non-profits have capacity to manage that?” she asked. “I would be surprised if many of them would be able to work through that process.
“Some of the larger non-profits may well be able to, but I don’t see this providing enormous relief related to northern and rural communities.”
Once pre-approved, a non-profit will need to show the fund its strategies on cash flow and tenancy, its affordability plan to keep rents low, and a letter of intent from a lender that it can finance or mortgage at least part of the purchase price of a new rental building.
That could prove a challenge for smaller community groups that don’t already own buildings and therefore lack the equity to leverage to get financing to purchase another. While partnering with the fund might help some of them break into the market, and eventually compete with larger private sector agencies, that does not appear to be a primary goal of the fund according to the criteria set out.
Geared to experienced operators, no geographic guidelines
The question of how to include smaller non-profits with less experience is still being grappled with, said Rental Protection Fund CEO Katie Maslechko.
“We’ve been spending a great deal of time thinking about that,” she said in an interview. “Obviously, history and experience operating housing is a pretty important, key tenet of selecting and pre-qualify the non-profits who will operate this housing going forward.
“However, each non-profit is unique, or you may have plenty that are perhaps larger non-profits but may want to establish a new arm of their organization to perhaps broaden out their mission a little bit, and we want to be able to support that level of creativity.”
The hope is groups of all sizes will apply, said Maslechko.
It’s also not clear whether $500 million is enough for the fund, when even an old, run-down apartment building in an urban centre like Victoria can sell for $20-$30 million. The entire fund could easily be spent three times over just in Victoria and Vancouver alone.
The fund’s financial planning is for an average grant of $250,000 per unit, above which a non-profit will have to take out mortgage loan financing to complete the deal.
Bond said it needs to be clear that rural communities get a slice of the money too.
Maslechko said there is no geographic guide to the investments, nor are there set amounts set aside for different regions of the province.
“This will be so highly contextual, region to region,” she said. “We want to ensure there’s equal and equitable opportunity for non-profits of all sizes, from communities of all sizes, to be able to step up and participate, but in a way that is contextual to the unique environment they’re operating in.”
Another question looming over the fund’s effectiveness is what happens after a non-profit purchases an old rental building.
Operating costs not included
Maslechko said the goal is not only to maintain the current tenants, but to find a way to conduct improvements to what can be decades-old buildings that may need repairs and energy improvements.
The fund won’t help pay for operating costs.
However, the province has given $5 million to BC Housing to help boost capital repairs to buildings purchased by the fund, which the Ministry of Housing says will be dispersed to non-profits in the form of $1 million for every 400 units of housing purchased.
Although Housing Minister Ravi Kahlon described this money as ongoing operating funding during his recent ministry budget estimates process, that no longer appears to be the case. That presents a problem, said Bond.
“You need to take care of operating costs, you need to look at repair, maintenance, upkeep and all of those things are significant,” said Bond.
“I think the effectiveness of the fund generally should be questioned, and whether rural or smaller communities have any access to it is something that’s going to be an issue.”