In The Press

No-frills housing choices

Affordability, close-knit communities draw residents back to the basics

Dec. 31, 2005. 01:00 AM

SHELLY SANDERS GREER

SPECIAL TO THE STAR

When Reid Rossi moved into his small one-bedroom condo in the Distillery District, he figured he was lucky getting into the housing market for such a bargain.

His 642-square-foot condo at 39 Parliament St. was just $165,000 in 2001 — and it was in a beautiful 19th century building.

Affordability was a key factor behind the purchase decision made by Rossi, who at the time was executive director of the Canadian Housing and Renewal Association, the national voice for affordable housing. But once he moved in, Rossi realized he had received more than square footage at a good price. He found himself living in a tight-knit community of residents from all walks of life who worked together to maintain and improve their home.

Rossi was the second buyer of a unit within an Options for Homes condominium, a non-profit development aimed at affordability without frills. The brainchild of planner/developer Michel Labbe, Options for Homes opens the door to home ownership to people with annual incomes as low as $16,000.

"You can't go through India and Thailand without feeling you have to give back for the fortune of living in Canada," Labbe says. "My debt is to provide affordable housing."

By skipping traditional items that push prices up, like expensive advertising campaigns and luxurious amenities such as pools, hot tubs and fitness centres, Labbe is able to build quality housing at lower-than-market prices.

The condo owners themselves oversee the construction and the units are sold at cost. Options for Homes pays administrative expenses through a 2 per cent fee for every unit. There is no mark-up and no expensive finishings, which is not a concern for most residents who can upgrade their suites themselves and make use of neighbourhood amenities.

"My wife likes the theatre, which we can walk to," says John Collins, another original resident from 1999 and the current president of the board of directors for 39 Parliament. "I go to the community centre for fitness, which costs $15 for three months for seniors. My wife and some other women in the building go to aquafit three times a week."

To date, Options for Homes has built five communities for 895 people. The average cost per suite is $40,000 less than market value in Toronto, and $20,000 less in smaller municipalities.

This low cost is achieved using a second or "alternative" mortgage which makes up the difference between the lowest affordable price offered to buyers and the actual fair market price. Purchasers don't make any payments on this second mortgage while they live in the building.

When the owners sell, if the suite has increased in value by 20 per cent, then the alternative mortgage has increased by the same percentage. So this mortgage is paid back in full plus 20 per cent, which deters speculators looking to profit quickly from a rising market. This money is then put back into Options for Homes to build future projects.

Right from the inception of an Options for Homes condo, there are four key differences from traditional condos that, when combined, make up a cost-saving model that has caught on in other markets including Kitchener-Waterloo, Collingwood and Montreal.

First of all, Labbe looks for land that has potential but is not in a "trendy" area. Labbe says that when he looked at land in the Distillery District, he was told it would never do well because it was too far from the downtown core. He got the land for a good price and now has three condos there that have more than 95 per cent owner occupancy and have appreciated in value significantly.

"The biggest challenge is finding patient landowners," he says. "We could be doing twice as many buildings if we could get more land. Because we're non-profit we don't have large amounts of money. So we buy residual land."

Next, using inexpensive flyers, people are invited to a presentation; but interested buyers have to pay $100 in order to get information about buying a unit.

"By saying we won't talk without $100 saves on sales staff which means lower prices," Labbe explains. "Generally 10 per cent of the people coming to information sessions tend to be purchasers. For them, the $100 offers a Power Point presentation, a copy of a video or DVD with more information and the legal documents, which they can take home."

A third difference is the fact that many of the people providing information at a session are themselves Options for Homes owners who receive a salary for their time and are not commissioned sales people. Not only does this keep costs down, it gives potential buyers an accurate picture of life in one of these buildings.

Once the units in a building have been sold, the new owners get together for meetings about the design of the building and rules, in a co-operative fashion. This sets a neighbourly tone that grows stronger over time.

"The main thing we like is the sense of community," says Lester Brown, an original purchaser at 39 Parliament in 1999. "My wife and I became members of the co-op and had several meetings before we moved in. Most of the people who moved in when we did are still here. We have an active neighbourhood association and many committees within the building. All the landscaping is done by people in the building and we have a really nice roof terrace garden that we take care of."

Options for Homes has mixed demographics, which appeal to both Rossi and Brown. Labbe says the breakdown is generally 50 per cent singles, 25 per cent seniors and 25 per cent mixed.

"Other condos we looked at had a specific type of lifestyle," Brown says. "They were all young people or all seniors. This has a mix of old, young, families, seniors and people with disabilities."

When construction begins, Deltera, a subsidiary of Tridel, gets to work.

"With Options for Homes our role is quite simply to build what Mike has envisioned," says Jim Ritchie, senior vice president, sales and marketing for Tridel. "Mike looks at every possible way to keep costs as low as possible. We're the largest condo builder in the country so we have good buying power. Also, the level of finishes is not as high as found in traditional condos. But there is no sacrifice in the quality of the building."

The long-time residency is a testament to both the building and the sense of community at Options for Homes. Rossi loved it so much that 16 months after he moved in, he bought a large three-bedroom suite in the same building for $279,000.

"I can tell you that the feeling of common interest sustains the building," he says. "There is a great sense of taking care of the building, of pride of ownership. I am here for the long-term absolutely."

While this model for affordable home ownership is working well, and Options for Homes has another three buildings on the go in Toronto, Labbe is surprised it hasn't been picked up by the rental market, especially given the support possible from the Canada Mortgage and Housing Corp., or CMHC. Mark Salerno, GTA district manager for CMHC says that the Partnership Centre has a number of ways to encourage the creation of affordable housing.

"There is proposal development funding, and a no-interest loan, which Options for Homes has used, which pays for a group to develop working drawings necessary to access permits," says Salerno. "We also provide consultation services like a needs study to determine the need for housing in a particular area."

Recently, the CMHC has also been providing waivers or reductions in mortgage insurance for affordable housing, and has been covering the travel and time costs to present proposals at different venues.

But as far as Labbe is concerned, more needs to be done to provide housing that people of all incomes can afford to own, as ownership leads to pride in communities.

"Ownership is cheaper than rental to build and operate," he says. "We need housing that produces a good community. If rental were the solution, Toronto wouldn't have a housing problem."

Innovative affordable housing is finally seeping into Ontario

By JOHN BARBER

Globe & Mail, Tuesday, November 9, 2004 - Page A13

A bracing wind of change blew through the East End when a small group of politicians and would-be developers gathered on Kingston Road yesterday morning to announce something Torontonians haven't seen for years: an innovative affordable housing program backed by both the federal and provincial governments.

Although the $2-million they gave away was a pittance compared with the hundreds of millions of dollars the two governments have promised to invest in affordable housing locally, it was enough to demonstrate a new determination to make a difference in Toronto.

So far, Ontario and Toronto have been bystanders to the new national program that is now supplying affordable housing across the country, especially in Quebec and British Columbia.

Held up first by a Tory government that was disinclined to provide matching funds -- and more recently by a Liberal government that felt it could not afford to do so -- the new national program is finally seeping its way into the local political landscape. And the project announced yesterday indicates that the two governments are prepared to be creative in how they make it work.

Rather than concentrating exclusively on affordable rental units, the governments have teamed up with Home Ownership Alternatives, a non-profit trust, to develop 382 affordable condominium apartments in three projects located in Scarborough, Markham and Pickering. Building on a model pioneered by non-profit developer Mike Labbé, the program uses creative financing to help working people with household incomes of no more than $45,000 to own their own homes.

First-time owners carry their new apartments with payments as low as $600 a month in some of Mr. Labbé's previous buildings, which were developed without the help of any government funding. If the model works as well with subsidies as it does without them, it could easily grow into a major new force in the underserved low end of the local housing market.

But even a delighted Mr. Labbé, who has spent years promoting his innovative technique of creating affordable home ownership in various government lobbies, acknowledges that housing policy in Ontario remains strangely undeveloped.

"It's a very odd situation," he says, noting that the flow of federal funds has been "horribly delayed" in Ontario. The previous Tory government's reluctance to get involved is an obvious reason for that. Another is the fact that little remains of the institutional structure that once helped build new, affordable housing in Ontario -- mainly co-ops and other non-profit groups. Although the money is there, the programs need to be rebuilt from scratch.

The federal program assumed that provinces would match Ottawa's $25,000 subsidies for every new unit that could be rented at below-market rents. But currently, the only subsidy available to Ontario developers is a $2,500-a-unit tax break.

Recognizing the enduring logjam in Ontario, federal Housing Minister Joe Fontana recently announced his willingness to bend some rules to get things going.

One option he is considering is for his government to begin disbursing the $350-million earmarked for affordable housing in Ontario without the immediate participation of Queen's Park -- as long as the province agrees to pay back the loan in the future.

Such a gesture would be "magnificent," according to one city official. It would go a long way to ensuring the successful revitalization of Regent Park, which is scheduled to begin soon but is probably not viable without substantial aid from senior governments.

Another option, which makes sense in a city with a rental vacancy rate of about 4 per cent, is for senior governments to offer rent supplements to fill up empty apartments with new tenants who couldn't afford them otherwise.

Both options will be on the table when federal and provincial housing ministers meet at the end of this month. In the meantime, yesterday's announcement on affordable home ownership indicates that Ontario might finally be ready to join the game.

Program offers low earners help buying homes

FRANK ETHERINGTON

KITCHENER (Dec 23, 2005)

One of the first affordable-housing projects in Canada to help individuals and families with incomes as low as $24,500 buy their own homes is ready to start in Kitchener.

Some low-income homebuyers will also get help putting together down payments.

As part of the experimental project, a low-income homebuyer who has difficulty raising a down payment of $4,500 will be asked to find about $1,500.

The other $3,000 would come in the form of a government loan to be repaid in line with the increased equity when the home is sold. For example, if the home increases in value by 20 per cent, the loan would be repaid at $3,000 plus 20 per cent.

After the condominium development of 64 stacked townhouses are built by Options for Homes (Waterloo Region), 16 will go to poor homebuyers who, until now, have only been able to afford rental housing.

The remaining 48 will be sold at cost to working-poor individuals or families earning $25,000 to $30,000 a year.

The project has been approved to receive $400,000 under Waterloo Region's ongoing affordable-housing program. It is now waiting for final approval by federal-provincial housing officials.

The units will be in two, four-level buildings on a 1.2-hectare (three-acre) site at Strasburg Road and Cedar Hill Crescent in southwest Kitchener.

Jan Ciuciura, president of the not-for-profit company, said the development includes 16 one-bedroom homes, 32 units with two bedrooms and 16 with three bedrooms. Units range in size from 575 to 1,327 square feet.

Some of the houses -- selling for as little as $79,000 -- will require $4,500 down payments and monthly payments of $692 to cover mortgage, taxes, utility and condominium fees.

Ciuciura and Rob Horne, regional planning commissioner and former housing director, said some low-income people in Waterloo Region are paying more than that in rent.

In past years, Horne has argued that in certain cases the region provides a subsidy of about $5,000 a year to keep a poor family in a rented apartment.

A regional study showed some tenants could afford mortgage payments if they could save enough to cover down payments and other costs associated with buying homes.

"We're the only developer in Ontario hitting the market where potential homebuyers have annual incomes of about $25,000 to $40,000," Ciuciura said.

"We want to help get working-poor people living in (Waterloo Region) rental units into places they can own and build some equity."

Rather than paying government subsidies or bonuses to builders to construct low-cost homes, Ciuciura said the pilot project will have assistance go directly to low-income buyers.

"We can help someone like a single mother with kids . . . get into one of these units, and provide her with financial help until her kids grow up, (and) she's able to get back to the work force," he said.

Housing developments by Options have been successful in Toronto and Waterloo where the company built and sold 60 units in 2004 at 139 Brighton St. at a former Brighton public school.

Options has also built more than $150 million worth of low-cost housing in Toronto since the late 1990s.

The company, which exists by charging a consulting fee to condominiums it builds, uses a form of second mortgage to make units affordable.

The company also keeps prices down because there are no marketing campaigns or real estate commissions on the no-frills projects.

The company pays market value for land but relies on local councils to defer development charges and other fees.

Those fees, along with government subsidies paid to companies building affordable-housing units, help form second mortgages that are paid off when owners sell units.

Combined savings result in lower prices and prevent speculation on the homes.

Horne said the Options proposal "sounds solid . . . and very exciting."

He said he supports any move that encourages people renting affordable-housing units to buy their own homes, build up equity and escape poverty.

He said the 16 individuals or families who would receive assistance to buy the most inexpensive Options units are people who have their names on Waterloo Region's waiting list for low-cost housing.

There are about 4,000 names on the list representing an estimated 10,000 men, women and children.

In the past four years, regional, provincial and federal governments have spent $31.6 million on affordable-housing to produce 891 low-cost units.

Horne believes federal and provincial governments are preparing to inject at least another $13 million into local projects next year that will help regional housing officials reach a target to build 1,500 low-cost homes by 2008.

Anyone interested in more information can call 519-742-4627.