The Canadian government is already augmenting a rental housing loan fund launched last year to help underwrite projects in which at least 20 per cent of the units will be designated affordable for a minimum of 10 years. The newly released 2018 federal budget commits $1.25 billion over three years to the Rental Construction Financing Initiative, representing a 50 per cent boost to its initial $2.5 billion pot.
“This new funding is intended to support projects that address the needs of modest- and middle-income households struggling in expensive housing markets,” the budget document states. “This measure alone is expected to spur the construction of more than 14,000 new rental units across Canada.”
The low-cost, 10-year loans could potentially cover 90 to 100 per cent of the residential portion of a new development. The minimum loan threshold is $1 million for new buildings with at least five units. Mixed-use buildings are also eligible provided the residential component accounts for at least 70 per cent of the gross floor space.
Canada Mortgage and Housing Corporation (CMHC) administers the loan fund, which is open to municipalities, not-for-profit or private sector developers who can ensure they will not need operating subsidies to maintain the affordable units for the required term. Affordable rents are prorated to the market where the project is situated and can be no higher than 30 per cent of the median household income in that market.
To qualify, projects must achieve at least 15 per cent better energy performance than the standard set in the 2015 national energy code. All common areas must be barrier-free and at least 10 per cent of the units must meet local accessibility standards.
Applicants who can secure other cost abatements, such as a waiver of local government development fees and/or property tax concessions, will be viewed more favourably. Projects proposed for sites with access to public transit and other features that support walkability and alternatives to car ownership will also be given priority.